Capital Structure, Investments, and Financing Activities

(34) Net equity

Equity capital/capital reserves

The equity capital of the company consisted of the subscribed capital composed of shares and the equity interest held by the general partner E. Merck KG, Darmstadt, Germany (general partner’s equity). As of the balance sheet date, the company’s subscribed capital amounting to € 168 million was divided into 129,242,251 no-par value bearer shares plus one registered share. Each share therefore corresponded to € 1.30 of the subscribed capital. The amount resulting from the issue of shares by Merck KGaA, Darmstadt, Germany, exceeding the nominal value was recognized in the capital reserves. The equity interest held by the general partner amounted to € 397 million. As in the previous year, there were no changes in subscribed capital in fiscal 2025.

Retained earnings

Retained earnings developed as follows:

The equity instruments in Calypso Biotech B.V., Netherlands, which were recognized in assets held for sale as of January 1, 2024, were sold for a mid-double-digit million euro amount effective January 8, 2024. The cumulative income of € 48 million recognized in other comprehensive income was reclassified to retained earnings.

Gains/losses recognized in equity

Gains/losses recognized in equity developed as follows (see also Note (39) Derivative financial instruments):

Share of net profit of E. Merck KG, Darmstadt, Germany

E. Merck KG, Darmstadt, Germany, and Merck KGaA, Darmstadt, Germany, engage in reciprocal net profit transfers. This makes it possible for E. Merck KG, Darmstadt, Germany, the general partner of Merck KGaA, Darmstadt, Germany, and the shareholders to participate in the net profit/loss of Merck KGaA, Darmstadt, Germany, in accordance with the ratio of the general partner’s equity interest to the subscribed capital (70.274% and 29.726% of the equity capital, respectively).

The allocation of net profit/loss is based on the net income of both E. Merck KG, Darmstadt, Germany, and Merck KGaA, Darmstadt, Germany, determined in accordance with the provisions of the German Commercial Code (HGB). These figures are adjusted for trade tax and/or corporation tax and create the basis for the allocation of net profit/loss. The adjustment for corporation tax is made to compensate for the difference in the tax treatment between the general partner and the limited liability shareholders. Corporation tax is only calculated on the income received by the limited liability shareholders. Its equivalent is the income tax applicable to the partners of E. Merck KG, Darmstadt, Germany, which must be paid by them directly. The adjustment thus ensures that the share in net profit corresponds to the respective interests held by the two shareholder groups.

The reciprocal net profit/loss transfer between E. Merck KG, Darmstadt, Germany, and Merck KGaA, Darmstadt, Germany, as stipulated by the Articles of Association was as follows:

The result of E. Merck KG, Darmstadt, Germany, adjusted for trade tax, on which the appropriation of its profit is based, amounted to € -61 million (2024: € -31 million). This resulted in a profit/loss transfer to Merck KGaA, Darmstadt, Germany, of € -18 million (2024: € -9 million). The net income adjusted for corporation tax of Merck KGaA, Darmstadt, Germany, on which the appropriation of its profit is based, amounted to € 1,027 million (2024: € 996 million). Merck KGaA, Darmstadt, Germany, transferred a profit of € 722 million to E. Merck KG, Darmstadt, Germany, (2024: € 700 million). In addition, an expense from corporation tax charges was reported in the amount of € 3 million (2024: expense of € 2 million).

Appropriation of profits

The profit distribution to be resolved by shareholders also defines the amount of that share of net profit/loss freely available to E. Merck KG, Darmstadt, Germany. If the shareholders resolve to carry forward or to allocate to retained earnings a portion of the net retained profit of Merck KGaA, Darmstadt, Germany, to which they are entitled, E. Merck KG, Darmstadt, Germany, shall be obliged to allocate to the profit carried forward/retained earnings of Merck KGaA, Darmstadt, Germany, a comparable sum determined according to the ratio of subscribed capital to general partner’s equity. This ensures that the retained earnings and the profit carried forward by Merck KGaA, Darmstadt, Germany, correspond to the ownership ratios of the shareholders on the one hand and E. Merck KG, Darmstadt, Germany, on the other. Consequently, for distributions to E. Merck KG, Darmstadt, Germany, the available amount is the amount that results from netting the profit transfer of Merck KGaA, Darmstadt, Germany, with the amount either allocated or withdrawn by E. Merck KG, Darmstadt, Germany, from retained earnings/profit carried forward. This amount corresponds to the sum paid as a dividend to the shareholders and reflects their pro rata shareholding in the company.

Based on the profit transfer, the appropriation of profits by Merck KGaA, Darmstadt, Germany, was as follows:

A dividend of € 2.20 per share was distributed for fiscal 2024. The dividend proposal for fiscal 2025 is unchanged at € 2.20 per share. With the proposed dividend payment to shareholders amounting to € 284 million (2024: € 284 million), the shareholders’ profit carried forward after the dividend payment would amount to € 34 million (2024: € 34 million). Based on the proposed dividend payment to the shareholders, E. Merck KG, Darmstadt, Germany, would be entitled to withdraw € 679 million (2024: € 677 million), meaning that E. Merck KG, Darmstadt, Germany, would be entitled to a profit carried forward of € 81 million (2024: € 81 million).

Appropriation of profits and changes in reserves

Based on the proposed appropriation of profits, the profit/loss transfer to E. Merck KG, Darmstadt, Germany, for fiscal 2025, including changes in reserves, amounted to € -754 million. This consisted of the profit transfer to E. Merck KG, Darmstadt, Germany (€ ‑722 million), the profit/loss transfer to Merck KGaA, Darmstadt, Germany (€ -18 million), an unchanged profit carried forward of E. Merck KG, Darmstadt, Germany, and the profit transfer from Merck & Cie KmG, Altdorf, Switzerland, a subsidiary of Merck KGaA, Darmstadt, Germany, to E. Merck KG, Darmstadt, Germany (€ -13 million). In the previous year, the profit/loss transfer to E. Merck KG, Darmstadt, Germany, including changes in reserves, amounted to € ‑755 million. This consisted of the profit transfer to E. Merck KG, Darmstadt, Germany (€ -700 million), the profit/loss transfer to Merck KGaA, Darmstadt, Germany (€ -9 million), an unchanged profit carried forward of E. Merck KG, Darmstadt, Germany, and the profit transfer from Merck & Cie KmG, Altdorf, Switzerland, a subsidiary of Merck KGaA, Darmstadt, Germany, to E. Merck KG, Darmstadt, Germany (€ -46 million) and was paid to E. Merck KG, Darmstadt, Germany, in fiscal 2025. Merck & Cie KmG is a partnership under Swiss law that is controlled by Merck KGaA, Darmstadt, Germany, but distributes its operating result directly to E. Merck KG, Darmstadt, Germany. This distribution is a payment to shareholders and is therefore also presented under changes in equity.

Non-controlling interests

The calculation of non-controlling interests was based on the reported equity of the subsidiaries concerned.

The non-controlling interests in consolidated equity and profit or loss essentially related to the non-controlling interests in Versum Materials Taiwan Co., Ltd., Taiwan; Merck Ltd., Bangkok, Thailand, a subsidiary of Merck KGaA, Darmstadt, Germany; and the listed company PT Merck Tbk., Jakarta, Indonesia, a subsidiary of Merck KGaA, Darmstadt, Germany.