Investments Accounted for Using the Equity Method

Four (2016: five) associates and eight (2016: six) joint ventures were accounted for in the consolidated financial statements using the equity method.

Associates and Joint Ventures Accounted for Using the Equity Method

 

 

Place of business

 

Bayer’s interest

Company name

 

 

 

%

1

For information concerning significant influence, see Note “Scope of Consolidation; Subsidiaries and Affiliates.”

Associates

 

 

 

 

Bayer Trendlines Ag Innovation Fund, L.P1

 

Misgav, Israel

 

100

Covestro AG

 

Leverkusen, Germany

 

24.6

Flagship Ventures V Agricultural Fund, L.P1

 

Cambridge, Massachusetts, U.S.A.

 

99.9

Nanjing Baijingyu Pharmaceutical Co., Ltd.1

 

Nanjing, China

 

15

Joint ventures

 

 

 

 

Bayer Zydus Pharma Private Limited

 

Mumbai, India

 

50

BlueRock Therapeutics Canada ULC

 

Vancouver, Canada

 

42.9

BlueRock Therapeutics GP LLC

 

San Francisco, California, U.S.A.

 

50

BlueRock Therapeutics LP

 

San Francisco, California, U.S.A.

 

42.9

Casebia Therapeutics LLC

 

Cambridge, Massachusetts, U.S.A.

 

50

Casebia Therapeutics LLP

 

Ascot, U.K.

 

50

Cooksonia Opco LLC

 

Boston, Massachusetts, U.S.A.

 

50

DCSO Deutsche Cyber-Sicherheitsorganisation GmbH

 

Berlin, Germany

 

25

In October 2015, Bayer successfully floated the former MaterialScience subgroup on the stock market under the name “Covestro”. Covestro is a leading global producer of high-tech polymer materials and develops innovative product solutions for a wide variety of everyday uses. The Covestro Group was deconsolidated at the end of the third quarter of 2017, and, in view of Bayer’s remaining significant influence, was recognized for the first time as an associate and accounted for using the equity method. See Note “Scope of Consolidation; Subsidiaries and Affiliates” for details on the deconsolidation of the Covestro Group.

The remaining interest in Covestro at the time of deconsolidation was remeasured at €3.6 billion based on its share price, which led to the identification of hidden reserves and liabilities. According to the Purchase price allocation (PPA) describes the process of allocating the purchase price into various assets and liabilities when a company is acquired. , the hidden reserves and liabilities primarily related to noncurrent assets (€1.9 billion), current assets (€0.1 billion), noncurrent liabilities (€0.6 billion) and goodwill (€1.0 billion).

The following two tables contain summarized data from the income statements and statements of financial position of the Covestro Group, and show the respective amounts recognized in the consolidated financial statements of the Bayer Group.

Earnings Data of the Covestro Group

 

 

2016

 

Q4 2017

 

 

€ million

 

€ million

Net sales

 

 

3,522

Income after income taxes

 

 

569

of which attributable to Covestro AG shareholders

 

 

566

Other comprehensive income after income taxes

 

 

(193)

of which attributable to Covestro AG shareholders

 

 

(191)

Total comprehensive income after income taxes

 

 

376

of which attributable to Covestro AG shareholders

 

 

375

Share of total comprehensive income after income taxes

 

 

92

Share of income after income taxes

 

 

139

Group adjustments

 

 

(88)

Equity-method income

 

 

51

Data from the Statements of Financial Position of the Covestro Group

 

 

Dec. 31, 2016

 

Dec. 31, 2017

 

 

€ million

 

€ million

Noncurrent assets

 

 

5,606

Current assets

 

 

5,735

Noncurrent liabilities

 

 

2,885

Current liabilities

 

 

3,091

Equity

 

 

5,365

Share of equity

 

 

1,320

Group adjustments

 

 

2,307

Carrying amount

 

 

3,627

The adjustments to the Group data contain hidden reserves and liabilities identified in the course of the purchase price allocation and their measurement using the equity method.

In December 2015, Bayer and CRISPR Therapeutics AG, Switzerland, agreed to establish a company to develop and commercialize new, breakthrough therapeutics for blood disorders, blindness and congenital heart diseases. The joint venture Casebia Therapeutics, established at the beginning of 2016, has access to gene-editing technology from CRISPR Therapeutics in specific disease areas, as well as access to protein engineering expertise and relevant disease know-how through Bayer.

The following two tables contain summarized data from the income statements and statements of financial position of the Casebia Group, which is accounted for using the equity method, and show the respective amounts recognized in the consolidated financial statements of the Bayer Group.

Earnings Data of the Casebia Group

 

 

2016

 

2017

 

 

€ million

 

€ million

Net sales

 

 

Loss after income taxes

 

(8)

 

(32)

Share of loss after income taxes

 

(4)

 

(16)

Equity-method loss

 

(4)

 

(16)

Data from the Statements of Financial Position of Casebia Group

 

 

Dec. 31, 2016

 

Dec. 31, 2017

 

 

€ million

 

€ million

Noncurrent assets

 

68

 

70

Current assets

 

4

 

24

Noncurrent liabilities

 

 

8

Current liabilities

 

3

 

4

Equity

 

69

 

82

Share of equity

 

38

 

69

Other

 

242

 

162

Carrying amount

 

280

 

231

The item “Other” comprises Bayer’s outstanding capital contribution obligation.

The following table contains a summary of the aggregated income statement data and aggregated carrying amounts of the individually nonmaterial associates accounted for using the equity method.

Earnings Data and Carrying Amounts of Associates Accounted for Using the Equity Method

 

 

2016

 

2017

 

 

€ million

 

€ million

2016 figures restated

Income after income taxes

 

4

 

7

Other comprehensive income after income taxes

 

3

 

28

Total comprehensive income after income taxes

 

7

 

35

Share of income after income taxes

 

2

 

1

Share of total comprehensive income after income taxes

 

5

 

29

Carrying amount

 

247

 

37

The following table contains a summary of the aggregated income statement data and aggregated carrying amounts of the individually nonmaterial joint ventures that are accounted for using the equity method.

Earnings Data and Carrying Amounts of Joint Ventures Accounted for Using the Equity Method

 

 

2016

 

2017

 

 

€ million

 

€ million

2016 figures restated

Income after income taxes

 

(6)

 

(16)

Total comprehensive income after income taxes

 

(6)

 

(16)

Share of income after income taxes

 

(4)

 

(16)

Share of total comprehensive income after income taxes

 

(4)

 

(16)

Carrying amount

 

57

 

112

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