(32) Contingent liabilities and other financial commitments
Contingent liabilities as of December 31, 2013 amounted to €8 million (2012: €28 million). They include contingent liabilities of €0 million (2012: €22 million) to investments accounted for using the equity method. Contingent liabilities result from guarantees and similar instruments assumed on behalf of third parties. They represent potential future commitments in cases where the occurrence of certain events would create an obligation that was uncertain at the closing date. An obligation to perform under such contingent liabilities arises in the event of delayed settlement or insolvency of the debtor.
As a personally liable partner in Currenta GmbH & Co. OHG, Leverkusen, Germany, LANXESS may be required to inject further capital into this company in the future.
Apart from provisions, liabilities and contingent liabilities, financial commitments also exist under operating leases.
As explained in the section on recognition and valuation principles, operating leases are those which – unlike finance leases – do not transfer substantially all risks and rewards incidental to the ownership of the leased assets to the lessee. In the LANXESS Group, operating leases are mainly used for operational reasons and not as a means of financing.
The minimum non-discounted future payments relating to operating leases totaled €492 million (2012: €496 million). The total future leasing and rental payments relating to operating leases was thus on the level of the prior year.
The respective payment obligations mature as follows:
Payments under operating leases in 2013 amounted to €61 million (2012: €48 million). The year-on-year increase was partly attributable to the Group’s new headquarters in Cologne and to higher usage-based charges in Singapore.
Financial commitments resulting from orders already placed under purchase agreements relating to planned or ongoing capital expenditure projects in the area of property, plant and equipment and intangible assets totaled €283 million (2012: €261 million). Of the respective payments, €233 million are due in 2014 and €50 million in 2015.
Description of the master agreement
Under the master agreement that was concluded between Bayer AG and LANXESS AG together with the Spin-Off and Takeover Agreement, Bayer AG and LANXESS AG agreed, among other things, on commitments regarding mutual indemnification for liabilities in line with the respective asset allocation and on special arrangements allocating responsibility to deal with claims in the areas of product liability, environmental contamination and antitrust violations. The master agreement also contains arrangements for the allocation of tax effects relating to the spin-off and to the preceding measures to create the subgroup that was subsequently spun off.