Investments Accounted for Using the Equity Method

Five (2017: four) associates and 10 (2017: eight) joint ventures were accounted for in the consolidated financial statements using the equity method. A list of these companies is available at www.bayer.com/shareownership2018.

The following table contains a summary of the aggregated income statement data and aggregated carrying amounts of the associates and joint ventures accounted for using the equity method (excluding the Covestro Group):

Earnings Data and Carrying Amounts of Companies Accounted for Using the Equity Method

 

 

Associates

 

Joint ventures

 

 

2017

2018

 

2017

2018

 

 

€ million

€ million

 

€ million

€ million

Income after income taxes

 

7

(2)

 

(48)

(75)

Other comprehensive income after income taxes

 

28

30

 

Total comprehensive income after income taxes

 

35

28

 

(48)

(75)

Share of income after income taxes

 

1

(1)

 

(32)

(34)

Share of total comprehensive income after income taxes

 

29

17

 

(32)

(34)

Carrying amount as of December 31

 

37

95

 

343

420

Information on the Covestro Group

The Covestro Group was deconsolidated at the end of the third quarter of 2017, and, in view of Bayer’s remaining significant influence, was then recognized for the first time as an associate and accounted for using the equity method. The equity-method carrying amount recognized at that time was €3.6 billion.

In the first quarter of 2018, Bayer sold 21.0 million shares of Covestro AG to institutional investors at a price of €86.25 per share. In the second quarter of 2018, Bayer sold a further 28.81 million shares of Covestro AG to institutional investors at a price of €75.50. In addition, 13.79 million shares of Covestro AG were acquired from Bayer Pension Trust e. V., which no longer holds any Covestro shares. Bayer AG now holds a 7.5% interest in Covestro to service the exchangeable bond issued in 2017 that matures in 2020. The total gain from the disposals in 2018 amounted to €304 million.

Through May 2018, the Covestro interest was accounted for in the Bayer Group consolidated financial statements as an associate using the equity method. The share disposals outlined in the previous paragraph led to the loss of significant influence on the financial and business policy decisions of Covestro. This in turn resulted in a change in the accounting method applied. Since May 2018, Bayer has reported the Covestro interest as an equity instrument, with changes in its fair value recognized through profit and loss.

In 2018, the equity-method income of the Covestro Group amounted to €103 million (2017: €51 million), while its carrying amount was €0 (2017: €3,627 million).

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