Corporate and Other Audited

Corporate and Other comprises Group administration expenses for Group functions that cannot be directly allocated to the divisions, such as Finance, Procurement, Legal, Communications, and Human Resources. Corporate costs additionally encompass expenses for central, non-allocated IT functions, including expenses related to the expansion and harmonization of IT systems within the Merck Group. Accordingly, Corporate and Other has no sales to report. Gains or losses on currency hedging are also disclosed in Corporate and Other.

In 2013, administration expenses recorded under Corporate and Other increased to € 206 million (2012: € 183 million). “Other operating income and expenses” showed net expenses of € 47 million (2012: € 262 million) for Corporate and Other. The sharp decline in net expenses compared with 2012 was mainly attributable to one-time items as well as to the foreign currency result from operating activities. Expenses classified as one-time items amounted to € 47 million in 2013 (2012: € 162 million). The significant decrease in comparison with 2012 resulted mainly from the reduced restructuring charges for the “Fit for 2018” transformation and growth program as well as from gains/losses from businesses already divested. In 2013, the foreign currency result showed income of € 32 million, whereas a loss of € –58 million was posted in 2012.

Overall, the aforementioned effects improved EBIT by 42.7% to € –260 million (2012: € –453 million) and EBITDA by 45.2% to € –244 million (2012: € –445 million). Adjusted for one-time effects, EBITDA pre totaled € –197 million in 2013 (2012: € –283 million). The business free cash flow reported under Corporate and Other amounted to € –281 million in 2013 (2012: € –309 million).