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4.6 Asset and Capital Structure of the Bayer Group

Bayer Group Summary Statements of Financial Position			[Table 3.22]
	Dec. 31, 2008	Dec. 31, 2009	Change
	€ million	€ million	%
Noncurrent assets	35,351	34,049	-3.7
Current assets	17,152	16,993	-0.9
Assets held for sale and discontinued operations	8	0	•
Total current assets	17,160	16,993	-1.0
Total assets	52,511	51,042	-2.8

Equity	16,340	18,951	+16.0
Noncurrent liabilities	22,336	23,118	+3.5
Current liabilities	13,822	8,973	-35.1
Liabilities directly related to assets held for sale and discontinued operations	13	0	•
Total current liabilities	13,835	8,973	-35.1
Liabilities	36,171	32,091	-11.3
Total equity and liabilities	52,511	51,042	-2.8

Total assets decreased by €1.5 billion compared with December 31, 2008, to €51.0 billion. Noncurrent assets declined by €1.3 billion to €34.0 billion, mainly due to the amortization of intangible assets. Noncurrent assets included goodwill of €8.7 billion (2008: €8.6 billion) resulting primarily from the acquisition of Schering, Berlin, Germany. Current assets declined by €0.2 billion compared with the previous year, to €17.0 billion.

Equity rose by €2.6 billion to €19.0 billion. The main positive effects came from a €2.3 billion increase in the capital stock through conversion of the mandatory convertible bond, the net income of €1.4 billion and positive currency effects of €0.3 billion. Equity was diminished by the dividend payment of €1.1 billion made in 2009 and a €0.3 billion after-tax increase in pension obligations recognized outside profit or loss. Our equity ratio (equity coverage of total assets) was 37.1% as of December 31, 2009 (2008: 31.1%).

Liabilities decreased by €4.1 billion compared with December 31, 2008, to €32.1 billion, largely because of a decline in financial liabilities. Current and noncurrent financial liabilities declined by a substantial €4.0 billion – including €2.3 billion from the conversion of the mandatory convertible bond – to €12.9 billion.

Net Pension Liability

Net Pension Liability		[Table 3.23]
	Dec. 31, 2008	Dec. 31, 2009
	€ million	€ million
Provisions for pensions and other post-employment benefits	6,347	6,517
Prepaid benefit assets	(351)	(100)
Net pension liability	5,996	6,417

The net pension liability increased from €6.0 billion to €6.4 billion in 2009, due especially to lower long-term capital market interest rates. Provisions for pensions and other post-employment benefits rose from €6.3 billion to €6.5 billion. Benefit plan assets in excess of obligations, reflected in the statement of financial position as other receivables, came to €0.1 billion (2008: €0.4 billion).

Ratios			[Table 3.24]
		2008	2009
Cost of sales ratio (%)	Cost of goods sold	50.0	48.6
Cost of sales ratio (%)	Sales	50.0	48.6
R&D expense ratio (%)	Research and development expenses	8.1	8.8
R&D expense ratio (%)	Sales	8.1	8.8
Inventory turnover	Cost of goods sold	2.5	2.5
Inventory turnover	Inventories	2.5	2.5
Receivables turnover	Sales	5.5	5.1
Receivables turnover	Trade accounts receivable	5.5	5.1
EBIT margin before special items (%)	EBIT before special items	13.2	12.1
EBIT margin before special items (%)	Sales	13.2	12.1
EBITDA margin before special items (%)	EBITDA before special items	21.1	20.8
EBITDA margin before special items (%)	Sales	21.1	20.8
Asset intensity (%)	Property, plant and equipment + intangible assets	61.1	60.6
Asset intensity (%)	Total assets (continuing operations)¹	61.1	60.6
D&A/capex ratio (%)	Depreciation and amortization²	129.7	159.4
D&A/capex ratio (%)	Capital expenditures²	129.7	159.4
Liability structure³ (%)	Current liabilities	38.2	28.0
Liability structure³ (%)	Liabilities	38.2	28.0
Gearing	Net debt + pension provisions	1.3	0.9
Gearing	Equity	1.3	0.9
Free operating cash flow (€ million)	Net operating cash flow less capital expenditures	1,849	3,800
Equity ratio³ (%)	Equity	31.1	37.1
Equity ratio³ (%)	Total assets	31.1	37.1
Return on equity³ (%)	Income after taxes	10.4	7.7
Return on equity³ (%)	Average equity	10.4	7.7
Return on assets (%)	Income before taxes and interest expense	7.0	6.1
Return on assets (%)	Average total assets for the year based on segment table	7.0	6.1
1 total assets (continuing operations) = noncurrent and current assets minus the item “Assets held for sale and discontinued operations” in the statement of financial position 2 property, plant and equipment + intangible assets 3 Ratio refers to the total of continuing and discontinued operations.