Chairman’s Letter
Notes
Bayer Links
Financial Statements
13. Non-operating result
The non-operating result was minus €782 million in 2006 (2005: minus €602 million), comprising equity-method loss of €25 million (2005: €10 million), non-operating expenses of €1,688 million (2005: €1,224) and non-operating income of €931 million (2005: €632 million). Details on the individual categories are provided below.
The income from investments in affiliated companies mainly comprised an equity-method loss of €55 million (2005: €47 million) from two production joint ventures with Lyondell and equity-method income of €28 million (2005: €35 million) received from GE Bayer Silicones prior to the sale of our interest. In addition, this divestiture contributed €236 million to income from investments in affiliated companies. For further details see Note [7.2].
Further details of the companies included at equity in the group financial statements are given in Note [19].
Further details of the companies included at equity in the group financial statements are given in Note [19].
| 2005 | 2006 | |
| € million | ||
| Net loss from investments in associates (equity-method loss) | (10) | (25) |
| Expenses | ||
| Write-downs of investments in affiliated companies | (27) | (20) |
| Losses from the sale of investments in affiliated companies | 0 | (12) |
| Income | ||
| Dividends from affiliated companies and income from profit and loss transfer agreements | 10 | 5 |
| Gains from the sale of investments in affiliated companies | 5 | 259 |
| (22) | 207 |
This item mainly comprises interest expense for financial liabilities, value adjustments relating to interest-rate hedging transactions, and interest income from investments. Interest expense of €370 million incurred for financing of the acquisition of Schering AG, Berlin, Germany, in 2006 is included here.
Finance leases are capitalized under property, plant and equipment in compliance with IAS 17 (Leases). The interest portion of the lease payments, amounting to €20 million (2005: minus €17 million), is reflected in interest expense.
Interest expense incurred to finance the construction phase of major investment projects is not included here. Such interest expense, amounting in 2006 to €12 million (2005: €4 million), is capitalized as part of the cost of acquisition or construction of the property, plant or equipment concerned, based on an average capitalization rate of 5 percent (2005: 4 percent).
Finance leases are capitalized under property, plant and equipment in compliance with IAS 17 (Leases). The interest portion of the lease payments, amounting to €20 million (2005: minus €17 million), is reflected in interest expense.
Interest expense incurred to finance the construction phase of major investment projects is not included here. Such interest expense, amounting in 2006 to €12 million (2005: €4 million), is capitalized as part of the cost of acquisition or construction of the property, plant or equipment concerned, based on an average capitalization rate of 5 percent (2005: 4 percent).
| 2005 | 2006 | |
| € million | ||
| Expenses | ||
| Interest and similar expenses | (909) | (1,381) |
| Income | ||
| Income from other financial assets | 7 | 10 |
| Other interest and similar income | 564 | 643 |
| (338) | (728) |
Other non-operating expenses mainly comprise the interest portion of pension and other personnel-related provisions for the continuing operations amounting to €218 million (2005: €228 million) and commitment fees of €21 million incurred for credit lines granted in connection with the acquisition of Schering AG, Berlin, Germany.
| 2005 | 2006 | |
| € million | ||
| Expenses | ||
| Interest portion of interest-bearing provisions | (234) | (223) |
| Net exchange loss | (18) | (18) |
| Miscellaneous non-operating expenses | (36) | (34) |
| Income | ||
| Miscellaneous non-operating income | 46 | 14 |
| (242) | (261) |
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