annual repor t 2012 - ve&k · oxea s.à r.l. in just a few years oxea has developed into one of...

the oxo people

well positioned for the future

Annual Repor t2012

Sustainability.

Success.

Potential.

2

OXEA S.à r.l.

In just a few years OXEA has developed into one of the world's largest suppliers of so-called Oxo Intermediates and Oxo Derivatives. These include basic chemical components, olefin derivatives and specialties for fields of applications such as coatings, pharmaceuticals, aromas and scents, paints & lacquers, adhesives, safety glass, lubricants and plastics.

Founding year: 2007Owner: Advent International

ANNUAL REPORT The OXEA Group

Forward-looking statements

This Annual Report contains forward-looking statements of OXEA. These are based on forecasts, assumptions and information currently available to the Management. These forward-looking state-ments do not represent a guarantee that the developments, successes and achievements pre-sented will actually come about or will not significantly deviate from the information provided in this Annual Report. Indeed, future developments, successes and achievements depend on the effects of various factors. Furthermore, the statements contain various risks and uncertainties. OXEA does not con sider itself to be under any obligation to update the forward-looking statements contained in this Annual Report.

€ million 2012 2011 Variance in %

Revenues 1,458.9 1,479.3 (1.4%)

EBITDA 193.1 204.2 (5.4%)

Net income 69.8 77.0 (9.4%)

Operating cash flow 144.0 193.3 (25.5%)

Depreciation/amortization 25.2 24.7 2.0%

Capital expenditure (CAPEX) 95.8 36.2 164.6%

Total assets 724.7 748.1 (3.1%)

Cash and cash equivalents 28.3 125.2 (77.4%)

Financial liabilities (excluding shareholder loans) 440.3 488.7 (9.9%)

Number of employees (average 2012) 1,406 1,365 3.0%

The OXEA Group

OXEA S.à r.l.

3

Contents ANNUAL REPORT

Editorial 4

Highlights of 2012 6

Well positioned for the future 8

Group Management Report

General business conditions 16 Results of operations, financial position and net assets 18 Environment, health, safety and REACH 22 Research and development 23 Significant events after the balance sheet date 23 Risk management and outlook 24

Consolidated Financial Statements

Consolidated Statement of Income 32 Consolidated Statement of Comprehensive Income 32 Consolidated Statement of Financial Position 33 Consolidated Statement of Changes in Equity 34 Consolidated Statement of Cash Flows 35 Notes to the Consolidated Financial Statements 36

Report of the Réviseur d’entreprises agréé 90

Other information

Locations 92 Corporate contacts 94 Publishing details 95

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Editorial

Ladies and Gentlemen,

Bernhard SpetsmannMiguel MantasDr. Martina FlöelDr. Reinhard Gradl

Again in 2012, OXEA delivered strong and sustainable financial performance. In a year marked by both challenges and significant achievements, we continued to drive innovation, strengthen our product portfolio and make substantial progress on our strategic commitments.

It is appropriate to remind ourselves that OXEA continues to be the world’s leading supplier of sev-eral Oxo products, as for example carboxylic acids, as well as one of the top three global suppliers in most of its other lines of business. Furthermore, we have continued to developed our product portfolio further towards our Oxo derivatives segment. Among the highlights of fiscal year 2012, OXEA:

• Achievedrevenuesof€1.459millionandanEBITDAof€193million• Generated€144millionincashflowfromoperatingactivities• Sustainedconsistentearningsdevelopmentthroughouttheyear• Investedaround€60million–arecordsum–instrategicgrowthprojects,and• Thankstoourstrongfinancialposition,completedsecondandthirdoptionalredemptionoffive percent of the outstanding Senior Secured Notes

TheresultsclearlyvalidateOXEA’srobustbusinessmodel.Despiteheadwinds–intheformofthedebtcrisisandweakmacroeconomicdemand–,OXEAmanagedtocontinuouslymaintainaprofit-able and stable EBITDA margin. Our highly successful derivatives strategy is an important contributor to our stable earnings develop-ment: At OXEA, we produce most of our products precursors captively. That in itself provides us with operational flexibility, but also strengthens our independence from individual markets, indus-tries and even economic cycles. To a certain extent, we are hereby able to insulate ourselves from general economic trends and generate considerable momentum internally.

At its base, OXEA’s sustainable performance is the result of the long-term time horizon of our corpo-rate strategy coupled with our consistent implementation and strong commitment to fulfilling the needs of our customers and markets.

We would like to expressly thank our more than 1,400 employees around the globe. They exceed our customers’ expectations every day through their determination, dedication, world class safety record and exceptional performance. It is our employees who have made us a leader in the global market, where we can offer our customers a comprehensive range of oxo products and support them in their growth.

Ladies and gentlemen, we are extremely well positioned for the future. We say that because OXEA is a very profitable company with a proven successful long-term strategy and we supply excellent products in growth markets around the world.

Keep watching us grow!

OXEA: Sustainability. Success. Potential.

Sincerely,

Group Management

OXEAS.àr.l.–theparentcompanyoftheOXEAGroup–isalimitedliabilitycompany(“sociétéàresponsabilitélimitée”)underLuxembourglaw.Theparentcompanyactsastheholdingcompanyof our group and controls, directly or indirectly, all of the consolidated group companies.

The operational management of all OXEA Group companies is the responsibility of the Management Team together with the Chairman of OXEA Group.

The business organization is based on several global functions (operations, commercial, finance) each headed by a Member of the Management Team. These functions include global responsibility independent of legal entity but subject to the country laws and consultation and participation rights of each legal entity’s corporate bodies.

Our main operating company in Germany, OXEA GmbH and our German holding company, OXEA Holding GmbH, are both German limited liability companies (Gesellschaft mit beschränkter Haftung) organized according to German law and are managed by Dr. Martina Flöel, Miguel Mantas and Bernhard Spetsmann, who serve as Managing Directors (Geschäftsführer) of both entities. They are required to conduct the business in compliance with applicable laws, the relevant entity’s articles of association, its rules of procedure and the relevant resolutions and instructions issued by the shareholders. In addition, the management of OXEA Holding GmbH and its affiliates are subject to the supervision by their Supervisory Boards.

(from right to left): Dr. Reinhard Gradl (Chairman of OXEA Group, Luxembourg), Dr. Martina Flöel, Miguel Mantas, Bernhard Spetsmann (Management Team and Managing Directors of OXEA Group companies)

HiGHliG HtS

In 2012, we further broadened our product portfolio. The result is, among others, an expanded range of higher alcohols for our fragrances and flavors customers. We also added our new products OXSOFT Duo 1 and OXSOFT Duo 2, which complete our growing OXSOFT line of innovative phthalate-free and non-VOC plasticizers, and keep expanding our highly demanded carboxylic acids, which are constantly finding new applications in growth areas.

OXSOFt

OF 2012

HiGHliG HtSWe initiated several significant projects last year, with projected completion dates in 2013. These projects include a fifth carboxylic acids plant – which will add 40 percent to global production capacities upon start-up – as well as a specialty derivatives plant in China.

50 %

40 %OXSOFt

During the year, we considerably upgraded production units for carboxylic acids and specialty esters and improved production performance well beyond target. A third production unit for specialty esters was built in record time of just 12 months. That unit went on stream in November, increasing OXEA’s global production capacity for specialty esters by more than 50 percent.

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SuStAinABility.

WHAt MAkES OXEA A SuStAinABlE cOMPAny?

Experience: 75 years ago, German chemist Dr. Otto Roelen developed the original hydroformylation process, also called oxo synthesis, on the premises of the OXEA production site in Oberhausen, Germany. Through intensive and consistent research over the years, the industrial production tech-nologies have been refined and have made OXEA what it is today: A proud pioneer and a global leader in the oxo business.

innovation: OXEA has developed a wide range of sophisticated proprietary processes and accumu-lated proprietary manufacturing know-how. Our interdisciplinary research teams of highly qualified chemical engineers, PhD chemists and process chemists help to keep us at the forefront of innova-tion. We continually optimize production processes to find more efficient alternatives. One important example is white biotechnology which could save us both raw materials and energy during production.

Responsible corporate management: Responsible management is the basis of our long-term eco-nomic success. The Six Sigma methodology is firmly embedded in our corporate strategy, and our OXEA Integrated Management System facilitates the consistent implementation of that methodology.

Skilled employees ensure a solid foundation: Our goal is to attract the best employees, and each year, OXEA’s apprentices are among the most talented anywhere. Early on, OXEA anticipated that

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demographic changes would require new approaches, and responded with individual programs for employees. For example, in 2012 OXEA received acclaim for its exemplary corporate health concepts, based on individual needs.

Safety and environment: Around the world, OXEA operates on a very high level of quality, health protection, work safety, and environmental protection. As an example, our reportable accidents aresignificantlylowerthanforthechemicalindustryasawhole–bothnationallyandinternationally. For OXEA, efficient safety management is an essential factor in successful quality management.

Sustainable products and processes: OXEA has its own strategy for sustainable chemical production, which includes constantly optimizing our processes, maintaining the highest safety standards and producing sustainable chemicals itself. We also manufacture sustainable chemicals. Our carboxylic acids find uses in the produc-tion of energy-efficient lubricant esters for environmentally friendly air conditioners and refrigerators. With our phthalate and VOC-free OXSOFT plasticizers range, OXEA provides customers the building blocks for their own efficient, eco-friendly and sustainable pro duction.

OXEA continues to be a global market leader in carboxylic acids, plus it is among the top three in its other lines of business.

Our company is lean and strong with fast decision-making processes that keep us dynamic and flex i-ble. We are well positioned internationally with outstanding growth potential in all our lines of busi ness. Our strategy is focused on the successful expansion into Oxo derivatives, extension of the value chain, and expansion into growth markets.

OXEA’s solid organic growth comes from a position of inner strength. In 2012 alone, we invested the recordsumofover€90million,whichwasfundedfromthecompany’sowncashflow.Weexpandedexisting production capacity at our sites, typically with even better results than anticipated. We suc-cessfully built a highly modern production unit for specialty esters in record time and we have more units for carboxylic acids and specialty derivatives under construction on two continents.

Thanks to our firmly established position in major world regions, we have the flexibility to exploit arbitrage opportunities between local and international markets.

SuccESS.

WHAt MAkES OXEA SO SuccESS Ful?

OXEA is backward integrated in derivatives value chains, based on our own hydroformylation technologies; we obtain our precursors from our own raw material production facilities. As the number One in the merchant market, we can choose to utilize our value chain and to either sell our products or to use them as precursors for future derivatives products. The result is that we can reliably respond to customer needs and changing market requirements in a fast and flexible way.

Globally, OXEA serves a variety of growth industries that have different economic cycles. This approach brings stability to our business activities, makes us impervious to sudden market fluctuations, and enables us to better support our customers in their growth.

Over the years, OXEA has built and maintained mutually beneficial, long-term relationships with our customers, which have led to stable, sustainable sales. In turn, our customers tell us they appreciate our competence, speed, flexibility and reliability.

SuccESS.

WHAt MAkES OXEA SO SuccESS Ful?

POtEntiAl.

WEll POSitiOnED FOR tHE FutuRE

Our strong global market position is based on our focused, long-term strategy, as well as consistent implementation, our continuing evolution and our dedicated employees. We’ve transformed into a producerofspecialtychemicalswhilemaintainingtheleadingpositioninoxointermediates–enjoying the advantages of higher margins, less cyclicality, stable earnings and higher company value. We bring value to customers and shareholders alike, and the OXEA name stands for sustainability, success and potential.

In 2013, OXEA will continue to implement our successful corporate strategy as we expand into growth markets, develop the product portfolio along the value chain, and pursue our long-term strategic financing concept. As we pursue this strategy, we will strive to achieve consistent growth, maintain the positive development in earnings and company value, along with a strong statement of financial position.

The new economics of abundant domestic shale gas has created a competitive advantage for our US-based manufacturing plants. This plentiful supply of shale gas led to the announcement of new projects totaling in the billions of dollars that will promote growth all along the US petrochemical supplychainforyearstocome.Withourhighlyefficientworldclassplants–aswellasacompre-hensiveandflexibleproductportfolio–OXEAiswellpositionedtotake advantage of this booming

13

POtEntiAl.

WEll POSitiOnED FOR tHE FutuRE

market. For that reason we recently announced a feasibility study for significant expansions of our US production sites at Bay City. Additionally, we will continue to invest in strategic corporate projects in the high-yield derivatives sector, for qualified growth, innovation and sustained improvement of our profitability. These investments will further strengthen our leading global position. We expect they will deliver value to OXEA with an increased EBITDA.

At all OXEA sites, we achieve high productivity and high utilization of our production units through the efficient use of resources, a high degree of operational and product safety, cost efficiency and customer orientation.

Ourcustomerdrivenmindset–butevenmoreso,ourinnovative strength–willfurther help us to remain cyclically resilient. Customer-oriented, innovative applications will continue to open up growth markets with immense potential for OXEA. From a position of strength, we will create an ongoing, sustained increase in the value of OXEA overall, as well as in substantial shareholder value.

OXEA: Well positioned for the future

OXEA S.à r.l.

ANNUAL REPORT

14 GROUP MANAGEMENT REPORT 2012

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Group Management Report ANNUAL REPORT

OXEA S.à r.l.

TAbLE OF CONTENTS

General business conditions 16Results of operations, financial position and net assets 18Environment, health, safety and REACH 22Research and development 23Significant events after the balance sheet date 23Risk management and outlook 24

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ANNUAL REPORT Group Management Report

OXEA S.à r.l.

OXEAS.àr.l.–theparentcompanyoftheOXEAGroup–isalimitedliabilitycompany(“sociétéà responsabilitélimitée”)underLuxembourglaw.Theparentcompanyactsastheholdingcompanyofour group and controls, directly or indirectly, all consolidated group companies.

The most important operating companies of the OXEA Group are OXEA GmbH and OXEA Corporation.

1.1 Markets and plants

OXEA is a globally operating group with core competencies in producing Oxo Intermediates and Oxo Derivatives. Its portfolio includes over 60 products supplied to customers in a wide range for many end market applications, such as construction, automotive, consumer goods, healthcare and agro-chemicals industries.

Ensuring its worldwide presence, OXEA maintains five production sites in Europe (Oberhausen, Marl, and Amsterdam) and in the United States (Bay City, Bishop) as well as a decentralized sales organi-zation with subsidiaries/offices in Dallas, Tokyo, Singapore, Mexico City, Shanghai and São Paulo.

In 2012, OXEA generated 48% of its revenues in Europe, 32% in North America (NAFTA), 5% in South America and 14% in the Asian-Pacific region. The Oxo Intermediates segment represented 67% of revenues, and Oxo Derivatives accounted for 33% of revenues.

1.2 Global economic development

OXEA’s analysis of the global economy is based on figures and forecasts provided by renowned institutions, such as the OECD and the IMF.

Growth in the global economy continued to slow down in 2012, with real global gross domestic pro-duct (GDP) of 3.2% compared to 3.9% in 2011. Above all, the unstable economic situation in Europe burdens economic activity worldwide. Concerns about the stability of the banking sector, the sover-eign debt crisis and the fragile economy continue to hamper private-sector investment and consum-er spending. Moreover, austerity policies to cut government deficits and bring down debt levels in Europe have led to a significant reduction of government spending. In addition, the U.S. economy re-mains sluggish and growth in emerging markets has cooled down due to spillover effects from ad-vanced economies and various country-specific factors. In the euro-zone, GDP declined by 0.4% in 2012 (2011: growth of 1.4%). Restrictive fiscal policies, rising unemployment, large capital outflows to northern countries and the sovereign debt crisis have all deepened the contraction in the southern periphery economies.

In the USA, economy stabilized to some extent. However, the continued difficult situation on the labor market, the weak real estate sector and the pressure to consolidate public-sector budgets impacted economic growth, which reached 2.3% (2011: 1.8%).

1. General business conditions

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OXEA S.à r.l.

Economic activity in Asia remained at a high level although China’s and India’s extraordinarily high growth levels cooled down to 7.8% and 4.5%, respectively. China and India remained the region’s leaders.

In Japan, economy started to recover from the consequences of the earthquake and tsunami in March 2011 with a growth rate of 2.0%

The global chemical industry was not immune to the world economic slowdown. According to the German Chemical Industry Association (VCI), the production and demand for chemical products weakened in almost all the world’s regions and markets. Only Asia (China), South America and the US expanded moderately.

1.3 Business development at OXEA

Despite the softening world economy in 2012, OXEA was able to reach robust results in revenues and profit in all regions and segments. EBITDA (earnings before interest, taxes and depreciation/amorti-zation)at€193.1millionwasonly5.4%belowthepreviousexcellentyear(2011:€204.2million).

Compared to 2011, OXEA was able to slightly increase its sales volumes. However, challenging cir-cumstances in both, macroeconomic and the chemical industry, led to a decrease in sales prices, net revenues and lower operating margins than in the prior year. The internal strategic orientation towards products with higher contribution margins and our strong marketing and cost savings measures were contributing factors enabling us to achieve a robust performance and a continuing stable EBITDA generation in a difficult economic environment.

1.4 Personnel

The average number of persons employed by OXEA in the 2012 financial year was 1,406 (1,138 in Germany). We are aware that satisfied, motivated and committed employees are material success factors for a growth-oriented company. Our corporate culture, characterized by our core values of sincerity, confidence, and mutual respect, creates an environment which allows us to be an attractive employer for our staff. Through our internal training programs, we provide our employees excellent development and qualification opportunities.

TrainingisakeytopicatOXEA–andnotjustforreasonsofsocialresponsibility:with30newandacurrent total of 91 trainees, OXEA is making a conscious investment into both the future and the quali-fication of its employees. At OXEA, we attracted around 74 new qualified members of staff worldwide in 2012. More than 75% of them are working in research, production, and engineering, primarily sup-porting our strategic investment projects.

We are continually strengthening our competitiveness by implementing a human resources strategy thatisbothfutureorientedandconsistent.Wedefinedthe“OXEAHouseofWorkingAbility”asthebasis of all our global activities and projects surrounding the challenging topic of demographic change. It is composed of five strategic elements:

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OXEA S.à r.l.

2.1 Results of operations

€ million 2012 2011

Net revenues 1,458.9 1,479.3

Gross profit 188.4 205.4

SG&A (37.3) (37.6)

R&D (6.9) (6.4)

Other operating income/(expense) 23.7 18.2

Operating result 168.0 179.5

Net income 69.8 77.0

EBitDA 193.1 204.2

2. Results of operations, financial position and net assets

•Healthpromotion •Employeeretention•Knowledgemanagement •Agedifferentiatedemploymentconditions•Employeerecruitment

OXEA has outstanding employees, and we do a lot to make sure it stays that way: intensive training, continuing development in all areas of the group, high standards of health and safety and targeted support for all employees.

2012

Revenues

Sales volume

(in thousand tons)

Revenues by segments

(Share in sales)

33% Oxo Derivatives

67% Oxo Intermediates

1000

800

600

400

200

0 2011 20112010 20102012

Oxo Derivatives

Oxo Intermediates

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OXEA S.à r.l.

€700millionofourrevenuesforthetwelvemonthsendedDecember31,2012resultedfromsalesinEurope,€476millioninNAFTA,€204millionintheAsiaPacificregion,€69millioninSouthAmericaand€10millionintherestoftheworldcomparedto€730million,€453million,€209million,€72mil-lionand€15millionrespectivelyintheprioryearperiod.

Gross profitGrossprofit for thetwelvemonthsendedDecember31,2012droppedby8.0%to€188.4millioncomparedwith€205.4millioninthecorrespondingperiodoftheprioryear.Thedecreaseof€17.0million was attributable to lower margins in the Oxo Intermediates segment, whereas the margin in Oxo Derivatives increased compared to 2011. The manufacturing fixed costs are essentially in line with prior year. Gross profit as a portion of sales decreased from 13.9% of sales in prior year to 12.9% in 2012 as a result of the softening world economy and the weakened demand in the chemical sector.

Selling general & administration expense (SG&A)SG&AexpenseforthetwelvemonthsendedDecember31,2012decreasedslightlyto€37.3millioncomparedwith€37.6millioninthecorrespondingperiodoftheprioryear.Thedecreaseisprimarily attributable to ongoing cost saving measures and a lower level of consulting fees in relation to projects.

Other operating income/(expense)NetotheroperatingincomeforthetwelvemonthsendedDecember31,2012amountedto€23.7millioncomparedwith€18.2millioninthecorrespondingperiodoftheprioryearmainlyasaresultof higher income from insurance claims.

Revenues by regions

(Share in sales)

RevenuesforthetwelvemonthsendedDecember31,2012were€1,458.9million,a1.4%decreasecompared with the corresponding period of the prior year. Revenues in Oxo Intermediates amounted to€971.9millioncomparedwith€1,008.8millionin2011representingadecreaseof3.7%.RevenuesinOxoDerivativesincreasedby3.5%to€487.0millioncomparedwith€470.5millioninthecorre-sponding period in the prior year. Overall sales volumes increased by 0.6% compared to 2011.

48% Europe

32% NAFTA

14% APAC

5% SAM

1% ROW

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OXEA S.à r.l.

Operating resultOperatingresult for thetwelvemonthsendedDecember31,2012of€168.0milliondecreasedby€11.5millioncomparedto€179.5millionintheprioryear.

net incomeNet income for the twelvemonths ended December 31, 2012was €69.8million comparedwith €77.0million in the corresponding period of the prior year.

2.2 Financial position and net assets

Condensed Consolidated Balance Sheet

Comparedtotheprioryear,totalassetsdecreasedby€23.4millionto€724.7million.Intangibleandtangibleassets increasedby€74.8million to€353.3millionasa resultof the increased investing activities in new production facilities and growth projects. Capital expenditures in 2012 amounted to €95.8million(prioryear:€36.2million)andtheshareofintangibleandtangibleassetsintotalassetsincreased to 49% compared with 37% as at December 31, 2011. The overall decrease in working capital reflects, among others, the implemented working capital management measures. Other cur-rentassetsof€80.8millionincludeacashpositionof€28.3million,adecreaseof€96.9millioncom-pared with the prior year. The strong cash flow generation allowed OXEA to complete the second and

Equity and liabilities€ million 31.12.2012 31.12.2011

Total equity (18.7) (33.4)

Non-current financial liabilities 435.6 480.7

Other non-current liabilities 92.7 77.0

Current financial liabilities 25.1 28.3

Other current liabilities 190.0 195.5

total equity and liabilities 724.7 748.1

Assets€ million 31.12.2012 31.12.2011

Intangible and tangible assets 353.3 278.5

Other non-current assets 9.4 8.2

Inventories 152.2 139.6

Trade receivables 129.0 148.0

Other current assets 80.8 173.8

total assets 724.7 748.1

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OXEA S.à r.l.

third optional redemption of 5% of the outstanding Senior Secured Notes in August 2012 with a total amountof€47.1millionin2012andadividendpaymenttoshareholdersintheamountof€50.0mil-lion.Thenetincreaseinequityismainlyaresultofnetincomefortheperiodof€69.7millionpartlyoffsetbydividendpaymentstoshareholdersof€50.0million.

ThenoncurrentfinancialliabilitiesconsistoftheSeniorSecuredNotes(withanominalvalueof€300millionandUS$260million,thereofalreadyredeemed€43millionandUS$37million)netoftherelated costsoffinancing,whichwillbeamortizedoverfiveyears,aswellasshareholderloansof€20million.

Other non-current and current liabilities comprise mainly trade payables, provisions for personnel ex-penses and other costs, deferred and current tax liabilities. In 2012, these liabilities and provisions increasedby€10.0million,primarilyduetoahigherleveloftradepayablespartlycompensatedbylower tax liabilities.

2.3 Financing policy

The purpose of our financing policy is to secure liquidity, to limit risks and to optimize our capital costs through an adequate capital structure. The realization of OXEA’s financing policy is determined by its operational activities and the strategic orientation of the group. As in prior years, all regulations and other requirements set out in the financial contracts were strictly adhered to in 2012.

In July 2010 OXEA FINANCE & Cy. S.C.A. issued Senior Secured Notes split into two tranches. The EURtrancheamountsto€300millionatan interest rateof9.625%,theUSDtrancheamountstoUS$260 million at an interest rate of 9.5%, both of which are repayable on July 16, 2017.

Due to the continuous strong cash generation in 2012, OXEA decided to partially repurchase its Se-niorSecuredNotes.OnJune15,2012,OXEAFINANCE&CyS.C.A.redeemed€14.3millionaggre-gate principal amount of the Euro Senior Secured Notes and $12.4 million aggregate principal amount of the Dollar Senior Secured Notes. On August 10, 2012, OXEA FINANCE & Cy S.C.A. redeemed €13.5millionaggregateprincipalamountoftheEuroSeniorSecuredNotesand$11.7millionaggre-gate principal amount of the Dollar Senior Secured Notes. At the reporting date, the nominal value of theSeniorSecuredNotesamountsto€257millionandUS$223million.

Net financial debt and net leverage€ million 31.12.2012 31.12.2011

Cash and cash equivalents 28.3 125.2

Non-current financial liabilities 435.6 480.7

net financial debt 407.3 355.5

EBITDA 193.1 204.2

net financial debt/EBitDA 2.1 1.7

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OXEA S.à r.l.

3.1 Environment, health and safety (EHS)

Environmental protection, safety and health are ranked number one within the values of OXEA. For the OXEA Group, EHS (Environment, Health and Safety) goals were defined for the period from Janu-ary 1 to December 31, 2012. The following table shows the EHS goals and the number of 2012 inci-dents as a measure of goal achievement:

The internationally applied OSHA indicator for work related injuries LTIR (Lost Time Injury Rate) was 0.08 (2011: 0.09). The OIR rate (OSHA Incident Rate), i.e., the total of IWLT (Injury Without Lost Time) and LTIR, also was 0.41 (2011: 0.09) due to four K II incidents. For the German sites, the Thousand Man Quota (accident rate per thousand employees) reached 0.88 (2011: 0.9). These data prove that we had an excellent safety performance in 2012.

incidents 2012 threshold target Stretch

Environmental

KI–Major 0 3 1 0

KII–Serious 0 4 2 1

Fire & explosion

KI–Major 0 0 0 0

KII–Serious 0 2 1 0

Injury

KI–LTI 1 2 1 0

KII–IWLT 4 4 2 1

3. Environment, health, safety and REACH

A liquidity reserve in the form of credit lines under the Senior Facilities Agreement and, where neces-sary, cash is maintained to guarantee the solvency and financial flexibility of OXEA at all times. Group Treasury performs liquidity analyses on a regular basis documented in regular liquidity reports to Management.InJuly2010,OXEAS.àr.l.andotherOXEAcompaniesenteredintoa“SeniorFacilitiesAgreement”withDeutscheBankAGandotherlendersinordertosecureanyshorttermborrowingrequirementsforthenextfiveyears.WithinthisfacilityOXEAhasavailableatotalcreditlineof€118.8million.Ofthat,guaranteesintheamountof€19.3millionhavebeendrawn.Undrawnfacilitiesamountto€99.5millionpluscashathandof€28.3million.

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OXEA S.à r.l.

In the reporting period no fire and explosion incident and environmental incident of category I or II oc-curred. This completes the excellent 2012 EHS performance of OXEA.

3.2 REAcH

By 2012, REACH (Registration, Evaluation, Authorisation and Restriction of Chemical substances) re-lated processes have been well established within OXEA and will be further developed on an ongoing basis. Our Amsterdam Esters Plant (AEP) was audited for REACH compliance by Dutch authorities without any findings. New registrations were carried out following new business developments and in anticipation of the 2013 registration deadline. In addition, several dossier updates on substances reg-istered in 2010 became necessary due to new information. But besides an increasing need for cus-tomer support it was also other, secondary REACH processes, namely substance evaluation, dossier compliance checks and test plan evaluation, which have now become operational processes of ECHA and required corresponding attention and support from OXEA.

As of the date of this report, there have been no significant changes in the Company’s situation or the industry environment within which we operate.

Our Global Technology Group supports the production and marketing activities of the OXEA Group. The group’s main focus is to secure and develop OXEA’s existing product and technology portfolio and to support OXEA’s growth strategy. Its main activity is to optimize processes and to further de-velop existing production processes, to develop procedures for the manufacture of new products and to evaluate, in the medium and long-term, the use of alternative production processes and raw ma-terials to the existing one. The Global Technology Group operates a technology Centre at the Ober-hausensitewithlaboratoryandpilotingfacilities.In2012,OXEAincurred€6.7milliononresearch&development expenditures (excluding patent-related costs). The average number of persons em-ployed by the Global Technology Group during the year was 41.

5. Significant events after the balance sheet date

4. Research and development

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OXEA S.à r.l.

6.1 Risk management

GeneralThe goal of risk management is to identify and to evaluate risks at the earliest possible stage, and to limit such risks through adequate measures as well as to avoid any risk that might jeopardize our abil-ity to continue as a going concern. Our risk management includes a strategic business planning mod-ule combined with detailed reporting tools which are used as an internal early warning and control system.

All functions report potential risks directly through a risk management system to the Management Team. Moreover, the Management Team submits an annual risk report to the Executive Committee.

Operating risks and impact from REAcHOXEA has high safety standards for the operation of its plants to protect employees and the environ-ment and has established a clear code of conduct and company principles. It has also taken organi-zational measures to avoid illegal acts or non-compliance with guidelines.

The European Chemicals Directive setting forth the terms for the registration, evaluation, authoriza-tion and restriction of chemicals and for the establishment of a European Office for Chemical Sub-stances (REACH) came into force on July 1, 2007. According to our estimates, compliance with REACHrequirementsresultsinanannualexpenditureofsome€1to€2million.

As an international group, OXEA is exposed to various risks. To minimize the financial impact of potential damages, insurance contracts, where available and economically reasonable, have been concluded. Material insurance policies protect OXEA from the consequences of a complete or partial destruction of its production plants (e.g., by fire or explosion), and from the consequences of the related interruption of business operations. OXEA also has insurance policies to cover risks associ-ated with product, business and environmental liabilities. The extent and amount of insurance cover-ages is constantly reviewed by OXEA in cooperation with external advisors.

Financial risksThe protection against financial risks is a material part of the risk management system of OXEA and is based on detailed guidelines and instructions and is controlled by Management. Compli-ance with the requirements set out in the financing contracts for the corporate bonds and the facilities agreements granted are regularly ensured by a stringent contract management and forecasts of the agreed financial ratios (financial covenants).

6. Risk management and outlook

25


OXEA S.à r.l.

Principles of financial risk management OXEA is exposed in particular to risks from movements in exchange rates and market prices that af-fect its assets, liabilities and forecasted transactions. Financial risk management aims to limit these market risks attributable to ongoing operational and finance activities. Selected derivative and non-derivative hedging instruments are used for this purpose, depending on the risk assessment. How-ever, OXEA only hedges the risks that affect the group’s cash flow. Derivatives are exclusively used as hedging instruments, i.e., not for trading or other speculative purposes. To reduce the credit risk, hedging transactions are generally only concluded with leading financial institutions with high ratings. In addition, the credit risk of derivative financial instruments with a positive fair value as well as the bank counterparty risk in general is minimized by way of limit management, which sets individualized figures for risk exposure depending on the counterparty’s rating. The fundamentals of OXEA’s finan-cial policy are established each year by the Executive Advisory Committee and overseen by the Board of Directors. Group Treasury is responsible for implementing the finance policy and for ongoing financial risk management. Certain transactions require the prior approval of the Board of Directors, which is also regularly informed about the extent and the amount of the current risk exposure. Trea-sury regards effective management of the financial market risk as one of its main tasks. The depart-ment performs simulation calculations using different worst-case and market scenarios so that it can estimate the effects of different conditions in the financial markets.

commodity price risksOXEA is exposed to fluctuations in raw material prices. These result primarily from the following raw materials: propylene, natural gas, precious metals and electricity. OXEA has not used commodity de-rivatives to hedge the commodity price risk but enters into short-term and long-term purchase con-tracts with the suppliers of these commodities, to ensure volumes at a price based on market prices for contracts instead of spot prices.

currency risksCurrency risks as defined by IFRS 7 arise on account of financial instruments being denominated in a currency that is not the functional currency and being of a monetary nature; differences resulting from the translation of financial statements into the group’s reporting currency are not taken into con-sideration. OXEA is exposed to currency risks from its investing, financing and operating activities. Financing and operating risks from foreign currencies are generally hedged to the extent that they in-fluence the group’s cash flows. Foreign currency risks that do not influence the group’s cash flows (i.e., the risks resulting from the translation of assets and liabilities of foreign operations into the group’s reporting currency) are generally not hedged. Foreign currency risks in the area of investment result, for example, from the acquisition and disposal of investments in foreign companies. OXEA may hedge these risks. At the reporting date, OXEA was not exposed to any significant risks from for-eign currency transactions in the field of investments. Foreign currency risks in the financing area are caused by financial receivables to third parties or group companies in foreign currency and by loans in foreign currencies that are extended between group entities for financing purposes. OXEA hedges

26


OXEA S.à r.l.

these risks. Currency derivatives are used to convert financial obligations and inter-company loans denominated in foreign currencies into the group entities’ functional currencies. At the reporting date, most financial liabilities were denominated in the functional currency of the respective group compa-ny, whereas the other ones were mostly hedged. Therefore, OXEA was not exposed to any significant currency risks in this respect.

Foreign currency risks in the operating area result from supplies and deliveries in the non-functional currency. However, the individual group entities mainly execute their operating activities in their re-spective functional currency. Overall, a relevant foreign currency position of OXEA exists only in USD. Currency risks resulting from operating activities in non-functional currencies are hedged by Treasury. Therefore OXEA’s assessment to exchange rate risk from ongoing operations is low. For the presen-tation of market risks, IFRS 7 requires sensitivity analyses that show the effects of hypothetical chang-es of relevant risk variables on profit or loss and shareholder’s equity. At the reporting date, 68% of total USD currency positions are hedged. An in-crease/decrease of the EUR/USD FX-rate of 10% wouldresultinaloss/profitof€1.2millionforOXEA.

interest rate risksOnce a year, the Executive Advisory Committee stipulates the desired mix of fixed and variable inter-est net financial liabilities. Currently OXEA is not exposed to interest rate risks. The existing long-term financing has fixed rate coupons. Drawings under the Senior Facilities Agreement expose OXEA to an interest rate risk. There were no such drawings at December 31, 2012. Therefore 100% (prior year: 100%) of the net financial liabilities denominated in EUR and 100% (prior year: 100%) of the net fi-nancial liabilities denominated in USD have a fixed rate of interest at December 31, 2012. At the re-porting date, there were no interest rate derivatives in the portfolio of OXEA.

Other price risksAs part of the presentation of market risks, IFRS 7 also requires disclosures on how hypothetical changes in risk variables (e.g., stock exchange prices) affect the price of financial instruments. There are no important risk variables applicable for OXEA.

27


OXEA S.à r.l.

credit and default risksOXEA is exposed to credit and default risks from its operating activities and certain financing activ-ities. With regard to financing activities, transactions are only concluded with leading financial institu-tions. At the level of operations, the outstanding receivables are continuously monitored. Credit risks are taken into account through individual and collective impairments. The carrying amounts of all fi-nancial assets, including derivatives with positive market values, plus the nominal value of contingent liabilities represent the maximum credit and default risk. Due to the global activities and the diversi-fied customer structure of the OXEA Group, there is no significant concentration of credit or default risk. In order to manage the credit risk, OXEA requires in some cases security for its open receivables. Atthereportingdate,€27.6millionofreceivablesweresecured,thereof€11.9millionwithlettersofcredit.

liquidity risksIn July 2010 OXEA FINANCE & Cy. S.C.A. issued Senior Secured Notes split into two tranches. TheEURtrancheoriginallyamountedto€300millionataninterestrateof9.625%,ofwhich€15millionwererepaid in2011,€3millionrepurchasedin2011and€28millionrepaid in2012,theUSD-tranche originally amounted to US$260 million at an interest rate of 9.5% of which US$13 million were repaid in 2011 and US$ 24 million in 2012. Both tranches are listed on the EURO MTF Luxembourg Stock Exchange, are fully placed with investors and are due for repayment on July 16, 2017. A liquidity reserve in the form of credit lines under the Senior Facilities Agreement and, where necessary, cash is maintained to guarantee the solvency and financial flexibility of OXEA at all times. Group Treasury performs liquidity analyses on a regular basis documented in regular li-quidity reports to Management. In July 2010 OXEA S.à r.l. and other OXEA companies entered into a“SeniorFacilitiesAgreement”withDeutscheBankAGandotherlendersinordertosecureanyshort-term borrowing requirements for the next five years, which was increased in 2011. Within thisfacilityOXEAhasavailableatotalcreditlineof€118.8million.Atthereportingdate,thenom-inalvalueoftheSeniorSecuredNotesamountsto€257millionandUS$223million.Inaddition,guaranteesintheamountof€19.3millionhavebeendrawn.Undrawnfacilitiesamountto€99.5millionpluscashathandof€28.3million.TheCompanypaysavariablerateofEuribor/USLiborplus margin for credit lines drawn and a commitment fee for credit lines not drawn. The margin de-pends on OXEA’s net debt cover and is determined according to a margin grid with adjustments on a quarterly basis. In December 2011 OXEA GmbH had entered into an Asset Backed Securities Program with Landesbank Baden-Württemberg which provides a facility for the sale of trade re-ceivablesforafundingamountofupto€60millionandUS$25million.Theprogramhasaninitialtenor of five years with a two years extension option and is backed by a commited three years re-volving liquidity line which was renewed in December 2012. Financing costs are market rates for short-term Commercial Paper issuances plus a bank margin for the administration of the program. Atthereportingdatethefundingvolumewas€49.6millionandUS$15.6millionrespectively.Con-sidering the cash collected on receivables sold which has not yet been transferred onwards to the purchaser,thenetfundingimpactasatDecember31,2012is€43.3millionandUS$15.6millionrespectively.

28


OXEA S.à r.l.

internal control and risk management system regarding the accounting processThe internal control system comprises principles, procedures and measures ensuring the effective-ness, efficiency and reliability of the accounting system and ensuring compliance with the appli-cable legal provisions. This also includes the internal audit system in relation to accounting.

Taking account of normal industry standards and statutory provisions, the OXEA Group has estab-lished an internal control and risk management system for the group accounting process with the purpose of identifying possible risks and of minimizing such risks through appropriate measures. Qualified personnel, suitable equipment, the use of adequate software as well as clear legal and internal rules provide the basis for a proper, uniform and continuous accounting process. OXEA has clearly defined responsibilities as well as various control and verification mechanisms. These measures ensure that the accounts of the OXEA Group are prepared on a uniform basis and in ac-cordance with legal requirements, generally accepted accounting principles, international financial reporting standards and internal group guidelines. This also guarantees the uniform and correct recognition and measurement of transactions throughout the whole group, based on statutory dis-closure requirements.

Market risksBesides the risks associated with the development of general economic conditions, fluctuations in demand from important customers represent risks on the sales market. OXEA counteracts these risks through its active Customer Relationship Management System and other strategic measures and product optimization processes. However, a further financial crisis/economic slowdown occurring worldwide with the related reduction in capacity utilization and a decrease in sales volume could also have long-term consequences for the OXEA Group.

6.2 Outlook

Global growth is projected to increase during 2013, as the factors underlying soft global activity are expected to subside. Policy actions have lowered acute crisis risks in the euro-zone and the United States. But in the euro-zone, the return to recovery after a protracted contraction is delayed. While Japan has slid into recession, stimulus is expected to boost growth in the near term. How the world’s economy performs will essentially depend on the key political decisions and strategic measures tak-en by leading industrial nations.

The near-term outlook for the euro-zone has been revised downward according to the IMF, even though progress in national adjustment and a strengthened EU-wide policy response to the euro area crisis reduced tail risks and improved financial conditions for sovereigns in the periphery. Europe`s activity is now expected to contract by 0.2% in 2013.

29


OXEA S.à r.l.

In the United States growth forecast is to average 2% in 2013. The underlying economic conditions remain on track. In particular, a supportive financial market environment and the turnaround in the housing market have helped to improve household balance sheets and should underpin firmer con-sumption growth in 2013.

While Asia will not be immune to a weak development in the euro-zone, growth in the region is ex-pected to remain resilient and will probably continue to be the strongest in the world (around 7.1%). Chinese growth is expected to hold up and further enforce Asia’s growth prospects.

Global growth will strengthen gradually through 2013, averaging 3.5% on an annual basis, a moder-ate uptick from 3.2% in 2012. A further strengthening to 4.1% is projected for 2014, assuming recov-ery takes a firm hold in the euro-zone economy.

We anticipate that the chemical industry will continue a solid growth of around 3.5% for 2013. While Europe and the United States are expected to experience a slight growth of 1.0%, the growth in Asia's chemical production is expected to be considerably higher with a rate of around 6.5-7.5% mainly driven by the strong contribution from the Chinese chemical industry, which is expected to ex-perience a growth of 9.5%.

OXEA anticipates that its segments will outperform the wider economy next year. It will benefit from stronger economic momentum in individual regions and market segments as well as from focusing on higher margin products. In order to serve the fast-growing demand for Oxo derivatives in China and Asia, OXEA is building its first chemical plant in Nanjing/China. These strategic measures together with continued high investments in debottlenecking and growth projects should be the basis for fur-ther growth in the upcoming years, both in volumes and operating profits. We therefore expect further increases in sales, margins and EBITDA for the years 2013 and 2014.

On the basis of the currently available information, OXEA assumes a positive overall development for the group in the foreseeable future and there are no substantial individual risks at the present time or in the foreseeable future that endanger its continued existence. The total sum of individual risks also does not pose a threat to the continued existence of the OXEA Group.

Luxembourg, February 28, 2013

Board of Management

Reinhard Gradl François Bourgon Michael J. Ristaino Godfrey Abel Fergal O'Hannrachain

OXEA S.à r.l.

ANNUAL REPORT

30 CONSOLIDATED FINANCIAL STATEMENTS 2012

OXEA S.à r.l.

Consolidated Financial Statements ANNUAL REPORT

31

TAbLE OF CONTENTS

consolidated Financial StatementsConsolidated Statement of Income 32Consolidated Statement of Comprehensive Income 32Consolidated Statement of Financial Position 33Consolidated Statement of Changes in Equity 34Consolidated Statement of Cash Flows 35Notes to the Consolidated Financial Statements 36

Report of the Réviseur d’entreprises agréé 90

32

ANNUAL REPORT Consolidated Financial Statements

OXEA S.à r.l.

Consolidated Statement of Income€ ’000 note 2012 2011

Revenue 2 1,458,934 1,479,307

Cost of sales (1,270,490) (1,273,931)

Gross profit 188,444 205,376

Selling expense (16,668) (15,531)

General and administrative expense (20,641) (22,070)

Research and development expense (6,853) (6,439)

Other operating income 3 91,522 86,616

Other operating expense 4 (67,853) (68,425)

Operating profit 167,951 179,527

Financial result thereof share of loss of associates: €1,326thousand(2011:€1,303thousand)

5 (56,114)

(55,866)

income before income taxes 111,837 123,661

Income taxes 6 (42,076) (46,644)

net income for the period 69,761 77,017

Attributable to:

Non-controlling interest 14 8

Owners of the company 69,747 77,009

The notes on pages 36 to 89 are an integral part of these Consolidated Financial Statements.

Consolidated Statement of Comprehensive Income€ ’000 note 2012 2011

net income for the period 69,761 77,017

Foreign currency translation differences for foreign operations (1,710) 1,072

Defined benefit plan actuarial gains (losses) 18 (8,277) 477

Income tax on other comprehensive income 6 2,814 (150)

Other comprehensive income for the period, net of income tax (7,173) 1,399

total comprehensive income for the period 62,588 78,416

Attributable to:


Owners of the company 62,574 78,408

total comprehensive income for the period 62,588 78,416

33

OXEA S.à r.l.


EQuity AnD liABilitiES

Subscribed capital 873 873

Capital surplus 17,974 19,048

Legal reserve 87 87

Retained earnings (44,119) (61,597)

Translation reserve 6,110 7,820

total equity attributable to owners of the company (19,075) (33,769)


total equity 17 (18,733) (33,441)

Provisions for pensions 18 32,892 22,681

Other provisions 19 6,084 7,946

Deferred tax liabilities 6 53,646 46,264

Financial liabilities 20 435,646 480,684

Other liabilities 20 82 274

non-current liabilities 528,350 557,849

Trade accounts payable 156,600 125,426

Other provisions 19 8,654 12,128

Tax liabilities 6 2,709 35,415

Financial liabilities 20 25,136 28,274

Other liabilities 20 22,006 22,491

current liabilities 215,105 223,734

total equity and liabilities 724,722 748,142

Consolidated Statement of Financial Position€ ’000 note December 31, 2012 December 31, 2011

ASSEtS

Intangible assets 8, 9 6,862 7,852

Property, plant and equipment 8, 10 346,452 270,634

Investments accounted for using the equity method 8, 11 2,301 2,311

Financial assets 8, 12 235 1,779

Deferred tax assets 6 6,057 2,773

Other receivables and miscellaneous non-current assets 15 820 1,363

non-current assets 362,727 286,712

Inventories 13 152,164 139,594

Trade accounts receivable 14 129,027 147,964

Other receivables and miscellaneous current assets 15 52,521 44,906

Financial assets 12 – 3,723

Cash and cash equivalents 16 28,283 125,243

current assets 361,995 461,430

total assets 724,722 748,142


34


OXEA S.à r.l.

Consolidated Statement of Changes in Equity 2011 € ’000

Sub- scribed capital

capital surplus

legal

Reserve

Retained earnings

trans-lation

reserve

total

non- controlling

interest

total

equity

Balance at January 1, 2011 873 20,276 – (86,850) 6,748 (58,953) 320 (58,633)

Net income – – – 77,009 – 77,009 8 77,017

Allocation of results – – 87 (87) – – – –

Other comprehensive income

Foreign currency translation differences – – – – 1,072 1,072 – 1,072

Defined benefit plan actuarial gains and losses, net of tax – –

– 327 – 327

– 327

total other comprehensive income – –

– 327 1,072 1,399 – 1,399

Total comprehensive income for the period – –

87 77,249 1,072 78,408 8 78,416

transactions with owners, recorded directly in equity

Capital withdrawal/contribution – (1,228) – (51,996) – (53,224) – (53,224)

Balance at December 31, 2011 873 19,048 87 (61,597) 7,820 (33,769) 328 (33,441)

Consolidated Statement of Changes in Equity 2012 € ’000

Sub- scribed capital

capital surplus

legal

Reserve

Retained earnings

trans-lation

reserve

total

non- controlling

interest

total

equity

Balance at January 1, 2012 873 19,048 87 (61,597) 7,820 (33,769) 328 (33,441)

Net income – – – 69,747 – 69,747 14 69,761

Other comprehensive income

Foreign currency translation differences – – – – (1,710) (1,710) – (1,710)

Defined benefit plan actuarial gains and losses, net of tax

–

–

–

(5,463)

–

(5,463)

–

(5,463)

total other comprehensive income

–

–

–

(5,463)

(1,710)

(7,173)

–

(7,173)

Total comprehensive income for the period

–

–

–

64,284

(1,710)

62,574

14

62,588

transactions with owners, recorded directly in equity

Capital withdrawal/contribution – (1,074) – (46,806) – (47,880) – (47,880)

Balance at December 31, 2012 873 17,974 87 (44,119) 6,110 (19,075) 342 (18,733)


35

OXEA S.à r.l.


Consolidated Statement of Cash Flows€ ’000 note 2012 2011

net income 69,761 77,017

Depreciation and amortization of intangible assets, property, plant and equipment and financial assets

8 25,155 24,665

Income tax expense 6 42,076 46,644

Financial result 5 56,114 55,866

Losses on disposal of fixed assets 1 460 939

Changes in pension provisions and other non-cash items (11,385) 6,308

total non-cash items 112,420 134,422

Interest received 481 372

Income taxes paid (66,147) (38,804)

cash movement in interest received and income taxes (65,666) (38,432)

cash movement before changes in working capital and provisions 116,515 173,007

Changes in inventories (13,816) (4,615)

Changes in receivables and other operating assets 15,250 56,475

Changes in other operating liabilities and provisions 26,012 (31,587)

cash provided by operating activities 143,961 193,280

Payments related to intangible assets and property, plant and equipment (95,801) (36,198)

cash used in investing activities (95,801) (36,198)

Repayment to shareholders 1 (50,000) (55,000)

Repayment of financial liabilities 1 (47,108) (26,703)

Interest and other financial expense paid (47,879) (49,020)

cash used in financing activities (144,987) (130,723)

Effects on cash and cash equivalents from foreign exchange rates (133) 204

net changes in cash and cash equivalents 24 (96,960) 26,563

cash and cash equivalents at beginning of period 125,243 98,680

cash and cash equivalents at end of period 16 28,283 125,243


36


OXEA S.à r.l.

a General information

The Company was founded as of December 1, 2006 and registered as ADVENT OXO S.à r.l. (herein-after referred to as OXEA S.à r.l.) in the commercial register of Luxembourg (Registre de Commerce etdesSociétésLuxembourg–B122023)onDecember18,2006andhasitsregisteredofficeat47,Grand Rue, 1661 Luxembourg, Luxembourg.

The OXEA Group (hereinafter referred to as OXEA) commenced operations on March 1, 2007. The business comprises the former Celanese polyols and olefine derivatives and solvents businesses and the operations of European OXO GmbH. The product range covers basic aldehydes, higher alde-hydes, alcohols, amines, carboxylic acids, esters and other derivatives. OXEA has experience and know-how in oxo chemicals and derivatives production and is a market leader in products such as butylacetates, n-propanol, butanols, C3/C4-amines, n-propyl acetate, carboxylic acids, butyralde-hyde, TCD derivatives and 2-ethylhexanol.

The Consolidated Financial Statements of OXEA S.à r.l. have been audited by KPMG Luxembourg S.à r.l., Luxembourg.

In accordance with IFRS, the fiscal year of the Consolidated Financial Statements equates to the business year of the parent company.

b Basis of preparation and measurement

The Consolidated Financial Statements of OXEA S.à r.l. for the fiscal year from January 1 to December 31, 2012 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The financial statements of OXEA S.à r.l. and its subsidiaries included in the Consolidated Financial Statements were prepared using uniform group accounting policies. On February 28, 2013, the 2012 Consolidated Financial Statements were approved by the Board of Management. The functional currency and the reporting currency of OXEA S.à r.l. is the Euro (€).ThereportingispresentedinthousandsofEurosunlessotherwisenoted.

The consolidated financial statements have been prepared on the historical cost basis except for the following items in the statement of financial position:

• derivativefinancialinstrumentsaremeasuredatfairvalue;• availableforsalefinancialassetsaremeasuredatfairvalue;• liabilitiesforcashsettledsharebasedpaymentarrangementsaremeasuredatfairvalue;• liabilityfordefinedbenefitobligationsisrecognizedatthepresentvalueofthedefinedbenefit obligation plus unrecognized actuarial gains less unrecognized actuarial losses;•planassetsaremeasuredatfairvalue.

Notes to the Consolidated Financial Statements

1. OXEA Group

37

OXEA S.à r.l.


c consolidated group

All significant subsidiaries and associates are included in the Consolidated Financial Statements. Subsidiaries are companies that are directly or indirectly controlled by OXEA S.à r.l. and are fully con-solidated. Associates are companies in which OXEA S.à r.l. has a significant influence, and that are neither subsidiaries nor joint ventures. Associates are accounted for using the equity method. On October 17, 2012 OXEA Hungary has been merged into OXEA GmbH. Furthermore, OXEA Nanjing, a newly established company which invests in a chemical plant in China, has been included in consol-idation for the first time.

The composition of OXEA is as follows:

December 31, 2012 December 31, 2011

Consolidated subsidiaries 21 21

Associates accounted for using the equity method 1 1

total 22 22

Subsidiaries

name and registered office

OXEA S.à r.l. share in % as of

December 31, 2012

OXEA S.à r.l. share in % as of

December 31, 2011

OXEA Holding S.à r.l., Luxembourg 100 100

OXEA Germany GmbH, Oberhausen 100 100

OXEA Beteiligungs GmbH, Oberhausen 100 100

OXEA Holding GmbH, Oberhausen 100 100

OXEA GmbH, Oberhausen 100 100

OXEA Infrastruktur GmbH & Co. KG, Oberhausen 98 98

OIG OXEA Infrastruktur GmbH, Oberhausen 100 100

OXEA Japan KK, Tokyo/Japan 100 100

OXEA Singapore PTE. LTD., Singapore 100 100

OXEA Nederland B.V., Rotterdam/The Netherlands 100 100

OXEA China LTD., Changzhou/China 100 100

OXEA Hungary Vagyonkezelö Kft, Budapest/Hungary – 100

OXEA UK LTD., Reigate Surrey/UK 100 100

OXEA Holding LLC, Dallas, TX/USA 100 100

OXEA Corporation, Dallas, TX/USA 100 100

OXEA Bishop LLC, Bishop, TX/USA 100 100

OXEA Finance S.à r.l., Luxembourg 100 100

OXEA Finance LLC, Dallas, TX/USA 100 100

OXEA FINANCE & Cy. S.C.A., Luxembourg 100 100

OXEA do Brasil Participações Ltda., São Paulo/Brazil 100 100

OXEA International GmbH, Oberhausen 100 100

OXEA (Nanjing), Advanced Derivatives Ltd., Nanjing China 100 –

38


OXEA S.à r.l.

d Redemption of Senior Secured notes and dividend payment

OnJune15,2012,OXEAFINANCE&CyS.C.A.redeemed€14.3millionaggregateprincipalamountof the Euro Senior Secured Notes and $12.4 million aggregate principal amount of the Dollar Senior SecuredNotes.OnAugust10,2012,OXEAFINANCE&CyS.C.A.redeemed€13.5millionaggregateprincipal amount of the Euro Senior Secured Notes and $11.7 million aggregate principal amount of theDollarSeniorSecuredNotes.OXEApaidapremiumof3%(€1.4million)onthenominalvalueofthe Senior Secured Notes redeemed. On November 21, 2012, OXEA redeemed convertible preferred equity certificates (CPECs) for a total consideration of €44.3million plus accrued interest onCPECS of €0.7millionandpaidadividendof€5.0milliontooneoftheshareholders,OXEA Associ-ates GmbH & Co. KG.

e Segment information and description

Segment reporting is undertaken on the basis of operating segments. An operating segment is a component of OXEA that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of OXEA’s other com-ponents.

OXEA has two reportable segments, as described below, these segments offer different products and services, and are managed separately because they require different technology and marketing strat-egies. The structure of the segments is based on the group’s management and internal reporting structure. For each of the segments, OXEA’s Board of Management reviews internal management reports on at least a quarterly basis.

The following summary describes the operations in the two operating segments:

The ‘‘oxo’’ process transforms olefins, which are unsaturated hydrocarbons such as propylene and ethylene, to aldehydes by adding syngas. These aldehydes, which we mainly use as building blocks to produce other oxo chemicals, and of which the largest is butyraldehyde, are then converted main-ly into alcohols, but also into carboxylic acids, polyols, amines, esters and other downstream deriva-tive products. Oxo chemicals are used in a wide range of applications, including ingredients for coat-ings, synthetic lubricants, polymer plasticizers and agrochemicals. These applications are used in a variety of industries such as automotive, construction, industrial goods, consumer and retail, phar-maceuticals, cosmetics, agriculture, and packaging. We refer to alcohols, aldehydes and esters as

39

OXEA S.à r.l.


Oxo intermediates and we refer to carboxylic acids, polyols, amines, olefin derivatives, specialty esters and certain other products, as Oxo Derivatives. The segment revenues, expenses, assets and liabilities are either directly attributable to a segment or allocated to that segment based on economic principles (e.g., on the basis of revenues).

Revenues include revenue generated primarily through the production and sale of specialty chemi-cals to third parties.

Segment operating assets consist of intangible assets, property, plant and equipment, inventories and trade and other current receivables. They exclude deferred tax assets, financial assets and oper-ating cash. Segment operating liabilities comprise trade payables and current provisions and other liabilities. They exclude items such as provisions for pensions, taxation and financial liabilities. Net operating assets employed are defined as operating assets minus operating liabilities.

Information regarding the results of the segments is included below. Performance is measured based on segment operating profit and EBITDA, as included in the internal management reports. EBITDA is calculated as net income excluding income taxes, financial result and depreciation and amortization.

Capital expenditure comprises additions to tangible and intangible fixed assets, but excludes addi-tions to investments in financial assets, capitalized borrowing costs and assets purchased in acquisi-tions.

40


OXEA S.à r.l.

Segment summary € million

Oxo Derivatives

Oxo intermediates

total operations

Revenues 2012 487.0 971.9 1,458.9

Change from previous year 3.5% (3.7%) (1.4%)

Proportion of total group revenues 33.4% 66.6% 100.0%

Revenues 2011 470.5 1,008.8 1,479.3

Operating profit (EBit) 2012 63.2 104.8 168.0


As a percentage of revenues 13.0% 10.8% 11.5%

Operating profit (EBit) 2011 57.4 122.1 179.5


Depreciation and amortization 2012 9.0 16.1 25.1

Impairment reversals 2012 4.2 – 4.2

Depreciation and amortization 2011 7.8 15.9 23.7

Impairment losses 2011 1.0 – 1.0

EBitDA 2012 72.2 120.9 193.1



EBitDA 2011 66.2 138.0 204.2


capital expenditure 2012 63.4 32.4 95.8

capital expenditure 2011 18.4 17.8 36.2

net operating assets employed 2012

Operating assets 282.4 404,7 687.1

Operating liabilities 62.4 131.0 193.4

net operating assets employed 220,0 273.7 493.7

net operating assets employed 2011

Operating assets 199.5 411.5 611.0

Operating liabilities 52.0 116.3 168.3

net operating assets employed 147.5 295.2 442.7

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OXEA S.à r.l.


Information by geographical region € million

Europe

north America

RoW

total operations

Revenues by destination

2012 700.0 475.7 283.2 1,458.9

Change from previous year (4.1%) 5.0% ( 4.5%) ( 1.4%)

Proportion of total group revenues 48.0% 32.6% 19.4% 100.0%

2011 729.7 453.2 296.4 1,479.3

Proportion of total group revenues 49.3% 30.7% 20.0% 100.0%

By company jurisdiction

Revenues 2012 953.4 493.0 12.6 1,458.9

Revenues 2011 965.0 500.4 13.9 1,479.3

Capital expenditure 2012 73.4 19.3 3.1 95.8

Capital expenditure 2011 28.7 7.5 – 36.2

Intangible assets, property, plant and equipment, investments 2012 238.8 113.7 3.1 355.6

Intangible assets, property, plant and equipment, investments 2011 195.5 85.2 0.1 280.8

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Segmentinformation–reconciliationwithbalancesheetfigures


€ million

Segment operating

assets

non-operating

portion total

Segment operating

assets

non-operating

portion total

a Intangible assets 6.9 – 6.9 7.9 – 7.9

b Property, plant and equipment 346.5 – 346.5

270.6

–

270.6

c Investments accounted for using the equity method – 2.3 2.3

–

2.3

2.3

d Deferred tax assets – 6.0 6.0 – 2.8 2.8

e Inventories 152.2 – 152.2 139.6 – 139.6

f Trade accounts receivable 129.0 – 129.0 148.0 – 148.0

g Financial assets – 0.2 0.2 – 5.5 5.5

h Other receivables and miscellaneous assets 52.5 0.8 53.3

44.2

2.1

46.3

i Cash and cash equivalents - 28.3 28.3 – 125.2 125.2

total assets 687.1 37.6 724.7 610.3 137.9 748.2

j Trade accounts payable 156.6 – 156.6 125.4 – 125.4

k Other provisions and liabilities 36.8 – 36.8

42.9

–

42.9

l Financial liabilities – 460.8 460.8 – 508.9 508.9

m Provisions for pensions – 32.9 32.9 – 22.7 22.7

n Income tax liabilities – 2.7 2.7 – 35.4 35.4

o Deferred tax liabilities – 53.6 53.6 – 46.3 46.3

total provisions and liabilities 193.4 550.0 743.4

168.3

613.3

781.6

net assets / Equity and minority interests 493.7 (512.4) (18.7)

442.0

(475.4)

(33.4)

net operating assets:• operatingassets a–i• operatingliabilities j–o

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Reconciliation of EBIT and EBITDA to net income€ million 2012 2011

net income for the period 69.8 77.0

Income taxes 42.1 46.6

Net financial result 56.1 55.9

Operating profit (EBit) 168.0 179.5

Depreciation and amortization 25.1 24.7

EBitDA 193.1 204.2

f Summary of significant accounting policies

The accounting policies and valuation principles are the same as those used in the previous fiscal year and have been consistently applied. Of course, this does not apply to changes arising from new or amended accounting standards or interpretations that became mandatory for the first time in fis-cal year 2012.

consolidation methodAll business combinations are accounted for using the acquisition method. The acquirer allocates the cost of a business combination by recognizing the acquiree’s identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria at their fair value at the acquisition date. Non-current assets that are classified as held for sale are recognized at fair value less costs to sell. Any excess of the cost of the business combination over the acquirer’s interest in the net fair value of identifiable assets and of the liabilities and contingent liabilities taken over, regardless of the level of the investment held, is recognized as goodwill. Any excess of the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities which exceeds the cost of a busi-ness combination is recognized immediately in profit or loss. Acquisition related costs are expensed in the period incurred for all acquisition after OXEA adopted the revised IFRS 3 in 2009. In the periods following the business combination, any realized differences between the carrying amounts and fair values of assets and liabilities are adjusted, amortized or reversed, in accordance with the treatment of the corresponding assets and liabilities. No goodwill arose from the business combina-tions in 2007 and 2009, nor are any assets held for resale at the balance sheet date. Income and expenses of a subsidiary are included in the consolidated financial statements from the acquisition date until the date on which the parent ceases to control the subsidiary.

Investments in associates accounted for using the equity method are carried at the acquirer’s interest in the identifiable assets (including any attributable goodwill) and liabilities are remeasured to fair value upon acquisition. Unrealized gains and losses from transactions with these companies are eliminated in proportion to the acquirer’s interest.

Eliminations: Transactions between consolidated companies as well as inter-company profits arising from sales and services rendered between group companies are eliminated.

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capital consolidation: Capital consolidation is based on the purchase method. Initially all assets, liabilities and intangible assets that are to be capitalized are valued at fair value. The acquisition cost is then compared with the fair value of the net assets acquired and any difference is capitalized as goodwill. Goodwill is not amortized, but is written down in the case of impairment.

Revenue recognition: Revenue is recognized when the economic benefit is likely to flow to the group and the amount of revenue can be reliably assessed. Revenues from the sale of goods are recognized upon transfer of ownership and risk of the goods sold to the buyer in accordance with standard inco-terms net of rebates and discounts. Revenues exclude any sales taxes.

Foreign currency transactions: Foreign currency transactions are translated into the functional cur-rency at the exchange rate at the date of the transaction. At the balance sheet date, foreign currency receivables and payables are valued at the closing rate. Exchange rate differences are recognized in the income statement.

translation of foreign currency financial statements: The assets and liabilities of group entities whose functional currency is not the Euro are translated into EUR from the local currency using the middle rate at the balance sheet date. The middle rate is the average of the bid and ask rates at clos-ing on the respective dates. The income statements and corresponding profits and losses of group entities denominated in a foreign currency are translated at monthly average exchange rates which approximate the exchange rate at the date of transaction. Exchange rate differences are recognized as a separate component of equity.

The relevant exchange rates used for the US Dollar, which is the significant foreign currency, were as follows:1 € = • RateatJanuary1,2012 1.2939US$• RateatDecember31,2012 1.3194US$• Averagerate2012 1.2848US$

intangible assets with finite useful lives are measured at cost and amortized on a straight-line basis over their useful lives. Such assets are impaired whenever events or changes in circumstances indi-cate that their recoverable amount, which is measured at the higher of fair value less costs to sell and value in use, is lower than the carrying amount. Impairment losses are reversed if the reasons for rec-ognizing the original impairment loss no longer apply. OXEA has capitalized development costs for REACH registration as the criteria described in IAS 38 are met.

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The estimated useful lives for intangible assets with finite lives are as follows:

• Knowhow,patentsandotherproductiontechnologies 2.5–12.0years• Customerrelationshipsandsimilarrights 1.3–8.0years• Software 1.8–5.0years• Otherrightsandvalues 3.0years

OXEA has no intangible assets with infinite useful lives.

Property, plant and equipment is carried at cost less straight-line depreciation and impairment losses. The depreciation period is based on the expected useful life. Items of property, plant and equipment are depreciated pro rata in the year of acquisition. If an item of property, plant and equip-ment consists of several components with different estimated useful lives, the individual significant components are depreciated over their individual useful lives. Costs relating to regularly scheduled maintenance shutdowns are capitalized and depreciated using the straight-line method over the pe-riod to the next planned shutdown. Borrowing costs are capitalized when the criteria of IAS 23 are met.

The estimated useful lives of material asset categories are as follows:

• Buildings 20years• Machinery&technicalequipment 25–40years• Miscellaneousmachineryandequipment 20years• Officeequipment 6–10years

Impairment write-downs are recorded whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The evaluation is based on the present value of expected future cash flows. An impairment write-down is recorded in profit and loss for the difference between the carrying amount of the asset and the recoverable amount. An impairment write-down is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation and amortisation, if no impairment loss has been recognised.

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Emission rights: In 2005 the European Union initiated a system whereby companies are granted cer-tain amounts of rights to emit carbon dioxide. These rights are initially granted free of charge and can be exchanged with other companies. At present, the accounting for such emission rights is not clearly regulated by IFRS. OXEA accounts for these rights as follows: At the time OXEA receives emission rights from the governments, these are not recognized in the balance sheet since the amount paid is nil and the rights are assigned free of charge. In the case where OXEA buys additional emission rights, these rights are recorded at historical cost which is usually the fair value. When the rights are used in operating activities, this is recognized as an expense in the income statement.

Rhodium: OXEA uses rhodium catalysts in its production processes. The base catalyst load con-tained in the reactors is accounted for as a fixed asset. Rhodium catalysts which are being recycled are accounted for as inventory. Inventory quantities are estimated after taking into account expected recovery rates for used catalysts.

leasing: In accordance with IAS 17 leasing contracts are classified as either finance or operating leases. Leased assets classified as operating leases are not capitalized and payments are charged to the income statement in the year in which they are incurred. A lease is classified as a finance lease if it transfers substantially all of the risks and rewards related to its ownership. Leased assets classified as finance leases are initially recorded at the lower of the fair value or the present value of the mini-mum lease payments and depreciated over the shorter period of the useful life of the asset or the lease term. Lease payments are apportioned between the interest component and the principal com-ponent. The principal component reduces the liability whilst the interest component is recorded as interest expense.

Financial instruments: Financial assets and financial liabilities are recorded on the balance sheet when OXEA enters into an agreement about a financial instrument. Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or when the financial as-set with all risks and rewards of ownership is transferred. Financial liabilities are derecognized when the contractual obligation expires or is discharged or cancelled. Standard purchases and sales of financial instruments are recognized upon the settlement date. Financial assets include, in particular, cash and cash equivalents, trade receivables and other originated loans and receivables, available- for-sale financial instruments and derivative and non-derivative financial assets held for trading as well as derivatives in a cash flow hedge relationship. Financial liabilities generally substantiate claims for repayment in cash or another financial asset. In particular, this includes trade payables, liabilities to banks, liabilities to shareholders, finance lease payables, derivatives held for trading, derivatives in a cash flow hedge relationship and financial guarantee contracts. Financial assets and liabilities are divided into the following valuation categories:

Financial assets and liabilities that are measured at fair value and recognized in income consist of derivatives and other trading instruments.

loans and receivables comprise financial assets with fixed or determinable payments, which are not quoted on an active market and are not derivatives or classified as available-for-sale. This cate-gory includes trade receivables, other receivables and short-term assets and other long-term assets.

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Initial valuation is at fair value, which generally equates to the nominal value of the receivable or loan. Subsequent measurements are at amortized cost under consideration of the effective interest rate method. The insurance claims are recorded at the present value of the possible recovery amounts, considering the best estimate of future cash inflows discounted with the refinancing rate of the insurer.

If there is objective evidence for an impairment of a receivable or a loan, an individual valuation ad-justment is undertaken. Such evidence could be when the financial difficulties of a debtor become known or payment delays occur. When assessing the need for an impairment, regional and sector specific conditions are considered. In certain instances, impairment losses on trade accounts receiv-able are recognized using allowance accounts. The decision to account for credit risks using an al-lowance account or by an individual valuation adjustment depends on the reliability of the risk as-sessment. As there is a wide variety of business areas and regional circumstances, this decision is the responsibility of the portfolio managers in question.

OXEA sells certain trade accounts receivable both on an ongoing and one-time basis to special pur-pose entities, which are not required to be consolidated. Financial assets sold under these arrange-ments are derecognized from accounts receivable at the time of sale if it is assured that the cash flows related to those receivables will be passed through to the acquirer and substantially all risks and rewards have been transferred. If substantially all risks and rewards have neither been transferred nor retained, financial assets are excluded from the books at the time of the sale if it is assured that the cash flows of the receivables will be passed through to the acquirer and the acquirer has gained control over the receivables. If substantially all risks and rewards have been retained financial assets remain in OXEA’s balance sheet as collateral.

cash and cash equivalents, which include cash accounts and short-term cash deposits at banks, have maturities of up to three months when initially recognized and are measured at amortized cost.

Available-for-sale financial instruments comprise financial assets which are not derivatives and do not fall under any of the previous categories. Initial valuation is at fair value. Subsequent changes in fair value are booked to equity under other comprehensive income. Available-for-sale financial instru-ments whose fair value cannot be reliably determined are carried at historical cost and are written down in the event of impairment. For these investments, the book value represents the best estimate of value.

If there is objective evidence for an impairment of an available-for-sale financial instrument, impair-ment write-downs are made. Objective evidence that an investment in an equity security is impaired includes a significant or prolonged decline in its fair value below its cost. Impairment losses on avail-able-for-sale investment securities are recognized by transferring the cumulative loss that has been recognized in other comprehensive income, and presented in the fair value reserve in equity, to prof-it or loss. The cumulative loss that is removed from other comprehensive income and recognized in profit or loss is the difference between the acquisition cost, net of any principal repayment and amor-tization, and the current fair value, less any impairment loss previously recognized in profit or loss.

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Changes in impairment provisions attributable to time value are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security in-creases and the increase can be related objectively to an event occurring after the impairment loss was recognized in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss. However, any subsequent recovery in the fair value of an impaired avail-able-for-sale equity security is recognized in other comprehensive income.

Financial liabilities are initially valued at fair value which usually equates to the amount received. Subsequent valuations are generally undertaken at amortized cost under consideration of the effec-tive interest rate method. This category includes trade payables, liabilities to banks, Senior Secured Notes, liabilities to shareholders and financial lease liabilities.

Financial guarantees of OXEA are contracts that require payments to be made to the guarantee holder if a debtor fails to make payment when due under terms of the financial guarantee. Financial guarantees are measured at fair value upon initial recognition. In future periods, financial guarantees are carried at the higher of amortized cost and the best estimate of the present obligation on the fi-nancial reporting date.

Derivatives within OXEA are generally used for hedging purposes. Changes in the fair value of such derivatives almost completely offset the change in the value of the underlying contracts. Derivatives thatarenotpartofaneffectivehedgingrelationshipassetoutinIAS39areclassifiedas“heldfortrading”andchangesarereportedatfairvaluethroughtheincomestatement.Ifthefairvaluesarenegative, the derivatives are recognized as financial liabilities. OXEA uses derivatives to hedge cur-rency risks resulting from its operating, financing, and investing activities. The company does not hold or issue derivatives for speculative trading purposes.

Derivatives are carried at their fair value upon initial recognition and subsequent measurement dates. The fair value of traded derivatives is equal to their market value, which can be positive or negative. If there is no market value available, the fair value is calculated using standard financial valuation models.Recordingthechangesinthefairvalues–ineithertheincomestatementordirectlyinequity–dependsonwhetherornotthederivativeispartofaneffectivehedgingrelationshipassetoutinIAS 39. If no hedge accounting is employed, the changes in the fair values of the derivatives are recognized in the income statement. If, on the other hand, an effective hedging relationship as set out in IAS 39 exists, the hedge will be recognized as described below.

Derivative financial instruments can be embedded within other contracts. If IFRS prescribes separa-tion, then the embedded derivative is recorded separately from the base contract and shown at fair value. At OXEA, convertible preferred equity certificates provided by the shareholders include such embedded derivatives.

OXEA has not yet made use of the option of designating financial instruments upon initial recognition as financial instruments at fair value through the income statement.

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OXEA employs derivatives that are not part of hedge accounting according to IAS 39 but which make an effective contribution to hedging the financial risk in accordance with the principles of risk man-agement. Furthermore, in accordance with IAS 39, OXEA does not use hedge accounting to hedge the foreign currency exposure of recognized monetary assets and liabilities. The gains and losses on the hedged item from currency translation that are recognized in profit or loss in accord ance with IAS 21 are shown in the income statement together with the gains and losses on the derivatives.

cash flow hedges are used to hedge against fluctuations in future cash flows from assets and liabil-ities recognized in the balance sheet, or from highly probable forecasted transactions. If a cash flow hedge is employed, the effective portion of the change in the fair value of the hedging instrument is recognized in equity (other comprehensive income) until the gain or loss on the hedged item is real-ized; the ineffective portion of the hedging instrument is recognized in the income statement. In the case of currency risks, the change in the fair value resulting from spot rate changes is designated as the hedged risk. The interest component is separated from the hedge in accordance with IAS 39.74 (b). If a hedge of a forecast transaction subsequently results in the recognition of a financial or non-financial asset or liability, the associated cumulative gains and losses that were recognized directly in equity are reclassified into profit or loss in the same periods during which the financial asset acquired or the financial liability assumed affects profit or loss for the period. In doing so, OXEA has decided not to make use of the basis adjustment option for hedging forecast transactions when non-financial balance sheet items arise.

inventories encompass assets held for sale in the ordinary course of business (finished goods and merchandise), assets in the process of being manufactured for sale (work in process) and assets con-sumed during the production process (raw materials and supplies). They are valued by the weighted-average method and recognized at the lower of cost and net realizable value, which is the estimated selling price in the ordinary course of business less the estimated remaining production costs and selling expenses.

The cost of production comprises the direct cost of materials, direct manufacturing expenses and ap-propriate allocations of fixed and variable material and manufacturing overheads at normal capacity utilization, where these are attributable to production.

Borrowing costs incurred in the course of production are not included in the acquisition or production cost of inventories as the products are not manufactured using long-term production processes.

Given the production and distribution sequences characteristic of OXEA, work in process and fin-ished goods are grouped together.

Pension obligations and other employee benefits: Provisions for pensions relate to obligations to employees. Liabilities for defined benefit plans are measured using the projected unit credit method, taking into account not only the pension obligations and vested pension rights known at the report-ing date, but also expected future salary and benefit increases. Actuarial gains and losses arising

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from experience-based adjustments and changes in actuarial assumptions are recorded directly in equity. Service costs are classified as operating expenses. Interest costs are charged to the financial result. The amounts payable under defined contribution plans are expensed when the contributions are due and classified as operating expenses. Past service costs are recognized immediately to the extent that the benefits are vested; otherwise, they are recognized on a straight-line basis over the average remaining vesting period. For funded plans, OXEA offsets the fair value of the plan assets with the benefit obligation.

Other provisions are recognized where OXEA has legal or constructive obligations to third parties on the basis of past transactions or events that will probably require an outflow of resources to settle the obligation, and this outflow can be reliably measured. These provisions are carried at their discounted expected settlement amount, taking into account all identifiable risks.

Provisions for contracts under early retirement programs, long service and anniversary bonuses are calculated based upon actuarial principles. For signed contracts under the early retirement programs, provisions for the present value of supplemental payments are made in their full amount and the wage and salary payments due in the inactive phase are accrued in installments and discounted. Provisions are recorded for the expected costs that are anticipated to be contracted during the term of the collective bargaining agreements, taking into account the ceilings provided in those agreements. Pro-visions are established for certain environmental protection measures and risks if these are likely to be necessary as a result of legal or regulatory obligations and these measures are not capitalized.

tax liabilities mainly comprise liabilities for domestic and foreign income taxes. They include liabil-ities for the current period as well as for prior periods. The liabilities are measured based on the applicable tax law in the countries in which OXEA operates.

Deferred tax assets and liabilities are recognized for temporary differences between the carrying amounts in the consolidated balance sheet and the tax base and on tax loss carry-forwards. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Deferred tax is provided on temporary differ-ences arising on the investments in subsidiaries and associates, except where the timing of the re-versal of the temporary difference is controlled by the group and it is probable that the temporary dif-ference will not reverse in the foreseeable future. Deferred tax is not recognized if it arises from the initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Currently enacted tax laws and tax laws that have been substantively enacted as of the balance sheet date are used as the basis for measuring deferred taxes.

Segment reporting is undertaken on the basis of operating segments. An operating segment is a component of OXEA that engages in business activities from which it may earn revenues and incur expenses. All operating segments’ operating results are reviewed regularly by OXEA’s Board of Man-agement to allow decisions to be made about resources to be allocated to the segment and to assess its performance. Segment results that are reported to the Board of Management include items direct-ly attributable to a segment as well as those that can be allocated on a reasonable basis.

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contingencies (contingent liabilities and assets) are potential liabilities or assets arising from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not entirely within the control of OXEA. Contingent liabilities can also be obligations that arise from past events for which an outflow of resources embodying economic benefits is not probable or for which the amount of the obligation cannot be measured reliably. Contingent lia bilities are only recognized at their fair value if they were assumed in the course of a business combination. Contingent assets are not recognized but disclosed in the notes to the Con-solidated Financial Statements, if applicable. Information on contingent liabilities is disclosed in the notes to the Consoli dated Financial Statements, unless the possibility of an outflow of economic benefits is remote.

use of estimates and judgementsThe presentation of the results of operations, financial position or cash flows in the Consolidated Financial Statements is dependent upon and sensitive to the accounting policies, assumptions and estimates used by Management. The actual amounts may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

The following critical accounting estimates and related assumptions and uncertainties inherent in ac-counting policies applied are essential to understand the underlying financial reporting risks and the effects that these accounting estimates, assumptions and uncertainties have on the Consolidated Financial Statements. For funded plans, OXEA offsets the fair value of the plan assets with the ben-efit obligation.

Measurement of property, plant and equipment, and intangible assets involves the use of estimates for determining the fair value at the acquisition date, in particular in the case of such assets acquired in a business combination. Furthermore, the expected useful lives of these assets must be estimated. The determination of the fair values of assets and liabilities, as well as of the useful lives of the assets is based on Management’s judgement. The determination of impairments of property, plant and equipment, and intangible assets involves the use of estimates that include, but are not limited to, the cause, timing and amount of the impairment.

Impairment and their reversals are based on a large number of factors, such as changes in current competitive conditions, expectations of growth, increased cost of capital, changes in the future avail-ability of financing, technological obsolescence, current replacement costs, prices paid in compara-ble transactions and other changes in circumstances that indicate that an impairment exists. The re-coverable amount and the fair values are typically determined using a discounted cash flow method which incorporates reasonable market participant assumptions. The identification of impairment indi-cators, as well as the estimation of future cash flows and the determination of fair values for assets (or groups of assets) require Management to make significant judgements concerning the identifica-tion and validation of impairment indicators, expected cash flows, applicable discount rates, useful lives and residual values.

Rhodium catalysts which are being recycled are accounted for as inventory. The respective inventory quantities are estimated after taking into account expected recovery rates for used catalysts.

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Measurements of insurance claims involves the use of estimates and judgements for the determina-tion of the future cash inflows and certain other assumptions.

The establishment of provisions for litigation, pensions and other employee benefits, taxes, environ-mental protection, inventory valuation, sales allowances, product liability and guarantees as well as deferred taxes involve the use of estimates and therefore is based on Management’s judgement. Es-timates are based on historical experience and other assumptions that are considered reasonable un-der the circumstances. Actual values may vary from the estimates. The estimates and the assump-tions are continually reviewed.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes:

• Note9,10–measurementofproperty,plantandequipmentandintangibleassets• Note18 –measurementofdefinedbenefitobligations• Note19 –otherprovisions• Note23 –measurementoffinancialinstruments

Recently adopted accounting pronouncementsIn the fiscal year 2012, OXEA adopted the following standards, interpretations and amendments to already existing standards:

In June 2011, the IASB issued amendments to iAS 1”PresentationofFinancialStatements”requiringcompanies to group together items within OCI that may be reclassified to the profit or loss section of the income statement. The application of the amendments is compulsory for fiscal years beginning on or after July 1, 2012, while earlier application is permitted. OXEA early adopted these amendments as of December 31, 2012.

In June 2011, the IASB issued iAS 19“EmployeeBenefits”(revised2011;IAS19R).IAS19Relimi-nates the corridor approach and requires immediate recognition of all actuarial gains and losses in the other comprehensive income. These changes do not have an impact on OXEA, because it has not made use of the corridor method. Actuarial gains and losses have already been recognized in line item OCI. IAS 19 revised also prescribes immediate recognition of all past service costs and the replacement of interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability/asset. The application of the amendments is compulsory for fiscal years beginning on or after July 1, 2012, while earlier appli-cation is permitted. The revised standard was early adopted by OXEA as of December 31, 2012. No significant effects on OXEA’s consolidated financial statements have been emerged from these amendments.

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In October 2010 the IASB issued amendments to iFRS 7“FinancialInstruments:Disclosures”whichbasically aim at improving the understanding of transfer transactions of financial assets. The amend-ments increase the disclosure requirements for transfers of financial assets where the transferor retains continuing involvement in the transferred asset; additional disclosures are required if a dispro-portionate amount of transfer transactions are undertaken around the end of a reporting period. The application of the amendments is compulsory for fiscal years beginning on or after July 1, 2011, while earlier application is permitted. The additional disclosure requirement of IFRS 7 has been compiled within the Group’s consolidated financial statements.

Recent accounting pronouncements, not yet adoptedThe following pronouncements, issued by the IASB, are not yet effective and have not yet been ad-opted by OXEA:

In May 2011, the IASB completed its improvements to the accounting requirements for off balance sheet activities and joint arrangements by issuing iFRS 10 “Consolidated Financial Statements”,iFRS 11“JointArrangements”,iFRS 12“DisclosureofInterestsinOtherEntities”andconsequentialamendments to iAS 27“SeparateFinancialStatements”andiAS 28“InvestmentsinAssociatesandJointVentures”.

IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.

IFRS 11 provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities.

IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off bal-ance sheet vehicles.

IFRS 10, 11, 12 and the consequential amendments to IAS 27 and IAS 28 are effective for annual periods beginning on or after January 01, 2013. These new or amended standards may be adopted early, however all as of the same date, except that an entity may early adopt the disclosure provisions of IFRS 12. The standards are to be applied on a retrospective basis. Currently, OXEA does not expect the amendments to have any relevance for the group’s consolidated financial statements.

InOctober2012,theIASBissued“InvestmentEntities”asamendmentstoiFRS 10, iFRS 12 and iAS 27 regarding the accounting of investment entities. The amendments define investment entities and provide an exception to the general consolidation requirements of subsidiaries in IFRS 10; instead of

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consolidating, those subsidiaries are measured at fair value through profit or loss. In addition, the amendments set out disclosure requirements for investment entities. The amendments are effective for fiscal years beginning on or after January 1, 2014, while earlier application is permitted. The amendment is not endorsed by the European Union yet .Currently, OXEA does not expect the amend-ments to have any relevance for the Group’s consolidated financial statements.

InJune2012,theIASBissued“ConsolidatedFinancialStatements,JointArrangementandDisclo-suresinOtherEntities:TransitionGuidance”amendmentsto iFRS 10, iFRS 11 and iFRS 12. The amendments clarify the transition guidance and provide reliefs for the fiscal years beginning on or after January 1, 2013, while earlier application is permitted. The amendment is not endorsed by the European Union yet. Currently, OXEA is assessing the impacts of the adoption on its consolidated financial statements.

InMay2012 the IASB issued the fourthomnibusstandard“Improvements to IFRS”aspartof its annual improvement process project. This standard slightly adjusts five standards (iAS 1, iAS 16, iAS 32, iAS 34, and iFRS 1). The amendments are effective for fiscal years beginning on or after January 1, 2013, while earlier application is permitted. Currently, OXEA does not expect the adoption of the amendment–ifendorsedbytheEU–tohaveamaterialimpactonthegroup’sconsolidatedfinancialstatements.

In December 2011, the IASB issued amendments to iAS 32,“Financial Instruments:Presentation”and iFRS 7“FinancialInstruments:Disclosures”regardingoffsettingoffinancialassetsandfinancialliabilities. The amendment to IAS 32 clarifies the existing offsetting rules to eliminate inconsistencies in current practice. The amendment is compulsory for fiscal years beginning on or after January 1, 2014 and shall be applied retrospectively; earlier application is permitted. However it requires the application of the amendments to IFRS 7. These amendments to IFRS 7 expand the disclosure requirements for financial assets and liabilities offset in the statements of financial position including netting agreements where netting is subject to certain future events. This amendment is effective for reporting periods beginning on or after January 1, 2013. Currently, OXEA does not expect the adop-tion of both amendments to have a material impact on its consolidated financial statements.

In May 2011, the IASB issued iFRS 13“FairValueMeasurement”.Thenewstandarddefinesfairvalue and standardizes disclosures on fair value measurements of both financial and non-financial instru-ment items. The new standard is applicable for annual periods beginning on or after January 1, 2013; early adoption is permitted. OXEA will adopt IFRS 13 in 2013. Regarding financial instruments, the majority of changes required by IFRS 13 have already been introduced, mainly by amendments to IFRS7“FinancialInstruments:Disclosures”.Thereforethecompanyexpectsonlyaminorimpactonits consolidated financial statements upon adopting IFRS 13.

55

OXEA S.à r.l.


Revenue breaks down into the following regions:

Revenues comprise only revenues from sales of goods.

2. Revenue

€ ’000 2012 2011

Europe 700,024 729,705

North America 475,713 453,216

Rest of the world 283,197 296,386

total 1,458,934 1,479,307

In November 2009, the IASB issued iFRS 9“FinancialInstruments”.Thisstandardisthefirstphaseof the IASB’s three-phase project to replace IAS 39, Financial Instruments: Recognition and Measure-ment. IFRS 9 amends the classification and measurement requirements for financial assets, including some hybrid contracts. It uses a single approach to determine whether a financial asset is measured at amortized cost or at fair value, replacing the different rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the different impairment methods in IAS 39. In December 2011, the IASB deferred the mandatory effective date from annual reporting periods beginning on or after January 1, 2013 to annual reporting periods beginning on or after January 1, 2015; early application is permitted. The IASB also provided relief from restating comparative financial statements for the ef-fect of applying IFRS 9; instead additional transition disclosures will be required. The European Finan-cial Reporting Advisory Group postponed its endorsement advice, to take more time to consider the output from the IASB project to improve accounting for financial instruments. OXEA is currently as-sessing the impacts of adopting IFRS 9 on its consolidated financial statements.

The IASB issued various other pronouncements. These recently adopted pronouncements as well as pronouncements not yet adopted do not have a material impact on OXEA’s consolidated financial statements.

56


OXEA S.à r.l.

3. Other operating income

€ ’000 2012 2011

Income from site services 70,097 68,247

Income from insurance claims 18,056 15,183

Other 3,369 3,186

total 91,522 86,616

4. Other operating expense

€ ’000 2012 2011

Expenses for site services (64,965) (64,102)

Other (2,888) (4,323)

total (67,853) (68,425)

Expenses for site services relate to costs incurred for services provided by OXEA to customers at its production sites in Oberhausen, Marl and Bay City.

Income from site services relates to services provided by OXEA and third parties to customers at its production sites in Oberhausen, Marl and Bay City. Income from insurance claims relates to reimbursements and claims in connection with equipment damages on sites which were insured by respective insurance contracts.

57

OXEA S.à r.l.


6. Income taxes

5. Financial result

€ ’000 2012 2011

Interest income 534 623

Interest expenses to third parties (44,985) (45,284)

Interest on shareholder loans (2,160) (2,248)

Share of loss of joint ventures accounted for using the equity method

(1,326)

(1,303)

Interest expenses from defined benefit plans (1,138) (1,015)

Gains from foreign currency transactions 15,398 13,838

Losses from foreign currency transactions (15,392) (15,620)

Other (7,045) (4,857)

total (56,114) (55,866)

€ ’000 2012 2011

Current period taxes (32,089) (38,426)

Adjustment for prior periods (2,506) (307)

current taxes (34,595) (38,733)

Deferred tax expensethereof origination and reversal of temporary differences €4,101(prioryear:€8,814income) (7,481)

(7,911)

total tax expense (42,076) (46,644)

In 2012, in Germany, a uniform corporate tax rate of 15% and thereon a solidarity surcharge of 5.5% is levied on all earnings. In addition to corporate income tax, income generated in Germany is subject to a trade tax that varies depending on the municipality in which the company is located.

During 2012, the overall average income tax rate remained stable at the previous year’s level (35%). While the deferred taxes in Germany as of December 31, 2012 were calculated with a tax rate of 35% (prior year: 35%), for group members outside Germany, a respective national tax rate is ap-plied. In 2012, such rates ranged from 21.5% to 40.7%.

58


OXEA S.à r.l.

2012 2011

€ ’000 in % € ’000 in %

Expected income tax by use of local rates 39,142 35.0 43,281 35.0

Tax-free income (342) (0.3) (239) (0.2)

Tax effect from non-deductible expenses 1,188 1.1 856 0.7

Change in tax rates 762 0.7 (818) (0.7)

Adjustment of prior year taxes 2,868 2.6 2,397 1.9

Tax effect from investments accounted for at equity – – 430 0.3

Other differences (1,542) (1.4) 737 0.7

income taxes/effective tax rates 42,076 37.6 46,644 37.7


€ ’000

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Intangible assets 3,999 1,669 5,419 1,816

Property, plant and equipment 903 55,286 792 53,322

Financial assets – – – 37

Inventories and accounts receivable 481 10,373 682 2,296

Provisions for pensions 5,973 – 2,803 –

Other provisions and liabilities 1,655 559 1,899 1,064

Tax loss carry-forwards and tax credits 4,928 – 1,664 –

Other 2,359 – 1,785 –

Netting (14,241) (14,241) (12,271) (12,271)

total 6,057 53,646 2,773 46,264

Reconciliation from the group tax rate to the effective tax rate:

OXEA is operating mainly in Germany and North America. Therefore the expected tax rate is calcu-lated by taking the profit before tax in the respective countries multiplied with the local tax rates, for Germany 34.0% (prior year: 33.0%) and for North America 36.0% (prior year: 36.0%). Deferred taxes result primarily from temporary differences between tax balances and the valuation of assets and liabilities according to IFRS, as well as from tax loss carry-forwards. In 2007 the revaluation of all the assets and liabilities associated with the purchase price allocation according to IFRS 3 resulted in sig-nificant deviations between fair values and the values in the tax accounts. This has primarily led to deferred tax liabilities. No deferred tax liabilities for outside basis differences are recognised, as the realisation of such differences is not planned.

The valuation of deferred tax assets depends on the estimation of probability of a reversal of the val-uation difference. A deferred tax asset is recognized for future tax benefits arising from temporary dif-ferences, tax loss carry-forwards and tax credits. Based on experience and the expected develop-ment of taxable income, it is assumed that the benefit of deferred tax assets recognized will be realized. Deferred tax assets on tax loss carry-forwards exist in Germany and have been fully recog-nized as of December 31, 2012. Deferred tax assets were offset against deferred tax liabilities if they related to the same taxation authority.

59

OXEA S.à r.l.


2012 2011

€ ’000changes

before taxDeferred

taxes

net of taxchanges

before taxDeferred

taxes

net of tax

Defined benefit plan actuarial gains (losses)

(8,277)

2,814

(5,463) 477 (150) 327

total (8,277) 2,814 (5,463) 477 (150) 327

7. Personnel expenses

€ ’000 2012 2011

Wages and salaries (95,063) (89,270)

Social security contributions and expenses for pensions (24,055) (21,351)

thereof for pension benefits (1,230) (1,231)

total (119,118) (110,621)

Average number of employees 2012 2011

Europe 1,164 1,138

thereof Germany 1,138 1,112

North America 229 215

Asia Pacific 13 12

OXEA Group 1,406 1,365

thereof with trainee contracts 78 73

The differences between deferred taxes of the prior year and the current year are recognized in de-ferred tax income (expense) and in other comprehensive income (see following table), if they relate to pensions.

The following table provides a breakdown of the personnel expenses included in the functional costs:

60

Acquisition costs

Amortisation / Depreciationnet book

valuenet book

value

€ ’000 Balance as of

01.01.2012

Additions

Disposals

transfers

translation difference

Balance as of

31.12.2012

Balance as of

01.01.2012

Additions

Disposals

Reversal of impairment

loss


Balance as of

31.12.2012

Balance as of

31.12.2012

Balance as of

31.12.2011

intAnGiBlE ASSEtS

Patents, licenses and similar rights 25,323 254 (16) 295 (11) 25,845 (19,498) (1,679) 16 234 3 (20,924) 4,921 5,825

Other intangibles 2,227 110 – – – 2,337 (200) (196) – – – (396) 1,941 2,027

total intangible assets 27,550 364 (16) 295 (11) 28,182 (19,698) (1,875) 16 234 3 (21,320) 6,862 7,852

PROPERty, PlAnt AnD EQuiPMEnt

Land, land rights and buildings 53.526 5,036 (3,533) 4,186 (153) 59,062 (12,626) (2,574) 3,528 163 14 (11,495) 47,567 40,900

Machinery and technical equipment 290,776 16,312 (3,099) 23,283 (1,740) 325,532 (93,929) (20,015) 2,640 3,378 177 (107,749) 217,783 196,847

Other equipment and fixtures 6,722 626 (72) 331 (21) 7,586 (2,962) (702) 63 47 49 (3,505) 4,081 3,760

Construction in progress 30,263 75,878 – (28,095) (275) 77,771 (1,136) 11 – 371 4 (750) 77,021 29,127

total property, plant and equipment

381,287

97,852

(6,704)

(295)

(2,189)

469,951

(110,653)

(23,280)

6,231

3,959

244

(123,499)

346,452

270,634

FinAnciAl ASSEtS AnD inVEStMEntS

Investments at equity 2,320 – (10) – – 2,310 (9) – – – – (9) 2,301 2,311

Financial assets 2,987 – (2,751) – (1) 235 (1,208) – 1,207 – 1 – 235 1,779

total financial assets 5,307 – (2,761) – (1) 2,545 (1,217) – 1,207 – 1 (9) 2,536 4,090

total 414,144 98,216 (9,481) – (2,201) 500,678 (131,568) (25,155) 7,454 4,193 248 (144,828) 355,850 282,576

Acquisition costs


valuenet book

value

€ ’000

Balance as of 01.01.2011

Additions

Disposals

transfers




Additions

Disposals

transfers





intAnGiBlE ASSEtS

Patents, licenses and similar rights 24,565 600 (184) 224 118 25,323 (17,563) (2,005) 184 – (114) (19,498) 5,825 7,002


total intangible assets 26,656 736 (184) 224 118 27,550 (17,577) (2,191) 184 – (114) (19,698) 7,852 9,079


Land, land rights and buildings 52,249 815 (107) 376 193 53,526 (10,004) (2,599) 16 (3) (36) (12,626) 40,900 42,245

Machinery and technical equipment 276,254 9,304 (2,629) 4,189 3,658 290,776 (74,326) (19,044) 887 28 (1,474) (93,929) 196,847 201,928

Other equipment and fixtures 6,001 393 (104) 378 54 6,722 (2,286) (687) 53 (25) (17) (2,962) 3,760 3,715

Construction in progress 11,207 24,046 (12) (5,167) 189 30,263 (974) (144) – – (18) (1,136) 29,127 10,233


345,711

34,558

(2,852)

(224)

4,094

381,287

(87,590)

(22,474)

956

–

(1,545)

(110,653)

270,634

258,121



Financial assets 3,080 11 (122) – 18 2,987 (1,237) – 30 – (1) (1,208) 1,779 1,843

total financial assets 5,443 11 (165) – 18 5,307 (1,246) – 30 – (1) (1,217) 4,090 4,197

total 377,810 35,305 (3,201) – 4,230 414,144 (106,413) (24,665) 1,170 – (1,660) (131,568) 282,576 271,397

8. Fixed assets

61

Acquisition costs


valuenet book

value

€ ’000 Balance as of

01.01.2012

Additions

Disposals

transfers


Balance as of

31.12.2012

Balance as of

01.01.2012

Additions

Disposals

Reversal of impairment

loss


Balance as of

31.12.2012

Balance as of

31.12.2012

Balance as of

31.12.2011

intAnGiBlE ASSEtS

Patents, licenses and similar rights 25,323 254 (16) 295 (11) 25,845 (19,498) (1,679) 16 234 3 (20,924) 4,921 5,825


total intangible assets 27,550 364 (16) 295 (11) 28,182 (19,698) (1,875) 16 234 3 (21,320) 6,862 7,852


Land, land rights and buildings 53.526 5,036 (3,533) 4,186 (153) 59,062 (12,626) (2,574) 3,528 163 14 (11,495) 47,567 40,900

Machinery and technical equipment 290,776 16,312 (3,099) 23,283 (1,740) 325,532 (93,929) (20,015) 2,640 3,378 177 (107,749) 217,783 196,847

Other equipment and fixtures 6,722 626 (72) 331 (21) 7,586 (2,962) (702) 63 47 49 (3,505) 4,081 3,760

Construction in progress 30,263 75,878 – (28,095) (275) 77,771 (1,136) 11 – 371 4 (750) 77,021 29,127


381,287

97,852

(6,704)

(295)

(2,189)

469,951

(110,653)

(23,280)

6,231

3,959

244

(123,499)

346,452

270,634



Financial assets 2,987 – (2,751) – (1) 235 (1,208) – 1,207 – 1 – 235 1,779

total financial assets 5,307 – (2,761) – (1) 2,545 (1,217) – 1,207 – 1 (9) 2,536 4,090

total 414,144 98,216 (9,481) – (2,201) 500,678 (131,568) (25,155) 7,454 4,193 248 (144,828) 355,850 282,576

Acquisition costs


valuenet book

value

€ ’000


Additions

Disposals

transfers




Additions

Disposals

transfers





intAnGiBlE ASSEtS

Patents, licenses and similar rights 24,565 600 (184) 224 118 25,323 (17,563) (2,005) 184 – (114) (19,498) 5,825 7,002


total intangible assets 26,656 736 (184) 224 118 27,550 (17,577) (2,191) 184 – (114) (19,698) 7,852 9,079


Land, land rights and buildings 52,249 815 (107) 376 193 53,526 (10,004) (2,599) 16 (3) (36) (12,626) 40,900 42,245

Machinery and technical equipment 276,254 9,304 (2,629) 4,189 3,658 290,776 (74,326) (19,044) 887 28 (1,474) (93,929) 196,847 201,928

Other equipment and fixtures 6,001 393 (104) 378 54 6,722 (2,286) (687) 53 (25) (17) (2,962) 3,760 3,715

Construction in progress 11,207 24,046 (12) (5,167) 189 30,263 (974) (144) – – (18) (1,136) 29,127 10,233


345,711

34,558

(2,852)

(224)

4,094

381,287

(87,590)

(22,474)

956

–

(1,545)

(110,653)

270,634

258,121



Financial assets 3,080 11 (122) – 18 2,987 (1,237) – 30 – (1) (1,208) 1,779 1,843

total financial assets 5,443 11 (165) – 18 5,307 (1,246) – 30 – (1) (1,217) 4,090 4,197

total 377,810 35,305 (3,201) – 4,230 414,144 (106,413) (24,665) 1,170 – (1,660) (131,568) 282,576 271,397

62


OXEA S.à r.l.

9. Intangible assets

AsofDecember31,2012borrowingcostsintheamountof€2.5millionwerecapitalizedasthecriteria of IAS 23 were met, using a capitalization rate of 10.6%.

Since 2008, OXEA tested its cash generating unit OXEA Bishop LLC (legal entity) for impairment an-nuallyandrecognisedanaccumulatedimpairmentlossof€5.1millionwithrespecttointangibleas-sets(€0.5million)andproperty,plantandequipment(€4.6million).In2012,€4.2millionofthelosswerereversedandrecognizedinthecostofsales(ofwhich€0.2millionrelatetointangibleassets).The reversal of impaiment loss has been allocated to the Oxo Derivatives segment, where it was orig-inally recognized. During the fourth quarter of 2012, OXEA assessed that the previously recognised impairment loss has reversed. As a result of an improved economic siuation, particulary favorable raw material price developments as well as investing and marketing activities combined with improved production efficiencies, the operating profit and EBITDA of the cash generating unit increased signif-icantly.

For the reversal of impairment loss, the recoverable amount of the long-lived assets of OXEA Bishop was determined and compared to the carrying amount. Based on OXEA`s test, the estimated recov-erableamountwas€7.7millionandexceeded thecarryingamount (thatwouldhavebeendeter-mined,netofdepreciationoramortization,ifnoimpairmentlosshadbeenrecognized)by€3.5mil-lion.

OXEA`s impairment calculation according to the fair value less cost to sell is based upon future esti-mated cash flows which are obtained from internal forecasts with a five year forecasting horizon. For the impairment testing procedure the planning assumptions were critically reviewed. The cash flows are discounted with the rate for the weighted average cost of capital (WACC) amounting to 9.17% (2011: 9.17%). The growth rate has been determined to be 0.0% (2011: 0.0%).

Duringthefinancialyear2012,expendituresof€13.3million(prioryear:€7.0million)havebeenrec-ognized in the carrying amount of property, plant and equipment in the course of construction.

Property,plantandequipmentofOXEACorporationandOXEAGmbHintheamountof€325.1million(prioryear:€259.0million)arepledged.

Intangibleassetsincludepatentsof€2.2million(prioryear:€2.7million),customerrelationshipsof€0.3million(prioryear:€0.5million)andsoftware,rightsandotherintangibleassetsof€2.4million(prioryear:€2.4million).CostsforREACHregistrationof€2.1millionareincludedinotherintangibleassets(prioryear:€2.2million).Regardingthereversal of the impairment loss, we refer to note 10. In-tellectual property rights are assigned or pledged as collateral (refer to note 20).

10. Property, plant and equipment

63

OXEA S.à r.l.


OXEA holds a 30% shareholding in the German Pipeline Development Company GmbH (GPDC). This investment is accounted for using the equity method. GPDC itself holds 49.8% of the PRG Propyl-enpipeline Ruhr GmbH & Co KG (PRG), which in 2009 started operating a 54-kilometre propylene pipeline.In2012,GPDCgeneratedapreliminarylossamountingto€0.7million(prioryear:€0.6mil-

11. Investments accounted for using the equity method


€ ’000

total thereof

short-term

total thereof

short-term

Derivatives (recognized at fair value) – – 1 –

Deposits (measured at cost) 233 – 1,770 –

Available-for-sale investments (measured at cost) 2 –

8

–

Available-for-sale securities (recognized at fair value) – –

3,723

3,723

total 235 – 5,502 3,723

12. Financial assets

lion).OXEAhasrecordedexpensesof€1,326thousand(prioryear:€1,303thousand)representingitsshareofthepreliminarylossandfinancingcostofGPDC.In2012,GPDChadtotalassetsof€49.5million(2011:€48.5million)and€42.0million(2011:€40.8million)ofliabilities.Accordingto§8Aofthe Joint Venture agreement OXEA bears 1/3 of the financing cost of GPDC. As OXEA has already paid most of its share of the preliminary loss and financing cost, the equity value is nearly unchanged.

Derivatives are embedded derivatives which reflect the fair value of convertible options relating to the convertible preferred equity certificates.

Shares in funds are used for securing the liabilities of the early retirement program for employees. These funds are held in a trust on behalf of the company. In accordance with IAS 19.131, these funds (plan assets) have now been reclassified and offset from to other provisions in the statement of financial position in ordertopresentthenetliabilityoftheearlyretirementprogram(pleaserefertonote“19.Otherprovisions”).

€ ’000

Original acquisition

cost2012

Book/ market

value 2012

Recognized in other

compre-hensive income

2012

Original acquisition

cost2011

Book/ market

value 2011

Recognized in other

compre-hensive income

2011

Shares in funds – – – 3,723 3,723 –

Investments 2 2 – 8 8 –

total 2 2 – 3,731 3,731 –

64


OXEA S.à r.l.


€ ’000

total

thereof short-term

total

thereof short-term

Trade receivables (gross) 130,199 130,199 149,276 149,276

Allowances (1,172) (1,172) (1,312) (1,312)

total trade receivables (net) 129,027 129,027 147,964 147,964

14. Trade accounts receivable

Raw materials and factory supplies include rhodium catalysts used in the production process. Work-in-progress and finished goods are combined into one item due to the production conditions in the chemical industry. Inventories were valued using the weighted average cost method. Overall, write-downsoninventoryamountedto€1.1millionatDecember31,2012(prioryear:€1.9million).Ofthetotalinventories,€22.3million(prioryear:€55.4million)werevaluedatnetrealizablevalue.Totalma-terialcostsincludedincostofsalesintheincomestatementamountedto€1,004.8million(prioryear:€1,011.5million).

Substantially all inventories of the group are pledged (refer to note 20).


€ ’000 total total

Raw materials and factory supplies 38,427 31,022

Work-in-progress and finished goods 113,737 108,572

total 152,164 139,594

13. Inventories

Investments include the minority investments in two development companies in Germany for which the fair value cannot be reliably measured as no active market exists. Therefore the investments are measured at cost.

65

OXEA S.à r.l.


Tradereceivablesthatarepastdueonthereportingdatebutnotimpairedamountto€6,138thou-sand(prioryear:€2,096thousand).Withrespecttothetradereceivablesthatareneitherimpairednorpast due, there are no indications as of the reporting date that the debtors will not meet their payment obligations.

Substantially all receivables of the group are either assigned and transferred for security purposes or pledged (refer to note 20).

The following table shows the development of allowances on trade receivables:

The total additions relate to allowances for individual impairments. The total utilization relates to the write-off of trade receivables.

All income and expenses relating to allowances and write-offs of trade receivables are reported under selling expenses.

carrying amount

December 31, 2011

thereof: not past due

on the reporting date

thereof: past due on the reporting date in the following periods

€ ’000< 30 days

30 – 60 days

61 – 90 days

> 90 days

Trade receivables (gross) 149,276 145,771 1,117 690 89 1,609

Allowances (1,312) – – – – (1,312)

total trade receivables (net) 147,964 145,771 1,117 690 89 297

carrying amount

December 31, 2012

thereof: not past due

on the reporting date

thereof: past due on the reporting date in the following periods

€ ’000< 30 days

30 – 60 days

61 – 90 days

> 90 days

Trade receivables (gross) 130,199 122,731 5,135 38 49 2,246

Allowances (1,172) – – – – (1,172)

total trade receivables (net) 129,027 122,731 5,135 38 49 1,074

€ ’000 2012 2011

Allowances as of beginning of business year 1,312 1,293

Currency translation adjustments (1) 2

Reversals (215) (103)

Additions (allowances recognized as expense) 76 164

Utilization – (44)

Allowances as of December 31 1,172 1,312

66


OXEA S.à r.l.

Substantially all bank accounts of the group are pledged (refer to note 20).


€ ’000 total total

Cash on hand 6 8

Bank balances 28,277 125,235

total 28,283 125,243

16. Cash and cash equivalents


€ ’000 total

thereof short-term total

thereof short-term

Receivables from insurance claims 18,164 18,164 9,809 9,809

Recoverable other taxes 10,608 10,608 16,875 16,875

Receivables from site services 10,527 10,527 3,646 3,646

Prepaid expenses 6,812 5,992 7,649 6,286

Deposits 5,538 5,538 6,521 6,521

Rebates 668 668 615 615

Derivatives 608 608 21 21

Recoverable income taxes 84 84 332 332

Other 332 332 801 801

total 53,341 52,521 46,269 44,906

15. Other receivables and miscellaneous assets

67

OXEA S.à r.l.


Subscribed capitalThefullypaidinsubscribedcapitalofOXEAS.àr.l.amountsto€872,664,representedby872,664sharesofanominalvalueof€1.00pershare.

capital surplusThe capital surplus as of January 1, 2012 includes shareholders’ contributions in terms of the equity portion and the conversion of the yield-free preferred equity certificates and convertible preferred equitycertificates(CPEC)foratotalamountof€19.0million.

In2012,thecapitalsurpluswasreducedbyanamountof€1.1milliontoreflecttheequityportionofthe convertible preferred equity certificates which was repaid to shareholders. In connection with the partialredemptionoftheCPECs,aredemptionpremiumof€41.8millionwasrecordedinretainedearnings.Theconsiderationpaidforthe1.5millionCPECsredeemedamountedto€44.3million.

24.4 million convertible preferred equity certificates can be converted to equity.

The convertible preferred equity certificates have a maturity date in 2056 and an interest rate of 2%. AsofDecember31,2012€20.5millionareaccountedforasfinancialliabilitiesaccordingtoIAS32.

17. Equity

€ ’000 December 31, 2012 December 31, 2011

in USD 14,929 33,352

in EUR 11,387 90,665

in MXN 829 347

in JPY 408 303

in GBP 216 225

in ZAR 139 99

in TWD 127 128

in SGD 102 86

in BRL 73 28

in CNY 72 10

in HUF 1 –

total 28,283 125,243

The following table shows a breakdown of cash and cash equivalents by currency:

68


OXEA S.à r.l.

OXEA has the right to redeem the convertible preferred equity certificates under certain conditions at their market value on a fully diluted basis, calculated on the basis of the equity value of OXEA. Under the terms of the Indenture and the Senior Facilities Agreement, it is possible to repurchase the CPECs.

legal reservesRetainedearningsof€87thousandwereallocatedinprioryearstothelegalreserveofOXEAS.àr.l.due to statutory requirements.

Retained earningsRetained earnings comprise current year and prior year’s net profits, actuarial gains and losses on pension obligations less the portion of the redemption premium arising on the partial repayment of the convertible preferred equity certificates and dividend payments.

In2012OXEApaidadividendof€5.0milliontoOXEA Associates GmbH & Co. KG.

translation reserveTranslation adjustments due to the use of the current rate are shown under currency translation ad-justments as a component of other comprehensive income in equity and recognized in income only upon the disposal of a company.

non-controlling interestsNon-controlling interests relate to a 2% minority share in OXEA Infrastruktur GmbH & Co. KG.

The provisions for pensions are as follows:

18. Provisions for pensions


€ ’000

total

thereof long-term

thereof short-term

total

thereof long-term

thereof short-term

Provisions for pensions 33,214 32,892 322 22,929 22,681 248

total 33,214 32,892 322 22,929 22,681 248

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OXEA S.à r.l.


Group companies provide retirement benefits for most of their employees, either directly or by con-tributing to independently administered funds. The manner in which these benefits are provided varies according to the legal, fiscal and economic conditions of each country. The benefits are generally based on the employees’ remuneration and years of service. The obligations relate both to existing retirees’ pensions and to pension entitlements of future retirees. Group companies provide retirement benefits under defined contribution and/or defined benefit plans.

Multi-employer planFor German employees, a basic level of benefits is provided by the legally independent funded plan, Pensionskasse der Mitarbeiter der Hoechst-Gruppe VVaG, which is financed by contribution of employees and OXEA and by the return on plan assets.This plan is a multi-employer plan in a form of a defined benefit plan, but is accounted for as a defined contribution plan. The reason for this accounting practice is that the plan exposes the participating companies to actuarial risks associated with the current and former employees of other compannies. There is no consistent and reliable basis for allocating the obligation, plan assets and cost to individual enterprises par-ticipating in the plan. Therefore, the plan is recorded as defined contribution plan in accordance with IAS 19.30.

Based upon the statutory actuarial valuations of 2011, the pension obligations of the plan are fully funded. For 2012, it is expected that the pension fund’s liabilities are fully funded by plan assets. In the case where this multi-employer plan faces a situation where the pension plan liabilities exceed plan assets, this can be remedied by either increasing the employer’s contribution to the pension plan or by reducing the benefits which are paid to entitled parties. In the event that pension plan benefits are reduced, it has to be verified whether this will trigger a requirement for additional funding by the employer. This decision is at the discretion of the board of the pension fund, which comprises repre-sentatives of the participating companies and employee representatives.

Other defined contribution plansIn the case of other defined contribution plans, which relate primarily to US employees, the company pays contributions to privately administered pension insurance plans on a mandatory, contractual or voluntary basis. Once the contributions have been paid, the company has no further payment obliga-tions. The regular contributions constitute expenses for the year in which they are due and as such are charged against operating income. In 2012, these expenses for defined contribution plans totalled €3,632 thousand (prior year: €3,743 thousand). In addition, contributions topublicpensionplanswere€7,654thousand(prioryear:€7,689thousand)in2012.

OXEAexpectstomakecashcontributionsof€3.8milliontoitsdefinedcontributionplansin2013.

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€ ’000 2012 2011 2010 2009 2008

Experience-related adjustments 3,261 (559) 811 1,141 (244)

Defined benefit obligation 33,214 22,929 21,467 17,782 14,874


Discount rate 3.25% 5.0%

Projected salary increase 2.75% 3.0%

Projected pension increase 2.0% 2.0%

Defined benefit plans All other retirement benefit plans are defined benefit plans, which are unfunded, i.e., financed by pro-visions. The actuarial valuations using the projected unit credit method per IAS 19 were undertaken using the following assumptions:

Assumptions regarding future mortality are based on published statistics and mortality tables. Age and gender specific fluctuation likelihoods were taken into account. The status of unfunded defined pension benefit obligations were computed as follows based on the above parameters:

The experience-related adjustments, which are the differences between the earlier actuarial assump-tions applied and actual developments, are as shown in the following table (based on the pension benefit plans as of December 31):

€ ’000 2012 2011

Defined benefit obligation as of January 1 22,929 21,467

Benefits paid (222) (165)

Current service cost 1.016 1,059

Interest cost 1.138 1,015

Termination benefits 76 30

Net actuarial (gains) and losses 8.277 (477)

Defined benefit obligation as of December 31 33.214 22,929

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The cost for the defined benefit pension plans are comprised as follows:

The expense is recognized in the following line items in the Statement of Income:

Expected payments from pension obligations existing at December 31, 2012 are as follows:

The actuarial gains and losses related to defined benefit obligations recognized separately in the Statement of Comprehensive Income are as follows:

Actuarial gains and losses are recorded in accordance with IAS 19.93A.

€ ’000 2012 2011

Accumulated actuarial (gains) losses relating to defined benefit obligation at beginning of the year

765 1,242

Newly arisen during the years due to changes in actuarial parameters 8,277 (477)

December 31 9,042 765

€ ’000 2013 2014 2015 2016 2017 2018 – 2022

Pension obligations 326 442 821 859 983 6063

€ ’000 2012 2011

Cost of sales 554 588

Selling expenses 115 98

General and administrative expenses 423 403

Financial result 1,138 1,015

Pension expense 2,230 2,104

€ ’000 2012 2011

Current service cost 1,016 1,059

Interest cost 1,138 1,015

Termination benefits 76 30

Pension expense 2,230 2,104

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OXEA S.à r.l.

The sales and purchase risks provisions cover provisions for warranties, product liability, customer rebates, payment discounts and other price reductions, sales commissions and provisions for expected losses on committed purchases as well as provisions for onerous contracts.

The personnel costs provision includes provisions for obligations for the granting of longservice bonuses and anniversary payments as well as provisions for early retirement programs for employees nearing retirement. OXEA Group companies have various programs that entitle employees who are at least 55 years old to reduce their working hours to 50% for up to six years. Under such arrangements, employees generally work full time during the first half of the transition period and leave the company at the start of the second half. Employees receive a minimum of 85% of their net salary throughout the transition period. In 2012, funds held for securing the liabilities of the early retirement program are reclassifiedforthefirsttimefrom“financialassets”to“otherprovisions”.Thischangeinpresentationhas been made to reflect their net liability as required by IAS 19.131. The plan asset includes invest-ment funds which are measured at fair value based on quoted market prices on an active market.

Environmental protection and remediation costs are related to expected costs for site shutdowns of production units, recultivating landfills and removal of environmental contamination at existing pro-duction or storage sites and other measures.

The development of other provisions is as follows:

€ ’000

Balance as of January

1, 2012

Addi-tions

utili - zation

Rever- sals

transfers

currency trans-lation

Balance as of Dec. 31,

2012

Sales and purchase risks 7,126 4,381 (6,290) (381) – (49) 4,787

Personnel costs 9,430 618 (296) – – – 9,752

Fair value of plan assets (early retirement program)

–

–

–

–

(3,543)

–

(3,543)

Environmental protection and remediation costs

280 – (23) – – – 257

Other 3,238 956 (778) – 73 (4) 3,485

total 20,074 5,955 (7,387) (381) (3,470) (53) 14,738

19. Other provisions


€ ’000

total

thereof short-term

total

thereof short-term

Sales and purchase risks 4,787 4,787 7,126 6,617

Personnel costs 9,752 2,298 9,430 1,993

Fair value of plan assets (early retirement program)

(3,543)

(2,126)

–

–

Environmental protection and remediation costs 257 210 280 280

Other provisions 3,485 3,485 3,238 3,238

total 14,738 8,654 20,074 12,128

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Financial liabilitiesThe financial liabilities as at December 31, 2012 are as follows:

The available facilities are as follows:

20. Liabilities

carrying amounts based on effective interest method

nominal valueEffective

interest rate€ ’000December 31,

2012December 31,

2011

9.625% Senior Secured Notes due 2017 €257,213 10.49% 249,662 274,697

9.5% USD Senior Secured Notes due 2017 US$ 222,918 10.42% 165,495 185,718

Interest on Senior Secured Notes – – 18,817 21,087

Other financial liabilities – – 6,319 7,187

total financial liabilities 440,293 488,689

Convertible preferred equity certificates

20,489

20,269

total liabilities to shareholders 24,402 20,489 20,269

total 460,782 508,958


9.625% Senior Secured Notes due 2017 249,662 274,697

9.5% USD Senior Secured Notes due 2017 165,495 185,718

Revolving facility 59,400 82,100

Ancillary facility 30,400 7,700

Guarantee facility 29,000 29,000

total 533,957 579,215

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OXEA S.à r.l.

In July 2010, OXEA FINANCE&Cy.S.C.A.issued€300,000,0009.625%SeniorSecuredNotesdue2017andUS$260,000,0009.5%SeniorSecuredNotesdue2017(the“Notes”).TheNotesareguar-anteedbycertainOXEAGroupcompanies.TheNotesandtheguaranteesoftheNotes(the“Guaran-tees”)aregeneralobligationsofOXEAFINANCE & Cy. S.C.A. and rank senior in right of payment to any and all of the existing and future indebtedness of OXEA FINANCE & Cy. S.C.A. and the guaran-tors that is subordinated in right of payment to the Notes and the Guarantees. The Notes and the Guarantees also rank equally in right of payment with all existing and future indebtedness of OXEA FINANCE & Cy. S.C.A. and the guarantors that is not subordinated in right of payment to the Notes and the Guarantees, including the Senior Facilities Agreement, and are effectively senior to OXEA FINANCE & Cy. S.C.A.’s and each guarantor’s existing and future unsecured indebtedness to the extent of the collateral securing the Notes and the Guarantees.

All liabilities and financial obligations under the Senior Facilities Agreement are secured by collateral for the benefit of Deutsche Bank AG, London Branch, as well as the other lenders and finance parties thereunder. The liabilities and financial obligations under the Notes and the Guarantees are also secured by the same collateral. The collateral includes pledges over the shares or partnership inter-ests in OXEA Holding S.à r.l., OXEA Holding LLC, OXEA Corporation, OXEA Finance S.à r.l., OXEA Finance & Cy. S.C.A., OXEA Finance LLC, OXEA Bishop LLC, OXEA Germany GmbH, OXEA Beteili-gungs GmbH, OXEA Holding GmbH, OXEA GmbH, OIG OXEA Infrastruktur GmbH, OXEA Infrastruk-tur GmbH & Co. KG, as well as OXEA Nederland B.V. Further, substantially all receivables of OXEA S.à r.l., OXEA Holding S.à r.l., OXEA Germany GmbH, OXEA Beteili gungs GmbH, OXEA Holding GmbH, OXEA GmbH, OXEA Holding LLC, OXEA Corporation, OXEA Finance LLC and OXEA FI-NANCE & Cy. S.C.A. are either assigned and transferred for security purposes or pledged. Most of the bank accounts of OXEA Germany GmbH, OXEA Holding GmbH, OXEA Beteiligungs GmbH, OXEA GmbH, OXEA Holding LLC, OXEA Corporation, OXEA Finance LLC, OXEA Finance S.à r.l. and OXEA FINANCE & Cy. S.C.A. are pledged in favor of Deutsche Bank AG, London Branch, and the other fi-nance parties. Furthermore, machinery, fixed assets, inventories and stock in trade of OXEA Holding LLC, OXEA Corporation, OXEA Finance LLC, OXEA GmbH have been transferred as collateral.

In addition, OXEA GmbH, OXEA Holding LLC, OXEA Corporation and OXEA Finance LLC assigned or pledged their intellectual property rights as collateral. Land owned by OXEA Corporation has been mortgaged. OXEA S.à r.l., OXEA Holding S.à r.l., OXEA Beteiligungs GmbH, OXEA Holding GmbH, OXEA GmbH, OXEA Corporation, OXEA Germany GmbH, OXEA Finance LLC, OXEA Holding LLC, OXEA FINANCE & Cy. S.C.A., OXEA Finance S.à r.l. are guarantors under the Senior Facilities Agree-ment and the Notes. As such, they guarantee the due and punctual performance of obligations on the part of the borrowers and the respective other guarantors under the Senior Facilities Agreement and the due and punctual payment of the financial obligations of OXEA FINANCE & Cy. S.C.A. under the Notes.

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OXEA S.à r.l.


In addition, the Senior Facilities Agreement and the indenture governing the Notes contain customary covenants that restrict, inter alia, the disposal of assets, the granting of collateral to third parties, the distribution of dividends, consolidations, acquisitions and joint ventures, the incurrence of financial liabilities and the granting of guarantees. The Senior Facilities Agreement further requires OXEA to comply with a specified financial ratio in respect of total net leverage. The financial ratio is tested at the end of each financial quarter. OXEA's compliance with all financial covenants is key focus of our financial risk management.

Analysis of financial liabilities by currency€ ’000 December 31, 2012 December 31, 2011

Financial liabilities in EUR 287,886 314,878

Financial liabilities in USD 172,896 194,080

total 460,782 508,958

Financial liabilities€ ’000 December 31, 2012 December 31, 2011

2012 – 28,274

2013 25,136 –

2014 – –

2015 – –

2016 – –

2017 and thereafter 435,646 480,684

total 460,782 508,958

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OXEA S.à r.l.

Stated at nominal value


Guarantees 6,667 6,667

total 6,667 6,667

21. Contingent liabilities and other financial obligations

As at the balance sheet date OXEA has convertible preferred equity certificates at a nominal value of €24.4millionwhichcanbeconvertedtoequity.Thecertificatescontainanequityandaliabilitycom-ponentwhichareclassifiedseparatelyasfinancial liabilities (€20.5million)andequity instruments(€7.5million)inaccordancewithIAS32.Anembeddedderivative,classifiedasafinancialassetheldfor trading, has been separated from the CPECS.

Maturities of liabilitiesDecember 31, 2012 December 31, 2011

€ ’000 < 1 year 1– 5 years > 5 years < 1 year 1– 5 years > 5 years

trade accounts payable 156,600 – – 125,426 – –

Senior Secured Notes – 415,157 – – – 460,415

Liabilities to shareholders – – 20,489 – – 20,269

Interest on Senior Secured Notes 18,817 – – 21,087 – –

Other financial liabilities 6,319 – _ 7,187 – –

Financial liabilities 25,136 415,157 20,489 28,274 – 480,684

Liabilities to employees 12,509 – – 12,037 – –

Liabilities to shareholders – – 82 – – 274

Tax liabilities other than income taxes 2,283 – – 1,054 – –

Advances received on orders 1,966 – – 883 – –

Liabilities to social insurance funds 602 – – 964 – –

Derivatives 175 – – 1,681 – –

Liabilities from social insurance contributions

20

–

–

19

–

–

Other 4,451 – – 5,853 – –

Other liabilities 22,006 – 82 22,491 – 274

total liabilities 203,742 415,157 20,571 176,191 – 480,958

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Maturities of financial obligations

Stated at nominal value

€ ’000 December 31, 2012

due in 2013 35,613

due in 2014 13,814

due in 2015 8,643

due in 2016 7,910

duein2017–2026 54,575

total 120,555

Other financial obligationsStated at nominal value


Obligation arising from long-term leases (excluding finance lease)

104,238

127,968

Purchase commitments 16,317 20,243

Payment and loan commitments and other financial obligations – 715

total 120,555 148,926

Onefinancialguarantee(€6.7million)inconnectionwiththeshareholdingintheGermanPipelineDevelopment Company GmbH is issued by a group company.

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OXEA S.à r.l.

Operating leasesOXEA’s obligations arising from non-cancelable operating leases are mainly related to long-term rent-al or lease agreements for technical equipment, precious metals, motor vehicles, office equipment and network infrastructure.

The operating lease contracts have no purchase options or escalation clauses. No major restrictions such as additional debt or further leasing are imposed by the lease agreements. Minimum lease pay-mentsof €21,259 thousand (prior year: €20,532 thousand) are included in theoperating result in2012. The following table provides a breakdown of the amounts of future operating lease liabilities at the nominal value of the future minimum payments:

The amount of future operating lease liabilities is mainly attributable to a long-term product and sup-ply agreement of synthesis gas at the Oberhausen site.

In the current business year, no additional lease payments arising from contractual obligations were recognized in the income statement in addition to the minimum lease payments.

22. Disclosures on leases


Less than one year 19,295 21,957

1–5years 37,841 41,098

Over 5 years 47,102 64,913

total 104,238 127,968

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OXEA S.à r.l.


Carrying amounts, amounts recognized, and fair values by category:

€ ’000

category in accordance with iAS 39

Recognized in balance sheet in accordance

with iAS 39

carry-ing

amount

Fair

value

carry-ing

amountFair

value

Amor-tized cost

Fair value

recog-nized in

equity

Fair value

recog-nized in

profit and loss

December 31, 2012

December 31, 2011

Assets

Cash and cash equivalents LaR 1) x 28,283 28,283 125,243 125,243

Trade receivables LaR 1) x 129,027 129,027 147,964 147,964

Other receivables LaR 1) x 52,733 52,733 46,248 46,248

Other non-derivative financial assets

Available-for-saleAfS 2)

x 2 2 8 8

financial assets x – – 3,723 3,723

Derivative financial assets

Derivative without a hedging relationship

FAHfT 3)

x 608 608 21 21

liabilities

Trade payables FLAC 4) x 156,600 156,600 125,426 125,426

Liabilities to shareholders

Other interest-bearing liabilities FLAC 4)

x 20,489 20,489 20,269 20,269

Other non-interest- bearing liabilities FLAC 4)

x 82 82 261 261

Other financial liabilities FLAC 4) x 25,136 25,136 28,274 28,274

Senior Secured Notes FLAC 4) x 415,157 456,124 460,415 471,636

Other liabilities FLAC 4) x 8,700 8,700 7,790 7,790

Derivative financial liabilities

Derivative without a hedging relationship FLHfT 5)

x

175

175 1,681 1,681

23. Additional disclosures on financial instruments

1) Loans and receivables (LaR)2) Available-for-sale financial assets (AfS) 3) Financial assets held for trading (FAHfT) 4) Financial liabilities measured at amortized cost (FLAC) 5) Financial liabilities held for trading (FLHfT)

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OXEA S.à r.l.

Cash and cash equivalents and trade and other receivables mainly have short periods to maturity. For this reason, their carrying amounts at the reporting date approximate the fair values. The fair values of other non-current receivables due after more than one year correspond to the present values of the payments related to the assets, taking into account the current interest rate parameters that reflect market and partner-based changes to terms and conditions, and expectations.

Trade and other payables, as well as other liabilities, generally have short periods to maturity; the values reported approximate the fair values. The fair values of the Senior Secured Notes were deter-mined based on bid and ask prices at the balance sheet date in the markets in which OXEA’s Notes are traded. The fair values of other financial liabilities are calculated as the present values of the pay-ments associated with the debts, based on the applicable yield curve and OXEA’s credit spread curve for specific currencies.

Fair value hierarchyThe table below analyzes financial instruments carried at fair value, by valuation method. The differ-ent levels have been defined as follows:• Level1: quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities• Level2: inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheasset

or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)• Level3: inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata (unobservable inputs)

Fair value hierarchy 2012December 31, 2012

€ ’000 level 1 level 2 level 3 total

Available-for-sale financial securities – – – –

Derivatives held for trading – 608 – 608

total – 608 – 608

Derivative financial liabilities held for trading – 175 – 175

total – 175 – 175

Fair value hierarchy 2011December 31, 2011

€ ’000 level 1 level 2 level 3 total

Available-for-sale financial securities 3,723 – – 3,723

Derivatives held for trading – 21 1 22

total 3,723 21 1 3,745

Derivative financial liabilities held for trading – 1,681 – 1,681

total – 1,681 – 1,681

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Although the group believes that its estimates of fair value are appropriate, the use of different meth-odologies or assumptions could lead to different measurements of fair value. For fair value measure-ments in Level 3, changing one or more of the assumptions used to reasonably possible alternative assumptions would have the following effects on the derivates held for trading:

net gain (loss) by category:

From subsequent measurement

€ ’000

From interest

At fair value

currency

translation

impairment

From Derecog-

nition

net gain (loss)

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

Cash and cash equivalents 534 623 – – –

– –

– –

– 534 623

Loans and receivables (LaR) – – –

– 1 (2) 139 (61) –

– 140 (63)

Trade receivables – – –

– 1 (2) 139 (61) –

– 140 (63)

Other receivables – – –

– –

– –

– –

– –

–

Available-for-sale financial assets (AfS) – – –

– –

– –

– –

– –

–

Financial instru-ments held for trading (FAHfT) – – 2,093 (991) –

– –

– –

– 2,093 (991)

Financial liabilities measured at amortized cost (FLAC) (45,755) (47,532) –

– – –

–

– –

– (45,755) (47,532)

Senior Secured Notes (43,595) (45,284) –

– – – –

– –

– (43,595) (45,284)

Liabilities toshareholders (2,160) (2,248) –

– –

– –

– –

– (2,160) (2,248)

total (45,221) (46,909) 2,093 (991) 1 (2) 139 (61) – – (42,988) (47,963)


€ ’000

Effect on profit or loss Favorable (unfavorable)

Effect on profit or loss Favorable (unfavorable)

Share price – – – (2)

Volatility – – 7 (2)

total – – 7 (4)

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OXEA S.à r.l.

a notes to the consolidated cash flow statement

The statement of cash flows shows how cash inflows and outflows during the year affected the cash and cash equivalents (liquidity) of the OXEA Group as at the closing date. Cash flows are classified by operating, investing and financing activities in accordance with IAS 17 (Statement of Cash Flows). The cash flows reported by consolidated companies outside the eurozone are translated at average monthly exchange rates, with the exception of cash and cash equivalents, which are translated at closingrates.The“Effectsoncashandcashequivalentsfromforeignexchangerates”arereportedin a separate line item.

net cash provided by operating activitiesThenetcash inflowfromoperatingactivities in2012amountedto€143,961thousand(prioryear:€193,280 thousand)and isprimarilyattributable to thenet incomeof theperiod totalling€69,761thousand (prior year: 77,017 thousand), adjusted for non-cash items such as depreciation in the amountof€25,155thousand(prioryear:€24,665thousand),thenetlossondisposaloffixedassets

Interest from financial instruments is recognized in financial income/expense as well as the other componentsofnetgain/loss,exceptforimpairmentsoftradereceivablesthatareclassifiedas“loansandreceivables”whicharereportedundersellingexpenses.

In 2012, net gains from the subsequent measurement of financial instruments held for trading of €2,093thousand(prioryear:netlosses€991thousand)doesnotincludeinteresteffectsordividendpayments.

transferred financial assets that are derecognized in their entiretyOXEA sells certain trade accounts receivable on an ongoing basis to a special purpose entity, which is not required to be consolidated. Financial assets sold under this arrangement are derecognized in their entirety from accounts receivable. This is the case when, at the time of sale, it is assured that the cash flows related to those receivables will be passed through to the acquirer and substantially all risks and rewards have been transferred to the unconsolidated SPE. OXEA also entered into a service agreement whereas OXEA collects the cash flows on behalf of the unconsolidated SPE. No material costs have been incurred in connection with the services rendered under the service agreement

In connection with the transfer certain deposits are retained by the SPE, which are shown under financial assets in the balance sheet. The carrying amount of the continuing involvement (loss reserve)amountsto€0.4millionandequalsthefairvalueofthisassetandthemaximumlossexpo-sure. Part of the loss reserve has been impaired as at December 31, 2012. The loss from the impair-mentamountsto€0.5million.

24. Other disclosures

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OXEA S.à r.l.


andinvestmentsof€460thousand(prioryear: €939 thousand) and changes in pension provisions and other noncash items of €11,385 thousand (prior year: €6,038 thousand). Net financial expenseamountedto€56,114thousand(prioryear:€55,866thousand)andnetincometaxesof€66,147thou-sand(prioryear:€38,804thousand)werepaid within the period from January 1, 2012 to December 31, 2012. Net income tax expense amounted to€42,076thousand(prioryear:€46,644thousand).In addition, changes in trade working capital (including receivables sold under the ABS program) and otheroperatingliabilitiesandprovisionscontributedcashinflowsintheamountof€27,446thousand(prioryear:€20,273thousand)tonetcashprovidedbyoperatingactivities.

net cash used in investing activities Thenetcashoutflowforinvestingactivitiesin2012totaled€95,801thousand(prioryear:€36,198thousand). Disbursements for property, plant and equipment and intangible assets particularly in-clude those for the expansion and maintenance of existing operating capacities as well as those for the newly constructed Speciality Esters and Carboxylic Acid units in Oberhausen.

net cash used in financing activities Anetcashoutflowof€144,987thousand(prioryear:€130,723thousand)wasrecordedforfinancingactivities in 2012. This amount includes a dividend payment to shareholders and a redemption and repurchase of Senior Security Notes (see note 1.d). Net interest and other financial expense paid de-creasedto€47,879thousand(prioryear:€49,020thousand).

b Risk management and financial derivatives

Principles of risk managementOXEA is exposed in particular to risks from movements in exchange rates and market prices that af-fect its assets, liabilities and forecasted transactions. Financial risk management aims to limit these market risks attributable to ongoing operational and finance activities. Selected derivative and non-derivative hedging instruments are used for this purpose, depending on the risk assessment. How-ever, OXEA only hedges the risks that affect the group’s cash flow. Derivatives are exclusively used as hedging instruments, i.e., not for trading or other speculative purposes. To reduce the credit risk, hedging transactions are generally only concluded with leading financial institutions with high ratings. In addition, the credit risk of derivative financial instruments with a positive fair value is minimized by way of limit management, which sets individualized relative and absolute figures for risk exposure depending on the counterparty’s rating. The fundamentals of OXEA’s financial policy are established each year by the Executive Committee and overseen by the Board of Directors. Group Treasury is responsible for implementing the finance policy and for ongoing risk management. Certain transac-tions require the prior approval of the Executive Committee, which is also regularly informed about the extent and the amount of the current risk exposure. Treasury regards effective management of the market risk as one of its main tasks. The department performs simulation calculations using different worst-case and market scenarios so that it can estimate the effects of different conditions in the markets.

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OXEA S.à r.l.

commodity price risksOXEA is exposed to fluctuations in raw material prices. These result primarily from the following raw materials: propylene, natural gas, precious metals and electricity. OXEA has not used commodity de-rivatives to hedge the commodity price risk but enters into short-term and long-term purchase con-tracts with the suppliers of these commodities to ensure volumes at a price based on market prices for contracts instead of spot prices.

currency risksCurrency risks as defined by IFRS 7 arise on account of financial instruments being denominated in a currency that is not the functional currency and being of a monetary nature. OXEA is exposed to currency risks from its financing, operating and investing activities. Risks from foreign currencies are generally hedged to the extent that they influence the group’s cash flows. Foreign currency risks that do not influence the group’s cash flows (i.e., the risks resulting from the translation of assets and lia-bilities of foreign operations into the group’s reporting currency) are generally not hedged.

Foreign currency risks in the financing area are caused by financial receivables to third parties or group companies in foreign currency and by loans in foreign currencies that are extended between group entities for financing purposes. OXEA hedges these risks. Currency derivatives are used to convert financial obligations and inter-company loans denominated in foreign currencies into the group entities’ functional currencies. At the reporting date, most financial liabilities were denominated in the functional currency of the respective group company whereas the other ones were mostly hedged. Therefore, OXEA was not exposed to any significant currency risks in this respect.

Foreign currency risks in the operating area result from supplies and deliveries in the non-functional currency. However, the individual group entities mainly execute their operating activities in their re-spective functional currency. Overall, a relevant foreign currency position of OXEA exists only in USD. Currency risks resulting from operating activities in non-functional currencies are hedged by Treasury. Therefore OXEA’s assessment to exchange rate risk from ongoing operations is low. For the presen-tation of market risks, IFRS 7 requires sensitivity analyses that show the effects of hypothetical chang-es of relevant risk variables on profit or loss and shareholder’s equity. At the reporting date, 68% of total USD currency positions are hedged. An increase/decrease of the EUR/USD FX-rate of 10% wouldresultinaloss/profitof€1.2millionforOXEA.

Foreign currency risks in the area of investment result, for example, from the acquisition and dispos-al of investments in foreign companies. OXEA may hedge these risks. At the reporting date, OXEA was not exposed to any significant risks from foreign currency transactions in the field of investments.

interest rate risksOnce a year, the Executive Committee stipulates the desired mix of fixed and variable interest net fi-nancial liabilities. Currently OXEA is not exposed to interest rate risks. The existing long-term financ-ing has fixed rate coupons. Drawings under the Senior Facilities Agreement, expose OXEA to an in-terest rate risk. There were no such drawings at December 31, 2012. Therefore 100% (prior year: 100%) of the net financial liabilities denominated in EUR and 100% (prior year: 100%) of the net fi-nancial liabilities denominated in USD have a fixed rate of interest at December 31, 2012. At the re-porting date, there were no interest rate derivatives in the portfolio of OXEA.

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Other price risks As part of the presentation of market risks, IFRS 7 also requires disclosures on how hypothetical changes in risk variables (e.g., stock exchange prices) affect the price of financial instruments. There are no important risk variables applicable for OXEA. As of December 31, 2012 OXEA did not hold any materialinvestmentstobeclassifiedas“availableforsale”.

credit and default risksOXEA is exposed to credit and default risks from its operating activities and certain financing activ-ities. With regard to financing activities, transactions are only concluded with leading financial institu-tions. At the level of operations, the outstanding receivables are continuously monitored. Credit risks are taken into account through individual and collective impairments. The carrying amounts of all fi-nancial assets, including derivatives with positive market values, plus the nominal value of contingent liabilities represent the maximum credit and default risk. Due to the global activities and the diversi-fied customer structure of the OXEA Group, there is no significant concentration of credit or default risk. In order to manage the credit risk, OXEA requires in some cases security for its open receivables. Atthereportingdate,€27.6millionofreceivablesweresecured,thereof€11.9millionwithlettersofcredit.

liquidity risksIn July 2010 OXEA FINANCE & Cy. S.C.A. issued Senior Secured Notes split into two tranches. The EURtrancheoriginallyamountedto€300millionataninterestrateof9.625%,ofwhich€15millionwererepaidin2011,€3millionrepurchasedin2011and€28millionrepaidin2012.TheUSDtrancheoriginally amounted to US$260 million at an interest rate of 9.5%, of which US$13 million were repaid in 2011 and US$ 24 million in 2012. Both tranches are listed on the EURO MTF market of the Luxem-bourg Stock Exchange, are fully placed with investors and are due for repayment on July 16, 2017. A liquidity reserve in the form of credit lines under the Senior Facilities Agreement and, where neces-sary, cash is maintained to guarantee the solvency and financial flexibility of OXEA at all times. Group Treasury performs liquidity analyses on a regular basis documented in regular liquidity reports to Management.InJuly2010OXEAS.àr.l.andcertainOXEAcompaniesenteredintoa“SeniorFacilitiesAgreement”withDeutscheBankAGandotherlendersinordertosecureanyshorttermborrowingrequirementsforthenextfiveyearswhichwasincreasedin2011from€104.0millionto€118.8mil-lion. At the reporting date, the nominal value of the SeniorSecuredNotesamountsto€257millionand US$223 million. In addition, guarantees in the amountof€19.3millionhavebeendrawn.Un-drawnfacilitiesamountto€99.5millionpluscashathandof€28.3million.TheCompanypaysavariable rate of Euribor/US-Libor plus margin for credit lines drawn and a commitment fee for cred-it lines not drawn. The margin depends on OXEA’s net debt cover and is determined according to a margin grid with adjustments on a quarterly basis.

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OXEA S.à r.l.

carrying amount

contractual cash flows

December 31, 2012

€ ’000 < 1 year 1 – 5 years > 5 years

non-derivative financial liabilities

Other financial liabilities 6,319 6,319 6,319 – –

Senior Secured Notes 415,157 633,923 41,047 592,876 –

Liabilities to shareholders 20,489 20,489 – – 20,489

Trade accounts payable 156,600 156,600 156,600 – –

Other non-interest-bearing liabilities 82 82 – – 82

Guarantees – 6,667 6,667 – –


Forward exchange contracts used for hedging 175 175 175 – –

total 598,822 824,255 210,808 592,876 20,571

carrying amount

contractual cash flows

December 31, 2011

€ ’000 < 1 year 1 – 5 years > 5 years

non-derivative financial liabilities

Other financial liabilities 7,187 7,187 7,187 – –

Senior Secured Notes 460,415 723,813 45,128 175,805 502,880

Liabilities to shareholders 20,269 20,269 – – 20,269

Trade accounts payable 125,426 125,426 125,426 – –

Other non-interest-bearing liabilities 261 261 261 – –

Guarantees – 6,667 6,667 – –


Forward exchange contracts used for hedging 1,681 1,681 1,681 –

–

total 615,239 885,304 186,350 175,805 523,149

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capital risk managementOXEA’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and benefits to other stakeholders and to main-tain an optimal capital structure to minimize the cost of capital. The group monitors capital on the ba-sis of invested capital as part of the return on invested capital concept. Invested capital is calculated as the sum of total equity plus current and non-current financial liabilities less cash and cash equiva-lents as reported in the consolidated balance sheet plus estimated liabilities from operating leases.

Invested capital as at December 31, 2012 was as follows:

In accordance with Luxembourg company law, the company is required to transfer a minimum of 5% of its net profit for each financial year to a legal reserve. This transfer is made following approval of the accounts at the Annual General Meeting. This requirement ceases to be necessary once the balance on the legal reserve reaches 10% of the issued share capital. The legal reserve is not avail-able for distribution to the shareholders. In regard to covenants to which OXEA has to comply with we refer to note 20.


Equity (18,733) (33,441)

Financial liabilities 460,782 508,958

Estimated operating lease liabilities 104,238 127,968

Less cash and cash equivalents (28,283) (125,243)

invested capital 518,004 478,242

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OXEA S.à r.l.

DerivativesThe following table shows the fair values of the various derivatives carried.

Services provided by the external auditorFees billed to the company and its subsidiaries by the external auditor and other member firms of the KPMG network during the year are as follows:

Such fees are presented under general and administrative expenses in the income statement.

c Share-based payments

In 2008, OXEA established a long-term incentive plan for selected members of second tier manage-ment which is cash-settled. Hereby, incentive payments will be made to participants still employed upon the occurrence of certain specified events such as the sale or disposal of OXEA shares to a third party or the refinancing of company debt. In 2012, OXEA did not make any payments to the partici-pants(prioryear:€0.2million).However,expensesfortheprogram,totalling€0.2million(prioryear:1.4 million) have been charged in the income statement. The corresponding liability as at the report-ingdateamountedto€2.7million(prioryear:€2.5million). The valuation of the incentive payments was based upon a valuation using the discounted cash flow method, and the discount factors included the weighted average cost of capital of comparable companies and an assumed vest-ing period of five years.

€ ’000 2012 2011

Audit fees (annual accounts/consolidated accounts) 631 607

Audit related fees 97 158

Tax fees – 31

total 728 796

net carrying amounts


Assets

Currency forwards/currency swaps 608 21

held for trading 608 21

Other derivatives – 1

held for trading – 1

liabilities

Currency forwards/currency swaps 175 1,681

held for trading 175 1,681

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d Related party disclosures

IAS24“RelatedPartyDisclosures”requiresthedisclosureoftransactionswithrelatedparties,bothwith companies that are not consolidated, as well as with individuals. The ultimate parent company ofOXEAS.àr.l.isADVENTOXEA(Cayman)Ltd.In2012,anamountof€300thousand(prioryear:€300thousand)waschargedbytheparentcompanyinformofadvisoryfees.Furthermore,interestexpenseincludesanamountof€514thousand(prioryear:€534thousand)payableonthenominalvalue of the shareholder loans. During 2012, shareholder loans in the form of convertible preferred equitycertificatesinthenominalamountof€1.5millionhavebeenrepaidtoshareholders.Thecon-siderationpaidforthe€1.5millionCPECsredeemedamountedto€44,3million,plusaccruedinter-estsof€0.7million.

With regard to transactions with the German Pipeline Development Company GmbH we refer to note 11.

OXEA maintains an equity-related participation scheme for selected members of senior management and third parties who do not provide any goods or services to the group. Participating members are currently partners in OXEA Associates GmbH & Co. KG, which holds shares of OXEA S.à r.l. The shares held by the partners vest in equal installments over a three-year period. All shares become fully vested in the event of a sale or IPO of the OXEA Group. In the event that a partner leaves prior to the shares becoming fully vested, ADVENT OXEA (Cayman) Ltd. has the option to purchase the partner’s shares. Depending upon the reason for the departure, the option price varies between the amount paid plus interest at the rate of 10% and market value. All partners in the partnership are en-titled to a proportionate share in the profits of the relevant partnership, in particular dividend pay-ments, distributions in cash or in kind from OXEA S.à r.l. or the sale of shares held in OXEA S.à r.l. OXEA Associates GmbH & Co. KG was created in July 2007 and subscribed to new shares in OXEA S.à r.l. The shares were issued in exchange for cash, the issuance price was based upon a valuation used to determine the original purchase price and calculated using the discounted cash flow method. Discount factors included consideration of the weighted average cost of capital of comparable com-panies (Peer Group). Participating members of management paid a cash amount which corresponded to the full value of their relevant share. Consequently no benefit in kind arose. On November 21, 2012, OXEApaidadividendof€5.0million toOXEAAssociatesGmbH&Co.KG (thereof tokeymembersofmanagement:€2.5million).

Compensation to key members of management was as follows:

Luxembourg, February 28, 2013

OXEA S.à r. l.

Board of Management

€ ’000 2012 2011

Short-term benefits 2,334 2,870

Post-employment benefits 1,490 263

total 3,824 3,133

Reinhard Gradl François Bourgon Michael J. Ristaino Godfrey Abel Fergal O'Hannrachain

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OXEA S.à r.l.

To the Partners ofOXEA S.à r.l.47, Grand Rue

L-1661 Luxembourg

Report of the Réviseur d’entreprises agréé

Report on the consolidated Financial StatementsWe have audited the accompanying consolidated financial statements of OXEA S.à r.l., which com-prise the consolidated statement of financial position as at December 31, 2012 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Board of Managers’ Responsibility for the consolidated Financial Statements The Board of Managers is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as the Board of Managers determines is necessary to enable the preparation of consolidated financial statements that are free from material misstate-ment, whether due to fraud or error.

Responsibility of the Réviseur d’entreprises agrééOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as adopted for Luxembourg by the Commission de Surveillance du Secteur Financier. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the judgement of the Réviseurd’entreprisesagréé,includingtheassessmentoftherisksofmaterialmisstatementoftheconsolidated financial statements, whether due to fraud or error. In making those risk assessments, theRéviseurd’entreprisesagrééconsidersinternalcontrolrelevanttotheentity’spreparationandfair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Managers, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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OXEA S.à r.l.


Luxembourg, March 1, 2013

KPMG Luxembourg S.à r. l.Cabinetderévisionagréé

Ph. Meyer

OpinionIn our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of OXEA S.à r.l. as of December 31, 2012, and of its consolidated financial perform-ance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

Report on other legal and regulatory requirementsThe consolidated management report, which is the responsibility of the Board of Managers, is con-sistent with the consolidated financial statements.

OXEA S.à r.l.

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Bishop

OXEA Bishop, LLCProduction site BishopU.S. Highway 77 Business(1.5 Miles South)Bishop, TX 78343USAPhone: +1-361-584-6920

OXEA Corporationcommercial office Mexico cityAv. Revolución 1314Col. Guadalupe InnDel. Álvaro ObregónC.P. 01020 Mexico, D.FMexicoPhone: + 52-55-5337-1991

OXEA GmbHAdministrative centercommercial officeProduction sitetechnology centerWerk RuhrchemieOtto-Roelen-Straße 346147 OberhausenGermanyPhone: + 49-208-693-3100

OXEA GmbHProduction site MarlChemiepark MarlPaul-Baumann-Str. 145777 MarlGermanyPhone: + 49-2365-49-04

OXEA Corporationcommercial office Dallas1505 West LBJ Freeway, Suite 400Dallas, TX 75234USAPhone: + 1-972-481-2700

OXEA CorporationProduction site Bay city2001 FM 3057Bay City, TX 77414-2968USAPhone: + 1-979-241-4000

Oberhausen

Luxembourg

Paris

TeddingtonBrussels

Amsterdam

Tarragona

Fabricco

Marl

Oberhausen

Frankfurt

The world of OXEA

OXEA is a global company with offices and manufacturing plants around the world.

ANNUAL REPORT Locations

93

Mexico City

BishopDallas

Bay City

Southlake

Brecksville

Alpharetta

Grapevine

Mt. Laurel

São Paulo

www.oxea-chemicals.com

OXEA Nederland B.V.Production site AmsterdamAmsterdam Esters PlantHornweg 101045 AR AmsterdamThe NetherlandsPhone: + 31-20-4489555

OXEA S.à r.l.Holding company47, Grand Rue1661 LuxembourgLuxembourgPhone: + 352-267-37-5

OXEA China Ltd.commercial office ShanghaiGrand Gateway Center B-35033 HongQiao RdXu Jia Hui, Shanghai 200030ChinaPhone: + 86-21-5451-0681

OXEA Pte. Ltd. Singaporecommercial office Singapore51 Goldhill Plaza #09-12/01Singapore 308900SingaporePhone: + 65-6478-5070

OXEA Japan KKcommercial office tokyoShinjuku NS Building 28F2-4-1, Nishi-Shinjuku, Shinjuku-kuTokyo 163-0828JapanPhone: + 81-3-5339-2201

Amsterdam

Bay city

Marl

Singapore

Shanghai

Tokyo

Taipei

Sales representatives

Production sites /Commercial offices

The world of OXEA

As global markets expand and new customers are found in other continents, we will adapt to different cultures, manufacturing conditions and legal or governmental frameworks.

We understand flexibility as one of the key competencies of our cross-cultural team.

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OXEA S.à r.l.

ANNUAL REPORT Corporate contacts

Global Marketing Miguel MantasManaging Director and Member of the Executive Board Marketing, Sales and Asian RegionPhone +49 208 693 3181E-mail [email protected]

Global Sales Purnendu RaiVice President Global SalesPhone +49 208 693 3181E-mail [email protected]

Global customer Relations, Supply chain and logisticsDr. Bernhard HerzogVice President Global Customer Relations, Supply Chain and Logistics Phone +49 208 693 2886E-mail [email protected]

Global Procurement Jan HilleVice President Global ProcurementPhone +49 208 693 2700E-mail [email protected]

Global Human ResourcesDr. Martina FlöelManaging Director and Member of the Executive BoardOperations & Technology, HR, Legal, Strategy, Communications, Corporate Development and European and US RegionPhone +49 208 693 2583E-mail [email protected]

Global communications/PRBirgit ReichelHead of Communications Phone +49 208 693 3112E-mail [email protected]

Global Safety & Environmental Protection Reinhold BührerDirector EHSA (Environment, Health, Safety and Analytic)Phone +49 208 693 2288 E-mail [email protected]

investor Relations Bernhard SpetsmannManaging Director and Member of the Executive Board Finance, IT Phone +49 208 693 2277 E-mail [email protected]

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OXEA S.à r.l. OXEA S.à r.l.

Imprint ANNUAL REPORT

Publishing details

Published by OXEA S.à r.l.•47,GrandRue•L1661Luxembourg

Concept/Design vE&KWerbeagenturGmbH&Co.KG•Essen•Germany

Photos OXEA Oberhausen • title: Mediencenter Diehl

Karramba Production / Roman Sotola (fotolia.com)

p.5: T. Willemsen Lokomotiv

p.6: OXEA Oberhausen / ispstock (fotolia.com)

p.8/9: Schlegelfotos (fotolia.com)

p.10/11: WavebreakMediaMicro / design on arrival (fotolia.com)

p.12/13: Scanrail (fotolia.com)

www.oxea-chemicals.com

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annual repor t 2012 - ve&k · oxea s.à r.l. in just a few years oxea has developed into one of...

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