During fiscal 2007, the Executive Board provided the Supervisory Board with regular written and verbal reports on the business development of Merck KGaA and the Merck Group. In particular, the Supervisory Board was informed about the market and sales situation of the company against the background of macroeconomic developments, the financial position of the company and its subsidiaries, as well as their earnings development and corporate planning. The major business policy transactions were also discussed in five joint meetings with the Executive Board, specifically the integration of Serono S.A., the capital increase of 2007 and the divestment of the Generics business. The Supervisory Board had formed an ad hoc committee “Capital Increase 2007”, which fulfilled its task with the completion of the capital increase. No permanent Supervisory Board committees have been set up.
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 Deutsche Treuhand-Gesellschaft Aktien-gesellschaft Wirtschaftsprüfungsgesellschaft. The auditors issued an unqualified audit opinion on the annual financial statements and management report for Merck KGaA in accordance with German Auditing Standards. For the consolidated financial statements prepared in accordance with International Financial Reporting Standards, the auditors issued the auditor’s report, reproduced in the Annual Report of the Merck Group, in accordance with the International Standards on Auditing (ISA) as well as German Auditing Standards. In addition, the auditors audited the calculation of Merck KGaA’s participation in the profits of E. Merck OHG in accordance with Art. 27 (3) of the Articles of Association. The annual financial statements of Merck KGaA, the consolidated financial statements of the Merck Group, the management reports for Merck KGaA and the Merck Group, and the proposal by the Executive Board for the appropriation of net retained profits were presented and distributed to the Supervisory Board, together with the auditor’s reports.
In accordance with Art. 14 (2) of the Articles of Association, the Supervisory Board also examined the annual financial statements of Merck KGaA and the management report for Merck KGaA, the proposal for the appropriation of net retained profits and the auditor’s report presented in accordance with Art. 27 (3) of the Articles of Association. It also examined the consolidated financial statements of the Merck Group, the management report for the Merck Group, and took note of the auditor’s report of KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft.
The discussion of the relevant agenda item at the Supervisory Board’s meeting on February 15, 2008 to approve the financial statements was also attended by the auditors signing the audit opinion on the annual financial statements of Merck KGaA and the consolidated financial statements of the Merck Group, who reported on their audit.
The Supervisory Board took note of and approved the results of the audit. On completion of its examination, the Supervisory Board found no objections and thus approves the annual financial statements and management report for Merck KGaA, the consolidated financial statements of the Merck Group and the management report for the Merck Group prepared by the Executive Board, as well as the report presented by the auditors in accordance with Art. 27 (3) of the Articles of Association. The Supervisory Board gives its consent to the proposal for the appropriation of net retained profits.
Mr. Flavio Battisti, who was an employee representative member and Vice Chairman of the Supervisory Board of Merck KGaA since its establishment, i.e. since 1995, left the Supervisory Board upon his retirement on November 30, 2007. The general partner E. Merck OHG, the Supervisory Board and the Executive Board expressed their thanks to Mr. Battisti. Despite his critical distance, Mr. Battisti both positively and successfully supported the development of the company with advice and assistance. He was succeeded by Mr. Heiner Wilhelm.
Darmstadt, February 15, 2008
The Supervisory Board of Merck KGaA
Prof. Dr. Wilhelm Simson
Chairman
