Financial Position of the Bayer Group

Bayer Group Summary Statements of Cash Flows

 

 

 

 

 

 

 

 

 

3rd Quarter 2014

3rd Quarter 2015

 

First Nine Months 2014

First Nine Months 2015

 

 

€ million

€ million

 

€ million

€ million

1

Gross cash flow = income after income taxes, plus income taxes, plus financial result, minus income taxes paid or accrued, plus depreciation, amortization and impairment losses, minus impairment loss reversals, plus / minus changes in pension provisions, minus gains / plus losses on retirements of noncurrent assets, minus gains from the remeasurement of already held assets in step acquisitions. The change in pension provisions includes the elimination of non-cash components of EBIT. It also contains benefit payments during the year.

Gross cash flow1

 

1,466

1,427

 

5,149

5,611

Changes in working capital / other non-cash items

 

315

879

 

(1,655)

(678)

Net cash provided by (used in) operating activities (net cash flow), continuing operations

 

1,781

2,306

 

3,494

4,933

Net cash provided by (used in) operating activities (net cash flow), discontinued operations

 

35

24

 

86

80

Net cash provided by (used in) operating activities (net cash flow) (total)

 

1,816

2,330

 

3,580

5,013

Net cash provided by (used in) investing activities (total)

 

(3,974)

(965)

 

(6,671)

(2,088)

Net cash provided by (used in) financing activities (total)

 

2,433

(2,162)

 

2,945

(2,238)

Change in cash and cash equivalents due to business activities

 

275

(797)

 

(146)

687

Cash and cash equivalents at beginning of period

 

1,228

3,247

 

1,662

1,853

Change due to exchange rate movements and to changes in scope of consolidation

 

177

(55)

 

164

(145)

Cash and cash equivalents at end of period

 

1,680

2,395

 

1,680

2,395

Operating Cash Flow

Gross cash flow from continuing operations in the third quarter of 2015 declined year on year to €1,427 million. The increase in earnings was partly offset by additional tax expenses connected with the carve-out of Covestro. Net cash flow (total) rose by 28.3% to €2,330 million due to a decrease in cash tied up in other working capital. Net cash flow (total) reflected income tax payments of €421 million (Q3 2014: €685 million).

Gross cash flow from continuing operations in the first nine months of 2015 advanced by 9.0% against the prior-year period to €5,611 million. Net cash flow (total) increased by a considerable 40.0% to €5,013 million due to a reduction in cash tied up in other working capital, reflecting income tax payments of €1,217 million (9M 2014: €1,420 million).

Investing Cash Flow

Net cash outflow for investing activities in the third quarter of 2015 amounted to €965 million. Disbursements for property, plant and equipment and intangible assets were 20.0% higher at €655 million (Q3 2014: €546 million). Of this amount, HealthCare accounted for €228 million (Q3 2014: €188 million), CropScience for €171 million (Q3 2014: €137 million) and Covestro for €128 million (Q3 2014: €134 million).

Net cash outflow for investing activities in the first nine months of 2015 totaled €2,088 million. Disbursements for property, plant and equipment and intangible assets were 11.8% higher at €1,601 million (9M 2014: €1,432 million). Of this amount, HealthCare accounted for €601 million (9M 2014: €514 million), CropScience for €416 million (9M 2014: €377 million) and Covestro for €352 million (9M 2014: €371 million). Cash outflows for noncurrent and current financial assets amounted to €584 million (9M 2014: €3,846 million).

Financing Cash Flow

In the third quarter of 2015, there was a net cash outflow of €2,162 million for financing activities, including net loan repayments of €1,938 million (Q3 2014: net borrowings of €2,579 million). Net interest payments were 52.4% higher at €221 million (Q3 2014: €145 million).

In the first nine months of 2015, there was a net cash outflow of €2,238 million for financing activities, including net borrowings of €88 million (9M 2014: €4,952 million). Net interest payments increased by 70.5% to €457 million (9M 2014: €268 million) due to higher borrowings for acquisitions in the fourth quarter of 2014.

Liquid Assets and Net Financial Debt

Net Financial Debt

 

 

 

 

 

 

 

 

 

Dec. 31, 2014

 

June 30, 2015

 

Sep. 30, 2015

 

 

€ million

 

€ million

 

€ million

1

Classified as debt according to IFRS

Bonds and notes / promissory notes

 

14,964

 

16,831

 

15,516

of which hybrid bonds1

 

4,552

 

5,824

 

4,525

Liabilities to banks

 

3,835

 

3,543

 

3,423

Liabilities under finance leases

 

441

 

458

 

470

Liabilities from derivatives

 

642

 

738

 

776

Other financial liabilities

 

1,976

 

3,278

 

2,583

Positive fair values of hedges of recorded transactions

 

(258)

 

(334)

 

(414)

Financial liabilities

 

21,600

 

24,514

 

22,354

Cash and cash equivalents

 

(1,853)

 

(3,247)

 

(2,395)

Current financial assets

 

(135)

 

(133)

 

(700)

Net financial debt

 

19,612

 

21,134

 

19,259

Net financial debt of the Bayer Group declined by 8.9%, from €21.1 billion on June 30, 2015, to €19.3 billion on September 30, 2015, due mainly to cash inflows from operating activities.

Financial debt included three subordinated hybrid bonds, which were reflected at a total amount of €4.5 billion. Net financial debt should be viewed against the fact that Moody’s and Standard & Poor’s treat 50% of the hybrid bonds with nominal volumes of €1.75 billion and €1.5 billion issued in July 2014 and of the hybrid bond with a nominal volume of €1.3 billion issued in April 2015 as equity. The hybrid bonds thus have a more limited effect on the Group’s rating-specific debt indicators than conventional borrowings. The other financial liabilities as of September 30, 2015, included commercial paper totaling €2.2 billion. Our noncurrent financial liabilities declined in the third quarter of 2015 from €17.2 billion to €16.7 billion. At the same time, current financial liabilities decreased from €7.7 billion to €6.0 billion.

Standard & Poor’s gives Bayer a long-term issuer rating of A– with stable outlook, while Moody’s gives us a long-term rating of A3 with stable outlook. The short-term ratings are A–2 (Standard & Poor’s) and P–2 (Moody’s). These investment-grade ratings document good creditworthiness.

Asset and Capital Structure

Bayer Group Summary Statements of Financial Position

 

 

 

 

 

 

 

 

 

Dec. 31, 2014

 

June 30, 2015

 

Sep. 30, 2015

 

 

€ million

 

€ million

 

€ million

Noncurrent assets

 

48,007

 

49,505

 

49,473

Current assets

 

22,227

 

25,975

 

24,819

Assets held for sale and discontinued operations

 

 

183

 

178

Total current assets

 

22,227

 

26,158

 

24,997

Total assets

 

70,234

 

75,663

 

74,470

 

 

 

 

 

 

 

Equity

 

20,218

 

22,466

 

22,580

Noncurrent liabilities

 

34,513

 

32,433

 

32,548

Current liabilities

 

15,503

 

20,650

 

19,231

Provisions and liabilities directly related to assets held for sale and discontinued operations

 

 

114

 

111

Total current liabilities

 

15,503

 

20,764

 

19,342

Liabilities

 

50,016

 

53,197

 

51,890

Total equity and liabilities

 

70,234

 

75,663

 

74,470

Total assets fell by €1.2 billion against June 30, 2015, to €74.5 billion. Noncurrent assets were level year on year at €49.5 billion. Total current assets moved back by €1.2 billion to €25.0 billion, mainly due to lower trade accounts receivable and cash disbursements that were only partly offset by the increase in other financial assets and other receivables.

Equity increased by €0.1 billion to €22.6 billion. Income after income taxes of €1.0 billion was offset by the €0.6 billion increase – recognized outside profit or loss – in post-employment benefit obligations and negative exchange differences of €0.4 billion. The equity ratio (equity coverage of total assets) as of September 30, 2015, was 30.3% (June 30, 2015: 29.7%).

Liabilities fell by €1.3 billion in the third quarter of 2015 to €51.9 billion. Provisions for pensions and other post-employment benefits rose by €0.5 billion and other provisions increased by €0.4 billion. The €2.1 billion decrease in financial liabilities resulted partly from the repayment of a hybrid bond issued in 2005 and the sale of commercial paper.

Net Defined Benefit Liability for Post-Employment Benefits

 

 

 

 

 

 

 

 

 

Dec. 31, 2014

 

June 30, 2015

 

Sep. 30, 2015

 

 

€ million

 

€ million

 

€ million

Provisions for pensions and other post-employment benefits

 

12,236

 

11,176

 

11,708

Net defined benefit asset

 

(41)

 

(43)

 

(40)

Net defined benefit liability for post-employment benefits

 

12,195

 

11,133

 

11,668

The net defined benefit liability for post-employment benefits increased by €0.6 billion in the third quarter of 2015 to €11.7 billion, mainly due to a decrease in long-term capital market interest rates for high-quality corporate bonds in Germany and the United States.