✓ audited

1.1 – Group accounting principles

Accounting standards applied: The Consolidated Financial Statements of BASF SE as of December 31, 2012, have been prepared in accordance with International Financial Reporting Standards (IFRS) and Section 315a (1) of the German Commercial Code (HGB). BASF SE is a publicly-listed corporation based in Ludwigshafen am Rhein. Its official address is Carl-Bosch-Str. 38, 67056 Ludwigshafen am Rhein, Germany.

The individual financial statements of the companies included in the Consolidated Financial Statements of the BASF Group (hereinafter referred to as “consolidated companies”) are prepared as of the balance sheet date of the Consolidated Financial Statements. All of the binding IFRSs in the fiscal year 2012 as well as the pronouncements of the International Financial Reporting Interpretations Committee (IFRIC) were applied. IFRSs are applied as soon as they have been endorsed by the European Union.

The accounting policies that have been applied are the same as those in 2011, with the exception of any changes required by the application of new or revised standards and interpretations. In 2012, there were no significant changes for BASF in this regard.

The Consolidated Financial Statements are prepared in euros, and all amounts, including the figures for previous years, are given in million euros unless otherwise indicated.

On February 18, 2013, the Consolidated Financial Statements were prepared and authorized for release by the Board of Executive Directors and will be submitted for approval by the Audit Committee to the Supervisory Board of BASF SE at its meeting on February 21, 2013.

Scope of consolidation: The Consolidated Financial Statements include BASF SE as well as all material subsidiaries. BASF controls these companies or exercises a majority of the voting rights, either directly or indirectly.

Material, jointly controlled entities are included on a proportional consolidation basis.

Associated companies are accounted for using the equity method. These are companies over which the Company can exercise a significant influence over the operating and financial policies, and are neither subsidiaries nor jointly controlled entities. In general, this applies to companies in which BASF has an interest of 20% to 50%.

Subsidiaries whose business is dormant or of low volume and that are insignificant for the presentation of a true and fair view of the net assets, financial position and results of operations as well as the cash flows are not consolidated. These companies are carried at amortized cost and are written down in the case of an impairment. The aggregate assets and equity of these subsidiaries amount to less than 1% of the corresponding value at Group level.

Consolidation methods: Assets and liabilities of consolidated companies are accounted for and valued uniformly in accordance with the principles described herein. For companies accounted for using the equity method, material deviations from our accounting policies are adjusted for.

Transactions between consolidated companies as well as intercompany profits resulting from sales and services rendered between consolidated companies are eliminated in full; for jointly controlled entities, they are proportionally eliminated. Material intercompany profits related to companies accounted for using the equity method are eliminated.

Capital consolidation at the acquisition date is based on the purchase method. Initially, all assets, liabilities and additional intangible assets that are to be capitalized are valued at fair value. Finally, the acquisition cost is compared with the proportional share of the net assets acquired at fair value. The resulting positive differences are capitalized as goodwill. Negative differences are reviewed once more, then recognized directly in profit or loss.

The incidental acquisition costs of a business combination are recognized in the income statement.

Translation of foreign currency financial statements: The translation of foreign currency financial statements depends on the functional currency of the consolidated companies. For companies whose functional currency is not the euro, translation into the reporting currency is based on the closing rate method: Balance sheet items are translated into euros at closing rates on the balance sheet date; expenses and income are translated into euros at monthly average rates and accumulated for the year. The translation adjustments due to the use of the closing rate method are shown under currency translation adjustments as a component of other comprehensive income in equity and are recognized in income only upon the disposal of a company.

For certain companies outside the eurozone or U.S. dollar zone, the euro or U.S. dollar is the functional currency.

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Selected exchange rates (1 EUR equals)

 

Closing rates

 

Average rates

 

Dec. 31, 2012

Dec. 31, 2011

 

2012

2011

Brazil (BRL)

2.70

2.42

 

2.51

2.33

China (CNY)

8.22

8.16

 

8.11

9.00

Great Britain (GBP)

0.82

0.84

 

0.81

0.87

Japan (JPY)

113.61

100.20

 

102.49

110.96

Malaysia (MYR)

4.03

4.11

 

3.97

4.26

Mexico (MXN)

17.18

18.05

 

16.90

17.29

Russia (RUB)

40.33

41.77

 

39.93

40.88

Switzerland (CHF)

1.21

1.22

 

1.21

1.23

South Korea (KRW)

1,406.23

1,498.69

 

1,447.69

1,541.23

United States (USD)

1.32

1.29

 

1.28

1.39