Net Assets and Financial Position of Wacker Chemie AG as per the German Commercial Code

Statement of Financial Position

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€ million

 

2013

 

2012

 

 

 

 

 

Assets

 

 

 

 

Intangible assets

 

5.1

 

5.9

Property, plant and equipment

 

1,639.4

 

1,823.0

Financial assets

 

1,700.0

 

1,453.6

Fixed assets

 

3,344.5

 

3,282.5

Inventories

 

388.6

 

447.5

Trade receivables

 

347.3

 

330.1

Other receivables and other assets

 

593.2

 

805.7

Receivables and other assets

 

940.5

 

1,135.8

Securities

 

58.1

 

175.4

Cash on hand, demand deposits

 

337.8

 

125.2

Current assets

 

1,725.0

 

1,883.9

Accruals and deferrals

 

2.5

 

3.4

Total assets

 

5,072.0

 

5,169.8

 

 

 

 

 

Equity and Liabilities

 

 

 

 

Subscribed capital

 

260.8

 

260.8

Less nominal value of treasury shares

 

-12.4

 

-12.4

Issued capital

 

248.4

 

248.4

Capital reserves

 

157.4

 

157.4

Other retained earnings

 

1,000.0

 

1,000.0

Retained profit

 

636.1

 

654.3

Equity

 

2,041.9

 

2,060.1

Provisions for pensions and similar obligations

 

571.1

 

535.7

Other provisions

 

328.4

 

297.6

Provisions

 

899.5

 

833.3

Financial liabilities

 

1,113.7

 

1,056.2

Trade payables

 

155.9

 

154.4

Other liabilities

 

861.0

 

1,065.8

Liabilities

 

2,130.6

 

2,276.4

Total equity and liabilities

 

5,072.0

 

5,169.8

 

 

 

 

 

The amount of total assets held by Wacker Chemie AG dropped slightly to € 5.07 billion (2012: € 5.17 billion). This represented a decrease of 2 percent compared to year-end 2012, whereby individual balance-sheet items had counteracting effects.

Fixed assets grew to € 3.34 billion in 2013 (2012: € 3.28 billion). Property, plant and equipment increased to € 153.2 million, primarily due to investments in plant and machinery. Depreciation reduced property, plant and equipment by € 328.1 million (2012: € 337.6 million), while financial assets grew from € 1.45 billion to € 1.70 billion. On the one hand, € 191.1 million was added to the equity base of Wacker Polysilicon North America, LLC, an intermediate holding company for production purposes. This measure ensured financing for construction of the Tennessee production site. On the other hand, impairments totaling € 8.0 million were recognized on the investment in WACKER’s Brazilian subsidiary.

Additionally, the closed investment fund recognized as a financial asset was increased from € 140.0 million to € 200.0 million. Liquidity not required in the short term is invested in this fund and held for future financing of investment projects. Fixed assets account for 66 percent of total assets held by Wacker Chemie AG. A year earlier, the ratio had been 63 percent.

The level of inventories sank substantially year on year, to € 388.6 million (Dec. 31, 2012: € 447.5 million), down 13 percent from a year earlier. In particular, high capacity utilization at WACKER POLYSILICON lead to low inventory levels at the balance-sheet date. Trade receivables increased from € 330.1 million to € 347.3 million. Other receivables and other assets declined to € 593.2 million as of the balance-sheet date, 26 percent down on one year earlier. Receivables from affiliated companies decreased significantly, amounting to € 475.6 million (Dec. 31, 2012: € 676.7 million). This decrease was due to repayment of the ongoing financing provided by the production company Wacker Polysilicon North America, LLC for construction work taking place at the new production site in Charleston, Tennessee. This company now receives its funding from its US parent company Wacker Chemicals Corporation, which issued $ 400 million in senior unsecured notes in a private placement in the USA for this purpose. Other assets decreased by 10 percent to € 107.4 million (Dec. 31, 2012: € 118.8 million). Other assets mainly comprise tax receivables and other receivables.

As per December 31, 2013, Wacker Chemie AG held € 51.2 million in commercial paper with a term of less than three months. Wacker Chemie AG’s cash on hand and demand deposits amounted to € 337.8 million as of December 31, 2013 (2012: € 125.2 million).

Equity amounted to € 2.04 billion as of the reporting date (2012: € 2.06 billion). This corresponds to an equity ratio of 40.3 percent (2012: 39.8 percent). At the annual Wacker Chemie AG shareholders’ meeting, a resolution was passed to distribute € 29.8 million in retained profit from 2012 as dividends. The remaining retained profit of € 624.5 was carried forward. Retained profit as of December 31, 2013 primarily comprised the current net income in 2013 of € 11.6 million and profit carried forward from 2012 of € 624.5 million that was not distributed as dividends.

As expected, provisions for pensions and similar obligations continued to rise in comparison to the previous year – up by € 35.4 million to € 571.1 million (2012: € 535.7 million), Other provisions, too, increased in 2013, by € 30.8 million to € 328.4 million, a rise of 10 percent. This balance-sheet item is comprised primarily of provisions for taxes, personnel and environmental protection, as well as other provisions. The reason for the increase was in particular additions to provisions for taxes and for personnel. All in all, provisions constituted 18 percent of total equity and liabilities.

As of year-end 2013, financial liabilities were € 1.11 billion (2012: € 1.06 billion), representing a rise of 5 percent. Bank loans amounted to € 819.1 million (2012: € 857.1 million). Wacker Chemie AG repaid € 19.0 million of a maturing promissory note (German Schuldschein) in the second quarter of 2013. Financial liabilities from cash pooling and intercompany loans increased by € 96.5 million. Liabilities due to affiliated companies amounted to € 286.5 million (2012: € 190.0 million). Financial liabilities accounted for 22 percent of total equity and liabilities (2012: 20 percent).

Trade payables remained nearly constant in comparison with 2012, amounting to € 155.9 million (2012: € 154.4 million). Other liabilities decreased, from € 1.07 billion in the previous year to € 861.0 million at the balance-sheet date. This resulted primarily from the drop in advance payments received from polysilicon contracts, which declined in the course of 2013 by € 184.9 million to € 836.0 million (2012: € 1.02 billion). Advance payments received for polysilicon deliveries represented 16 percent of total equity and liabilities.

Cash flow from operating activities fell year on year by € 399.0 million to € 317.2 million – a reduction of € 81.8 million. The main reasons for the decline are the operating result of € 157.0 million (2012: € 389.1 million) and the much lower depreciation. Depreciation totaled € 339.7 million in 2013 (2012: € 514.8 million). As expected, advance payments received for polysilicon deliveries changed in 2013 by € –184.9 million (2012: € –155.0 million) in line with the deliveries made and the advance payments retained in connection with terminated contracts. The reduction in working capital and the establishment of provisions had a positive impact on cash flow from operating activities.

At € –229.9 million, Wacker Chemie AG’s cash flow from investing activities was considerably lower than 2012’s level of € –482.2 million. Investments in property, plant and equipment decreased, amounting to € 153.8 million in 2013 (2012: € 251.9 million). Some of the funds were spent on the continued expansion of polysilicon production at the Nünchritz site and on ongoing investments at the Burghausen site. Financial investments primarily comprised capital increases for Wacker Polysilicon North America, LLC, for the purpose of financing construction of the Tennessee production site. Financing was handled via an intermediate holding company. Additionally, we paid into our closed securities fund. This amount includes the proceeds from the sale of securities totaling € 170.9 million. Adjusted for the effect caused by the sale of securities, the cash outflow from noncurrent investing activities amounted to € 400.8 million (2012: € 611.2 million).

Net cash flow from investing activities and operating activities, less securities and advance payments received, improved considerably in 2013 and amounted to € 101.3 million (2012: € –57.3 million).

Impacted by inflows from repayments of intra-Group financing, cash flow from financing activities amounted to € 176.5 million. On balance, intra-Group loans of € 225.3 million were repaid. The dividend payout of € –29.8 million for 2012 also impacted cash flow. In the prior year, financing of € –207.2 million was raised on balance; a large portion of this financing was of an intra-Group nature.

Liquidity – defined as the sum of securities in current assets, of shares in closed investment funds, and of cash on hand and demand deposits – rose from € 440.6 million at year-end 2012 to € 595.9 million at year-end 2013. The balance of liquidity and liabilities with respect to financial institutions improved. At the end of 2013, net financial debt amounted to € 223.3 million (2012: € 416.5 million).