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Last Update:
March 1, 2012
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27 – Consolidated statements of cash flows and capital structure management

Consolidated statements of cash flows

Cash provided by operating activities includes the following cash flows:

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Million €

2011

2010

Income tax payments

1,710

2,051

Interest payments

588

639

Dividends received

188

75

Interest payments comprise interest received of €179 million (2010: €106 million) and interest paid of €767 million (2010: €745 million).

Capital structure management

The aim of capital structure management is to maintain the financial flexibility needed to continually develop our business portfolio and take advantage of strategic opportunities. The objectives of our financing policy are to secure liquidity, limit financial risks and optimize the cost of capital by means of an appropriate capital structure. The capital structure is orientated to the needs of the operational business and the company’s strategic direction.

It focuses on meeting the requirements needed to ensure a solid A rating and unrestricted access to capital markets; these include dynamic debt and equity ratio requirements. The capital structure of BASF is managed using selected financial ratios, within the framework of our financial management. Equity as reported on the balance sheet amounted to €25,385 million as of December 31, 2011 (December 31, 2010: €22,657 million). The equity ratio amounted to 41.5% on December 31, 2011 (December 31, 2010: 38.1%).

BASF prefers to access external financing via the capital markets. A commercial paper program is used for short-term financing, while corporate bonds are used for financing in the medium and long-term. These are issued in euros and other currencies with different maturities. This ensures a balanced maturity profile, a diverse range of investors and advantageous financing conditions for BASF.

As part of its interest rate risk management, BASF pursues a strategy of reducing the Group’s interest expense by turning selected capital market liabilities with fixed interest into variable rate receiver swaps.

Currently, BASF has the following ratings:

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December 31, 2011

 

December 31, 2010

 

Moody’s

Standard & Poor’s

 

Moody’s

Standard & Poor’s

Long-termfinancial indebtedness

A1

A+

 

A1

A

Short-termfinancial indebtedness

P-1

A-1

 

P-1

A-1

Outlook

stable

stable

 

stable

stabil

Moody’s last confirmed BASF’s A1 long-term rating on December 6, 2011, and rated the outlook as stable. On May 10, 2011, Standard & Poor’s upgraded BASF’s long-term rating by one notch from A to A+, also with a stable outlook. BASF’s short-term ratings were confirmed by both agencies.

BASF continues to aim for at least a solid A rating, which ensures unrestricted access to financial and capital markets.

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