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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
Subtractions   (1)       (1)
Changes in scope of consolidation 1         1
Sep. 30, 2013 23 12 5 6 20 66
Consolidated associates and joint ventures
Jan. 1, 2013   1     2 3
Additions   1       1
Subtractions         (1) (1)
Sep. 30, 2013 0 2 0 0 1 3
Non-consolidated companies
Jan. 1, 2013 2 2 1 3 1 9
Additions 1       1 2
Changes in scope of consolidation (1)         (1)
Sep. 30, 2013 2 2 1 3 2 10
Jan. 1, 2013 24 16 6 9 21 76
Additions 1 1     3 5
Subtractions 0 (1)     (1) (2)
Sep. 30, 2013 25 16 6 9 23 79

In addition, two special purpose entities in the EMEA (excluding Germany) region are included in the consolidated interim 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. The acquisition, which mainly strengthens LANXESS’s portfolio of biocides for paints and coatings, 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 the 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 the 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.

On September 14, 2013, LANXESS also acquired the phosphorus chemicals portfolio of Thermphos France S.A.R.L., Epierre, France. The acquisition essentially involved selected property, plant and equipment. The activities have been assigned to the Functional Chemicals business unit in the Performance Chemicals segment. The acquisition will not materially impact 2013 sales or earnings. Further information including the provisional purchase price allocation will be provided in the notes to the consolidated financial statements for 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. The first-time consolidation of Bond-Laminates GmbH, Brilon, Germany, was effected from September 12, 2012. The provisional purchase price allocations were not adjusted in light of any new information or knowledge within twelve months of the respective acquisition dates and are therefore final. Details of these acquisitions and their effects on the LANXESS Group’s consolidated statement of financial position are provided in the notes to the consolidated financial statements as of December 31, 2012, under the heading “Companies consolidated.”

Due to the transfer of control to LANXESS AG, the investment in LANXESS-TSRC (Nantong) Chemical Industrial Co., Ltd., Nantong, China, ceased to be accounted for as a joint venture using the equity method as of the first quarter of 2013. Instead, the company was fully consolidated as a subsidiary for the first time. The transition to full consolidation had no effect on earnings. Upon 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 consolidated for the first time. This had no material impact on the LANXESS Group‘s financial position or results of operations.

Starting in the third quarter of 2013, the investment in DuBay Polymer GmbH, Hamm, Germany, is no longer fully consolidated due to the LANXESS Group’s loss of control over that company. Instead, it is included in the consolidated financial statements as a joint venture. In the LANXESS Group, joint ventures are no longer accounted for using the equity method, but according to LANXESS’s interest in their assets, liabilities, revenues and expenses. The change to the latter method had no effect on earnings.