07 Investments in Joint Ventures and Associates Accounted for Using the Equity Method

The Group applies the equity method to account for joint ventures and associates. Since reduction of the company’s stake in Siltronic AG and deconsolidation of the latter as of March 15, 2017, the remaining share of 30.8 percent has been accounted for using the equity method. The Group considers its investment in Siltronic AG (and its subsidiaries) to be significant.

The Siltronic Group is one of the world’s leading producers of silicon wafers for the semiconductor industry. WACKER supplies Siltronic with polysilicon, the key base material for the production of silicon wafers.

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Significant Investments in Associates

Company’s name and registered office: Siltronic AG, Munich, Germany, and its subsidiaries	2018	2017

Ownership interest (%)	30.83	30.83
Proportion of voting rights (%)	30.83	30.83
Total non-controlling interests (shares)	9,250,000	9,250,000
Xetra closing price at year-end (€)	72.20	121.30
Market capitalization of shares (€ million)	667.9	1,122.0
Dividends received (€ million)	23.1	–

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Summarized Financial Information on Siltronic AG and Its Subsidiaries¹ on a 100-Percent Basis:

€ million

2018

2017

¹	Consolidated financial statements of the Siltronic sub-group in accordance with IFRS
²	Information based on figures for the period after March 15, 2017, due to first-time inclusion during the year

Ownership interest (%)

30.8

30.8

Current assets

1,078.9

706.0

Noncurrent assets excluding goodwill

1,174.3

1,037.1

Current liabilities

277.9

152.1

Noncurrent liabilities

736.8

578.3

Net assets (100 percent)

1,238.5

1,012.7

Less share of non-controlling interests

-41.2

-14.8

Group’s share of net assets

369.2

307.7

Effects of consolidation

1.7

1.3

Goodwill

245.7

245.7

Carrying amount of share in associate

616.6

554.7

Sales²

1,456.7

919.3

Group net income for the year²

323.2

130.5

Other comprehensive income²

-48.3

-12.4

Total²

274.9

118.1

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Reconciliation of the Equity Carrying Amount

€ million	2018	2017

Carrying amount of equity-accounted investments
At the beginning of the year	554.7	518.6
Share of profit / loss for the period	99.5	38.7
Other changes recognized in profit or loss	0.4	1.3
Change recognized in profit or loss	99.9	40.0
Dividends	-23.1	–
Change in other equity	-14.9	-3.9
At the end of the year	616.6	554.7

Taken individually, the remaining joint ventures and associates are immaterial for the Group’s earnings, net assets or financial position. The following table shows the reporting-period change in the total carrying amounts of investments:

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Summarized Pro Rata Financial Information for Joint Ventures That Are Immaterial Individually

€ million	2018	2017

Carrying amount of equity-accounted investments
At the beginning of the year	9.9	11.2
Share of profit / loss for the period	1.8	2.0
Share of change in other equity	-0.1	-0.6
Overall result of the companies	1.7	1.4
Dividends	–	-2.7
Change in the scope of consolidation	–	–
At the end of the year	11.6	9.9

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Summarized Pro Rata Financial Information for Associates That Are Immaterial Individually

€ million	2018	2017

Carrying amount of equity-accounted investments
At the beginning of the year	–	–
Share of profit / loss for the period	0.4	0.3
Share of change in other equity	0.1	-5.8
Overall result of the companies	0.5	-5.5
Impairment loss reversal of equity-accounted investments	29.6	–
Loss in excess of investment as per IAS 28.38	–	5.5
At the end of the year	30.1	–

If shareholders have granted loans to joint ventures or associates, the repayment of these generally takes priority over dividend distribution.

Deviations between the share of net income and the result from investments in joint ventures and associates, and between the share of equity and the carrying amount of investments in joint ventures and associates accounted for using the equity method, are primarily the result of fair value adjustments and consolidation measures.

In 2018, the carrying amount included the impairment loss reversal of the equity-accounted investment in the Chinese siloxane joint venture with DowDupont.

The following shows the key figures for companies accounted for using the equity method.

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€ million	2018		2017
	Total	Attributable to WACKER	Total	Attributable to WACKER

Key Figures for Joint Ventures
Profit or loss from continuing operations	3.6	1.8	4.0	2.0
Other comprehensive income	-0.2	-0.1	-1.2	-0.6
Total	3.4	1.7	2.8	1.4

Key Figures for Associates
Profit or loss from continuing operations	324.8	99.9	127.1	39.1
Other comprehensive income	-47.9	-14.8	-35.9	-9.7
Total	276.9	85.1	91.2	29.4

Silicon

After oxygen, silicon is the most common element in the earth’s crust. In nature, it occurs without exception in the form of compounds, chiefly silicon dioxide and silicates. Silicon is obtained through energy-intensive reaction of quartz sand with carbon and is the most important raw material in the electronics industry.

Polysilicon

Hyperpure polycrystalline silicon from WACKER POLYSILICON is used for manufacturing wafers for the electronics and solar industries. To produce it, metallurgical-grade silicon is converted into liquid trichlorosilane, highly distilled and deposited in hyperpure form at 1,000 ° C.

Siloxanes

Systematic name given to compounds comprising silicon atoms linked together via oxygen atoms and with the remaining valences occupied by hydrogen or organic groups. Siloxanes are the building blocks for the polymers (polysiloxane and polyorganosiloxane) that form silicones.