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 2012 2013 Change %
       
Sales 5 4 (20.0)
Cost of sales (5) (4) (20.0)
Gross profit 0 0 0.0
       
General administration expenses (44) (39) (11.4)
Other operating income 1 2 100.0
Other operating expenses (3) (2) (33.3)
Operating result (46) (39) (15.2)
       
Income from investments in affiliated companies 283 169 (40.3)
Net interest expense (71) (85) 19.7
Other financial income and expenses – net (8) (14) 75.0
Financial result 204 70 (65.7)
       
Income before income taxes 158 31 (80.4)
       
Income taxes (54) 4 < (100)
Net income 104 35 (66.3)
       
Carryforward to new account 44 13 (70.5)
Allocation to retained earnings (52) 0 (100.0)
Distributable profit 96 48 (50.0)
 

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 €4 million, which was slightly lower than the prior-year level of €5 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 against the previous year, down €5 million, or 11.4%, to €39 million. They principally comprised personnel and other business expenses not directly related to the services provided to Group companies. The operating result improved by €7 million to minus €39 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, decreased by €134 million, or 65.7%, to €70 million. This change was primarily due to the profit transfer of €169 million from LANXESS Deutschland GmbH, which was €114 million lower than in the previous year. The €14 million increase in net interest expense to €85 million had an adverse effect and was mainly attributable to additional borrowings by subsidiaries.

Income before income taxes came to €31 million, following €158 million in the previous year. A net gain from income taxes of €4 million comprised €3 million in tax expenses for 2013 and a tax gain of €7 million for the previous years. Net income decreased by €69 million to €35 million.

Taking into account the profit carryforward of €13 million, the distributable profit decreased to €48 million as of December 31, 2013.

Assets and capital structure of LANXESS AG

LANXESS AG Statement of Financial Position in Accordance with the German Commercial Code (HGB) – Abridged
 
  Dec. 31, 2012 Dec. 31, 2013 Change
           
  € million % € million % %
           
ASSETS          
Financial assets 757 22.3 757 23.5 0.0
Non-current assets 757 22.3 757 23.5 0.0
Receivables from affiliated companies 1,850 54.6 1,967 61.1 6.3
Other assets 39 1.2 25 0.7 (35.9)
Liquid assets and securities 734 21.7 467 14.5 (36.4)
Current assets 2,623 77.5 2,459 76.3 (6.3)
Prepaid expenses 6 0.2 5 0.2 (16.7)
Total assets 3,386 100.0 3,221 100.0 (4.9)
           
EQUITY AND LIABILITIES          
Equity 1,219 36.0 1,171 36.4 (3.9)
Provisions 117 3.4 101 3.1 (13.7)
Liabilities to banks 68 2.0 59 1.8 (13.2)
Payables to affiliated companies 1,973 58.3 1,886 58.6 (4.4)
Other liabilities 9 0.3 4 0.1 (55.6)
Liabilities 2,050 60.6 1,949 60.5 (4.9)
Total assets 3,386 100.0 3,221 100.0 (4.9)
 

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 €3,221 million as of December 31, 2013, which was €165 million, or 4.9%, below 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 increased from 22.3% to 23.5%. Current assets declined by €164 million to €2,459 million and accounted for 76.3% of total assets, compared with 77.5% in 2012. Receivables from subsidiaries accounted for 61.1% of total assets and related principally to financial transactions and short-term loans. The share of bank balances and securities in total assets decreased from 21.7% to 14.5%.

Equity decreased by €48 million to €1,171 million due to the dividend payout for 2012, which was higher than net income for the reporting period. The equity ratio was 36.4%, after 36.0% at the end of 2012.

Liabilities decreased by €101 million to €1,949 million, largely on account of payables to subsidiaries, which were €87 million lower than the previous year at €1,886 million. The provisions fell by €16 million to €101 million and related mainly to commitments to employees and statutory obligations.