For reasons of sustainability, Merck generally follows a conservative financial policy. Apart from a solid balance sheet with transparent and healthy structures, this policy is reflected by the selection of financing sources, liquidity management, key financial indicators, dividend policy, and risk management. Merck generates high business free cash flow and its return on capital employed is consistently improving. In the context of the Group-wide efficiency program currently underway, cash is being reserved with high priority to fund restructuring measures across all divisions and regions. Around € 800 million of one-time costs related to restructuring are [...]

[...] from retained earnings/profit carried forward. This amount corresponds to the amount that is paid as a dividend to the shareholders, and reflects their pro rata shareholding in the company. XLS 2013 2012 € million E. Merck KG Merck KGaA E. Merck KG Merck KGaA Net income/net loss 345.1 134.0 –366.7 –151.1 Profit carried forward previous year – – 502.5 212.6 Withdrawal from revenue reserves – – 114.4 48.4 Transfer to revenue reserves – – – – Retained earnings Merck KGaA 134.0 109.9 Withdrawal by E. Merck KG –318.8 –250.2 Dividend proposal –122.8 –109.9 Profit carried forward 26.3 11.2 – – For 2012, a dividend of € 1.70 per share [...]

[...] grow, also through bigger acquisitions. We will propose to the Annual General Meeting to increase the dividend by € 0.20 to € 1.90 per share. This is in keeping with our aim to continually raise the dividend in line with increases in net income. However, in our deliberations on the dividend proposal, we also took into account that we are in a period of transformation. In 2013, we made good progress with our transformation and growth program known as “Fit for 2018”. We even reached some of our objectives faster than planned, for instance those aimed at lowering costs. Yet “Fit for 2018” extends well beyond efficiency improvements. The program also [...]

[...] companies. The higher tax credits arose primarily in the United States due to the consideration of dividend income from high-tax countries. The tax effects of non-deductible expenses/tax-free income/other tax effects include a deferred tax benefit in the amount of € 194.1 million (2012: € 2.4 million) which resulted primarily from the decrease in deferred tax liabilities on intangible assets from changes in the applied tax rates for specific companies. The reconciliation between deferred taxes in the balance sheet and deferred taxes in the income statement is presented in the following table: XLS € million 2013 2012 Change in deferred tax assets (balance [...]

[...] income is recognized either immediately or is recognized when the contractual obligation is fulfilled. Dividend income is recognized when the shareholders’ right to receive the dividend is established. This is normally the date of the dividend resolution. Interest income is recognized in the period in which it is earned.