Management Report

Proposal for Distribution of the Profit

Under German law, the dividend payment is based on the balance sheet profit of the parent company, which amounted to €1,032 million in 2007:

Bayer AG Summary Income Statements according to the German Commercial Code	2006	2007
€ million
Net sales	196	242
Cost of goods sold	(146)	(195)
Gross profit	50	47
Selling and administration expenses	(194)	(224)
Other operating income and expenses – net	(5)	(2)
Operating result	(149)	(179)
Non-operating result	1,449	2,304
Income before income taxes	1,300	2,125
Income taxes	(50)	(197)
Net income	1,250	1,928
Allocation to retained earnings	(486)	(896)
Balance sheet profit	764	1,032

We will propose to the Annual Stockholders’ Meeting on April 25, 2008 that the balance sheet profit be used to pay a dividend of €1.35 (2006: €1.00) per share (764,341,920 shares) on the capital stock of €2.0 billion entitled to the dividend for 2007.