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ANNUAL REPORT 2014
DELIVERING GROWTH

Table of contents

  • Page 1
    ANNUAL REPORT 2014 DELIVERING GROWTH

  • Page 2
    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. To reflect such fact and to avoid any misconception of the reader of the publication certain logos, terms and business ...

  • Page 3

  • Page 4
    ... Earnings per share pre one-time items (â,¬)1 Business free cash flow 1 Taking into account the share split; previous year's figures have been adjusted accordingly. See "Earnings per share" in the Notes to the Consolidated Financial Statements. GROUP â†' SALES â,¬ million 2014 â†' 2013 â†' 2012...

  • Page 5
    ... KGaA, Darmstadt, Germany Performance Materials Performance Materials Group Healthcare Life Science Business sectors Biopharmaceuticals Life Science Businesses Consumer Health Allergopharma Biosimilars Effective January 1, 2015 the Group changed the structure of its financial reporting...

  • Page 6
    " WE ARE ALL PURSUING ONE GOAL: DELIVERING GROWTH WITH OUR IDEAS AND COMMITMENT TO OUR DAILY WORK. TO BENEFIT OUR PATIENTS, OUR CUSTOMERS, OUR SHAREHOLDERS AND OUR SOCIETY." K A R L- L U D W I G K L E Y, Chairman of the Executive Board of Merck KGaA, Darmstadt, Germany

  • Page 7
    ...AZ an important partner to the leading global electronic manufacturers. Highlights 2014 GROUP 3 2 MARCH 26 â†' SHARE SPLIT ANNOUNCED 1 FIT FOR 2018 Subsequent to a doubling in the value of its shares since the beginning of 2011, the company announces a share split in a ratio of 1:2. The share...

  • Page 8
    ... worldwide. As of 2017, it will mainly focus on the bulk production and packaging of medicines referenced in China's essential drug list. 4 5 6 SEPTEMBER 1 â†' GROUNDBREAKING CEREMONY FOR NEW GLOBAL HEADQUARTERS The expansion of the company´s site in Darmstadt into a contemporary global...

  • Page 9
    ... in liquid crystals and insights into future trends, our company is technology leader and key driver of future developments. TREND/4 â†' HEALTH FOR EVERYONE 26 - 31 For many people around the world, access to innovative health solutions is more of a dream than a reality. In order to change this...

  • Page 10
    ... Company Shares CORPORATE GOVERNANCE â†' 142 - 165 144 145 162 164 Capital structure and corporate bodies of Merck KGaA, Darmstadt, Germany Statement on Corporate Governance Report of the Supervisory Board Objectives of the Supervisory Board with respect to its composition GROUP MANAGEMENT REPORT...

  • Page 11
    ...more people can relate to this quote from Johann Wolfgang von Goethe as life expectancies steadily increase worldwide. Birth rates, meanwhile, are sinking. These developments are reflected in our portfolio of products and services - including those that treat infertility and further cancer research.

  • Page 12

  • Page 13
    .... As the world leader in the fertility drug industry, Merck KGaA, Darmstadt, Germany, supplies hormones for each phase of the reproductive cycle - from developing the egg cell to the early stage of pregnancy. The company has also developed a wealth of products in this area, including a computerized...

  • Page 14
    ... Younger for Longer 9 " BY THE AGE OF 30, A WOMAN'S PROBABILITY OF A SUCCESSFUL PREGNANCY BEGINS TO DECLINE, AND AT 40 THE ODDS BECOME VERY LOW." P R O F. D R . H E R I B E R T K E N T E N I C H â†' FERTILIT Y CENTER BERLIN SILKE AND JENS â†' ASSISTED REPRODUCTIVE TECHNOLOGY HELPED SILKE AND JENS...

  • Page 15
    10 M A G A Z I N E â†' Younger for Longer F I L L I N G O F R E A D Y- T O - U S E S Y R I N G E S â†' U N D E R C L E A N RO O M C O N D I T I O N S AT A PHARMACEUTIC AL PRODUCTION PL ANT I N D A R M S T A D T , G E R M A N Y.

  • Page 16
    ... of Global Research and Development at the Group's Biopharmaceuticals busi­ ness. The broad range of innovative mate­ rials, reagents, test kits and equipment from the Life Science business of Merck KGaA, Darmstadt, Germany, also supports medical progress. Diverse products make the development and...

  • Page 17

  • Page 18
    TREND/2 â†' GROWING MIDDLE CLASS MARKETS IN MOTION The world is converging - with amazing dynamism. Economic boundaries are blurring, and global competition is heating up at an accelerating rate. We are strengthening our presence in emerging markets and preparing ourselves for a successful future.

  • Page 19
    ...â†' E X E C U T I V E V I C E P R E S I D E N T, H E A D O F S T R AT E GY & G LO B A L F R A N C H I S E S AT T H E B I O P H A R M AC E U T I C A L S B U S I N E S S " WE ARE UNIQUELY POSITIONED TO FURTHER OUR GREAT POTENTIAL IN EMERGING MARKETS BY DRIVING GROWTH OF OUR SPECIALTY CARE PORTFOLIO."

  • Page 20
    ... KGaA, Darmstadt, Germany, offers health solutions to address these issues. "Emerging markets have accounted for al­ most two­thirds of the Group's Biopharma­ ceuticals business' organic growth over the last several years," says Meeta Gulyani, Executive Vice President, Head of Strategy & Global...

  • Page 21
    ... with the unfamiliar in order to develop truly inno­ vative content, products and applications," summarizes Walter Galinat, who heads the Performance Materials business sector of Merck KGaA, Darmstadt, Germany. With this philosophy, the company is laying the ideal foundation for success in dynamic...

  • Page 22
    M A G A Z I N E â†' Markets in motion 17 Asia-Pacific 2009 2020 2030 3,228 million 1,740 million ERICH NOBIS â†' V I C E P R E S I D E N T, I N T E RC O N T I N E N TA L C ONSUMER HEALTH 525 million " HEALTH IS THE KEY TO REALIZING A HIGHER STANDARD OF LIVING."

  • Page 23
    ... CLEAR FUTURE The digital revolution is impacting our lives in a variety of ways - especially as users of communication media. Whether for smartphones, laptops or flat-screen televisions, we as global liquid crystals market and technology leader are driving the development of cutting-edge displays.

  • Page 24

  • Page 25
    ...economists as a growth driver. Online marketing along with the real­time analysis of relevant customer and market data using digital technologies have become key competitive factors for com­ panies. Smartphones and tablet computers have long been making the Internet mobile. This represents a rapid...

  • Page 26
    ... KGaA, Darmstadt, Germany, had come up with the idea of the flat­screen display, it would take some time for this dream to become a reality. Initially, liquid crystals were used in the LC displays of pocket calculators and digital watches. In close cooperation with customers - electronics companies...

  • Page 27
    22 M A G A Z I N E â†' A crystal clear future RESEARCH â†' I N A L A BO R ATO RY O F E M D P E R F O R M A NC E M AT E R I A L S IN BRANCHBURG, NJ (USA) " WE CREATE ADDED VALUE THROUGH NEW PRODUCTS FOR SEMICONDUCTORS WITH UNPRECEDENTED LEVELS OF EFFICIENCY." RICO WIEDENBRUCH â†' H E A D O F I N ...

  • Page 28
    ...dimensional cinematic experience. established itself as the global technology and market leader. In addition, strategic acquisitions are being made to secure a successful future, such as the takeover of AZ Electronic Materials. "This company supplies specialty chemicals for other display components...

  • Page 29
    ...uence do innovative display solutions have on architecture and on the lives of people in urban environments?" This question was discussed by experts at a symposium entitled "Building Innovation - Displaying Architecture", which Merck KGaA, Darmstadt, Germany, held in Shanghai in November 2014. The...

  • Page 30
    ..., NEW RISKS AND NEW OPPORTUNITIES." TIM EDLER, REALITIES:UNITED â†' In 2000, the brothers Tim Edler and Jan Edler founded realities:united, a studio for art, architecture and technology. They develop and support architectural solutions, usually incorporating new media and information technologies...

  • Page 31

  • Page 32
    TREND/4 â†' ACCESS TO HEALTH HEALTH FOR EVERYONE An estimated 1.3 billion people have no access to effective and affordable health care. With our Group-wide Access to Health initiative, we are pursuing multiple approaches in order to overcome access barriers, for instance through a program to fi...

  • Page 33
    ...which Merck KGaA, Darmstadt, Germany, developed as part of a research collaboration in the 1970s. It was a milestone in the treatment of the worm disease that has made it possible to cure schistosomiasis in many millions of people. With its broad­based Praziquantel Do­ nation Program, the company...

  • Page 34
    ... freshwater with their excreta. Once in the water, miracidia hatch from the eggs and use the freshwater snail as an intermediate host ... ...and then grow into cercaria. The cercaria penetrate human skin, primarily attacking the bladder and colon via the blood and lymphatic systems. WORMS OF...

  • Page 35
    ... at strengthening supply chains in order to deliver and reach out efficiently at the point of care. ENSURING ACCESS TO S AFE MEDICINES The numerous projects based on the Access to Health strategy are bearing fruit around the world, with a clear focus on the rural regions of developing coun­ tries...

  • Page 36
    M A G A Z I N E â†' Health for everyone 31 ACCESS TO MEDICINE â†' T H E G RO U P I S E L I M I N AT I NG BARRIERS TO ACCESS P R I M A R I LY I N R U R A L A R E A S A MOBILE MINILAB â†' COUNTERFEIT MEDICINES C A N B E D E T E C T E D Q U I C K LY A N D E A S I LY

  • Page 37
    01 TO OUR SHAREHOLDERS â†' Pages 32 - 41

  • Page 38
    034 038 040 Letter from Karl-Ludwig Kley The Executive Board Company Shares

  • Page 39
    34 T O O U R S H A R E H O L D E R S â†' Letter from Karl-Ludwig Kley K A R L- L U D W I G K L E Y Chairman of the Executive Board

  • Page 40
    ... 35 Our company has completed another good year. We again achieved profitable growth. The "Fit for 2018" transformation program, with which we are shaping the future of our company, is showing its effect. With the acquisition of AZ Electronic Materials (AZ), the offer to acquire Sigma-Aldrich and...

  • Page 41
    ... reporting: â†' Healthcare comprises the Biopharmaceuticals, Consumer Health, Allergopharma and Biosimilars businesses. â†' Life Science includes the Life Science business and offers room for the planned acquisition of Sigma-Aldrich. â†' Performance Materials consists of liquid crystals, the AZ...

  • Page 42
    ...quality products, improved solutions for customers as well as on innovative approaches for a healthier as well as more comfortable and pleasant life. And through their work, they continue to write our success story. I owe my thanks to every single one of our employees. Merck KGaA, Darmstadt, Germany...

  • Page 43
    38 T O O U R S H A R E H O L D E R S â†' The Executive Board T H E E X E C U T I V E B OA R D O F T H E G R O U P â†' B E R N D R E C K M A N N , M A R C U S K U H N E R T , K A R L- L U D W I G K L E Y, STEFAN OSCHMANN, BELÉN GARIJO, KAI BECKMANN from left to right

  • Page 44
    ...: Environment, Health, Safety, Security, Quality MARCUS KUHNERT Member of the Executive Board Chief Financial Of ficer Responsibility for Group functions: Group Accounting & Subsidiaries; Group Controlling & Risk Management; Corporate Finance; Mergers & Acquisitions; Group Tax; Investor Relations...

  • Page 45
    ... became effective. The price and number of the shares of Merck KGaA, Darmstadt, Germany, were adjusted accordingly. On May 9, 2014, the Annual General Meeting resolved to redivide the share capital of Merck KGaA, Darmstadt, Germany, so that one existing company no-par value share with a pro rata...

  • Page 46
    ... in free float (129.2 million). C O M PA N Y S H A R E S â†' IDENTIFIED INVESTORS BY REGION AS OF DECEMBER 2014 in % 4 Rest of Europe Rest of World 17 Germany 10 6 % 47 United States German Retail / Undisclosed 16 United Kingdom Source: Orient Capital Total number of shares outstanding...

  • Page 47
    02 GROUP MANAGEMENT REPORT â†' Pages 42 - 141

  • Page 48
    ...MI C P OSI T I O N 141 080 082 084 084 097 104 109 115 121 Macroeconomic and sector-specific environment Review of forecast against actual business developments Course of business and economic position Group Biopharmaceuticals Consumer Health Performance Materials Life Science Corporate and Other

  • Page 49
    ... and chemical company. The Group holds the global rights to the Merck name and brand. The only exceptions are Canada and the United States, where the company operates as EMD Serono, EMD Millipore und EMD Performance Materials. The Group's product portfolio ranges from innovative pharmaceuticals and...

  • Page 50
    ... developing life cycle management products to capitalize on the Biopharmaceuticals division's strong brand equity, the company entered into a long-term strategic partnership with Lupin Ltd. of India to broaden the General Medicine portfolio in emerging markets with affordable, high-quality medicines...

  • Page 51
    ...-time items Margin (% of sales) Business free cash flow Effective May 15, 2014, Uta Kemmerich-Keil took over the leadership of Consumer Health, thus succeeding Udit Batra as President and Chief Executive Officer. Kemmerich-Keil was previously CEO of Allergopharma, the global Allergy business unit...

  • Page 52
    ... of the Display Materials business unit on January 1, 2015, generated more than half of Performance Materials' sales in 2014. With a high market share, Merck KGaA, Darmstadt, Germany, has established itself as the global market and technology leader in liquid crystal mixtures. The market is highly...

  • Page 53
    ... the structure and behavior of living organisms. The Life Science division's products and services are used in the research, development and manufacture of biotechnological and pharmaceutical drug therapies, as well as in research and application laboratories. In addition, products and services from...

  • Page 54
    ...manufacturing. On September 22, 2014, Merck KGaA, Darmstadt, Germany, and Sigma-Aldrich announced that they had entered into a definitive agreement under which the company will acquire SigmaAldrich for US $ 17.0 billion (â,¬ 13.1 billion), establishing one of the leading players in the global life...

  • Page 55
    ...strategic plans and to make decisions. The structure of Merck KGaA, Darmstadt, Germany, with members of the Merck family as personally liable partners requires the Group Executive Board, whose members are also personally liable partners, to pay special attention to the long-term development of value...

  • Page 56
    ... company. Group strategy The Group focuses on innovative and top-quality high-tech products in the Healthcare, Life Science and Performance Materials business sectors of Merck KGaA, Darmstadt, Germany. The company's goal is sustainable and profitable growth. Merck KGaA, Darmstadt, Germany, intends...

  • Page 57
    ...providing innovative solutions that include drugs, devices and services to help people living with multiple sclerosis. The Biopharmaceuticals business plans to fully exploit the potential of Rebif®, its top-selling product, in an increasingly competitive multiple sclerosis market and to position it...

  • Page 58
    ... strategy are a deeply technical field force, product depth in developed markets as well as portfolio breadth in emerging markets. The Life Science business will focus on expanding its presence across laboratories in emerging geographies as well as gaining share of wallet in North America. The Life...

  • Page 59
    ...for the acquisition of AZ Electronic Materials (Performance Materials). One-time expenses in connection with restructuring measures as well as costs related to the integration of acquired businesses have also been assumed for 2015. With the planned acquisition of Sigma-Aldrich (Life Science) in 2015...

  • Page 60
    ... OF THE GROUP As a global company with a diverse portfolio of products and services, Merck KGaA, Darmstadt, Germany, uses a comprehensive framework of indicators to manage performance. The most important KPI (key performance indicator) to measure performance is EBITDA pre one-time items. The Value...

  • Page 61
    ... Opportunities, and in the Report on Expected Developments. As the most important indicators of the Group's financial business performance, the KPI s are key elements of the company's performance management system. Sales Sales are defined as the revenues from the sale of goods and services rendered...

  • Page 62
    ... inventories and trade accounts receivable. To manage working capital on a regional and local level, the businesses use the two indicators days sales outstanding and days in inventory. GROUP â†' BUSINESS FREE CASH FLOW â,¬ million / change in % 2014 2013 Change EBITDA pre one-time items 3,387...

  • Page 63
    ... success in changing markets. Merck KGaA, Darmstadt, Germany, is continuously working to develop new products and service innovations for patients and customers. Indicators for the degree of innovation are defined individually depending on the specifics of the respective businesses. Credit rating...

  • Page 64
    ... the company's corporate culture - with respect to employees, products, the environment, and society. Over the course of nearly 350-year history of Merck KGaA, Darmstadt, Germany, the principle of corporate responsibility has become a firm pillar of corporate governance. It is part of daily conduct...

  • Page 65
    ..., ecological and ethical conduct. In 2014, Merck KGaA, Darmstadt, Germany, maintained its good position in other major sustainability indices as well. For instance, we were once more included in the STOXX Global ESG Leaders index. Moreover, the company has remained listed on the Euronext Vigeo...

  • Page 66
    ... in Africa and India. Accessibility Merck KGaA, Darmstadt, Germany, promotes initiatives to strengthen supply chains and to develop localized health solutions in order to deliver and reach out efficiently at the point of care. One example is the Group's Temptation Project, which uses heat and...

  • Page 67
    ... quality analyses, and efficient water consumption, along with patient focus, personalized medicine and digital / mobile health. The employees of Merck KGaA, Darmstadt, Germany, were called upon to submit suggestions for new materials and systems, as well as for new business models. During the 2014...

  • Page 68
    ... can use the products in a responsible, safe and proper manner. 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 health care professionals have access to relevant...

  • Page 69
    ... met. In 2014, Merck KGaA, Darmstadt, Germany, received the ISO 14001 group certificate for its environmental management system for the sixth consecutive year. This certificate covers 58 sites, including eight of the nine production sites of the newly acquired AZ Electronic Materials. Spending on...

  • Page 70
    ...2015. Counting the Bari and Tiburtina sites in Italy, eight the company production sites have a certified energy management system. The results of the Carbon Disclosure Project likewise indicate that the Group is on the right path. In 2014, Merck KGaA, Darmstadt, Germany, again ranked in performance...

  • Page 71
    ...In 2014, the Group spent a total of â,¬ 50.8 million on community engagement activities. Of the total monetary and non-monetary donations made by our subsidiaries in 2014, 61 % went to Emerging Markets (Latin America and Asia, excluding Japan), 37 % to Europe, as well as 2 % to the North America and...

  • Page 72
    ... Research and development at the group 67 RESEARCH AND DEVELOPMENT AT THE GROUP Merck KGaA, Darmstadt, Germany, 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 2014, the company focused...

  • Page 73
    ... for a late-stage biosimilar, initially for smaller emerging markets. Between 2015 and 2016, Merck KGaA, Darmstadt, Germany, plans to initiate between two and five Phase III clinical trials. BIOPH A RM AC EU T IC A L S PIPEL INE IN 2014 The Biopharmaceuticals division's core R&D fields include...

  • Page 74
    ... as updated by the European Medicines Agency (EMA ) in December 2013, and were included in an update of the Summary of Product Characteristics in June 2014. They confirm that RAS biomarker testing is essential for patient-centric care and is thus a truly personalized approach to the treatment of...

  • Page 75
    ...As part of the strategic alliance, Merck KGaA, Darmstadt, Germany, will co-promote Pfizer's Xalkori®, a medicine to treat NSCLC , in the United States and several other key markets. Global collaboration with Pfizer is expected to accelerate the development of avelumab in multiple tumor types. Up to...

  • Page 76
    ...-of-care therapy. The outcome of this study is expected in 2016. A two-year long-term extension study (ADDRESS II LTE ) has also been initiated in order to develop atacicept's safety database. Also aiming at the treatment of SLE , an agreement was entered into by Merck KGaA, Darmstadt, Germany...

  • Page 77
    .... Merck KGaA, Darmstadt, Germany, and Ono Pharmaceutical reached a mutual agreement to terminate the license agreement on ceralifimod (ONO -4641) since the project did not meet the company's threshold for continued investment. The Biopharmaceuticals division remains committed to driving innovation...

  • Page 78
    ...U P â†' Research and development at the group 73 B I O P H A R M AC E U T I C A LS P I P E L I N E , AS OF DECEMBER 31, 2014 Therapeutic area Compound Indication Status Oncology Evofosfamide (TH-302; hypoxia-activated prodrug) Evofosfamide (TH-302; hypoxia-activated prodrug) Evofosfamide (TH...

  • Page 79
    .... At the same time, Consumer Health is further developing its established brand-name products by making them simpler to use and by offering accompanying services. The Merck KGaA, Darmstadt, Germany, "LC 2021" strategic initiative combines the company's future LC activities, with a special focus on...

  • Page 80
    ...which the Group has been offering since April 2014. L IF E S C IENC E With nearly 800 employees focused on R&D, the Life Science division is working with customers to develop innovative solutions for the research, development and production of pharmaceutical and biotech processes worldwide. Through...

  • Page 81
    .... In the third quarter of 2014, the Life Science division also announced the opening of a new Biomanufacturing Sciences Training Center (BSTC ) facility in Tokyo, Japan. The state-ofthe-art facility is designed to help biopharmaceutical companies develop manufacturing processes and find solutions to...

  • Page 82
    ... to the success of Merck KGaA, Darmstadt, Germany. We are therefore focusing on recruiting the right employees with the right capabilities at the right time and retaining this talent. Within the context of our Group strategy we also place particular emphasis on talent development, compensation and...

  • Page 83
    ... company. Therefore, as part of our diversity and inclusion strategy, we are focusing on topics such as internationality, demographics and gender balance. People from a total of 122 different nations work at Merck KGaA, Darmstadt, Germany. Only 27 % of our employees are German citizens and 72 % work...

  • Page 84
    ... health and safety. This internationally recognized key performance indicator describes the number of workplace accidents resulting in lost time of more than one day per one million working hours. Merck KGaA, Darmstadt, Germany, set itself the goal of reducing the LTIR to 2.5 by 2015. In 2014...

  • Page 85
    ... for AZ Electronic Materials, another key business for the Performance Materials division. According to Gartner, a market research institute specializing in technology and electronics markets, the semiconductor industry grew by 7.2 % in 2014 compared with 5.0 % in 2013. Healthcare market IMS Health...

  • Page 86
    ... The Life Science division is a leading supplier of products and services for general laboratory applications, as well as for the research, development and production of drug therapies of biological and chemical origin. For the global laboratory product market relevant to the Lab Solutions business...

  • Page 87
    ... AGAINST ACTUAL BUSINESS DEVELOPMENTS In the Annual Report for 2013, Merck KGaA, Darmstadt, Germany, forecast slight organic sales growth for the Group in 2014, mainly driven by the Life Science and Consumer Health divisions. For EBITDA pre one-time items in 2014, a value at the 2013 level was...

  • Page 88
    ... growth â,¬ 1.77 - 1.83 billion â,¬ 1.5 - 1.6 billion moderate organic growth one-time items2 Business free cash ï¬,ow2 Consumer Health Sales2 EBITDA pre 742 one-time items2 Business free cash ï¬,ow2 Performance Materials Sales EBITDA pre 1,642 780 788 significant increase significant increase...

  • Page 89
    ... (Standard & Poor's) and "Baa1" with negative outlook (Moody's), despite the announcement of the acquisition of the Sigma-Aldrich Corporation (Sigma-Aldrich) for around US$ 17 billion GROUP â†' KEY FIGURES â,¬ million 2014 2013 Change in % Total revenues Sales Operating result (EBIT ) Margin...

  • Page 90
    ... in the contribution of Performance Materials to Group sales is largely due to the acquisition of AZ. As in 2013, the Consumer Health division accounted for 7 % of Group sales. GROUP â†' SALES BY DIVISION - 2014 â,¬ million / % of sales 24 Life Science â†' 2,682.5 % 51 Biopharmaceuticals...

  • Page 91
    ...O N â†' Course of business and economic position GROUP â†' SALES COMPONENTS BY DIVISION - 2014 â,¬ million / change in % Sales Organic growth Exchange rate effects Acquisitions / divestments Total change Biopharmaceuticals Consumer Health Performance Materials Life Science Group 5,783.3 766...

  • Page 92
    ... mainly attributable to the Japanese yen. Overall, sales increased by 3.9 % in this region in 2014. GROUP â†' SALES COMPONENTS BY REGION - 2014 â,¬ million / change in % Sales Organic growth Exchange rate effects Acquisitions / divestments Total change Europe North America Emerging Markets...

  • Page 93
    ... assets in connection with the AZ purchase price allocation. Along with stronger sales growth in regions with lower margins as well as isolated production and supply bottlenecks in the Biopharmaceuticals division, gross margin, i.e. gross profit as a percentage of sales, declined to 70.6 % (2013: 75...

  • Page 94
    ... clinical development programs in the Biopharmaceuticals division. Owing to the good performance of the Merck KGaA, Darmstadt, Germany, share price compared with the DAX, expenses from additions to provisions within the scope of the company's Long-Term Incentive Plan (LTIP ) were higher in 2014 than...

  • Page 95
    ... and Other. With a share of 51 % (2013: 54 %, excluding Corporate and Other), the Biopharmaceuticals division's contribution to EBITDA pre one-time items was the highest among all the operating divisions. The percentage contributions of the Life Science division and Consumer Health remained at the...

  • Page 96
    ... of business and economic position 91 Net assets and financial position GROUP â†' BAL ANCE SHEET STRUCTURE Dec. 31, 2014 â,¬ million in % Dec. 31, 2013 â,¬ million in % Change â,¬ million in % Current assets of which: Cash and cash equivalents Current financial assets Trade accounts receivable...

  • Page 97
    ... as financial liabilities, which relates to the financing of the planned acquisition of Sigma-Aldrich. Currency hedging transactions completed for the expected purchase price payment in U.S. dollars for the acquisition of Sigma-Aldrich in 2015 resulted in high positive market values that increased...

  • Page 98
    ... of business and economic position 93 GROUP â†' NET FINANCIAL DEBT Book value Dec. 31, 2014 Maturity Interest rate (%) Financial Covenant â,¬ million Book value Dec. 31, 2013 â,¬ million Change â,¬ million in % Eurobond 2010 / 2015 (Nominal volume â,¬ 1,350 million) Eurobond 2009 / 2015 (Nominal...

  • Page 99
    ... financial liabilities are presented under "Management of financial risks" in the Notes to the Group accounts. GROUP â†' WO R K I NG C A P I TA L Change â,¬ million Dec. 31, 2014 Dec. 31, 2013 â,¬ million in % Trade accounts receivable Inventories Trade accounts payable Working capital % of sales...

  • Page 100
    ...15 Life Science â†' 419.0 Performance Materials â†' 699.6 25 % 56 Biopharmaceuticals â†' 1,577.2 4 Consumer Health â†' 124.0 Not presented: Decline in Group business free cash flow by â,¬ - 215 million due to Corporate and Other. In 2014, all four operating divisions generated lower business...

  • Page 101
    ... and growth program. With the acquisition of AZ and the formation of strategic partnerships, the Group succeeded in securing future growth and profitability. In particular, the planned acquisition of Sigma-Aldrich represents a milestone for the Group's Life Science business. Group sales increased by...

  • Page 102
    ... 1.3 - 11.7 Margin ( % of sales) EBITDA pre one-time items Margin ( % of sales) Business free cash ï¬,ow 1 Previous year's figures have been adjusted, see "The Group" in the Group management report. Development of sales and results of operations In 2014, the Biopharmaceuticals division generated...

  • Page 103
    ... North America region contributed 22 % to the division's sales (2013: 23 %). In the Rest of World region, sales grew organically by 5.2 %, mainly powered by the good sales performance of Erbitux® and strong demand for products from the Fertility franchise. Including negative exchange rate effects...

  • Page 104
    ... Total change Europe North America Emerging Markets Rest of World Biopharmaceuticals divison 2,424.3 1,291.9 1,666.9 400.2 5,783.3 - 1.4 1.0 13.5 5.2 3.6 - 0.3 - 0.1 - 5.3 - 5.6 - 1.9 - - - - - - 1.7 0.9 8.2 - 0.4 1.7 In 2014, sales of the key products of the Biopharmaceuticals division...

  • Page 105
    ...of products to treat thyroid disorders (Euthyrox®) developed well. The decline in sales of Glucophage®, which is used to treat diabetes, to â,¬ 378 million (2013: â,¬ 394) was largely due to the impact of negative currency effects in the first half of 2014, as well as supply constraints in Europe.

  • Page 106
    ... with the previous year. Taking into account the development of sales and total revenues as well as cost of sales, the gross profit of the Biopharmaceuticals division fell by â,¬ -181 million to â,¬ 4,855 million, leading to a gross margin of 84.0 % (2013: 88.5 %). This decrease was pri- marily...

  • Page 107
    ...well as the development of inventories as well as trade accounts receivable, with foreign exchange effects accounting for the increase in both balance sheet items in 2014. B I O P H A R M AC E U T I C A LS â†' BUSINESS FREE CASH FLOW â,¬ million 2014 20131 Change in % EBITDA pre one-time items...

  • Page 108
    ...W A N D C H A N G E B Y Q U A R T E R 1, 2 â,¬ million / change in % 2014 % 480 340 337 486 377 512 383 449 Q1 â†' 2013 41.2 - 30.6 - 26.3 - 14.9 Q2 â†' Q3 â†' Q4 â†' 1 2 Quarterly breakdown unaudited. Previous year's figures have been adjusted, see "The Group" in the Group management report.

  • Page 109
    ...- 1.7 - 28.1 Margin (% of sales) EBITDA pre one-time items Margin (% of sales) Business free cash ï¬,ow 1 Previous year's figures have been adjusted, see "The Group" in the Group management report. Development of sales and results of operations In 2014, sales by the Consumer Health division rose...

  • Page 110
    ...share of divisional sales accounted for by Europe remained constant at 47 % in 2014 (2013: 46 %). C O N S U M E R H E A LT H â†' SALES COMPONENTS BY REGION - 2014 â,¬ million / change in % Sales Organic growth Exchange rate effects Acquisitions / divestments Total change Europe North America...

  • Page 111
    ... profit rose by 3.2 % to â,¬ 518 million. Consequently, gross margin was unchanged at 67.6 %. Higher marketing and selling expenses were largely related to the establishment of a consumer-oriented global marketing concept of the division to strengthen strategic brands. The decline in other operating...

  • Page 112
    ...trade accounts receivable in comparison with the previous year. The increase in these two balance sheet items lowered business free cash flow in 2014, whereas their development in 2013 had a positive impact on this financial indicator. Higher capital spending in 2014 also lowered business free cash...

  • Page 113
    ... â†' Consumer Health The development of business free cash flow in the individual quarters in comparison with 2013 is presented in the following overview: C O N S U M E R H E A LT H â†' B U S I N E S S F R E E C A S H F L O W A N D C H A N G E B Y Q U A R T E R 1, 2 â,¬ million / change in % 2014...

  • Page 114
    ... contribution to sales growth. The acquisition-related sales growth was due to the first-time consolidation of AZ as of May 2, 2014, the integration of which has been completed. The Liquid Crystals business unit again maintained its market leadership position in liquid crystal materials in 2014. The...

  • Page 115
    ... 383 Q1 â†' 2013 1.1 1.8 7.0 6.9 Q2 â†' Q3 â†' Q4 â†' 1 Quarterly breakdown unaudited. P E R F O R M A N C E M AT E R I A LS â†' SALES BY REGION - 2014 â,¬ million / % of divisional sales 9 Rest of World â†' 207.6 Europe â†' 192.8 10 7 North America â†' 134.8 % Emerging Markets â†' 1,524...

  • Page 116
    ...O N â†' Performance Materials 111 Accounting for 74 % of sales (2013: 75 %), the Emerging Markets region again generated the vast majority of the division's sales. This is due to the concentration of liquid crystal customers as well as high-tech materials from the new AZ business unit in Asia. The...

  • Page 117
    ... in connection with the AZ purchase price allocation. As a consequence of these one-time expenses, the consolidated contribution of AZ to divisional gross profit was low in 2014. The gross margin of Performance Materials fell accordingly to 52.3 % (2013: 62.6 %). The decrease in the operating result...

  • Page 118
    ... 1 Quarterly breakdown unaudited. Development of business free cash ï¬,ow In 2014, the Performance Materials division generated business free cash flow of â,¬ 700 million (2013: â,¬ 788 million). The sharp increase in trade accounts receivable as well as inventories was related to the acquisition...

  • Page 119
    ...I O N â†' Performance Materials The development of business free cash flow in the individual quarters in comparison with 2013 is presented in the following overview: P E R F O R M A N C E M AT E R I A LS â†' BUSINESS FREE C ASH FLOW AND CHANGE BY QUARTER1 â,¬ million / change in % 2014 % 165 199...

  • Page 120
    ....2 Margin (% of sales) EBITDA pre one-time items Margin (% of sales) Business free cash ï¬,ow Development of sales and results of operations In 2014, the Life Science division posted solid organic sales growth of 4.5 %, which was driven by Process Solutions. The organic increase was countered by...

  • Page 121
    ... products for biopharmaceutical manufacturing, supported by the solid sales performance of the Lab Solutions business area. Sales in North America rose to â,¬ 725 million (2013: â,¬ 711 million), which represented an unchanged share of 27 % of the Life Science division's global sales in 2014. Sales...

  • Page 122
    ...volume increases, sales of the Bioscience business area nearly remained stable. The Process Solutions business area, which markets products and services for the pharmaceutical production value chain, generated sales organic growth of 8.9 %, which was the highest rate within the Life Science division...

  • Page 123
    ...: LIFE SCIENCE â†' R E S U LT S O F O P E R AT I O N S 2014 â,¬ million in % 20131 â,¬ million in % Change â,¬ million in % Sales Royalty, license and commission income Total revenues Cost of sales1 (of which: amortization of intangible assets) 1 Gross profit1 Marketing and selling expenses1...

  • Page 124
    ...also lowered this key performance indicator. The increase in the two balance sheet items inventories and receivables as of December 31, 2014 was especially due to foreign exchange effects. LIFE SCIENCE â†' BUSINESS FREE CASH FLOW â,¬ million 2014 2013 Change in % EBITDA pre one-time items 658...

  • Page 125
    ... Life Science The development of business free cash flow in the individual quarters in comparison with 2013 is presented in the following overview: LIFE SCIENCE â†' BUSINESS FREE C ASH FLOW AND CHANGE BY QUARTER1 â,¬ million / change in % 2014 % 54 81 125 157 109 139 131 117 Q1 â†' 2013 - 32...

  • Page 126
    ...â†' KEY FIGURES â,¬ million 2014 2013 Change in % Operating result (EBIT ) EBITDA EBITDA pre one-time items - 245.1 - 226.0 - 166.0 - 214.7 - 259.7 - 244.0 - 196.7 - 281.2 - 5.6 - 7.3 - 15.5 - 23.7 Business free cash ï¬,ow In 2014, administration expenses reported under Corporate and Other...

  • Page 127
    .... The Group's opportunity management process is integrated into our internal controlling processes and carried out in the operating units on the basis of the Group strategy. The divisions analyze and assess potential market opportunities as part of strategy and planning processes. In this connection...

  • Page 128
    ... the net assets, financial position and results of operations Moderate negative impact on the net assets, financial position and results of operations Insignificant negative impact on the net assets, financial position and results of operations The combination of the two factors results in the risk...

  • Page 129
    ... Opportunities are assessed in their respective specific business environment. Marketing measures for operational planning are usually quantified in relation to sales, EBITDA pre one-time items and business free cash flow. Net present value, the internal rate of return (IRR ), the return on capital...

  • Page 130
    .... Market risks and opportunities Merck KGaA, Darmstadt, Germany, competes with numerous companies in the pharmaceutical, chemical and life science sectors. Rising competitive pressure can have a significant impact on the quantities sold and prices attainable for the Group's products. Opportunities...

  • Page 131
    ... medium to long term and thus related opportunities for the company. Opportunities due to new application possibilities for liquid crystals Merck KGaA, Darmstadt, Germany, is pursuing a strategy of leveraging its expertise as the global market leader in liquid crystals in order to develop new fields...

  • Page 132
    ..., Germany, established an internal coordination network covering all functions and businesses ("Anti-Counterfeiting of Merck KGaA, Darmstadt, Germany") several years ago. In addition, security measures are in use to protect products against counterfeiting. Innovative technical security solutions and...

  • Page 133
    ... activities at all times. Merck KGaA, Darmstadt, Germany, therefore has a central Group-wide liquidity management process to reduce potential liquidity risks. Furthermore, the company has a multi-currency revolving credit facility of â,¬ 2 billion with a term of five years and an extension option...

  • Page 134
    ... consolidated financial statements and taken into account accordingly. The Group rates risks beyond this as low. Risk and opportunities from pension obligations Merck KGaA, Darmstadt, Germany, has commitments in connection with pension obligations. The present value of defined benefit obligations...

  • Page 135
    ... course of the Sigma-Aldrich transaction. In line with market procedures, the company's financing conditions are closely tied to its rating. The better a rating, the more favorably the Group can generally raise funds on the capital market or from banks. REPORT ON RISKS AND OPPORTUNITIES â†' OV E RV...

  • Page 136
    ... drug pricing by the divested Generics Group Paroxetine: In connection with the divested generics business, the company is subject to antitrust investigations by the British Competition and Market Authority (CMA ) in the United Kingdom. In March 2013, the authorities informed Merck KGaA, Darmstadt...

  • Page 137
    ... risks to people and the environment. In order to ensure the continuity of plant and equipment, Merck KGaA, Darmstadt, Germany, monitors these risks both at its own sites as well as at suppliers and contract manufacturers. By adhering to high technical standards, our rules of conduct and all legal...

  • Page 138
    ... Group is pursuing the possibilities that are arising and takes the expected effects into account in the forecast development of its key performance indicators, namely sales, EBITDA pre one-time items and business free cash flow. Merck KGaA, Darmstadt, Germany, will actively seek opportunities above...

  • Page 139
    ... 2015, can be found under "The Group" (pages 44 - 49) in this Annual Report. In September 2014, Merck KGaA, Darmstadt, Germany, and the U.S. life science company Sigma­Aldrich entered into a merger agreement according to which the company would acquire Sigma­ Aldrich. Sigma­Aldrich shareholders...

  • Page 140
    ...account the successful acquisition of Sigma-Aldrich In the event of the successful acquisition of Sigma-Aldrich and the first-time consolidation in mid-2015, Merck KGaA, Darmstadt, Germany, expects double-digit growth rates for the sales of both the Group and the Life Science business sector in 2015...

  • Page 141
    ... in business cash flow for the Healthcare business sector in 2015. In 2014, Merck KGaA, Darmstadt, Germany, already resolutely prioritized its research and development activities in the Healthcare business sector and discontinued various projects. For 2015, the Group will drive strategically...

  • Page 142
    ... account the successful acquisition of Sigma-Aldrich In the event of the successful acquisition of Sigma-Aldrich and first-time consolidation in mid-2015, the company expects doubledigit growth rates in the Life Science business sector for sales, EBITDA pre one-time items and business free cash flow...

  • Page 143
    ... from the acquisition of AZ Electronic Materials - Positive foreign exchange effects - Increase in EBITDA pre one-time items - Considerable investments in future technologies EBITDA pre one-time items 894.8 Business free cash ï¬,ow 699.6 Sales Merck KGaA, Darmstadt, Germany, expects low...

  • Page 144
    ... the successful acquisition of Sigma-Aldrich in mid-2015, Merck KGaA, Darmstadt, Germany, expects double-digit sales growth for the Group and the Life Science business sector in 2015, as compared with 2014. Very strong growth of EBITDA pre one-time items and business free cash flow for the Group is...

  • Page 145
    ... sole discretion of the personally liable general partner with an equity interest, namely E. Merck KG, Darmstadt, Germany. Pursuant to the information on voting rights submitted to us in accordance with the German Securities Trading Act (WpHG), on December 31, 2014 no shareholders owned direct or...

  • Page 146
    ...the Supervisory Board and of E. Merck KG, Darmstadt, Germany, to stipulate the further details of the implementation of the increase in contingent capital. The company is not authorized to acquire its own shares. The company has not entered into any material agreements subject to a change of control...

  • Page 147
    03 CORPORATE GOVERNANCE â†' Pages 142 - 165

  • Page 148
    144 145 162 164 Capital structure and corporate bodies of Merck KGaA, Darmstadt, Germany Statement on Corporate Governance Report of the Supervisory Board Objectives of the Supervisory Board with respect to its composition

  • Page 149
    ... structure and corporate bodies of Merck KGaA, Darmstadt, Germany CAPITAL STRUCTURE AND CORPORATE BODIES OF MERCK KGAA, DARMSTADT, GERMANY M ERC K KG A A , DA R M S TADT, GE RMANY, TOTAL C APITAL â,¬ 565,211,241.95 E X EC U TIVE BOA R D O F MERC K KG AA , DARMS TADT, GE RMANY General partners...

  • Page 150
    ... of German company law at Merck KGaA, Darmstadt, Germany with additional references to the General Meeting and shareholder rights. Merck KGaA, Darmstadt, Germany The general partner E. Merck KG, Darmstadt, Germany, holds around 70 % of the total capital of Merck KGaA, Darmstadt, Germany (equity...

  • Page 151
    ... profit, the approval of the actions of the Executive Board members and the Supervisory Board members, as well as the choice of the auditor. Changes to the Articles of Association likewise require the adoption of a resolution by the General Meeting. The shareholders of Merck KGaA, Darmstadt, Germany...

  • Page 152
    ... general partner E. Merck KG, Darmstadt, Germany, and in this capacity they receive profit-based compensation from E. Merck KG, Darmstadt, Germany. Given this context, the stipulations of the German Corporate Governance Code concerning the compensation of management board members of publicly listed...

  • Page 153
    ... In fiscal 2014, the following total values were specified for members of the Executive Board, which resulted in the respective number of MSU s they were eligible to receive based upon the definitive reference price of the shares of Merck KGaA, Darmstadt, Germany, (60 trading days preceding January...

  • Page 154
    ... Accordingly, the following total compensation results for the members of the Executive Board of Merck KGaA, Darmstadt, Germany, broken down by performance-independent and performance-related components: Performance-independent components Without a long-term incentive effect Fixed compensation...

  • Page 155
    ... the members of the Executive Board have been offered the possibility to receive their pension entitlement in the form of a one-time lump-sum payment calculated in accordance with actuarial principles. The amount of the old-age pension is determined by a percentage share of pensionable compensation...

  • Page 156
    ...the pension entitlements of this group of persons (2013: â,¬ 103,615 thousand). Compensation of the Supervisory Board members of Merck KGaA, Darmstadt, Germany The compensation of the Supervisory Board members is defined by Article 20 of the Articles of Association of Merck KGaA, Darmstadt, Germany...

  • Page 157
    ... for meeting attendance. As a member of corporate bodies of E. Merck KG, Darmstadt, Germany, Wolfgang Büchele received an additional payment of â,¬ 140,000 for performing this function in 2014 (2013: â,¬ 140,000). As a member of corporate bodies of E. Merck KG, Darmstadt, Germany, Johannes...

  • Page 158
    ... Code of Conduct, all employees are instructed on the subject of insider trading. Accounting and audits of financial statements Merck KGaA, Darmstadt, Germany, prepares its consolidated financial statements and Group management report in accordance with International Financial Reporting Standards...

  • Page 159
    ... Plan of Merck KGaA, Darmstadt, Germany, which are conducted as Web-based training courses and on-site events. By presenting various training topics, particularly on the Code of Conduct, corruption, antitrust and competition law as well as health care compliance, they serve to sensitize employees...

  • Page 160
    ... for products, supply chains and the community. The company signed this expanded version of Responsible Care for the entire Group in February 2007. In addition, Merck KGaA, Darmstadt, Germany, was one of the first companies in 2014 to sign the new version of the Responsible Care Global Charter...

  • Page 161
    ... and Consumer Health divisions as well as for the Allergopharma and Biosimilars business units (until Dec. 31, 2014) Kai Beckmann Darmstadt, Head of Group Human Resources Belén Garijo Lopez Frankfurt am Main, responsible for the Healthcare business sector of Merck KGaA, Darmstadt, Germany (since...

  • Page 162
    ... boards and (b) comparable German and foreign supervisory bodies of corporations Wolfgang Büchele Römerberg, Chairman of the Executive Board of Linde AG, Munich, Chairman (since May 9, 2014) Michael Fletterich Gernsheim, Full-time member of the Works Council of Merck KGaA, Darmstadt, Germany...

  • Page 163
    ... of the German Stock Corporation Act (AktG). The Supervisory Board examines the annual financial statements and management report of Merck KGaA, Darmstadt, Germany, as well as the Group financial statements and the Group management report, taking into account in each case the reports of the auditor...

  • Page 164
    ... Finance Committee of the Board of Partners of E. Merck KG, Darmstadt, Germany. Board of Partners of E. Merck KG, Darmstadt, Germany Some of the responsibilities that lie with the supervisory board of a German stock corporation are fulfilled at the company by E. Merck KG, Darmstadt, Germany. This...

  • Page 165
    ... times a year. The members of the Executive Board of Merck KGaA, Darmstadt, Germany, are invited to all meetings of the Board of Partners, unless the Board of Partners resolves otherwise in individual cases. The members of the Board of Partners may convene a joint meeting with the Supervisory Board...

  • Page 166
    ...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 the company, as well as accounting...

  • Page 167
    ... quarter of 2014. The report of the Research and Development Committee of the Board of Partners of E. Merck KG, Darmstadt, Germany, was a further focus of the meeting. The Supervisory Board also dealt with the report of the Group Compliance Officer and the report of the Group Data Privacy Officer...

  • Page 168
    ... the Annual Report. Committees Apart from the Nomination Committee, the Supervisory Board of Merck KGaA, Darmstadt, Germany, currently has no further committees on account of the special features that apply to the Supervisory Board of a corporation with general partners (KGaA) under German company...

  • Page 169
    ... the company. General notes on the composition of the Supervisory Board The Supervisory Board of Merck KGaA, Darmstadt, Germany, currently consists of 16 members, eight of whom represent the shareholders and a further eight who represent the employees. The eight employee representative members are...

  • Page 170
    ... Currently, the main sales markets of Merck KGaA, Darmstadt, Germany, are Europe, North and Latin America, and Asia-Pacific. The present composition of the Supervisory Board satisfies this objective. More than three Supervisory Board members have entrepreneurial experience in Europe, covering a wide...

  • Page 171
    04 CONSOLIDATED FINANCIAL STATEMENTS â†' Pages 166 - 259

  • Page 172
    168 169 170 171 172 174 Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Balance Sheet Consolidated Cash Flow Statement Consolidated Statement of Changes in Net Equity Notes to the Group accounts

  • Page 173
    ... E N T S â†' Consolidated Income Statement CONSOLIDATED INCOME STATEMENT â,¬ million Note 2014 2013 Sales Royalty, license and commission income Total revenues Cost of sales1 (of which: amortization of intangible assets)1 Gross profit1 Marketing and selling expenses1 (of which: amortization of...

  • Page 174
    ... taken directly to equity Reclassification to profit or loss Changes recognized in equity Other comprehensive income Comprehensive income of which attributable to Merck KGaA, Darmstadt, Germany, shareholders of which attributable to non-controlling interests â†' 33 â†' 32 â†' 32 â†' 49 â†' 32 1,164...

  • Page 175
    ...T S â†' Consolidated Balance Sheet CONSOLIDATED BALANCE SHEET â,¬ million Note Dec. 31, 2014 Dec. 31, 2013 Current assets Cash and cash equivalents Current financial assets Trade accounts receivable Inventories Other current assets Income tax receivables Assets held for sale Non-current assets...

  • Page 176
    ... acquisitions Payments from the disposal of other financial assets1 Payments from the divestment of the Discovery and Development Solutions business field Net cash flows from investing activities Dividend payments to Merck KGaA, Darmstadt, Germany, shareholders Dividend payments to non-controlling...

  • Page 177
    ... million Capital reserves (share premium) General partner's Subscribed capital Merck KGaA, Merck KGaA, equity Merck KGaA, Darmstadt, Germany Darmstadt, Germany Darmstadt, Germany Retained earnings / Net retained profit Remeasurement of defined benefit plans Balance as of January 1, 2013 Profit...

  • Page 178
    ... Statement of Changes in Net Equity 173 Gains / losses recognized in equity Available-for-sale financial assets Derivative financial Currency translation instruments difference Equity attributable to Merck KGaA, Darmstadt, Germany, shareholders Non-controlling interests Total equity...

  • Page 179
    ... to the Group accounts NOTES TO THE GROUP ACCOUNTS GENERAL (1) C OMPA N Y INF ORM AT ION The accompanying consolidated financial statements as at December 31, 2014 have been prepared with Merck KGaA, Frankfurter Strasse 250, 64293 Darmstadt, Germany which manages the operations of the Group, as...

  • Page 180
    ... % of the share capital and thus obtained control of the publicly listed company AZ Electronic Materials S.A., Luxembourg (AZ). The payments for the obtainment of control were as follows: Acquired shareholding (in %) â,¬ million Purchase price for the obtainment of control Acquired cash and cash...

  • Page 181
    ... price / Payments for the acquisition of further shares after obtainment of control Total purchase price before the deduction of acquired cash and cash equivalents 81.3 18.7 100.0 1,523.4 351.3 1,874.7 Business activities as well as sales and earnings contribution of AZ AZ is a leading global...

  • Page 182
    ... Non-current financial liabilities Other non-current liabilities and provisions Deferred tax liabilities Liabilities Net assets Non-controlling interests on the acquisition date (18.7 %) Net assets acquired Purchase price for the acquisition of shares (81.3 %) Positive difference (goodwill...

  • Page 183
    ...to the business field. The selling price was â,¬ 22.6 million. In accordance with the contractual agreement, â,¬ 20.9 million of this amount was received as of the end of the reporting period. Planned acquisition of the Sigma-Aldrich Corporation Merck KGaA, Darmstadt, Germany, and the Sigma-Aldrich...

  • Page 184
    ... (crizotinib), a drug for the treatment of non small cell lung cancer in the United States and certain other major markets, over a multi-year period. During co-promotion of the product, the Group will receive from Pfizer cost reimbursements and a share of the profits. The fair value of the right was...

  • Page 185
    ..., revenues and expenses related to the agreement in accordance with the respectively valid IFRS . In 2014, the Group received sales of â,¬ 113.2 million from the commercialization of Erbitux® in Japan (2013: â,¬ 115.1 million). On February 13, 2015, Merck KGaA, Darmstadt, Germany, announced...

  • Page 186
    ... for the acquisitions of Serono SA, the Millipore Corporation as well as AZ Electronic Materials S.A. Amortization of software was already allocated to the functional costs in the past. The accounting policy change has led to an increase in marketing and selling expenses, cost of sales as well...

  • Page 187
    ... (operating business) Receivables from non-income-related taxes Other receivables Income tax receivables Assets held for sale Intangible assets With finite useful lives With indefinite useful lives Property, plant and equipment Deferred tax assets EQUITY AND LIABILITIES Nominal value Amortized cost...

  • Page 188
    ... average cost of capital (WACC ) used for discounting. All of these assumptions are considered a source of estimation uncertainty due to their inherent uncertainty. The following long-term growth rates and discount rates were used to conduct the goodwill impairment tests of the cash-generating units...

  • Page 189
    ..., 2013 Long-term growth rate Weighted average cost of capital after tax Weighted average cost of capital before tax Biopharmaceuticals Consumer Health Life Science Performance Materials 1,680.0 164.1 2,730.9 8.2 0.0 2.5 2.8 1.0 6.5 7.2 7.6 6.4 8.1 8.8 8.8 8.3 The amount of the value in use...

  • Page 190
    ... extent, the Group is obliged to take measures to protect the environment and reported provisions for environmental protection of â,¬ 123.7 million as of December 31, 2014 (2013: â,¬ 111.2 million). The underlying obligations were located mainly in Germany and the United States. Provisions were...

  • Page 191
    ... are accounted for using the purchase method in accordance with IFRS 3. Subsidiaries acquired and consolidated for the first time were measured at the carrying values at the time of acquisition on the basis of financial statements prepared for this purpose. Differences resulting in this connection...

  • Page 192
    ... 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 193
    ... 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 after regulatory...

  • Page 194
    ...S â†' Notes to the Group accounts 189 Loans and receivables "Loans and receivables" are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are subsequently measured at amortized cost. If there is objective evidence that such assets are...

  • Page 195
    ... useful lives of marketing authorizations, acquired patents, licenses and similar rights, brand names, trademarks and software are between 3 and 19 years. Amortization of intangible assets and software is allocated to the functional costs in the income statement. An impairment test is performed if...

  • Page 196
    ...Plant and machinery Operating and office equipment; other facilities maximum of 33 years maximum of 40 years 6 to 25 years 3 to 10 years The useful lives of the assets are reviewed regularly and adjusted if necessary. If indications of a decline in value exist, an impairment test is performed. The...

  • Page 197
    ... 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 198
    ... services rendered. Group sales totaled â,¬ 11,291.5 million in 2014 (2013: â,¬ 10,700.1 million), which represented an increase of 5.5 % compared to 2013 (decrease of - 0.4 % in 2013). Sales are presented by division and region in the Segment Reporting (see Note [51]). Revenue from the strategic...

  • Page 199
    ... expenses incurred related mainly to the marketing of Rebif® in the United States, for which expenses of â,¬ 314.6 million were incurred in 2014 (2013: â,¬ 302.4 million). These also represented exclusively selling expenses. The breakdown of royalty, license and commission expenses by division is...

  • Page 200
    ... classified to the category "available-for-sale". In 2013, impairments were recorded in the amount of â,¬ 17.3 million for capitalized goodwill in connection with the sale of the Discovery and Development Solutions business field of the Life Science division. Further information on impairments can...

  • Page 201
    ...Fit for 2018" program. Acquisition costs amounting to â,¬ 24.5 million (2013: â,¬ 0.0 million) were incurred for the acquisition of AZ Electronic Materials S.A., Luxembourg, as well as for the proposed acquisition of the Sigma-Aldrich Corporation, USA . Other operating expenses also include special...

  • Page 202
    ... by applying the statutory tax rate of 30.7 % of a corporation headquartered in Darmstadt. â,¬ million 2014 2013 Profit before income tax Tax rate Theoretical tax expense Tax rate differences Tax effect of companies with a negative contribution to consolidated profit Tax for other periods Tax...

  • Page 203
    ... to the Group accounts The reconciliation between deferred taxes in the balance sheet and deferred taxes in the income statement is presented in the following table: â,¬ million 2014 2013 Change in deferred tax assets (balance sheet) Change in deferred tax liabilities (balance sheet) Deferred...

  • Page 204
    ... KGaA, Darmstadt, Germany, 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 represented by shares. Following the resolution by the Annual General Meeting of the company...

  • Page 205
    ... Group accounts NOTES TO THE CONSOLIDATED BALANCE SHEET (35) C A SH A ND C A SH EQUI VA L EN T S This item comprised: â,¬ million Dec. 31, 2014 Dec. 31, 2013 Cash, bank balances and cheques Short-term cash investments (up to 3 months) 546.7 2,331.8 2,878.5 332.0 648.8 980.8 Changes in cash...

  • Page 206
    ... products of the Group, 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...

  • Page 207
    ...current non-current Dec. 31, 2014 current non-current Dec. 31, 2013 Other receivables Derivative assets (operative) Financial items Receivables from non-income related taxes Prepaid expenses Assets from defined benefit plans Other assets Non-financial items 147.0 468.5 615.5 5.4 2.9 8.3 152...

  • Page 208
    ...N T S â†' Notes to the Group accounts 203 Other receivables from third parties past due were as follows: â,¬ million Dec. 31, 2014 Dec. 31, 2013 Neither past due nor impaired Past due...connection in 2014 or in 2013. (4 0) TA X REC EI VA BL E S Tax receivables amounted to â,¬ 297.0 million (2013...

  • Page 209
    ... Notes to the Group accounts (41) IN TA NGIBL E A S SE T S Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other Finite useful life Indefinite useful life Goodwill Software Advance payments Total â,¬ million Cost at January 1, 2013 Changes in scope of...

  • Page 210
    ... of AZ Electronic Materials S.A. and the Millipore Corporation, part of which is carried in U.S. dollars, into the reporting currency. In connection with the sale of the Discovery and Development Solutions business field of the Life Science division to Eurofins Scientific S.A., Luxembourg, in 2013...

  • Page 211
    ... the divisions as follows: â,¬ million Remaining useful life in years Biopharmaceuticals Consumer Health Performance Materials Life Science Total Dec. 31, 2014 Total Dec. 31, 2013 Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other Finite useful life...

  • Page 212
    ... Other facilities, operating and office equipment Construction in progress and advance payments to vendors and contractors Total Cost at January 1, 2013 Changes in the scope of consolidation Additions Disposals Transfers Classification as held for sale or transfer to a disposal group Currency...

  • Page 213
    ... in the first quarter of 2014. In fiscal 2014, impairment losses in the amount of â,¬ 5.7 million (2013: â,¬ 41.7 million) were recognized, of which a major part related to the Performance Materials division. The total amount of property, plant and equipment used to secure financial liabilities was...

  • Page 214
    ... Notes to the Group accounts 209 (4 4) F IN A NC IA L L IA BIL I T IE S â,¬ million December 31, 2014 < 1 year 1 - 5 years > 5 years Total Loans and commercial paper Liabilities to banks Liabilities to related parties Loans from third parties and other financial liabilities Liabilities from...

  • Page 215
    ... as of the reporting date. On September 22, 2014 the Group arranged credit lines amounting to US$ 15.6 billion with a banking consortium to secure the expected purchase price payment for the planned acquisition of the Sigma-Aldrich Corporation, USA (Sigma-Aldrich). As of the balance sheet date, the...

  • Page 216
    ... currently outstanding: Issuer Nominal value Maturity Nominal interest rate Issue price Merck Financial Services GmbH, Germany, a subsidiary of Merck KGaA, Darmstadt, Germany Merck Financial Services GmbH, Germany, a subsidiary of Merck KGaA, Darmstadt, Germany EMD Millipore Corporation, USA...

  • Page 217
    ... 556.9 1,140.1 As of December 31, 2014, other financial liabilities included liabilities to related companies amounting to â,¬ 425.6 million (2013: â,¬ 373.1 million). These are mainly profit entitlements of E. Merck KG, Darmstadt, Germany. Moreover, this item contained liabilities to investments...

  • Page 218
    ... in the sales of the involved companies' drugs to the detriment of patients and state coffers. Moreover, in connection with the product Raptiva®, patients have filed suit to receive compensatory damages. The Group has taken appropriate accounting measures for these legal disputes in the financial...

  • Page 219
    ...on the total value defined for the respective person and the average closing price of the shares of Merck KGaA, Darmstadt, Germany, in Xetra® trading during the last 60 trading days prior to January 1 of the respective fiscal year (reference price). In order for members of top management to receive...

  • Page 220
    ... of the plan for the Executive Board can be found in the compensation report, which is part of the Statement on Corporate Governance. Provisions for employee benefits also include obligations for the partial retirement program and other severance pay that were not set up in connection with the...

  • Page 221
    ... health care costs for retirees in the United States. In order to limit the risks of changing capital market conditions and demographic developments, for many years now the Group has been offering only defined contribution plans to newly hired employees. The value recognized in the balance sheet...

  • Page 222
    ... 462.5 98.0 - 3,004.8 98.0 1.2 The main benefit rules are as follows: Merck KGaA, Darmstadt, Germany, and AB Allgemeine Pensions GmbH & Co. KG accounted for â,¬ 2,434.0 million (2013: â,¬ 1,670.6 million) of the defined benefit obligations and â,¬ 1,098.1 million (2013: â,¬ 1,052.6 million) of the...

  • Page 223
    ... Notes to the Group accounts In the reporting period, the following items were recognized in income: â,¬ million 2014 2013 Current service cost Past service cost Gains (-) or losses (+) on settlement Other effects recognized in income Interest expense Interest income Total amount recognized in...

  • Page 224
    ... lower the medical cost trend rate is 50 basis points higher the medical cost trend rate is 50 basis points lower 3,463.7 4,218.1 3,947.7 3,690.7 4,028.0 3,633.7 3,813.7 3,811.8 The fair value of the plan assets changed in the reporting period as follows: â,¬ million 2014 2013 Fair value of the...

  • Page 225
    ... real estate used by Group companies. The plan assets serve exclusively to meet the defined benefit obligations. Covering the benefit obligations with financial assets represents a means of providing for future cash outflows, which occur in some countries (e.g. Switzerland and the United Kingdom) on...

  • Page 226
    ... for trade tax and create the basis for the allocation of net profit / loss. (5 0) EQUI T Y 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, Darmstadt, Germany. As of the balance sheet...

  • Page 227
    ... of Merck KGaA, Darmstadt, Germany Basis for appropriation of profits Profit transfer to E. Merck KG, Darmstadt, Germany Ratio of general partner's capital to total capital Profit transfer from E. Merck KG, Darmstadt, Germany Ratio of share capital to total capital Trade tax Corporation tax...

  • Page 228
    ... the accounting policies of the Group, as well as pro rata consolidation entries. The net equity attributable to non-controlling interests mainly related to the minority interests in the publicly traded companies Merck Ltd., India, a subsidiary of Merck KGaA, Darmstadt, Germany, and P.T. Merck Tbk...

  • Page 229
    ...â†' Notes to the Group accounts SEGMENT REPORTING (51) INF ORM AT ION BY DI V ISIO N / C OUN T RY A ND REGION I N F O R M AT I O N BY D I V I S I O N Biopharmaceuticals1 â,¬ million 2014 2013 Consumer Health1 2014 2013 Sales Royalty, license and commission income Total revenues Cost of sales2 (of...

  • Page 230
    ...S O L I D A T E D F I N A N C I A L S T A T E M E N T S â†' Notes to the Group accounts 225 Performance Materials 2014 2013 Life Science 2014 2013 Corporate and Other 2014 2013 Group 2014 2013 2,059.6 0.9 2,060.5 - 983.2 (- 46.4) 1,077.3 - 177.8 (- 11.7) - 1.1 - 56.1 - 170.6 (- 2.8) - 60.2 611...

  • Page 231
    ... during 2014. The Biopharmaceuticals division focuses on specialist therapeutic areas and markets innovative prescription drugs of chemical and biotechnological origin. The Consumer Health division comprises the Group's business with high-quality over-the-counter products for preventive health care...

  • Page 232
    ... the reconciliation of EBITDA pre one-time items of all operating businesses to the profit before income tax of the Group: â,¬ million 2014 2013 Total EBITDA pre one-time items of the operating businesses Corporate and Other EBITDA pre one-time items of the Group 3,553.7 - 166.0 3,387.7 - 1,360...

  • Page 233
    ...â,¬ 60.5 million related to the step-up of the acquired inventories of AZ Electronic Materials S.A. (AZ). Additionally, this figure included acquisition costs of â,¬ 24.5 million for the acquisition of AZ and the planned acquisition of the Sigma-Aldrich Corporation, USA . Business free cash flow was...

  • Page 234
    ...Dec. 31, 2014 Dec. 31, 2013 Assets Monetary assets (cash and cash equivalents, current financial assets, loans and securities) Non-operating receivables, income tax receivables, deferred taxes and net defined benefit assets Assets held for sale Operating assets (gross) Trade accounts payable Other...

  • Page 235
    ... to the Group accounts Biopharmaceuticals Product group 2013 reported transfer adjustments â,¬ million Disclosure change1 2013 adjusted Sales Royalty, license and commission income Total revenues Cost of sales1 (of which: amortization of intangible assets)1 Gross profit1 Marketing and selling...

  • Page 236
    ... to the Group accounts 231 Consumer Health Product group 2013 reported transfer adjustments â,¬ million Disclosure change1 2013 adjusted Sales Royalty, license and commission income Total revenues Cost of sales1 (of which: amortization of intangible assets)1 Gross profit1 Marketing and selling...

  • Page 237
    ... could be tapped for future operating activities and to meet obligations is disclosed in Note [44]. The cash flows reported by Group companies in non-functional currencies are translated at average exchange rates. Cash and cash equivalents are translated at the closing rates. The impact of foreign...

  • Page 238
    ... total of all nominal values of currency hedges (translated at the closing rate into euros) as well as all the nominal values of interest rate hedges. The fair value results from the actuarial valuation of the derivatives on the basis of quoted prices or current market data as of the balance sheet...

  • Page 239
    ... in 2014 in relation to the expected U.S. dollar-denominated purchase price payment for the proposed acquisition of the Sigma-Aldrich Corporation, USA . All hedging transactions for forecast transactions and firm purchase commitments in non-functional currency represent cash flow hedges. Intragroup...

  • Page 240
    ...to the previously described transaction risks, Merck KGaA, Darmstadt, Germany, is also exposed to currency translation risks since many Group companies are located outside the eurozone. The financial statements of these companies are translated into euros. Exchange rate differences in the assets and...

  • Page 241
    ...extension option of one year as well as bilateral credit facilities and various bank credit lines of â,¬ 11,748.0 million (2013: â,¬ 267.2 million), mainly intended for the expected purchase price payment for the proposed acquisition of the Sigma-Aldrich Corporation, USA . There were no indications...

  • Page 242
    ... companies with good credit ratings and on the other hand, due to the broad-based business structure of the Group, there is no particularly high concentration of credit risks with respect to either customers or individual countries. The credit risk from financial contracts is monitored daily...

  • Page 243
    ... amount Dec. 31, 2014 Amortized 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...

  • Page 244
    ... M E N T S â†' Notes to the Group accounts 239 Subsequent measurement according to IAS 39 Carrying amount according to IAS 17 Fair value, Dec. 31, 2014 Carrying amount Dec. 31, 2013 Amortized cost At cost Fair value Non-financial items Fair value Dec. 31, 2013 2,878.5 - 39.8 21.7 2.9 2,135...

  • Page 245
    ... as well as fair value fluctuations of option contracts to hedge forecast transactions were recorded (2013: losses of â,¬ - 4.3 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...

  • Page 246
    ... to the Group accounts 241 Level 3 assets comprise investments in equity instruments classified as available-for-sale. These include interests in InfraServ GmbH & Co. Wiesbaden KG, Germany, which were acquired in the context of the acquisition of AZ Electronics Materials S.A. The fair values of...

  • Page 247
    ... E M E N T S â†' Notes to the Group accounts The changes of financial assets allocated to Level 3 and measured at fair value were as follows: â,¬ million 2014 2013 Net book value as of January 1 Additions due to the acquisition of AZ Electronic Materials S.A. Transfers into Level 3 out of Level...

  • Page 248
    ... 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 the objectives of our financial policy and set...

  • Page 249
    ... share capital of Sigma-Aldrich Corporation Obligation to purchase the entire share capital of AZ Electronic Materials S.A. Obligations to acquire intangible assets Obligations to acquire property, plant and equipment Future operating lease payments Long-term purchase commitments Other financial...

  • Page 250
    ... 0.6 8.3 172.0 Operating lease agreements related mainly to customary leasing arrangements to lease operating and office equipment. The payments resulting from operating lease agreements amounted to â,¬ 91.8 million (2013: â,¬ 104.0 million) and were recorded as an expense in the reporting period.

  • Page 251
    ... the Group had 39,639 employees (2013: 38,154). The average number of employees during the year was 38,930 (2013: 38,282). The breakdown of personnel by function was as follows: Average number of employees 2014 2013 Production Logistics Marketing and Sales Administration Research and Development...

  • Page 252
    ..., Germany Merck Accounting Solutions & Services Europe GmbH, Darmstadt, Germany, a subsidiary of Merck KGaA, Darmstadt, Germany Merck Chemicals GmbH, Schwalbach, Germany, a subsidiary of Merck KGaA, Darmstadt, Germany Merck Consumer Health Holding GmbH, Darmstadt, Germany, a subsidiary of Merck KGaA...

  • Page 253
    ... the Long-Term Incentive Plan totaled â,¬ 12.7 million (2013: â,¬ 8.0 million), and additions to the pension provisions of E. Merck KG, Darmstadt, Germany, include current service costs of â,¬ 2.1 million (2013: â,¬ 2.5 million) for members of the Executive Board of Merck KGaA, Darmstadt, Germany...

  • Page 254
    ... KGaA, Darmstadt, Germany Merck Accounting Solutions & Services Europe GmbH, a subsidiary of Merck KGaA, Darmstadt, Germany Merck Chemicals GmbH, a subsidiary of Merck KGaA, Darmstadt, Germany Merck China Chemicals Holding GmbH, a subsidiary of Merck KGaA, Darmstadt, Germany Merck Consumer Health...

  • Page 255
    ...T E M E N T S â†' Notes to the Group accounts Country Company Registered office thereof Merck KGaA, Darmstadt, Germany (%) Equity interest (%) Germany Germany Germany Germany Germany Germany Germany Germany Germany Germany Other European countries Austria Austria Austria Austria Belgium Belgium...

  • Page 256
    ... KGaA, Darmstadt, Germany Merck Serono SIA , a subsidiary of Merck KGaA, Darmstadt, Germany Merck Serono, UAB , a subsidiary of Merck KGaA, Darmstadt, Germany AZ Electronic Materials (Luxembourg) S.a.r.l. AZ Electronic Materials Group S.a.r.l. AZ Electronic Materials S.A. AZ Electronic Materials...

  • Page 257
    ... of Merck KGaA, Darmstadt, Germany Merck Chemicals and Life Science S.A., a subsidiary of Merck KGaA, Darmstadt, Germany Merck, S.L., a subsidiary of Merck KGaA, Darmstadt, Germany Merck Chemicals and Life Science AB, a subsidiary of Merck KGaA, Darmstadt, Germany Allergopharma AG Ares Trading SA AZ...

  • Page 258
    ... AG SeroMer Holding SA Merck Ilac Ecza ve Kimya Ticaret AS, a subsidiary of Merck KGaA, Darmstadt, Germany AZ Electronic Materials (UK) Ltd. AZ Electronic Materials Services Ltd. Lamberts Healthcare Ltd. Merck Chemicals Ltd., a subsidiary of Merck KGaA, Darmstadt, Germany Merck Consumer Health Care...

  • Page 259
    ... Serono Laboratories Inc. Merck Quimica Argentina S.A.I.C., a subsidiary of Merck KGaA, Darmstadt, Germany Merck S.A., a subsidiary of Merck KGaA, Darmstadt, Germany Merck S.A., a subsidiary of Merck KGaA, Darmstadt, Germany AZ Electronic Materials (Hong Kong) Finance Ltd. AZ Electronic Materials...

  • Page 260
    ... of Merck KGaA, Darmstadt, Germany Millipore India Pvt. Ltd. P.T. Merck Chemicals and Life Sciences, a subsidiary of Merck KGaA, Darmstadt, Germany P.T. Merck Tbk., a subsidiary of Merck KGaA, Darmstadt, Germany Inter-Lab Ltd. InterPharm Industries Ltd. InterPharm Laboratories Ltd. Merck Serono Ltd...

  • Page 261
    ...) KK AZ Electronic Materials Manufacturing (Japan) KK Merck Ltd., a subsidiary of Merck KGaA, Darmstadt, Germany Merck Performance Materials G.K., a subsidiary of Merck KGaA, Darmstadt, Germany Merck Serono Co., Ltd., a subsidiary of Merck KGaA, Darmstadt, Germany Millipore Mauritius Ltd. Merck Ltd...

  • Page 262
    ... Netherlands Portugal Switzerland Switzerland Switzerland United Kingdom North America United States United States United States Emerging Markets Dominican Republic Darmstadt 100.00 100.00 Gonnon S.A.S. Merck Finance B.V., a subsidiary of Merck KGaA, Darmstadt, Germany Merck Holding Netherlands...

  • Page 263
    ...the Group accounts Country Company Registered office thereof Merck KGaA, Darmstadt, Germany (%) Equity interest (%) Rest of the World Australia Morocco Nigeria South Africa Biochrom Australia Pty. Ltd. Merck Maroc S.A.R.L., a subsidiary of Merck KGaA, Darmstadt, Germany Merck Pharmaceutical and...

  • Page 264
    C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S â†' Notes to the Group accounts 259 Darmstadt, February 18, 2015 K A R L- L U D W I G K L E Y KAI BECKMANN BELÉN GARIJO LOPEZ MARCUS KUHNERT STEFAN OSCHMANN BERND RECKMANN

  • Page 265
    ... financial statements of Merck KGaA, Darmstadt, Germany, 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 Group...

  • Page 266
    ...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, 2014. The preparation of the consolidated financial statements...

  • Page 267
    ... consolidated financial statements is available on the Web at ar2014.emdgroup.com. It has been optimized for mobile devices. More information about our company can be found on the Web at www.emdgroup.com. You can order all publications from Group Communications, Merck KGaA, 64271 Darmstadt, Germany...

  • Page 268
    ... Liquidity Capital expenditure on intangible assets2 Capital expenditure on property, plant and equipment2 Business free cash flow Net financial debt Other key data Equity ratio (in %) Research and development3 Dividend per share (in â,¬) Employees (number as of December 31) Taking into account...

  • Page 269
    2010 2011 2012 2013 2014 Change in % 9,291 8,929 1,113 12.5 2,457 27.5 - 88 2,545 28.5 861 642 1.45 10,276 9,906 1,132 11.4 2,731 27.6 7 2,724 27.5 839 618 1.39 ...

  • Page 270
    FINANCIAL CALENDAR FOR 2015 MARCH â†' T U E SDAY, M ARC H 3, 2015 A N N UA L PR E S S C O NF ER ENC E AUGUST â†' THURSDAY, AUGUS T 6, 2015 REPOR T ON THE SEC OND QUAR TE R APRIL â†' FR IDAY, A PR IL 17, 2015 A N N UA L G E NER A L M EET ING NOVEMBER â†' THURSDAY, NOVEMBE R 12, 2015 REPOR T ON ...

  • Page 271
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