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Earnings, asset and financial position of LANXESS AG

LANXESS AG serves primarily as the management holding company for the LANXESS Group. The principal management functions for the entire Group are performed by the Board of Management. The Board of Management shapes Group strategy and manages resource allocation, infrastructure and organization. As the Group management company, LANXESS AG is responsible for financing and communication with the company’s key stakeholders. The economic performance of LANXESS AG depends principally on that of the operating companies in the LANXESS Group and on the development of the chemical industry.

The financial statements of LANXESS AG are prepared in accordance with the German Commercial Code (HGB) and the German Stock Corporation Act (AktG).

Sales and earnings of LANXESS AG

LANXESS AG Income Statement in Accordance with the German Commercial Code (HGB) – Abridged
       
€ million 2011 2012 Change %
       
Sales 4 5 25.0
Cost of sales (4) (5) 25.0
Gross profit 0 0 0.0
       
General administration expenses (45) (44) (2.2)
Other operating income 1 1 0.0
Other operating expenses (2) (3) 50.0
Operating result (46) (46) 0.0
       
Income from investments in affiliated companies 216 283 31.0
Net interest expense (45) (71) 57.8
Other financial income and expenses – net (10) (8) (20.0)
Financial result 161 204 26.7
       
Income before income taxes 115 158 37.4
       
Income taxes (46) (54) 17.4
Net income 69 104 50.7
       
Carryforward to new account 46 44 (4.3)
Allocation to retained earnings 0 (52)
Distributable profit 115 96 (16.5)
 

The earnings of LANXESS AG are determined largely by profit or loss transfers from LANXESS Deutschland GmbH and LANXESS International Holding GmbH, which hold the shares of the other subsidiaries and affiliates both in Germany and elsewhere.

Sales of LANXESS AG stood at €5 million, which was slightly higher than the prior-year level of €4 million. They related to services provided to LANXESS Deutschland GmbH. A balanced result remained after deducting the cost of sales, which consisted mostly of personnel expenses and appropriate shares of the general administration expenses.

General administration expenses decreased slightly against the previous year, down €1 million, or 2.2%, to €44 million. They principally comprised personnel and other business expenses not directly related to the services provided to Group companies. The operating result was level with the prior year at minus €46 million.

The financial result, which comprises the balance of income and losses from investments in affiliated companies, the net interest position, and other financial income and expense, rose by €43 million, or 26.7%, to €204 million. This change was primarily due to the profit transfer of €283 million from LANXESS Deutschland GmbH, which was €67 million higher than in the previous year. The decrease in the net interest position by €26 million to minus €71 million had an adverse effect and was mainly attributable to additional borrowings from subsidiaries.

Income before income taxes came to €158 million, following €115 million in the previous year. Income taxes increased by €8 million to €54 million and comprised €14 million in tax expense for previous years and €40 million in tax expenses for 2012. Net income rose substantially, up €35 million to €104 million.

Taking into account the allocation of €52 million to retained earnings and the profit carryforward of €44 million, the distributable profit amounted to €96 million as of December 31, 2012, against €115 million in the previous year.

Statement of financial position and financial condition of LANXESS AG

LANXESS AG Statement of Financial Position in Accordance with the German Commercial Code (HGB) – Abridged
           
  Dec. 31, 2011 Dec. 31, 2012 Change
           
  € million % € million % %
           
ASSETS          
Financial assets 757 26.7 757 22.3 0.0
Non-current assets 757 26.7 757 22.3 0.0
Receivables from affiliated companies 1,704 60.0 1,850 54.6 8.6
Other assets 78 2.8 39 1.2 (50.0)
Liquid assets and securities 298 10.5 734 21.7 >100
Current assets 2,080 73.3 2,623 77.5 26.1
Prepaid expenses 1 0.0 6 0.2 >100
Total assets 2,838 100.0 3,386 100.0 19.3
           
EQUITY AND LIABILITIES          
Equity 1,185 41.8 1,219 36.0 2.9
Provisions 105 3.7 117 3.4 11.4
Liabilities to banks 80 2.8 68 2.0 (15.0)
Payables to affiliated companies 1,464 51.6 1,973 58.3 34.8
Other liabilities 4 0.1 9 0.3 >100
Liabilities 1,548 54.5 2,050 60.6 32.4
Total assets 2,838 100.0 3,386 100.0 19.3
 

In view of its function as a strategic holding company, the statement of financial position of LANXESS AG is dominated by financial assets and by receivables from, and payables to, subsidiaries.

LANXESS AG had total assets of €3,386 million as of December 31, 2012, which was €548 million, or 19.3%, above the prior-year figure. Non-current assets were constant at €757 million and primarily included the carrying amount of the investment in LANXESS Deutschland GmbH, which stands at €739 million. The share of non-current assets in total assets decreased from 26.7% to 22.3%. Current assets rose by €543 million to €2,623 million and accounted for 77.5% of total assets, compared with 73.3% in 2011. Receivables from subsidiaries accounted for 54.6% of total assets and related principally to financial transactions and short-term loans. At the same time, a long-term loan from LANXESS Finance B.V. increased the share of bank balances and securities in total assets from 10.5% to 21.7%.

Equity rose by €34 million to €1,219 million. This increase was due to the net income for the year, less the dividend payment for 2011. The equity ratio was 36.0% after 41.8% at the end of 2011.

Liabilities rose by €514 million to €2,167 million, largely on account of payables to subsidiaries, which were €509 million higher than the previous year at €1,973 million. The increase was mainly due to long-term loans totaling €493 million from LANXESS Finance B.V. The provisions rose by €12 million to €117 million and related mainly to commitments to employees and statutory obligations.

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