1. Summary of Accounting Policies

1.1. General information

BASF SE (registered at the district trade register, or Amtsgericht, for Ludwigshafen am Rhein, number HRB 6000) is a publicly listed corporation headquartered in Ludwigshafen am Rhein, Germany. Its official address is Carl-Bosch-Str. 38, 67056 Ludwigshafen am Rhein, Germany.

The Consolidated Financial Statements of BASF SE as of December 31, 2025, have been prepared in accordance with the IFRS^® Accounting Standards (hereinafter referred to as “IFRS Accounting Standards”) of the International Accounting Standards Board (IASB^®) and section 315e (1) of the German Commercial Code (HGB). IFRS Accounting Standards are generally only applied after they have been endorsed by the European Union. For the 2025 fiscal year, all of the binding IFRS Accounting Standards and pronouncements of the International Financial Reporting Interpretations Committee (IFRIC^®) were applied. The Consolidated Financial Statements are for the period from January 1, 2025, to December 31, 2025, and are presented in euros. They are written in German and translated into English. All amounts, including the figures for previous years, are given in million euros unless otherwise indicated.

Due to rounding, individual figures in this report may not add up to the totals shown and percentages may not correspond exactly to the figures shown.

The individual financial statements of the consolidated companies are prepared as of the balance sheet date of the Consolidated Financial Statements. Business continuity is assumed. The accounting policies applied are largely the same as those used in 2024.

On February 23, 2026, the Board of Executive Directors prepared the Consolidated Financial Statements, submitted them to the Supervisory Board for review and approval, and released them for publication.

1.2. Changes in accounting principles

Accounting policies applied for the first time in 2025

BASF falls within the scope of the amendments to IFRS 9 and IFRS 7 for contracts referencing nature-dependent electricity. BASF adopted these amendments early, beginning with the Half-Year Financial Statements 2025. Upon retrospective initial application of the amended own use exemption, one power purchase agreement (PPA) was derecognized at its carrying amount at the beginning of the current fiscal year against the opening balance of equity without affecting profit and loss. In accordance with the transition requirements, the prior-year figures were not restated. The amendments to IAS 21 had no material effect on the Consolidated Financial Statements of BASF SE.

IFRS Accounting Standards and IFRICs not yet to be considered but already endorsed by the EU

The effects on the BASF Group financial statements of the IFRS Accounting Standards and IFRICs not yet in force in 2025 but already endorsed by the European Union were assessed. The amendments, with exception of the introduction of IFRS 18, are unlikely to have a material impact on the reporting of BASF. The introduction of IFRS 18 will have a significant impact on the presentation of the statement of income. Income and expenses from foreign currency transactions will be presented in the prescribed categories in accordance with the standard’s requirements. In the statement of cash flows, interest and dividends received as well as interest paid will no longer be classified as cash flows from operating activities but will be reported under cash flows from investing or financing activities, respectively. Furthermore, the standard requires that management-defined performance measures (MPMs) be disclosed in the notes to the financial statements. BASF currently intends to introduce new MPMs, the precise details of which are still being reviewed. BASF does not plan on early adoption of the described amendments.

IFRS Accounting Standards and IFRICs not yet to be considered and not yet endorsed by the EU

The IASB issued further standards and amendments to standards and interpretations which are still subject to EU endorsement and whose application is not yet mandatory. The introduction of IFRS 19 and Amendments to IFRS 19 do not affect the Consolidated Financial Statements of BASF SE as BASF SE does not fall within the scope of application of this standard. The Amendments to IAS 21 are not expected to have an impact on BASF’s reporting. BASF does not plan on early adoption of the described amendments.

1.3. Group accounting principles

Scope of consolidation: The scope of consolidation is based on the application of the standards IFRS 10 and 11 and IAS 28.

According to IFRS 10, a group consists of a parent entity and the subsidiaries controlled by the parent. “Control” of an investee assumes the simultaneous fulfillment of the following three criteria:

• The parent company holds decision-making power over the relevant activities of the investee

• The parent company has rights to variable returns from the investee

• The parent company can use its decision-making power to affect the variable returns

Fulfillment of these three criteria is analyzed based on the corporate governance structure of the companies.

According to IFRS 11, which regulates the accounting of joint arrangements, a distinction must be made between joint ventures and joint operations. In the case of a joint venture, the parties that have joint control of a legally independent company have rights to the net assets of that arrangement. In joint operations, the parties that have joint control have direct rights to the assets and obligations for the liabilities relating to the arrangement. This requirement is particularly fulfilled if the production output of the joint arrangement is almost entirely transferred to the partners, through which the partners guarantee the joint arrangement’s ongoing financing.

Companies whose corporate governance structures classify them as joint arrangements are analyzed to determine if they meet the criteria for joint ventures or joint operations in accordance with IFRS 11. If the joint arrangement is structured as a separate vehicle, its legal form, any other contractual arrangements and all other facts and circumstances are reviewed.

In addition to BASF SE, the Consolidated Financial Statements include all material subsidiaries on a fully consolidated and all material joint operations on a proportionally consolidated basis. Companies of minor importance for the presentation of a true and fair view of the net assets, financial position and results of operations are not consolidated, but rather are reported under other shareholdings (for more information, see Note 25.4, footnote a). The aggregate assets and equity of these companies amount to less than 1% of the corresponding value at Group level.

Joint ventures and associated companies are accounted for using the equity method in the Consolidated Financial Statements in accordance with IAS 28. Associated companies are entities that are not subsidiaries, joint ventures or joint operations, and over whose operating and financial policies significant influence can be exercised. In general, this applies to companies in which BASF has an investment of between 20% and 50%. Associated companies and joint ventures that are fully or predominantly allocated to operating divisions are classified as integral because they are integrated into the value chain of the respective division; are controlled by the divisions; and they generate their income in close cooperation with the other assets of the BASF Group and/or of these divisions. Equity-accounted income from integral joint ventures or associated companies is reported as part of income from operations (EBIT). Equity-accounted income from non-integral associated companies is reported in net income from shareholdings (for more information, see Note 10).

Consolidation methods: Assets and liabilities of consolidated companies are uniformly recognized and measured in accordance with the principles described herein. For companies accounted for using the equity method, material deviations in measurement resulting from the application of other accounting principles than those applied by BASF are adjusted.

Transactions between consolidated companies as well as intercompany profits resulting from trade between consolidated companies are eliminated in full. Sales and material other balances and transactions between joint operations and fully consolidated Group companies are also eliminated. Material intercompany profits and losses related to companies accounted for using the equity method are eliminated.

Capital consolidation is conducted on the acquisition date according to the purchase method. Initially, all assets, liabilities and additional intangible assets that are to be capitalized are measured at fair value regardless of the scope of any noncontrolling interests. Subsequently, the cost of acquiring the company is compared with the proportional share of the fair value of the net assets acquired. The resulting positive differences are capitalized as goodwill. Negative differences are reviewed once more, then recognized directly in the income statement.

Noncontrolling interests are measured at fair value on the date of acquisition proportional to the assets acquired and liabilities assumed (partial goodwill method).

The acquisition of shares in companies already controlled by BASF or included in the Consolidated Financial Statements as a joint arrangement is treated as a transaction between shareholders if it does not result in a change in the consolidation method.

The incidental acquisition costs of a business combination are recognized in the income statement under other operating expenses.

Foreign currency translation: The cost of assets acquired in foreign currencies and revenue from sales in foreign currencies are determined by the exchange rate on the date the transaction is recognized. Foreign currency receivables and liabilities are valued at the exchange rates on the balance sheet date. Changes in assets and liabilities arising from foreign currency translation are either recognized in the income statement under other operating income or expenses or in other financial result, and those related to financial assets measured at fair value through other comprehensive income are shown in other comprehensive income.

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 using closing rates on the balance sheet date; expenses and income are translated into euros at monthly average rates and accumulated for the year. The difference between a company’s equity translated at historical rates at the time of acquisition or retention and its equity translated at closing rates on the balance sheet date is reported under other comprehensive income (translation adjustments) and is recognized in the income statement only upon the disposal of the company or a foreign business.

For certain companies outside the eurozone or U.S. dollar zone, the euro or U.S. dollar is the functional currency; this includes, among others, BASF Tuerk Kimya Sanayi ve Ticaret Ltd. Sti., Istanbul, Türkiye, and BASF Argentina S.A., Buenos Aires, Argentina. In such cases, financial statements prepared in the local currency are translated into the functional currency using the temporal method: All nonmonetary assets and related depreciation and amortization as well as equity are translated at the exchange rate applying to the respective transactions. All other balance sheet items are translated using closing rates on the balance sheet date; other expenses and income are translated at monthly average rates. The resulting translation differences are recognized in the income statement under other operating income or expenses. If necessary, financial statements in the functional currency are translated into the presentation currency according to the closing rate method.

1.4. Accounting policies

The accounting policies for the individual items in the balance sheet and the income statement are presented in the respective sections of the Notes.

Business combinations: In business combinations, the acquired assets and liabilities are recognized at fair value on the date the acquirer effectively obtains control. The fair value of acquired assets and assumed liabilities at the date of acquisition, as well as the useful lives of the acquired assets, are largely based on projected cash flows. Actual cash flows can deviate significantly from those. Independent external appraisals are typically used for the purchase price allocation of material business combinations. Valuations in the course of business combinations are based on existing information as of the acquisition date.

Groups of assets and liabilities held for sale (disposal groups): These comprise those assets and directly associated liabilities shown separately on the balance sheet whose sale in the context of a single transaction is highly probable. A transaction is assumed to be highly probable if there are no significant risks to the completion of the transaction, which usually requires the conclusion of binding agreements. Assets and liabilities classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell; this does not apply to assets that do not fall under the valuation principles of IFRS 5. Scheduled depreciation and amortization of noncurrent assets and the use of the equity method are suspended.

Discontinued operations: These are classified as held for sale and are presented as discontinued operations in BASF’s Consolidated Financial Statements in accordance with IFRS 5. Until closing of the transaction, the income after taxes of discontinued operations is shown in income after taxes of the BASF Group as a separate item (income after taxes from discontinued operations). The BASF Group’s sales and earnings are retroactively adjusted for the consolidated contributions from discontinued operations as of the beginning of the business year. The prior-year figures are restated. In addition, the assets and liabilities of the discontinued operations are reclassified to a disposal group (assets or liabilities of disposal groups). Depreciation and amortization of noncurrent assets and the use of the equity method are suspended as of the date when the disposal group is initially presented. The statement of cash flows is not adjusted. The activities of discontinued operations are not allocated to any reportable segment in financial reporting. The assets and liabilities of the discontinued business are reported under Other.

Use of estimates and assumptions in preparing the Consolidated Financial Statements

The carrying amount of assets, liabilities and provisions, contingent liabilities and other financial obligations reported in the Consolidated Financial Statements depends on the use of estimates, assumptions and discretionary scope. Specific estimates or assumptions used in individual accounting or valuation methods are disclosed in their respective sections of the Notes to the Consolidated Financial Statements. They are based on the circumstances and estimates on the balance sheet date and thus affect the amounts of income and expenses shown for the reporting periods presented. These assumptions primarily relate to the determination of discounted cash flows in the context of impairment tests and purchase price allocations; the useful lives of depreciable property, plant and equipment and intangible assets; the carrying amount of shareholdings; and the measurement of provisions for items such as employee benefits, warranties, trade discounts, environmental protection or the extent of recognition of assets, liabilities and provisions for taxes. Although uncertainty is appropriately incorporated in the valuation factors, actual results can differ from these estimates.

Uncertainties persist in connection with the current geopolitical and economic situation, which could impact the Consolidated Financial Statements. A potential escalation of international conflicts could disrupt global supply chains and lead to further restrictions in the availability of energy, raw materials or intermediate products. The ongoing war in Ukraine and the tense situation in the Middle East pose significant risks to market development and raw material supplies. Furthermore, the continuation of higher U.S. tariffs and potential retaliatory measures by other trading partners make it difficult to reliably assess the impact on sales volumes, price trends and the competitive landscape. These uncertainties were reflected in the estimates and assumptions used. Current inflation developments were taken into account both in the measurement of pension provisions and other provisions as well as in the fixed asset impairment tests.

Climate and sustainability-related developments: The chemical industry is resource-intensive. BASF is committed to the Paris Climate Agreement. Using resources as efficiently and responsibly as possible and the concept of a circular economy are firmly embedded in BASF’s strategy and its actions. BASF aims to reduce CO₂ emissions and increase the use of renewable and recycled raw materials. In this context, BASF always strives to use raw materials more efficiently and improve production processes as well as to continually seek ways to use nonfossil, renewable or recycled feedstocks. Despite the current global political situation, the path to climate neutrality is resolutely being pursued (for more information on electricity supply contracts, see Note 25).

BASF is exposed to physical and transition climate-related risks. Physical climate risks are the direct consequences of extreme weather scenarios in the form of floods, droughts, hurricanes, extreme rainfall or heat. These can cause damage to assets, interrupt deliveries to customers or have adverse effects on the supply of raw materials and precursors to plants. BASF responds to risks related to weather scenarios by adapting operational processes, for example in the area of logistics, by investing in assets and infrastructure or by maintaining broad insurance coverage.

Transition risks are risks that arise from the transition to a low-emission economy. These can arise from developments aimed at preventing or reversing damage to the climate or to nature. As an energy-intensive company, BASF expects, among other things, rising energy and CO₂ prices as part of the structural transition.

The transition also creates opportunities, for example, through increasing demand for products based on renewable raw materials, insulation foams for buildings, coolants and battery materials as well as better circular economy and climate protection solutions. The market-oriented approach anchored in the strategy is intended to enable BASF to leverage these opportunities and support the green transformation of various customer industries in a differentiated manner by prioritizing investments and projects with a sustainability focus according to customer demand and willingness to pay.

At the end of December 2025, BASF began commissioning the steam cracker at its new Verbund site in Zhanjiang, China. The Zhanjiang Verbund site is strategically positioned to produce high-quality chemical products with a lower carbon footprint, thereby participating in the growth of the largest chemicals market in the world. The site’s electricity supply comes 100% from renewable sources via long-term supply agreements.

Climate-related risks are taken into account in estimates and discretionary decisions when preparing the Consolidated Financial Statements. Physical and transition risks are assessed on an ongoing basis and can, for example, have an impact on useful lives and residual carrying amounts of fixed assets, the valuation of provisions for environmental or restoration obligations, the valuation of inventories or growth rates in goodwill impairment tests.

The transition to electromobility will have a negative long-term impact on the emissions catalyst business. This development is reflected in a negative long-term growth rate in the goodwill impairment test of the Environmental Catalyst and Metal Solutions (ECMS) cash-generating unit. Other BASF businesses will benefit from this transformation, in particular as a result of growing demand for lightweight components and battery materials. In the short term, however, lower demand is expected in the battery materials market, which was taken into account accordingly in the impairment test for the goodwill of the cash-generating unit Battery Materials.