Value added Audited by KPMG

Value added is a measure of the economic strength of a company and indicates how the corporate result is achieved and for what it is used. The corporate result, i.e. the sum of total revenues, other income and financial income, amounted to €7,270 million in 2007. After deducting the costs of materials as well as other purchased services and expenses, the net value added statement shows a sharp rise in gross net value added to €3,853 million. High additional amortization of intangible assets and write-downs of Serono inventories in connection with the purchase price allocation results in net value added of €2,195 million compared with €2,509 million in 2006. The majority, or 88%, of net value added went towards personnel expenses, i.e. salaries, social security contributions and pension expenses. Financial expenses increased markedly owing to the Serono acquisition, while taxes on income as well as net income clearly declined.