Scope of Consolidation

The consolidated financial statements include the financial statements of Wacker Chemie AG and all companies over which Wacker Chemie AG has direct or indirect control as defined in IFRS 10, or can exercise joint control as defined in IFRS 11. Depending on their structure, companies over which Wacker Chemie AG can exercise joint control are included in the consolidated financial statements either proportionately (line-by-line) or are accounted for using the equity method. In the absence of other limiting contractual agreements, holding a majority of the voting rights usually leads to control. Joint control generally exists when voting rights are equally balanced, except if other (contractual) rights result in control by one shareholder. Currently, one company with joint control is consolidated using the equity method.

Associates in which Wacker Chemie AG can exercise significant influence as defined in IAS 28 are likewise accounted for using the equity method. Significant influence is presumed if Wacker Chemie AG directly or indirectly holds 20 percent of the voting rights in the investment, unless it can be clearly demonstrated that this is not the case.

Structured entities are also consolidated in the manner described in IFRS 10 if the economic substance of the relationship indicates the existence of control. WACKER includes one such structured entity, a special fund, in its consolidated financial statements. Wacker Chemie AG has contributed cash to this fund. The 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.

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.

A detailed list of the companies included in the consolidated financial statements and of Wacker Chemie AG’s entire shareholdings is shown in the Breakdown of Shareholdings section in accordance with Sections 285 and 313 of the German Commercial Code.

A total of 52 companies were included in the consolidated financial statements as of December 31, 2017 (Dec. 31, 2016: 60 companies). Compared with December 31, 2016, the scope of consolidation changed as follows:

Between January 24 and February 9, 2017, WACKER sold a total of 6 percent of the shares of Siltronic AG on the stock exchange. After this sale, the WACKER Group still held a stake of 51.8 percent in the Siltronic Group.

On March 15, 2017, WACKER reduced its stake in Siltronic AG from 51.8 percent to 30.8 percent by means of a bookbuilding offering to institutional investors. As WACKER had lost control of Siltronic, the segment was deconsolidated as of March 15, 2017. The remaining stake of 30.8 percent in the associate is accounted for using the equity method.

For further information on deconsolidation of the Siltronic Group and on disclosures in accordance with IFRS 5 Discontinued Operations, please refer to the Sale of Interests in Fiscal 2017 section in the Notes.

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, or to settle Group debts. The distribution of dividends can be limited by the need to prioritize 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 the Notes (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.