29 – Statement of Cash Flows and Capital Structure Management Statement of cash flows Cash flows from operating activities contained the following payments: (XLS:) Download Statement of cash flows (Million €) 2018 2017 Income tax payments 1,981 2,147 Interest payments 393 409 Dividends received 427 498 In 2018, interest payments comprised interest payments received of €162 million (2017: €161 million) and interest paid of €555 million (2017: €570 million). In 2017, BASF SE transferred securities in the amount of €500 million to BASF Pensionstreuhand e.V., Ludwigshafen am Rhein, Germany. This transfer was not cash effective and therefore had no effect on the statement of cash flows. In 2018, the amount of €134 million was taken from plan assets of BASF Pensionstreuhand e.V., Ludwigshafen am Rhein, Germany, for the reimbursement of pension benefits paid pertaining to 2017. Cash flows from investing activities included €7,362 million in payments made for acquisitions (2017: €150 million). Payments of €107 million were received for divestitures in 2018 (2017: €177 million). Payments made for intangible assets and property, plant and equipment amounted to €3,894 million, €102 million lower than in the previous year. Cash and cash equivalents in the amount of €2,519 million reported in the statement of cash flows as of December 31, 2018 consist of the balance sheet value (€2,300 million) and the value reclassified to the oil and gas business disposal group (€219 million). As in the previous year, cash and cash equivalents were not subject to any utilization restrictions. For more information on cash flows from acquisitions and divestitures, see Note 2.4For more information on the contribution of discontinued operations on BASF’s Statement of Cash Flows, see Note 2.5 (XLS:) Download Reconciliation according to IAS 7 (Million €) Dec. 31, 2017 Cash effective in cash flows from financing activities Non-cash-effective changes Dec. 31, 20181 Acquisitions/divestitures/changes in scope of consolidation Currency effects Other effects Changes in fair value 1 Contributions as of December 31, 2018 include contributions reclassified to the disposal group and therefore deviate from balance sheet values. 2 Includes additions from leasing contracts Financial indebtedness 18,032 3,252 – 56 11 – 21,351 Loan liabilities 376 150 7 8 – – 541 Liabilities from finance leases 124 (35) 9 1 352 – 134 Other financing-related liabilities 1,058 (281) 115 (7) 4 – 889 Financial and similar liabilities 19,590 3,086 131 58 50 – 22,915 Assets/liabilities from hedging transactions (118) (120) – – – 303 65 Total 19,472 2,966 131 58 50 303 22,980 The reconciliation breaks down the changes in financial and similar liabilities and their hedging transactions into cash-effective and non-cash-effective changes. The cash-effective changes presented above correspond to the figures in cash flows from financing activities. Loan liabilities do not contain any interest components. Other financing-related liabilities primarily comprise liabilities from accounts used for cash pooling with BASF companies not included in the Consolidated Financial Statements. They are reported in miscellaneous liabilities within the balance sheet item other liabilities that qualify as financial instruments. The assets/liabilities from hedging transactions form part of the balance sheet item derivatives with positive or negative fair values and include only those transactions which hedge risks arising from financial indebtedness and financing-related liabilities secured by micro hedges. For more information on receivables and miscellaneous assets, see Note 18For more information on liabilities, see Note 24For more information on the Statement of Cash Flows, see the Management’s Report 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 ensure solvency, limit financial risks and optimize the cost of capital. Capital structure management focuses on meeting the requirements needed to ensure unrestricted access to the capital market and a solid “A” rating. The 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 €36,109 million as of December 31, 2018 (December 31, 2017: €34,756 million); the equity ratio was 41.7% on December 31, 2018 (December 31, 2017: 44.1%). 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, achieve a diverse range of investors and optimize our debt capital financing conditions. BASF currently has the following ratings, which were were most recently confirmed by Moody’s on February 15, 2019, by Standard & Poor’s on January 11, 2019, and by Scope Ratings on December 11, 2018. Ratings as of December 31, 2018 Noncurrent financial indebtedness Current financial indebtedness Outlook Moody’s A1 P-1 stable Standard & Poor’s A A-1 stable Scope A S-1 stable Ratings as of December 31, 2017 Noncurrent financial indebtedness Current financial indebtedness Outlook Moody’s A1 P-1 stable Standard & Poor’s A A-1 stable Scope A S-1 stable BASF strives to maintain a solid “A” rating, which ensures unrestricted access to financial and capital markets. For more information on BASF’s financing policy, see the Management’s Report back next