10. Investments Accounted for Using the Equity Method and Other Financial Assets

Accounting policies

Joint ventures and associated companies are accounted for using the equity method. The carrying amounts of shareholdings are adjusted annually based on the pro rata share of net income, dividends and other changes in equity. Should there be indications of a reduction in the value of an investment, an impairment test is conducted and, if necessary, an impairment is recognized in the income statement. In the case of publicly listed associated companies, share prices are included in the impairment test and form the basis of valuation if there is an indication for permanent impairment or reversal of an impairment. Furthermore, earnings and the carrying amount are adjusted when accounting policies deviate or as a result of purchase price allocations.

10.1 Integral companies accounted for using the equity method

The material equity-accounted shareholding that is classified as integral is BASF-YPC Company Ltd., Nanjing, China, in which BASF and Sinopec each hold 50%, and which operates the Verbund site in Nanjing, China.

Income from integral companies accounted for using the equity method decreased by €190 million in 2024. Of the decrease, €21 million related to the shareholding in Heesung Catalysts Corporation, Seoul, South Korea (joint venture), and €10 million to the shareholding in BASF-YPC Company Ltd. (joint venture). In 2024, there were also impairments of €108 million on the shareholding in Nordlicht Offshore Wind GmbH, Hamburg, Germany, and €5 million on each of the shareholdings in the joint ventures, BASF HERAEUS (China) Metal Resource Co., Ltd., Zhejiang, China, and BASF PJPC Neopentylglycol Co. Ltd., Jilin City, China in 2024. A further impairment of €19 million was attributable to the shareholding in Markor Meiou Chemical (Xinjiang) Co., Ltd., Korla, China (associated company), in connection with the expected divestiture.

Proportional changes in other comprehensive income included income and expense recognized directly in equity and related, in addition to currency effects, to changes in the fair value of derivatives in connection with long-term power supply agreements, particularly at the HKZ Investor Holding B.V. joint venture in Arnhem, Netherlands. The company holds shares in the Hollandse Kust Zuid offshore wind farm and manages the power supply agreements with the wind farm.

Changes in the scope of consolidation in 2023 resulted from the reclassification of Changchun Chemetall Chemicals Co., Ltd., Changchun, China.

Additions in 2024 mainly related to the shareholding in the associated company, Nordlicht Offshore Wind GmbH, Hamburg, Germany.

Disposals in 2024 were mainly due to decreases in capital of the associated companies, Shanghai Lianheng Isocyanate Co. Ltd., Shanghai, China, and Markor Meiou Chemical (Xinjiang) Co., Ltd. In addition, disposals in both years included capital reductions for Yara Freeport LLC, Freeport, Texas (associated company).

Transfers in both years primarily included dividend payments by the joint ventures, Heesung Catalysts Corporation, BASF-YPC Company Ltd., Southeast Texas Pipelines LLC, Houston, Texas, and N.E. Chemcat Corporation, Tokyo, Japan.

Additional information on the BASF-YPC Company Ltd. material integral investment accounted for using the equity method

10.2 Non-integral companies accounted for using the equity method

The non-integral companies accounted for using the equity method are exclusively associated companies.

On September 3, 2024, BASF completed the sale of Wintershall Dea’s exploration and production business (E&P business) to Harbour Energy plc, London, United Kingdom. In return for the transfer of the E&P business, BASF received a cash payment and 39.59% of shares in Harbour Energy. BASF exercises significant influence over Harbour Energy and accounts for the shareholding accordingly using the equity method. Following the transaction, Harbour Energy and Wintershall Dea represent the material non-integral shareholdings accounted for using the equity method.

BASF continues to hold a 72.7% stake in Wintershall Dea, which was converted from a stock corporation (AG) to a limited liability company (GmbH) on September 23, 2024. The remaining shares are held by LetterOne. Wintershall Dea is classified as an associated company because, in addition to BASF and LetterOne, independent members are also represented in the board responsible for decisions about relevant activities and BASF can thus only exercise significant influence.

Stahl Lux 2 S.A., Luxembourg (BASF interest: 16.32%), and CIMO Compagnie industrielle de Monthey S.A., Monthey, Switzerland (BASF interest: 15.0%), are classified as associated companies as BASF is represented in the relevant boards and can thus exercise significant influence over the companies.

Income from non-integral companies accounted for using the equity method increased by €765 million in 2024, mainly due to the gain on the disposal of Wintershall Dea’s E&P business to Harbour Energy in the amount of €390 million (before taxes).

The investment in Harbour Energy was initially recorded at the share’s closing rate on September 3, 2024, (£2.86) plus the directly attributable acquisition costs. The difference between the carrying amount of the shareholding and Harbour Energy’s proportional equity was allocated as part of an external appraisal (purchase price allocation). The portion of the difference allocated to assets will lead to corresponding adjustments to earnings and investment value in subsequent periods. Harbour shares were quoted at £2.55 per share as of December 31, 2024. The market value of the Harbour Energy shares held by BASF was therefore €2,063 million as of the balance sheet date. Because the share price had risen again in the course of January 2025 to values above those on the date of acquisition, there was no significant or lasting decline in fair value.

The shareholding in Wintershall Dea was reviewed for any indication of impairment. There was no indication of impairment.

• For more information on Wintershall Dea, see Note 3 and the “Annual Report & Accounts” of Harbour Energy plc.

In 2024, proportional changes in other comprehensive income included changes in the fair value of derivatives as well as currency effects, primarily at Harbour Energy and Wintershall Dea. The sale of Wintershall Dea’s E&P business to Harbour Energy led to differences arising from currency translation in the amount of €43 million and changes in the fair value of derivatives in the amount of €2 million, which were recognized as expenses in the disposal gain.

In 2023, primarily changes in the fair value of derivatives used to hedge gas prices and impairments of Wintershall Dea’s shareholdings in Russian companies arose, which are measured at fair value through other comprehensive income in accordance with IFRS 9.

Changes in the scope of consolidation and disposals in 2024 particularly related to the disposal of the carrying amount of the shareholding in Wintershall Dea attributable to the sold E&P business. In 2023, in addition to the sale of the shareholding in Quantafuel ASA, Oslo, Norway, there were adjustments to the scope of consolidation at Wintershall Dea. Disposals in 2023 included capital reductions for the associated company, Stahl Lux 2 SA, Luxembourg.

Additions included the shareholding in Harbour Energy at fair value plus directly attributable incidental acquisition costs.

In both years, transfers included dividend payments from Wintershall Dea GmbH (Wintershall Dea AG until September 23, 2024).

Additional information on the Harbour Energy and Wintershall Dea material non-integral shareholdings accounted for using the equity method

The following table contains financial information on the Harbour Energy material non-integral shareholding accounted for using the equity method, including adjustments for fair value made at initial recognition and the resulting effects on earnings.

The following table contains financial information on the Wintershall Dea material non-integral shareholding accounted for using the equity method, including adjustments for fair value made at initial recognition and the resulting effects on earnings.

10.3 Other shareholdings and financial assets

Net income from other shareholdings in 2024 increased year on year by €33 million. In addition to higher income from the sale of shareholdings, amortization of the fair value of shareholdings was lower in 2024.