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Scope of consolidation

The consolidated interim financial statements of the LANXESS Group include the parent company LANXESS AG along with all of its domestic and foreign subsidiaries.

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Scope of consolidation
             
  EMEA (excl. Germany) Germany North America Latin America Asia-Pacific Total

Fully consolidated companies

(incl. parent company)

Jan. 1, 2013 22 13 5 6 18 64
Additions         2 2
Changes in scope of consolidation 1         1
June 30, 2013 23 13 5 6 20 67
             

Companies accounted for using

the equity method

Jan. 1, 2013   1     2 3
Subtractions         (1) (1)
June 30, 2013 0 1 0 0 1 2
             
Non-consolidated companies
Jan. 1, 2013 2 2 1 3 1 9
Additions         1 1
Changes in scope of consolidation (1)         (1)
June 30, 2013 1 2 1 3 2 9
             
Total
Jan. 1, 2013 24 16 6 9 21 76
Additions 0 0 0 0 3 3
Subtractions 0 0 0 0 (1) (1)
June 30, 2013 24 16 6 9 23 78

In addition, two special purpose entities in the EMEA region (excluding Germany) are included in the consolidated financial statements.

LANXESS acquired all of the shares of Singapore-based PCTS Specialty Chemicals Pte. Ltd. on April 5, 2013. First-time inclusion in the consolidated interim financial statements was effected from that date. The acquisition was funded from existing liquidity of the LANXESS Group. The company was assigned to the Material Protection Products business unit of the Performance Chemicals segment. With the acquisition, LANXESS is strengthening, in particular, its portfolio of biocides for paints and coatings.

The acquisition was accounted for as a business combination in accordance with IFRS 3. Thus, in allocating the purchase price, the acquiree’s identifiable assets, liabilities and contingent liabilities were included at fair value. The purchase price allocation was carried out in light of the information available at and immediately after the date of acquisition. According to IFRS, it can be adjusted within one year after date of acquisition to reflect new information and findings.

The goodwill resulting from the acquisition reflects, in particular, additional sales opportunities to existing and new customers, primarily in the Asian market.

The following table shows the effects from the acquisition on the Group’s financial position.

Additions from Acquisition of PCTS
       
€ million IFRS carrying amounts prior to first-time consolidation Purchase price allocation Carrying amounts upon first-time consolidation
Intangible assets 0 6 6
Property, plant and equipment 0 5 5
Other assets 7 0 7
Total assets 7 11 18
Non-current liabilities 0 1 1
Current liabilities 1 0 1
Total liabilities 1 1 2
Net acquired assets (excluding goodwill) 6 10 16
Acquisition costs     18
Acquired goodwill (provisional)     2

The acquired activities did not materially impact Group sales or earnings, nor would they have done so if the business had already been consolidated from January 2013.

Tire Curing Bladders, LLC, Little Rock, United States, which was acquired last year, was consolidated for the first time as of March 14, 2012. In the twelve-month period following the acquisition date, there were no new findings or information requiring an adjustment of the provisional purchase price allocation. That allocation is therefore final. Likewise, as of June 30, 2013, it had not proven necessary to adjust the purchase price allocation for Bond-Laminates GmbH, Brilon, Germany, which was acquired on September 12, 2012. Details of these acquisitions and their effects on the LANXESS Group’s consolidated statement of financial position are provided in the section entitled “Companies consolidated” in the notes to the consolidated financial statements as of December 31, 2012.

Due to the transfer of control to LANXESS AG, the investment in LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., Nantong, China, was no longer accounted for using the equity method as of the first quarter of 2013. Instead, the company was fully consolidated for the first time. The transition to full consolidation had no effect on earnings. Within the context of the first-time full consolidation, the 50% equity attributable to non-controlling interests was included at its pro-rata share of the fair value of the fully consolidated company’s net assets.

The company OOO LANXESS Lipetsk, Lipetsk, Russia, was also consolidated for the first time. This had no material impact on the LANXESS Group’s financial position or results of operations.

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