BASF SE
Financial Statements 2023
Contents
The Management's Report of BASF SE has been combined with the Management's Report of the BASF Group and is published in the BASF Report 2023. The Financial Statements and Combined Management's Report of the BASF Group and BASF SE for the 2023 fiscal year will be submitted to the body maintaining the company register and are available on the company register website.
Financial Statements of BASF SE | 1 | |||||||||||||||||||||||||||||||||||||
Statement of Income | 1 | |||||||||||||||||||||||||||||||||||||
Balance Sheet | 2 | |||||||||||||||||||||||||||||||||||||
Notes | 3 | |||||||||||||||||||||||||||||||||||||
Summary of accounting policies | 3 | |||||||||||||||||||||||||||||||||||||
1 | - | Accounting and valuation methods | 3 | |||||||||||||||||||||||||||||||||||
2 | - | Sales revenue | 6 | |||||||||||||||||||||||||||||||||||
3 | - | Other operating income | 6 | |||||||||||||||||||||||||||||||||||
4 | - | Other operating expenses | 6 | |||||||||||||||||||||||||||||||||||
5 | - | Financial result | 7 | |||||||||||||||||||||||||||||||||||
6 | - | Income taxes | 8 | |||||||||||||||||||||||||||||||||||
7 | - | Other disclosures | 9 | |||||||||||||||||||||||||||||||||||
8 | - | Intangible assets | 10 | |||||||||||||||||||||||||||||||||||
9 | - | Property, plant and equipment | 11 | |||||||||||||||||||||||||||||||||||
10 - | Financial assets | 12 | ||||||||||||||||||||||||||||||||||||
11 - | Inventories | 13 | ||||||||||||||||||||||||||||||||||||
12 - | Receivables and other assets | 13 | ||||||||||||||||||||||||||||||||||||
13 - | Cash and cash equivalents | 13 | ||||||||||||||||||||||||||||||||||||
14 - | Prepaid expenses | 14 | ||||||||||||||||||||||||||||||||||||
15 - | Subscribed capital | 14 | ||||||||||||||||||||||||||||||||||||
16 - | Retained earnings and retained profits | 15 | ||||||||||||||||||||||||||||||||||||
17 - | Provisions for pensions and similar obligations | 16 | ||||||||||||||||||||||||||||||||||||
18 - | Other provisions | 16 | ||||||||||||||||||||||||||||||||||||
19 - | Liabilities | 17 | ||||||||||||||||||||||||||||||||||||
20 - | Shares in investment assets | 18 | ||||||||||||||||||||||||||||||||||||
21 - | Contingent liabilities and other financial obligations | 19 | ||||||||||||||||||||||||||||||||||||
22 - | Related party transactions | 20 | ||||||||||||||||||||||||||||||||||||
23 - | Derivative instruments | 20 | ||||||||||||||||||||||||||||||||||||
24 - | Services provided by the external auditor | 22 | ||||||||||||||||||||||||||||||||||||
25 - | Events after the reporting period | 22 | ||||||||||||||||||||||||||||||||||||
26 - | Management and supervisory boards | 23 | ||||||||||||||||||||||||||||||||||||
27 - | BASF SE list of shares held 2023 pursuant to section 285 No. 11, 11a and 11b of the German Commercial Code | 27 |
Declaration of the Board of Executive Directors and Assurance Pursuant to Sections 264(2) and 289(1) of the German Commercial
Code (HGB) | 43 | ||
Independent Auditor's Report | 44 |
Note:
Individual values in this report may not add up to the totals presented and percentages may not add up exactly to the values presented due to rounding.
1
Financial Statements of BASF SE
Statement of Income
Statement of income
Million € | |||||
Explanations in Note | 2023 | 2022 | |||
Sales revenue | (2) | 22,832 | 30,558 | ||
Cost of sales | 20,070 | 27,524 | |||
Gross profit on sales | 2,762 | 3,034 | |||
Selling expenses | 1,807 | 2,217 | |||
General administrative expenses | 497 | 618 | |||
Research and development expenses | 1,238 | 1,458 | |||
Other operating income | (3) | 247 | 274 | ||
Other operating expenses | (4) | 1,531 | 1,011 | ||
Income from operations | -2,064 | -1,996 | |||
Income from shareholdings | 9,801 | 7,205 | |||
Interest result | 30 | -832 | |||
Other financial result | 78 | 176 | |||
Financial result | (5) | 9,909 | 6,549 | ||
Income before income taxes | 7,845 | 4,553 | |||
Income taxes | (6) | 411 | 704 | ||
Net income | 7,434 | 3,849 | |||
BASF SE Financial Statements 2023
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Balance Sheet
Assets
Million € | |||||
Explanations in Note | December 31, 2023 | December 31, 2022 | |||
Intangible assets | (8) | 1,159 | 1,652 | ||
Property, plant and equipment | (9) | 3,403 | 3,365 | ||
Financial assets | (10) | 22,878 | 22,643 | ||
Fixed assets | 27,440 | 27,660 | |||
Inventories | (11) | 2,913 | 3,197 | ||
Accounts receivable, trade | 796 | 1,142 | |||
Receivables from affiliated companies | 23,636 | 28,441 | |||
Miscellaneous receivables and other assets | 657 | 966 | |||
Receivables and other assets | (12) | 25,089 | 30,549 | ||
Marketable securities | - | 197 | |||
Cash at banks and on hand | 1,160 | 183 | |||
Cash and cash equivalents | (13) | 1,160 | 380 | ||
Current assets | 29,162 | 34,126 | |||
Prepaid expenses | (14) | 144 | 156 | ||
Deferred tax assets | (6) | 287 | 695 | ||
Total assets | 57,033 | 62,637 | |||
Equity and liabilities
Million € | |||||
Explanations in Note | December 31, 2023 | December 31, 2022 | |||
Subscribed capital | (15) | 1,142 | 1,144 | ||
Capital reserve | 3,172 | 3,170 | |||
Retained earnings | (16) | 12,144 | 11,399 | ||
Retained profits | (16) | 7,434 | 3,849 |
Equity | 23,892 | 19,562 | |||
Special reserves | 52 | 54 | |||
Provisions for pensions and similar obligations | (17) | 1,294 | 1,386 | ||
Provisions for taxes | 218 | 165 | |||
Other provisions | (18) | 1,341 | 1,601 | ||
Provisions | 2,853 | 3,152 | |||
Financial indebtedness | 17,360 | 17,247 | |||
Accounts payable, trade | 1,078 | 1,469 | |||
Liabilities to affiliated companies | 10,913 | 20,027 | |||
Miscellaneous liabilities | 650 | 882 | |||
Liabilities | (19) | 30,001 | 39,625 | ||
Prepaid expenses | 235 | 244 | |||
Total equity and liabilities | 57,033 | 62,637 | |||
BASF SE Financial Statements 2023
3
Notes
Summary of accounting policies
BASF SE, headquartered in Ludwigshafen am Rhein, Germany, is registered at the Ludwigshafen district trade register (Amtsgericht) under the number HRB 6000.
The Financial Statements of BASF SE are prepared in accordance with section 61 of the Council Regulation (EC) No 2157/2001 of October 8, 2001, on the Statute for a European company (SE) and the applicable regulations for public limited-liability companies in the Member State in which it has its registered office, i.e., in accordance with the accounting regulations for the fiscal year ending December 31, 2023, in particular the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). The Consolidated Financial Statements of the BASF Group, however, take into account the Financial Statements of BASF SE, which are prepared in accordance with International Financial Reporting Standards (IFRS). The Management's Report of BASF SE has been combined with the Management's Report of the BASF Group for the first time for the 2023 fiscal year in accordance with section 315(5) in conjunction with section 298(2) sentence 2 of the German Commercial Code (HGB).
On February 19, 2024, the Board of Executive Directors prepared the Consolidated Financial Statements, submitted them to the Supervisory Board for review and approval, and released them for publication.
1 - Accounting and valuation methods
Revenue recognition: Revenues from goods or services are recognized upon the transfer of benefits and risks to the buyer or when the services are rendered. Allowances are made for rebates and other trade discounts. Provisions are recognized to cover probable risks from the return of products, future warranty obligations and other claims, taking into account the individual circumstances.
Intangible assets: These are valued at cost less straight-line amortization. In 2023, the weighted average amortization period was 12 years and was based on the following useful lives:
2023 | 2022 | |||
Goodwill | 10 years | 10 years | ||
Software | 5 years | 5 years |
useful lives. Additions that cost more than €250 but not more than €800 are depreciated immediately in the year of purchase. Items that cost less than €250 are recognized directly as expenses. Movable depreciable fixed assets that are functionally integrated are treated as a single asset item.
The cost of self-constructed plants includes direct costs, appropriate allocations of material and manufacturing costs, depreciation of fixed assets provided this is necessitated by production, and a share of the general and administrative costs of the divisions associated with the construction of the plants. Financing costs, costs for social services, costs for voluntary social benefits and pension costs are not capitalized.
Patents, licenses, know-how, other rights | 14 years | 14 years | ||
The useful lives of individual goodwill items are determined by the expected economic use of the acquired businesses or are based on expert opinions of the useful lives of patents, licenses, know-how and other rights purchased as part of the acquisition.
Write-downs are recognized if impairment is expected to be permanent. If the reason for the impairment no longer exists in subsequent years, the impairment is reversed up to an amount that may not exceed the amortized cost. For goodwill, the lower carrying amount is retained.
BASF SE does not make use of the optional right to capitalize internally generated intangible assets forming part of fixed assets.
Property, plant and equipment: These are measured at acquisition or production cost less depreciation over their estimated
Both movable and immovable fixed assets are depreciated using the straight-line method. Declining-balance depreciation of additions from previous years is continued. For declining-balance depreciation, a systematic transition to straight-line depreciation takes place if this results in higher depreciation amounts.
The weighted average depreciation periods were as follows:
2023 | 2022 | |||
Buildings and structural installations | 25 years | 25 years | ||
Machinery and technical equipment | 10 years | 10 years | ||
Factory and office equipment and other | 10 years | 10 years | ||
facilities | ||||
Write-downs to the lower fair value are recognized if impairment is expected to be permanent. If the reason for the impairment no longer exists in subsequent years, the impairment is reversed up to an amount that may not exceed the amortized cost.
BASF SE Financial Statements 2023
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Financial assets: In accordance with the principle of individual valuation, shareholdings and loans are carried at cost. Interest- bearing loans are recognized at cost; loans bearing no interest or below market interest rates are recognized at present value. In the case of permanent impairment, existing risks are recognized through an impairment loss based on a lower estimated fair value of the loan and shareholding. If the reason for the impairment no longer exists in subsequent years, the impairment is reversed up to an amount that may not exceed the acquisition cost.
Financial activities are shown in the statement of income under income from shareholdings, interest result and other financial result.
Inventories: Inventories are carried at cost. They are recognized at quoted, market or fair values if these are lower than cost. For raw materials and factory supplies, fair values constitute the replacement costs. Merchandise is recognized at the expected sales proceeds less costs to be incurred prior to sale or lower replacement costs. Work in process and finished goods are recognized at the expected sales proceeds less costs to be incurred prior to sale or lower reproduction cost. The acquisition or production costs of raw materials as well as work in process, finished goods and merchandise are determined by the last-in,first-out (LIFO) method. Factory supplies are carried predominantly at average cost. To cover storage risks, valuations are adjusted downward based on coverage and turnover analyses.
In addition to direct costs, production costs include an appropriate allocation of overhead production costs - including the general administrative expenses of each production unit - using normal capacity utilization rates for the production plants. Furthermore, depreciation of fixed assets is reported in cost of sales provided this is necessitated by production. Financing costs, social services, voluntary social benefits and pensions are not included in production costs.
Construction in progress pertains especially to chemical plants under construction for BASF Group companies. Profits are recognized upon the final invoicing of a project or the invoicing of part of a project. Expected losses are recognized by write-downs to the lower fair values.
Advance payments on inventories are measured at cost.
Receivables and other assets: These are generally carried at their nominal value. Loan receivables generating no or low interest are discounted to their present values. For risks of collectability, country- specific risks and general credit risks, appropriate valuation allowances and write-downs are carried out to take into account lower fair values. Valuation allowances on trade accounts receivable are recognized using customer-specific discount rates calculated by BASF, which are linked to a percentage rate for probability of default and country-specific risk.
Cash and cash equivalents: This item includes marketable securities, cash at banks and cash on hand. Marketable securities are measured at cost. They are recognized at quoted, market or fair values if these are lower than cost. Cash on hand and bank balances are measured at nominal costs.
Deferred taxes: Deferred taxes are recorded for temporary differences between the carrying amount of assets and liabilities in the financial statements and the carrying amounts for tax purposes. Deferred tax assets are recognized if the net temporary difference is an asset balance that is expected to be recovered in future years. Additionally, deferred taxes from tax group companies of BASF SE are recognized in the Financial Statements of BASF SE. Furthermore, deferred taxes for tax loss carryforwards are recognized if it is expected that they will be used within the next five years.
Offsetting of assets as well as income and expenses: Assets that cannot be accessed by any other creditors and that only serve to meet debts allocated to these assets arising from obligations related to pensions and working-timeaccounts are measured at fair value and offset with these debts.
The fair value of the plan assets generally corresponds to the market price. If there is no active market, the fair value is calculated using generally recognized measurement methods. The measurement methods should determine a fair value that reasonably approximates a market price that would have prevailed between independent business partners under normal business conditions. Should a reliable determination of fair value not be possible using recognized measurement methods, amortized cost is to be applied following the strict lower of cost or market principle. In the case of plan assets of working-time accounts, amortized cost corresponds to the budgeted actuarial reserves of the insurance contract plus irrevocably distributed profit shares.
If the obligation is found to exceed the plan assets, the remaining difference is reported under provisions. If the plan assets exceed the corresponding obligation, the difference is reported as an excess of plan assets over obligations.
For pensions and working-time accounts, income and expenses from plan assets are offset with the income and expenses of the corresponding obligation. These balances are reported under the interest result.
Special reserves: The special reserves were maintained pursuant to section 67(3) sentence 1 of the Introductory Law to the German Commercial Code (EGHGB), as these were established before the year in which the conversion to the provisions of the Act to Modernize Accounting Law (BilMoG) took place. This referred primarily to transmissions of revealed inner reserves in accordance with section 6b of the German Income Tax Act (EStG). Since January 1, 2010, no new special reserves have been established.
Provisions: Provisions for pensions are determined on the basis of actuarial assumptions made according to the internationally accepted projected unit credit method. The obligations are valued using assumptions regarding future pay and pension increases. The valuation is based on the 2018 G mortality tables by Prof. Dr. Klaus Heubeck, modified by the mortality and invalidity expectations for the BASF population. Age-dependent and gender-specific fluctuation probabilities are also used. In accordance with the German law on implementing the guideline for residential real estate mortgage loans and on amended commercial regulations, the discount rate is determined as the average market interest rate of the past 10 years as published by Deutsche Bundesbank, with an
BASF SE Financial Statements 2023
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assumed residual period of 15 years. The obligations as of December 31, 2023, were valued using a discount rate of 1.82% (previous year: 1.78%). Indirect pension obligations are not recognized as liabilities, pursuant to the optional right under section 28(1) sentence 2 EGHGB.
Provisions for taxes are determined for German trade income tax and German corporate income tax based on the expected trade earnings and the expected taxable corporate income.
Other provisions are recognized for the expected amounts of contingent liabilities and probable losses from pending transactions, as well as to cover omitted maintenance procedures as of the end of the year, which will be incurred within the first three months of the following year. The amounts provided are based on reasonable commercial judgment of the amount necessary to meet obligations, while taking into consideration expected future price and cost increases. Provisions with a maturity of more than one year are discounted in accordance with their maturity with the average market interest rate of the past seven business years, as published by Deutsche Bundesbank.
Provisions are established for environmental protection measures or risks if it is likely that the measures are necessary to comply with legal or regulatory obligations, provided these measures do not lead to costs that must be capitalized.
Provisions for recultivation obligations associated with the operation of landfill sites are built up in installments over the expected service lives.
Provisions for long-service bonuses are calculated based on actuarial principles corresponding to the projected unit credit method taking into account the rate of compensation increase and the adequate periodical interest rate pursuant to section 253(2) HGB.
The provisions for share price-based variable compensation (LTI program allocated until 2020) are measured at the fair values of existing options as of the balance sheet date. These are based on the arbitrage-free valuation model according to Black-Scholes. The amounts are accrued proportionally as provisions over the respective vesting period.
The provision for share price-based variable compensation in the form of a performance share plan (LTI program granted from 2020 onward) is measured at fair value and discounted in line with the remaining term in accordance with section 253(2) HGB.
Liabilities: Liabilities are recognized in the amount required for settlement.
Translation of foreign currency items: The cost of assets acquired in foreign currencies and revenues from sales in foreign currencies are recorded at the exchange rate on the date of the transaction.
Current foreign currency receivables and liabilities are valued at the average spot currency exchange rate on the balance sheet date. Noncurrent foreign currency receivables are recorded at the rate
prevailing on the acquisition date or at the rate on the balance sheet date if lower. Noncurrent foreign currency liabilities are recorded at the rate prevailing on the acquisition date or at the rate on the balance sheet date if higher. Foreign currency receivables or liabilities that are hedged are carried at hedge rates.
Derivative financial instruments: Derivative financial instruments are treated as pending transactions and are generally not recorded as assets or liabilities. The associated underlying transactions and derivatives are combined into valuation units. Profits from hedging transactions that cannot be attributed to a particular underlying transaction are only realized upon maturity. Unrealized losses from derivative financial instruments are recognized through profit or loss and included in provisions, provided they are not combined into valuation units and the unrealized losses are not offset by changes in value of the underlying transactions. The use of derivative financial instruments to hedge against foreign currency, interest rate, share price and other price risks is described in detail in Note 23 - Derivative instruments.
Use of estimates and assumptions in the preparation of the Financial Statements: The carrying amounts of assets, liabilities and provisions, contingent liabilities and other financial obligations in the Financial Statements depend on the use of estimates and assumptions. They are based on the circumstances and estimates on the balance sheet date and affect the reported amounts of income and expenses during the reporting periods. In the preparation of these Financial Statements, such estimates are used in the determination of the useful lives of property, plant and equipment and intangible assets, the measurement of provisions, the carrying amount of investments, deferred tax assets, and other similar evaluations of assets and obligations, among other things. Although uncertainty is properly incorporated into the valuation factors, actual results can differ from these estimates.
Customer facilities: The energy facilities operated by BASF SE to produce electricity and gas are customer facilities for internal supply in accordance with section 3 no. 24b of the German Energy Act (EnWG). BASF SE is therefore not subject to the regulations imposed upon grid operators by the EnWG.
BASF SE Financial Statements 2023
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2 - Sales revenue
Sales revenue by segment | Sales revenue by region | |||||||||
Million € | Million € | |||||||||
2023 | 2022 | 2023 | 2022 | |||||||
Chemicals | 5,194 | 7,934 | Europe | 16,258 | 22,016 | |||||
Materials | 3,720 | 6,019 | of which Germany | 5,876 | 8,032 | |||||
Industrial Solutions | 3,854 | 4,969 | North America | 2,038 | 2,875 | |||||
Surface Technologies | 641 | 608 | Asia Pacific | 2,637 | 3,228 | |||||
Nutrition & Care | 4,192 | 5,438 | South America, Africa, Middle East | 1,899 | 2,439 | |||||
Agricultural Solutions | 3,885 | 4,171 | 22,832 | 30,558 | ||||||
Other | 1,346 | 1,419 | ||||||||
22,832 | 30,558 | |||||||||
3 - Other operating income
Other operating income declined by €27 million year on year to €247 million. Out-of-period income amounted to €100 million (previous year: €151 million) and included income from the release of provisions of €41 million (previous year: €87 million) and reimbursements of costs for previous years in the amount of €23 million (previous year: €45 million). Furthermore, income from agreed compensation payments declined by €16 million compared
with the previous year to €2 million. Gains from foreign currency transactions amounted to €25 million (previous year: €26 million). By contrast, income from the sale of assets increased by €34 million compared with the previous year to €55 million. In addition, income from portfolio measures of €10 million (previous year: €1 million) was recognized.
4 - Other operating expenses
Other operating expenses rose by €520 million year on year to €1,531 million. Expenses for restructuring measures of €220 million (previous year: €68 million) were recognized in the reporting year in connection with the implementation of further strategic measures. Expenses for portfolio measures amounted to €73 million (previous year: €8 million). In addition, expenses from agreed cost transfers
from Group companies of €400 million (previous year: €4 million) were recognized. By contrast, losses from foreign currency transactions declined by €34 million to €41 million. There were no out-of-period expenses in the reporting year (previous year: €6 million).
BASF SE Financial Statements 2023
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5 - Financial result
Financial result
Million € | |||||
2023 | 2022 | ||||
Income from shareholdings and similar income | 5,955 | 692 | |||
of which from affiliated | companies | 5,891 | 574 | ||
Income from profit transfers | 3,908 | 6,602 | |||
Expenses from loss transfer agreements | 59 | 81 | |||
Write-downs of and losses from the disposal of shareholdings | 3 | 8 | |||
Income from shareholdings | 9,801 | 7,205 | |||
Income from other securities and the loan of financial assets | 6 | 3 | |||
of which from affiliated | companies | 1 | 1 | ||
Interest and similar income | 1,111 | 224 | |||
of which from affiliated | companies | 576 | 98 | ||
Interest and similar expenses | 1,087 | 1,059 | |||
of which to affiliated companies | 476 | 143 | |||
Interest result | 30 | -832 | |||
Write-downs of and losses from the disposal of loans and marketable securities | 14 | 2 | |||
Miscellaneous other financial result | 92 | 178 | |||
Other financial result | 78 | 176 | |||
Financial result | 9,909 | 6,549 | |||
The financial result rose by €3,360 million compared with the previous year to €9,909 million. Dividends totaling €4,807 million from a Dutch subsidiary of BASF SE, which mainly included retained earnings, led to an increase in net income from shareholdings. This was offset by lower profit transfers, which were influenced in particular by a lower distribution of retained earnings from a Belgian Group company.
The interest result contained the balance of income and expenses from plan assets for pensions and working-time accounts as offset against the income and expenses of the corresponding obligations. Interest expenses from pension-related obligations amounted to €92 million (previous year: €210 million) and income from pension plan assets amounted to €455 million (previous year: -€278 million). This led to a considerable increase in the interest result.
Expenses from the unwinding of the discount on other provisions amounted to €2 million (previous year: €6 million) and are included in interest and similar expenses.
The miscellaneous other financial result declined by €86 million to €92 million. The decline mainly resulted from individual impairments on receivables from cash pooling against Group companies and lower interest income on income taxes.
BASF SE Financial Statements 2023
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BASF SE published this content on 26 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2024 15:00:34 UTC.