11 – Noncurrent Assets

Additions to property, plant and equipment were mainly due to investment projects. As well as the expansion of the vitamin A plant in Ludwigshafen, Germany, these included construction and expansion projects and modernization measures, in particular at the sites in Ludwigshafen, Germany; Antwerp, Belgium; Shanghai, China; Geismar, Louisiana; and Freeport, Texas.

In addition, the acquisition of Solvay’s global polyamide business added property, plant and equipment in the amount of €434 million and intangible assets in the amount to €768 million.

As well as depreciation, the item additions to depreciation and amortization on property, plant and equipment included, in particular, discontinued investments in North America.

Currency effects were primarily due to the depreciation of the Brazilian real against the euro.

In the first half of 2019, additions to non-integral investments accounted for using the equity method related to the shareholding in Wintershall Dea GmbH, Kassel/Hamburg, Germany, in the amount of €14,078 million and in Solenis UK International Ltd., London, United Kingdom, in the amount of €590 million.

Disposals in the first half of 2020 related to capital decreases at the integral equity-accounted shareholding in BASF Sonatrach PropanChem, S.A., Tarragona, Spain (minus €5 million) and at the non-integral shareholding in Solenis UK International Ltd. (minus €11 million). In the first half of 2019, disposals related to a capital decrease in the amount of €871 million at the non-integral equity-accounted shareholding in Wintershall Dea GmbH and the sale of the integral equity-accounted shareholding in Synvina C.V., Amsterdam, Netherlands.

Transfers in the first half of 2020 amounted to minus €1,078 million and included the income after taxes, dividend distributions, other comprehensive income and impairments of the investments accounted for using the equity method. Transfers at non-integral shareholdings mainly related to an impairment of the shareholding in Wintershall Dea GmbH in the amount of €819 million as a result of updated oil and gas price forecasts and changed reserve estimates. As part of the impairment test, the expected cash flows in euros from the exploration and production assets held by Wintershall Dea were updated and discounted. This assumed an oil price of $43 per bbl of Brent crude in 2021 that rises to a nominal $62 per bbl by 2023 and then develops in line with cost increases. The development of gas prices assumed a price of $3.8 per mmbtu (TTF) for 2021 that rises to a nominal $7.7 per mmbtu in 2025 and then follows the expected cost trend. The expected cash flows were discounted using the country-specific cost of capital rates, which reflect the relevant country risks and tax rates. The cost of capital rates in euros, calculated using the capital asset pricing model, were between 5.9% and 11.2% after taxes. This corresponds to cost of capital rates before taxes of between 8.6% and 32%. An increase in the cost of capital rate of one percentage point would lead to an additional impairment of around €1.2 billion. All other assumptions remaining the same, the effect would be approximately twice as high in the case of a 10% decrease in price assumptions over the entire planning period.

In the first half of 2020, currency effects reduced the carrying amount of investments accounted for using the equity method by €171 million. This mainly affected the non-integral shareholdings in Wintershall Dea GmbH (minus €88 million) and Solenis UK International Ltd. (minus €47 million).