Scope of Consolidation

Changes in the Scope of Consolidation

As of September 30, 2021, the scope of consolidation comprised Covestro AG and 68 (December 31, 2020: 47) consolidated companies.

In the third quarter of 2021, the number of consolidated companies was down due to the sale of Pearl Polyurethane Systems FZCO, Dubai (United Arab Emirates), and Pearl Polyurethane Systems L.L.C, Dubai (United Arab Emirates), as part of completion of the sale of the polyurethane systems house business in the Middle East. In addition, Asellion B.V., Amsterdam (Netherlands); DSM NeoResins Holdings B.V., Waalwijk (Netherlands); and DSM Resins Holding (Netherlands) B.V., Zwolle (Netherlands), merged with Covestro (Netherlands) B.V., Nieuwegein (Netherlands), and Healthy Nest Inc., Wilmington, Delaware (USA) merged with Covestro LLC, Pittsburgh, Pennsylvania (USA).

The changes in the scope of consolidation in the first half of fiscal 2021 are described in note 4.1 “Changes in the Scope of Consolidation” in the Half-Year Financial Report 2021.

Acquisitions and Divestitures

Acquisitions

No reportable acquisitions were made in the third quarter of 2021. There were no significant developments to report in the third quarter regarding the acquisition of the Resins & Functional Materials business (RFM) from Koninklijke DSM N.V., Heerlen (Netherlands).

Divestitures

On July 26, 2021, Covestro successfully completed the sale of the assets and liabilities (disposal group) of the system house business in the Middle East to the former co-shareholder Pearl Industries Overseas Ltd., Dubai (United Arab Emirates). The sale of this systems house business is part of Covestro’s portfolio optimization process, during the course of which Covestro sold the only North American systems house in April 2017 and the European systems house business in November 2019. The systems house business was part of the Solutions & Specialties segment and offers customer-specific polyurethane systems to the construction sector in particular. The transaction was structured as a share deal. The selling price expected in the fourth quarter of 2020 was lower than the value of the net assets to be sold, which were written down accordingly. Impairment charges led to a loss totaling €16 million reported in manufacturing costs, selling expenses, and general administration expenses in fiscal 2020. In connection with this disposal, current assets amounting to €55 million and liabilities of €22 million were sold. The loss of €1 million on the disposal was recognized in the other operating result and led to an insignificant negative effect on earnings due to impairment charges on the assets in the previous year.

On July 31, 2021, the sale of assets (disposal group) in Taoyuan (Taiwan) to Evermore Chemical Industry Co. Ltd., Nantou (Taiwan), was completed successfully. These were part of the RFM acquisition and therefore attributable to the Solutions & Specialties segment. Production-related assets totaling €12 million were sold. Inventories, which are measured separately, were also transferred. The loss of €1 million on the disposal was recognized in the other operating result and led to an insignificant negative effect on earnings due to remeasurement of the purchase price allocation.