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Structure of the statement of financial position

As of June 30, 2012, the LANXESS Group had total assets of €7,016 million, up €138 million, or 2.0%, from €6,878 million on December 31, 2011. The main reason for the increase was the growth in net working capital.

Non-current assets rose during the first half-year by €40 million to €3,529 million. The intangible assets and property, plant and equipment included in this figure increased by €58 million to €3,110 million. Cash outflows for purchases of property, plant, equipment and intangible assets, at €229 million, were well above the prior-year figure of €177 million on account of the deliberate growth strategy. Depreciation and amortization in the first half totaled €181 million, compared with €150 million in the prior-year period. The first-time consolidation of Tire Curing Bladders, LLC, Little Rock, United States, which was acquired in the first quarter of 2012, led to additions in the single-digit million range. The increase in the carrying amount of investments accounted for using the equity method was chiefly attributable to the positive earnings of Currenta GmbH & Co. OHG in the first half of 2012. The change in investments in other affiliated companies was partly due to the purchase of a strategic minority interest in BioAmber, Inc., Minneapolis, United States, in the first quarter of 2012 and the mark-to-market valuation of the interest in Gevo Inc., United States, in light of the recent development of its share price. The ratio of non-current assets to total assets was 50.3%, down slightly from 50.7% on December 31, 2011.

Current assets amounted to €3,487 million, up €98 million, or 2.9%, from December 31, 2011. Inventories rose by €202 million to €1,588 million, largely because of a business-driven inventory build-up and preparations for maintenance shutdowns. Trade receivables were also distinctly higher, rising by €184 million from year end 2011 to €1,330 million due to the growth in business. The balance of cash and cash equivalents and near-cash assets decreased by €294 million to €234 million, largely as a result of the scheduled redemption of the Euro Benchmark Bond issued in 2005. The ratio of current assets to total assets was 49.7% against 49.3% as of December 31, 2011.

The LANXESS Group has significant internally generated intangible assets that are not reflected in the statement of financial position due to accounting rules. These include the brand equity of LANXESS and the value of the Group’s other brands. A variety of measures were deployed in the reporting period to continually enhance these assets. These measures contributed to the continued success in positioning the business units in the market.

Our established relationships with customers and suppliers also constitute a significant intangible asset, which cannot, however, be reflected in the statement of financial position. These long-standing partnerships with customers and suppliers, built on trust and consistently high product quality, enable us to firmly adhere to our price-before-volume strategy. Our specific competence in technology and innovation, also a valuable asset, is rooted in our specific knowledge in the areas of research and development and custom manufacturing. It enables us to generate significant added value for our customers.

Our commercial success is also founded on the knowledge and experience of our employees. In addition, we have sophisticated production and business processes that create competitive advantages for us in the relevant markets.

Equity rose by €185 million, or 8.9%, compared with December 31, 2011, to €2,259 million, predominantly due to the net income of €369 million for the first half of the year. The principal offsetting items were negative effects in other equity components from the measurement of pension obligations. The ratio of equity to the Group’s total assets was 32.2% as of June 30, 2012, against 30.2% as of December 31, 2011.

Non-current liabilities grew by €356 million to €3,071 million as of June 30, 2012. In addition to the three-year CNH 500 million (roughly €60 million) Chinese off-shore renminbi bond that we placed in the first quarter of 2012, we issued two further bonds with a volume of €100 million each and maturities of 10 and 15 years, respectively. The main reason for the €120 million increase in pension provisions to €799 million was the change in the discount rates used for measurement due to the fall in market rates of interest . The ratio of non-current liabilities to total assets was 43.8%, against 39.5% as of December 31, 2011.

Current liabilities came to €1,686 million, down by €403 million, or 19.3%, from December 31, 2011. The decrease resulted mainly from the scheduled redemption of the Euro Benchmark Bond issued in 2005. Current income tax liabilities showed a business-related increase. Trade payables declined. The ratio of current liabilities to total assets was 24.0% as of June 30, 2012, against 30.3% as of year end 2011.

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