11 – Noncurrent Assets

Additions to property, plant and equipment in the first half of 2022 were mainly due to investment projects such as the establishment of a new Verbund site in Zhanjiang, China, and the construction and expansion of the ethylene oxide and polyethylene oxide production plants in Antwerp, Belgium, and in Ludwigshafen, Germany. Furthermore, they included construction and expansion projects as well as modernization measures, primarily at the sites in Ludwigshafen, Germany; Antwerp, Belgium; Shanghai, China; Geismar, Louisiana; and Freeport, Texas.

In addition to regular depreciation, accumulated depreciation on property, plant and equipment included, in particular, impairments in connection with the agreed divestiture of the De Meern site in the Netherlands.

Currency effects in the first half of 2022 resulted largely from appreciation of the U.S. dollar against the euro.

BASF’s market capitalization declined by 34% in the first half of the year to €37,376 million. Equity increased to €46,373 million in the same period, mainly due to higher other comprehensive income.

BASF therefore reviewed whether a need for impairment could be derived from this, especially of goodwill. Despite the significant decline in market capitalization, the business results of almost all goodwill-bearing cash-generating units have developed in line with or better than assumed for the impairment tests as of December 31, 2021. We also have no indications of a significant deterioration in future business developments compared with previous assumptions. One exception is business with the automotive industry, where the weak phase is lasting longer than expected. However, as this is primarily due to supply chain disruptions, we expect the recovery to be merely delayed.

The discount rate used for the impairment tests rose only insignificantly despite an increase in the risk-free interest rate due to changes in other relevant market parameters. Furthermore, the carrying amounts of the goodwill-bearing cash-generating units have not changed significantly since the end of the year.

On this basis, there were no indications of goodwill impairment.

Proportional income after taxes and other adjustments to income and expenses declined by a total of €503 million, mainly due to the lower earnings of the non-integral shareholding in Wintershall Dea AG, Kassel/Hamburg, Germany, as a result of the impairments recognized, and the decline in earnings at Lucura Versicherungs AG, Ludwigshafen, Germany, and BASF-YPC Company Ltd., Nanjing, China.

• For more information, see Note 8

Proportional changes of other comprehensive income included income and expense recognized directly in equity and related primarily to translation-related changes in the value of the shareholding in Wintershall Dea AG.

Additions to integral investments accounted for using the equity method mainly related to the shareholding in HKZ Investor Holding B.V., Arnhem, Netherlands.

Disposals in the first half of 2022 included a capital decrease at Yara Freeport LLC, Wilmington, Delaware.

Transfers in the first half of 2022 amounted to –€462 million and mainly included dividend distributions, particularly from Wintershall Dea AG, BASF-YPC Company Ltd., and Markor Meiou Chemical (Xinjiang) Co., Ltd., Shanghai, China.