5. Changes in the Scope of Consolidation

5.1. Scope of Consolidation and Investments

As of December 31, 2018, the scope of consolidation comprised Covestro AG and 49 (previous year: 49) consolidated companies.

The Covestro Group holds 100% of the voting rights in the fully consolidated subsidiary Bayer Pearl Polyurethane Systems L.L.C, Dubai (United Arab Emirates), pursuant to a contractual agreement with the noncontrolling stockholders.

Pure Salt Baytown LLC, Houston (United States), (Pure Salt LLC) is included as a structured entity. The Covestro Group obtains all the evaporated salt needed for its production operations at Baytown (United States), from Pure Salt LLC. This comprises most of that company’s production capacity. The variable and fixed costs of Pure Salt LLC are reimbursed by Covestro in accordance with a contractually agreed mechanism. Moreover, the Covestro Group is obliged to finance one-time operating expenses and guarantees the liabilities of Pure Salt LLC to banks. As of December 31, 2018, guaranteed liabilities amounted to €1 million (previous year: €6 million). Pure Salt LLC is dependent to a high degree on Covestro (e.g. through approval requirements), which means that Covestro can indirectly enforce its interests in respect of this company.

As in the previous year, the scope of consolidation as of December 31, 2018, included the joint operation LyondellBasell Covestro Manufacturing Maasvlakte V.O.F, Rotterdam (Netherlands). Pursuant to IFRS 11 (Joint Arrangements), Covestro’s shares of this company’s assets, liabilities, revenues and expenses are included in the consolidated financial statements in accordance with Covestro’s rights and obligations. The main purpose of LyondellBasell Covestro Manufacturing Maasvlakte V.O.F is the joint production of propylene oxide (PO) for Covestro and its partner Lyondell.

Additionally, two (previous year: two) associated companies and one (previous year: one) joint venture are accounted for in the consolidated financial statements using the equity method.

Five (previous year: six) subsidiaries and one (previous year: one) associated company that in aggregate are immaterial to the Covestro Group’s net assets, financial position and results of operations are not consolidated but recognized at cost. The immaterial subsidiaries each accounted for no more than 0.1% of Group sales, equity or total assets.

The consolidated financial statements of Covestro are submitted to the operator of the Federal Gazette (Bundesanzeiger).

Details of subsidiaries and affiliated companies pursuant to Section 313 of the German Commercial Code (HGB) are shown in the following tables. The first table shows fully consolidated companies:

The following joint operation was included in the consolidated financial statements in line with Covestro‘s shares of its assets, liabilities, revenues and expenses:

The following associated companies and joint ventures are accounted for in the consolidated financial statements using the equity method:

The following subsidiaries were reflected in the consolidated financial statements at amortized cost due to their immateriality:

The following associated company was accounted for in the consolidated financial statements at cost due to its immateriality:

The following domestic subsidiaries availed themselves in fiscal 2018 of certain exemptions granted under Section 264, Paragraph 3 or Section 264b of the German Commercial Code (HGB) regarding the preparation, auditing and publication of financial statements:

5.2 Acquisitions and Divestitures

Acquisitions

No material acquisitions were made in fiscal 2018.

Divestitures

On August 1, 2018, Covestro finalized an asset deal under the Polycarbonates segment to divest the assets and liabilities (disposal group) of the United States sheet business to Plaskolite LLC, Columbus, OH (United States), for a selling price of €62 million. Production-related assets and inventories of €29 million as well as liabilities amounting to €3 million were transferred to the buyer. The gain on the disposal of this business totaling €36 million was recognized in other operating result.