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Last Update: 03/12/2009
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Part of the audited Consolidated Financial Statements and Management´s Analysis

18 -- Retained earnings and other comprehensive income

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Million €

2008

2007

Legal reserves

420

354

Other retained earnings

12,830

14,201

 

13,250

14,556

Changes in the scope of consolidation led to no changes in the legal reserves in 2008. In 2007, there was an increase of €3 million. Transfers from other retained earnings increased legal reserves by €66 million in 2008 and €40 million in 2007.

The acquisition of stakes in companies which BASF controls are treated as transactions between shareholders. In 2008, minority interests were acquired in BASF India Ltd., Mumbai, India, BASF Construction Chemicals Central Asia LLP, Almati, Kazakhstan, and OOO BASF Stroitelnye Sistemy, Moscow, the Russian Federation. In addition, a 40% stake in Svalöf Weibull AB, Svalöv, Sweden (which had been accounted for using the equity method), was swapped with Svenska Lantmännen for the 15% stake in BASF Plant Science GmbH, Ludwigshafen. The amount resulting from the difference between the acquisition price/value of the shares given and the proportionate value of the net assets received of €105 million was netted against retained earnings.

In 2007, the effect of applying the fair value option to the asset swap with Gazprom resulted in an excess of €634 million which was recognized in retained earnings.

The offsetting of actuarial gains and losses resulted in a decrease in retained earnings of €637 million in 2008 and €92 million in 2007.

Other comprehensive income

According to IFRS, certain expenses and income have been recorded in ‘other comprehensive income’. This includes translation adjustments, the valuation of securities at fair value, changes in the fair value of derivatives held to hedge future cash flows and effects from the revaluation of assets and liabilities on takeover. In 2007, there was an effect from the revaluation following the purchase of the remaining 50% stake in BASF GE Schwarzheide GmbH & Co. KG of €12 million.

Translation adjustments

The translation adjustments due to the use of the current rate method are shown under currency translations adjustments as a component of other comprehensive income in equity (translation adjustments) and are recognized in income only upon the disposal of a company.

Valuation of securities at fair value

Changes in value of available-for-sale securities are accounted for in other comprehensive income, without impacting the income statement, until the securities are disposed of. Upon disposal, the changes accumulated in other comprehensive income are recognized in income.

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