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

Statement of Financial Position

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€ million

 

2014

 

2013

 

 

 

 

 

Assets

 

 

 

 

Intangible assets

 

8.9

 

5.1

Property, plant and equipment

 

1,464.9

 

1,639.4

Financial assets

 

1,974.6

 

1,700.0

Fixed assets

 

3,448.4

 

3,344.5

Inventories

 

426.5

 

388.6

Trade receivables

 

377.3

 

347.3

Other receivables and other assets

 

736.0

 

593.2

Receivables and other assets

 

1,113.3

 

940.5

Securities

 

89.2

 

58.1

Cash on hand, demand deposits

 

28.8

 

337.8

Current assets

 

1,657.8

 

1,725.0

Accruals and deferrals

 

3.4

 

2.5

Total assets

 

5,109.6

 

5,072.0

 

 

 

 

 

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

 

960.5

 

636.1

Equity

 

2,366.3

 

2,041.9

Provisions for pensions and similar obligations

 

609.1

 

571.1

Other provisions

 

342.6

 

328.4

Provisions

 

951.7

 

899.5

Financial liabilities

 

949.9

 

1,113.7

Trade payables

 

153.1

 

155.9

Other liabilities

 

649.6

 

861.0

Liabilities

 

1,752.6

 

2,130.6

Accruals and deferrals

 

39.0

 

Total equity and liabilities

 

5,109.6

 

5,072.0

 

 

 

 

 

The amount of total assets held by Wacker Chemie AG was almost unchanged year on year, totaling € 5.11 billion at the end of 2014 (Dec. 31, 2013: € 5.07 billion). Individual balance-sheet items had counteracting effects.

Fixed assets grew slightly in 2014 to € 3.34 billion (2013: € 3.45 billion), with property, plant and equipment, on the one hand, and financial assets, on the other, following different paths. On balance, property, plant and equipment declined slightly, as depreciation in the amount of € 315.9 million (2013: € 328.1 million) exceeded investment spending. Wacker Chemie AG invested € 151.9 million in property, plant and equipment during the reporting year, primarily investing in plant and machinery. Financial assets grew from € 1.70 billion to € 1.97 billion. The greater part of this increase comprised the € 270.1 million 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. Fixed assets continue to account for 67 percent of total assets, almost unchanged year on year.

The level of inventories increased year on year to € 426.5 million (Dec. 31, 2013: € 388.6 million), a rise of 10 percent. This was mainly due to high plant-utilization rates. Similarly, trade receivables increased from € 347.3 million to € 377.3 million as business volumes grew.

Other receivables and other assets grew by 24 percent to reach € 736.0 million (Dec. 31, 2013: € 593.2 million), which included an amount of € 636.0 million (Dec. 31, 2013: € 475.6 million) in receivables from affiliated companies. This increase was due in part to 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 (USA). This company is funded by its US parent, Wacker Chemical Corporation. Loans to Siltronic AG served, among other things, to finance the acquisition of Siltronic Silicon Wafer Pte. Ltd.

Other assets decreased by 10 percent to € 96.3 million (Dec. 31, 2013: € 107.4 million) and mainly comprised tax receivables, advance payments and reimbursement claims.

As of December 31, 2014, Wacker Chemie AG held € 85.0 million in commercial paper, € 75.0 million of which was for terms of less than three months. Wacker Chemie AG’s cash on hand and demand deposits amounted to € 28.8 million as of December 31, 2014 (Dec. 31, 2013: € 337.8 million), with loans granted to subsidiaries being the main reason for this decline. Examples of financing therefore include the investments in the production plant at Charleston, Tennessee (USA) and the acquisition of a majority stake in Siltronic Silicon Wafer Pte. Ltd.

Equity amounted to € 2.37 billion as of the reporting date (Dec. 31, 2013: € 2.04 billion). That corresponds to an equity ratio of 46.3 percent (Dec. 31, 2013: 40.3 percent). At the annual Wacker Chemie AG shareholders’ meeting, a resolution was passed to distribute € 24.8 million in retained profit from 2013 as dividends. The remaining retained profit of € 611.3 million was carried forward. Retained profit as of December 31, 2014 primarily comprised the current net income in 2014 of € 349.2 million and the non-distributed profit of € 611.3 million carried forward from 2013.

As expected, provisions for pensions and similar obligations continued to rise compared with the previous year, increasing by € 38.0 million to € 609.1 million (Dec. 31, 2013: € 571.1 million). Other provisions increased in fiscal 2014 by 4 percent to € 342.6 million (Dec. 31, 2013: € 328.4 million). This balance-sheet item is comprised primarily of provisions for taxes, personnel and environmental protection. The reason for the increase was, in particular, additions to provisions for taxes and for personnel. Overall, provisions accounted for 19 percent of total equity and liabilities.

As of the reporting date, financial liabilities amounted to € 949.9 million (Dec. 31, 2013: € 1.11 billion). This decrease of 15 percent was attributable to a decline in liabilities due to affiliated companies, which fell by € 241.0 million to € 45.5 million as of the reporting date (Dec. 31, 2013: € 286.5 million). A positive influence here was the dividend paid by Siltronic AG to Wacker-Chemie Dritte Venture GmbH. Bank loans, on the other hand, rose to € 899.4 million (Dec. 31, 2013: € 819.1 million). In Q3 2014, Wacker Chemie AG drew down a new long-term loan of € 80.0 million. Overall, the share of financial liabilities in total equity and liabilities declined to 19 percent (Dec. 31, 2013: 22 percent).

Trade payables remained nearly constant in comparison with 2013, amounting to € 153.1 million (Dec. 31, 2013: € 155.9 million). Other liabilities decreased from € 861.0 million in 2013 to € 649.6 million at the reporting date. This was primarily due to the drop in advance payments received under polysilicon contracts. These payments decreased in the course of 2014 by € 218.5 million to € 617.5 million (Dec. 31, 2013: € 836.0 million). Deliveries for advance payments already received from polysilicon customers as well as amounts retained following the termination or amendment of contracts with polysilicon customers were the reason for this steep decline. Advance payments received for polysilicon deliveries accounted for 12 percent of total equity and liabilities.

In 2014, Siltronic AG made a compensatory payment of € 39.0 million to Wacker Chemie AG in return for the planned future transfer of employees to the latter. This payment covers tax amounts that will be imposed on Wacker Chemie AG in the future. It was recognized as deferred income and will be reversed over the remaining period of service of the employees in question.

Cash flow from operating activities rose year on year from € 317.2 million to € 428.2 million – a gain of over 35 percent. This is basically due to the substantially higher operating result of € 552.0 million (2013: € 157.0 million). On the other hand, working capital increased, especially due to higher inventories and trade receivables. However, the operating result included non-cash income from polysilicon deliveries for which we had already received advance payments. In addition, advance payments for contracts that were terminated were retained in 2014, also contributing to non-cash income.

At € -446.8 million, Wacker Chemie AG’s cash flow from investing activities was considerably higher than 2013’s level of € -229.9 million. In 2013, cash flow from investing activities had included non-recurring income from sales of securities in the amount of € 170.9 million. Adjusted for this income from securities, the cash outflow from investing activities amounted to € 400.8 million in 2013. Investments in property, plant and equipment increased only slightly, amounting to € 151.9 million in 2014 (2013: € 153.2 million). The funds were invested in the continued expansion of polysilicon production at the Nünchritz site and in ongoing investments at the Burghausen site. Financial investments also rose and mainly comprised capital increases for Wacker Polysilicon North America, LLC for funding construction of the Charleston, Tennessee production site in the USA. Financing was secured through an intermediate holding company.

Net cash flow – the balance of investing activities and operating activities, less securities and changes in advance payments received – improved again in 2014, coming in at € 209.9 million (2013: € 101.3 million).

Impacted by outflows for intra-Group financing, cash flow from financing activities amounted to € -266.6 million. Wacker Chemie AG extended loans to its subsidiaries in an aggregate amount of € 319.2 million. The dividend payout of € -24.8 million for 2013 also impacted cash flow. On the other hand, a long-term loan taken out in the amount of € 80.0 million increased cash flow. In the prior year, a net inflow from financing in the amount of € 176.5 million was largely attributable to the repayment of intra-Group financing.

Liquidity – defined as the sum of securities in current assets, shares in closed-end investment funds, and cash on hand and demand deposits – decreased from € 595.9 million at year-end 2013 to € 315.1 million at year-end 2014. This had a negative impact on the balance of liquidity and liabilities to financial institutions. At the end of 2014, net financial debt amounted to € 584.3 million (2013: € 223.3 million).