1 – Basis of presentation

The Consolidated Financial Statements of the BASF Group for the year ending December 31, 2014, were prepared in accordance with the International Financial Reporting Standards (IFRS) valid as of the balance sheet date. The Interim Financial Statements as of September 30, 2015, have been prepared in line with the rules of International Accounting Standard 34 in abbreviated form and, with the exception of the changes outlined below, using the same accounting policies. The Interim Financial Statements and Interim Management’s Report have been neither audited nor have undergone an auditor’s review.

Change in presentation of joint operation sales in BASF Group Financial Statements

At its meeting on March 24, 2015, the IFRS Interpretation Committee (IFRIC) determined that, according to IFRS 11.20(d), a joint operator’s share of the output purchased by another partner cannot be recognized as revenue as long as these sales correspond to the operator’s share of ownership interest in the joint operation. As a consequence of this determination, this portion of the joint operation’s sales to other partners ceased to be recognized as of January 1, 2015. Partners’ share of the output purchased in excess of their ownership interest will continue to be shown in the BASF Group Financial Statements as sales to third parties. Intercompany sales from the joint operation will also continue to be eliminated.

Sales in the third quarter of 2014 and in the first three quarters of 2014 contained, respectively, €96 million and €370 million which, according to the new recognition method, would have been eliminated against cost of sales. For the full 2014 business year, this amount would have been €415 million. If the recognition method had remained unchanged, sales and cost of sales in the third quarter of 2015 would have been €19 million higher, or €56 million higher over the first three quarters of the year. A restatement of the prior-year figures was not necessary, as this change in recognition would have had no material impact on the presentation of the net assets, financial position and results of operations of the BASF Group in 2014.

Restatement of prior-year figures due to dissolution of natural gas trading business disposal group per December 31, 2014

BASF and Gazprom did not proceed with the asset swap at the end of 2014 as planned. The arrangement had been for Wintershall to give Gazprom its share in the jointly operated natural gas trading and storage business as well as a 50% share in Wintershall Noordzee B.V., Rijswijk, Netherlands. In return, BASF would have received 25% plus a share in blocks IV and V of the Achimov formation of the Urengoy natural gas and condensate field in western Siberia.

At the end of 2012, the assets and liabilities affected by the swap were reclassified into a gas trading business disposal group in the financial statements. As a result of the transaction’s cancellation in December 2014, the reporting as a disposal group in accordance with the stipulations of International Financial Reporting Standard 5 – Noncurrent Assets Held for Sale and Discontinued Operations – was ceased, and the amortization and depreciation as well as equity-accounted income from the joint ventures that had been contained in the disposal group, and thus suspended since 2012, were accounted for.

Details on the restated prior-year figures due to the dissolution of the gas trading disposal group were published on February 27, 2015.

The agreement to swap assets with Gazprom was renewed at the beginning of September and completed on September 30, 2015.

The following tables show the effects on significant comparative figures of the restatements necessary for the third quarter of 2014 and from January to September 2014:

Change in presentation of hedges for financial receivables and payables in the statement of cash flows

The presentation in the statement of cash flows of hedges for financial receivables and payables was adjusted as of January 1, 2015. Without changing cash provided by operating activities, hedging is now better reflected by offsetting adjustment effects from underlying transactions with changes in the market value of hedging transactions in the line item “miscellaneous items.” The effects from hedging transactions were previously contained in the item “changes in net working capital.” The figures for 2014 have been adjusted accordingly.

In the third quarter of 2014, this led to a €121 million decrease in changes in net working capital and a €121 million increase in miscellaneous items. In the first three quarters of 2014, the adjustment meant a decrease of €196 million in changes in net working capital and an increase of €196 million in miscellaneous items.

For the full 2014 business year, the result was an increase of €76 million in changes in net working capital and a reduction of €76 million in miscellaneous items.