The consolidated financial statements include the financial statements of Wacker Chemie AG and its subsidiaries, as well as joint operations, joint ventures and associates.

Subsidiaries are defined as companies in which Wacker Chemie AG has existing rights that give it the current ability to direct the relevant activities. Thus, control only exists when Wacker Chemie AG or one of its subsidiaries is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Usually, the possibility of control depends on Wacker Chemie AG directly or indirectly holding a voting majority. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Structured entities are also consolidated if the economic substance of the relationship indicates the existence of control. A structured entity serves a specific business purpose. Structured entities have been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when the relevant activities are directed by means of contractual arrangements that cover a narrow and well-defined objective.

Joint operations and joint ventures are based on joint arrangements. A joint arrangement exists if the WACKER Group contractually agrees to share control with a third party to jointly direct activities. Joint control exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to its attributable assets and liabilities from its obligations. The assets, liabilities, income and expenses from joint operations are included in the consolidated financial statements on a pro rata basis in accordance with the WACKER Group’s rights and obligations. In the case of joint ventures, the parties that have joint control of the joint arrangement have rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method.

Currently, no joint operations are accounted for in the consolidated financial statements.

Associates in which Wacker Chemie AG generally exercises significant influence due to ownership of 20 – 50 percent are likewise accounted for using the equity method.

If joint ventures and associated companies have their own subsidiaries, these are not included in the table below.

Companies in which Wacker Chemie AG has a shareholding of less than 20 percent or does not exercise significant influence are shown as other investments under noncurrent financial assets.

Compared with December 31, 2014, the scope of consolidation changed as follows:

Change in the Scope of Consolidation

On January 2, 2014, Wacker Biotech GmbH acquired Scil Proteins Production GmbH, based in Halle, Germany. The merger of these two companies took place on January 1, 2015.

WACKER placed 25.5 percent of its shares in its previously wholly owned subsidiary Siltronic AG on the Frankfurt Stock Exchange in an IPO on June 11, 2015. At the same time, new shares were issued to increase the capital of Siltronic AG, reducing WACKER’s stake by 16.7 percent. Following the IPO, the non-controlling interest in Siltronic AG was 42.2 percent. WACKER remains the majority shareholder with its 57.8-percent stake and fully consolidates the company in its financial statements. The total proceeds from the transaction amounted to € 379.5 million. Transaction costs of € 17.6 million were offset against the proceeds in equity. Because WACKER is still the majority shareholder, this transaction is accounted for as a transaction with owners that has no impact on the statement of income. Please refer to the statement of changes in equity for equity-related changes. The changes are posted in a separate line there.

A total of 14 domestic and 42 foreign companies were included in the consolidated financial statements.

As it had no substantial impact on the Group’s earnings, net assets or financial position, the W.E.L.T. Reisebüro GmbH subsidiary was not consolidated. In 2014, both its sales and its total assets were below € 0.5 million. This subsidiary, in which WACKER holds a 51-percent stake, is valued at cost under noncurrent financial assets.

Apart from directly or indirectly controlled companies, WACKER consolidates one structured entity where its influence amounts to control as defined in IFRS 10. This is a special trust to which Wacker Chemie AG has contributed funds. This trust fund was established exclusively for WACKER, and all shares in the fund are held by WACKER. Contractual provisions of this fund qualify it as a structured entity as defined in IFRS 10.

Legal, contractual or regulatory restrictions and protective rights concerning non-controlling interests can limit the Group in its ability to retain access to assets, transfer these to or from other companies unhindered within the Group and to settle Group debts. The distribution of dividends can be limited by the prioritization of retirement of shareholder loans. At the reporting date, there were no significant restrictions due to protective rights to the benefit of non-controlling interests. For more information, please refer to Note 12 (Equity /Non-Controlling Interests /Capital Structure Management).

In certain countries, regulatory requirements or local corporate-law stipulations can limit the Group’s ability to transfer assets to or from other companies within the Group. Cash and cash equivalents are subject to local foreign-exchange restrictions in some Asian and South American countries. Capital may be exported from such countries only with prior approval from government authorities and by means of capital measures (dividends, capital reductions). There are no other significant limitations on assets utility within the Group.