5. Changes in the Scope of Consolidation

5.1. Scope of Consolidation and Investments

As of December 31, 2018, the scope of consolidation comprised Covestro AG and 49 (previous year: 49) consolidated companies.

The Covestro Group holds 100% of the voting rights in the fully consolidated subsidiary Bayer Pearl Polyurethane Systems L.L.C, Dubai (United Arab Emirates), pursuant to a contractual agreement with the noncontrolling stockholders.

Pure Salt Baytown LLC, Houston (United States), (Pure Salt LLC) is included as a structured entity. The Covestro Group obtains all the evaporated salt needed for its production operations at Baytown (United States), from Pure Salt LLC. This comprises most of that company’s production capacity. The variable and fixed costs of Pure Salt LLC are reimbursed by Covestro in accordance with a contractually agreed mechanism. Moreover, the Covestro Group is obliged to finance one-time operating expenses and guarantees the liabilities of Pure Salt LLC to banks. As of December 31, 2018, guaranteed liabilities amounted to €1 million (previous year: €6 million). Pure Salt LLC is dependent to a high degree on Covestro (e.g. through approval requirements), which means that Covestro can indirectly enforce its interests in respect of this company.

As in the previous year, the scope of consolidation as of December 31, 2018, included the joint operation LyondellBasell Covestro Manufacturing Maasvlakte V.O.F, Rotterdam (Netherlands). Pursuant to 11 (Joint Arrangements), Covestro’s shares of this company’s assets, liabilities, revenues and expenses are included in the consolidated financial statements in accordance with Covestro’s rights and obligations. The main purpose of LyondellBasell Covestro Manufacturing Maasvlakte V.O.F is the joint production of (PO) for Covestro and its partner Lyondell.

Additionally, two (previous year: two) associated companies and one (previous year: one) joint venture are accounted for in the consolidated financial statements using the equity method.

Five (previous year: six) subsidiaries and one (previous year: one) associated company that in aggregate are immaterial to the Covestro Group’s net assets, financial position and results of operations are not consolidated but recognized at cost. The immaterial subsidiaries each accounted for no more than 0.1% of Group sales, equity or total assets.

The consolidated financial statements of Covestro are submitted to the operator of the Federal Gazette (Bundesanzeiger).

Details of subsidiaries and affiliated companies pursuant to Section 313 of the (HGB) are shown in the following tables. The first table shows fully consolidated companies:

Fully Consolidated Companies

 

 

 

 

 

Company name

 

Place of business

 

Covestro’s interest

 

 

 

 

%

1 Fully consolidated subsidiary pursuant to IFRS 10.B39

2 Fully consolidated structured entity according to IFRS 10.B8 in conjunction with B19 (b) and (c) and other substantial rights of Covestro

EMLA

 

 

 

 

Bayer Pearl Polyurethane Systems FZCO

 

Dubai (United Arab Emirates)

 

51

Bayer Pearl Polyurethane Systems L.L.C

 

Dubai (United Arab Emirates)

 

491

Covestro (France) SNC

 

Fos-sur-Mer (France)

 

100

Covestro (Slovakia) Services s.r.o.

 

Bratislava (Slovakia)

 

100

Covestro (Tielt) NV

 

Tielt (Belgium)

 

100

Covestro A/S

 

Otterup (Denmark)

 

100

Covestro B.V.

 

Foxhol (Netherlands)

 

100

Covestro Brunsbüttel Energie GmbH

 

Brunsbüttel (Germany)

 

100

Covestro Deutschland AG

 

Leverkusen (Germany)

 

100

Covestro Elastomers SAS

 

Romans-sur-Isère (France)

 

100

Covestro First Real Estate GmbH

 

Monheim (Germany)

 

100

Covestro GmbH

 

Leverkusen (Germany)

 

100

Covestro Indústria e Comércio de Polímeros Ltda.

 

São Paulo (Brazil)

 

100

Covestro International SA

 

Fribourg (Switzerland)

 

100

Covestro NV

 

Antwerp (Belgium)

 

100

Covestro Oldenburg GmbH & Co. KG

 

Oldenburg (Germany)

 

100

Covestro Polyurethanes B.V.

 

Nieuwegein (Netherlands)

 

100

Covestro S.p.A.

 

Milan (Italy)

 

99

Covestro S.r.l.

 

Milan (Italy)

 

100

Covestro Second Real Estate GmbH

 

Monheim (Germany)

 

100

Covestro Thermoplast Composite GmbH

 

Markt Bibart (Germany)

 

100

Covestro UK Limited

 

Cheadle (United Kingdom)

 

100

Covestro, S.L.

 

La Canonja (Spain)

 

100

Epurex Films GmbH & Co. KG

 

Bomlitz (Germany)

 

100

MS Global AG

 

Köniz (Switzerland)

 

100

MS Holding B.V.

 

Nieuwegein (Netherlands)

 

100

OOO Covestro

 

Moscow (Russia)

 

100

NAFTA

 

 

 

 

Covestro International Trade Services Corp.

 

Wilmington (United States)

 

100

Covestro LLC

 

Pittsburgh (United States)

 

100

Covestro PO LLC

 

New Martinsville (United States)

 

100

Covestro S.A. de C.V.

 

Mexico City (Mexico)

 

100

Pure Salt Baytown LLC

 

Houston (United States)

 

02

APAC

 

 

 

 

Covestro (Hong Kong) Limited

 

Hong Kong (China)

 

100

Covestro (India) Private Limited

 

Thane (India)

 

100

Covestro (Shanghai) Management Co., Ltd.

 

Shanghai (China)

 

100

Covestro (Taiwan) Ltd.

 

Kaohsiung City (Taiwan)

 

95.5

Covestro (Thailand) Co., Ltd.

 

Bangkok (Thailand)

 

100

Covestro (Viet Nam) Company Limited

 

Ho Chi Minh City (Vietnam)

 

100

Covestro Far East (Hong Kong) Limited

 

Hong Kong (China)

 

100

Covestro Japan Ltd.

 

Tokyo (Japan)

 

100

Covestro Korea Corporation

 

Seoul (South Korea)

 

100

Covestro Polymers (China) Co., Ltd.

 

Shanghai (China)

 

100

Covestro Polymers (Qingdao) Co., Ltd.

 

Qingdao (China)

 

100

Covestro Polymers (Shenzhen) Co., Ltd.

 

Shenzhen (China)

 

100

Covestro Pty Ltd

 

Cheltenham (Australia)

 

100

Guangzhou Covestro Polymers Co., Ltd.

 

Guangzhou (China)

 

100

PT Covestro Polymers Indonesia

 

Jakarta (Indonesia)

 

99.9

Sumika Covestro Urethane Company, Ltd.

 

Amagasaki (Japan)

 

60

The following joint operation was included in the consolidated financial statements in line with Covestro‘s shares of its assets, liabilities, revenues and expenses:

Joint Operation

 

 

 

 

 

Company name

 

Place of business

 

Covestro’s interest

 

 

 

 

%

LyondellBasell Covestro Manufacturing Maasvlakte V.O.F

 

Rotterdam (Netherlands)

 

50

The following associated companies and joint ventures are accounted for in the consolidated financial statements using the equity method:

Associates and Joint Ventures Accounted for Using the Equity Method

 

 

 

 

 

Company name

 

Place of business

 

Covestro’s interest

 

 

 

 

%

Associates

 

 

 

 

Paltough Industries (1998) Ltd.

 

Kibbuz Ramat Yochanan (Israel)

 

25

PO JV, LP

 

Wilmington (United States)

 

39.4

Joint ventures

 

 

 

 

DIC Covestro Polymer Ltd.

 

Tokyo (Japan)

 

50

The following subsidiaries were reflected in the consolidated financial statements at amortized cost due to their immateriality:

Immaterial Subsidiaries

 

 

 

 

 

Company name

 

Place of business

 

Covestro’s interest

 

 

 

 

%

Asellion B.V.

 

Amsterdam (Netherlands)

 

100

Covestro Polímer Anoním Şírketí

 

Istanbul (Turkey)

 

100

Covestro Polymers (Tianjin) Co., Ltd.

 

Tianjin (China)

 

100

Covestro Verwaltungs GmbH Oldenburg

 

Oldenburg (Germany)

 

100

Epurex Films Geschäftsführungs-GmbH

 

Bomlitz (Germany)

 

100

The following associated company was accounted for in the consolidated financial statements at cost due to its immateriality:

Immaterial Associate

 

 

 

 

 

Company name

 

Place of business

 

Covestro’s interest

 

 

 

 

%

Technology JV, L.P.

 

Wilmington (United States)

 

33.3

The following domestic subsidiaries availed themselves in fiscal 2018 of certain exemptions granted under Section 264, Paragraph 3 or Section 264b of the German Commercial Code (HGB) regarding the preparation, auditing and publication of financial statements:

German Exempt Subsidiaries

 

 

 

 

 

Company name

 

Place of business

 

Covestro’s interest

 

 

 

 

%

Covestro GmbH

 

Leverkusen (Germany)

 

100

Covestro Oldenburg GmbH & Co. KG

 

Oldenburg (Germany)

 

100

Epurex Films GmbH & Co. KG

 

Bomlitz (Germany)

 

100

5.2 Acquisitions and Divestitures

Acquisitions

No material acquisitions were made in fiscal 2018.

Divestitures

On August 1, 2018, Covestro finalized an asset deal under the Polycarbonates segment to divest the assets and liabilities (disposal group) of the United States sheet business to Plaskolite LLC, Columbus, OH (United States), for a selling price of €62 million. Production-related assets and inventories of €29 million as well as liabilities amounting to €3 million were transferred to the buyer. The gain on the disposal of this business totaling €36 million was recognized in other operating result.

IFRSs/International Financial Reporting Standards
International accounting standards as endorsed by the European Union
PO/propylene oxide
A chemical compound from the class of epoxies used in the production of polyurethanes
HGB/German Commercial Code
Comprises much of the German accounting legislation