29 – Statement of cash flows and capital structure management

Statement of cash flows

Cash provided by operating activities included the following cash flows:

Million €

 

2014

2013

Income tax payments

 

1,231

1,125

Interest payments

 

490

446

Dividends received

 

244

238

Interest payments comprised interest received of €187 million (2013: €160 million) and interest paid of €677 million (2013: €606 million).

Cash provided by operating activities also included €47 million in benefits paid (2013: €250 million) which are covered by a contractual trust arrangement.

Cash used in investing activities included payments for acquisitions amounting to €963 million (2013: €1,156 million). These arose from the purchase of shares in producing oil and gas fields as well as exploration licenses from Statoil, Stavanger, Norway, and Tullow Oil Norge AS, Oslo, Norway. Payments from divestitures in the amount of €1,336 million (2013: €63 million) were primarily attributable to the sale of the 50% share in Styrolution Holding GmbH to the INEOS Group in the amount of around €900 million. Divestitures also included payments arising from the disposal of shares in non-BASF-operated oil and gas fields to the MOL Group, as well as from the sale of the PolyAd Services business to Edgewater Capital Partners, L.P., Cleveland, Ohio. The payments for property, plant and equipment, and intangible assets in the amount of €5,296 million included investments for 2014, to the extent that they already had an effect on cash.

Cash and cash equivalents were not subject to any utilization restrictions, as in the previous year.

Capital structure management

The aim of capital structure management is to maintain the financial flexibility needed to further develop BASF’s business portfolio and take advantage of strategic opportunities. The objectives of the Company’s financing policy are to secure solvency, limit financial risks and optimize the cost of capital.

Capital structure management focuses on meeting the requirements needed to ensure unrestricted access to capital markets and a solid “A” rating. BASF’s capital structure is managed using selected financial ratios, such as dynamic debt ratios, as part of the company’s financial planning. The equity of the BASF Group as reported in the balance sheet amounted to €28,195 million as of December 31, 2014 (December 31, 2013: €27,673 million); the equity ratio was 39.5% on December 31, 2014 (December 31, 2013: 43.1%).

BASF prefers to access external financing on 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. The goal is to create a balanced maturity profile and diverse range of investors, and to optimize our debt capital financing conditions.

As a part of risk management, activities in countries with transfer restrictions are continuously monitored. This includes, for example, regular analysis of the macroeconomic and legal environment, shareholders’ equity and the business model of the operating unit. The chief aim is the reduction of counterparty, transfer and currency risks for the BASF Group.

Currently, BASF has the following ratings:

 

 

December 31, 2014

December 31, 2013

 

 

Moody’s

Standard & Poor’s

Moody’s

Standard & Poor’s

Long-term financial indebtedness

 

A1

A+

A1

A+

Short-term financial indebtedness

 

P-1

A-1

P-1

A-1

Outlook

 

stable

stable

stable

stable

Moody’s confirmed BASF’s short-term and long-term rating on October 31, 2014 and Standard and Poor’s on December 11, 2014 with a stable outlook.

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