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Structure of the statement of financial position

As of September 30, 2013, the LANXESS Group had total assets of €7,111 million, down €408 million or 5.4% from €7,519 million on December 31, 2012. This was largely the result of a decrease in near-cash assets and inventories, partially offset by an increase in property, plant and equipment.

Non-current assets rose by €5 million to €3,752 million, with intangible assets and property, plant and equipment increasing by €34 million to €3,418 million. Cash outflows for purchases of intangible assets, property, plant and equipment in the first nine months of 2013 came to €398 million, ahead of the €381 million reported for the same period of last year. Depreciation and amortization in the first nine months totaled €332 million, compared with €276 million in the prior-year period. The first-time full consolidation of LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., Nantong, China, previously accounted for using the equity method, and the first-time consolidation of PCTS Specialty Chemicals Pte. Ltd., Singapore, which was acquired in April, led to additions in the mid-double-digit million euro range. The carrying amount of investments accounted for using the equity method decreased accordingly by €8 million. The ratio of non-current assets to total assets was 52.8%, up from 49.8% on December 31, 2012.

Current assets amounted to €3,359 million, down by €413 million or 10.9% from December 31, 2012. Inventories decreased by €139 million or 9.1% to €1,388 million. Trade receivables, at €1,136 million, were slightly higher than at the end of 2012. Near-cash assets decreased by €261 million to €150 million following the sale of shares in money market funds. Cash and cash equivalents decreased by €18 million to €368 million, in part because of capital expenditure projects in the current fiscal year and the funding of working capital. The ratio of current assets to total assets was 47.2%, against 50.2% as of December 31, 2012.

The LANXESS Group has significant internally generated intangible assets that are not reflected in the statement of financial position in light of accounting rules. These include the brand equity of LANXESS and the value of the Group’s other brands. A variety of measures were deployed in the reporting period to continually enhance these assets. These measures contributed to our continued success in positioning the business units in the market.

Our established relationships with customers and suppliers also constitute a significant intangible asset, which cannot, however, be reflected in the statement of financial position. The long-standing, trust-based partnerships with customers and suppliers, underpinned by consistent service and product quality, enable us to set ourselves apart from our competitors. Our competence in technology and innovation, also a valuable asset, is rooted in our specific knowledge in the areas of research and development and custom manufacturing. It enables us to generate significant added value for our customers.

Our commercial success is also founded on the knowledge and experience of our employees. In addition, we have sophisticated production and business processes that create competitive advantages for us in the relevant markets.

Equity decreased by €183 million or 7.9% compared with December 31, 2012, to €2,147 million, predominantly due to the dividend payment and the net negative effect of currency translation. The net income of €45 million for the first nine months had the opposite effect. The ratio of equity to the Group’s total assets was 30.2% as of September 30, 2013, against 31.0% as of December 31, 2012.

Non-current liabilities fell by €497 million to €3,062 million as of September 30, 2013. This change was mainly attributable to the decrease in other non-current financial liabilities, which at €1,661 million were €506 million lower than on December 31, 2012. The decrease was largely the result of the reclassification into other current financial liabilities of the Eurobond that matures in April 2014. Provisions for pensions and other post-employment benefits increased by €24 million compared to the end of 2012, to €917 million. This increase was mainly due to additional vested rights established in the reporting period and interest effects. The ratio of non-current liabilities to total assets was 43.1%, down from 47.3% as of December 31, 2012.

Current liabilities came to €1,902 million, up by €272 million or 16.7% from December 31, 2012. The increase was mainly due to the higher level of other current financial liabilities resulting from the reclassification of the Eurobond maturing in April 2014. This increase was partly offset by the business-related €144 million decrease in trade payables to €651 million and the €73 million decline in other current provisions to €367 million. The latter decline was mainly due to the utilization of provisions to pay employee bonuses for the 2012 fiscal year. In addition, other current liabilities fell by €51 million. The ratio of current liabilities to total assets was 26.7% at the end of the third quarter, compared with 21.7% at the end of 2012.

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