5. Changes in the Scope of Consolidation

5.1 Scope of Consolidation and Investments

As of December⁠ ⁠31, 2025, the scope of consolidation comprised Covestro⁠ ⁠AG and 57 (previous year: 55) consolidated companies.

In the 2025 reporting year, the number of consolidated companies changed as a result of the intragroup merger of Covestro Polyurethanes B.V. into Covestro (Netherlands) B.V., both headquartered in Geleen (Netherlands), effective March⁠ ⁠1, 2025, and as a result of the acquisition of Pontacol AG, Schmitten FR (Switzerland). Effective August⁠ ⁠28, 2025, Pontacol AG and its subsidiaries Pontacol GmbH, Buxtehude (Germany), and Pontacol Inc., Dover, Delaware (United States), were included in the Covestro Group’s consolidated financial statements for the first time.

The scope of consolidation included the joint operation LyondellBasell Covestro Manufacturing Maasvlakte V.O.F, Rotterdam (Netherlands), as of December⁠ ⁠31, 2025, which is unchanged from the previous year. 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 was the joint production of propylene oxide (PO). As a consequence of the jointly taken decision to close the facility permanently, this purpose of the company will cease to apply when the closure has been completed by the end of the year⁠ ⁠2026.

Additionally, two (previous year: two) associates are accounted for in the consolidated financial statements using the equity method.

Five (previous year: six) subsidiaries and two (previous year: two) associates that in aggregate are immaterial to the Covestro Group’s net assets, financial position, and results of operations are not consolidated or accounted for using the equity method, but recognized at cost. As in the previous year, the immaterial subsidiaries each accounted for no more than 0.1% of Group sales, equity, or total assets of the Group in the 2025 reporting year.

The information on the companies included in the consolidated financial statements and on the Covestro Group’s shareholdings pursuant to Section 313, Paragraph⁠ ⁠2 HGB and the list of domestic subsidiaries that made use of the exemption provisions pursuant to Section 264, Paragraph⁠ ⁠3 HGB in fiscal⁠ ⁠2025 are components of the consolidated financial statements submitted for publication to Germany’s Federal Gazette (Bundesanzeiger).

The disclosures on shareholdings in accordance with the requirements of Section 313, Paragraph 2 HGB are shown in the following tables. The interests held in the companies listed did not change significantly compared with the previous year.

According to IFRS⁠ ⁠10 (Consolidated Financial Statements), Covestro’s interest in the amount of 50% in Covestro Eternal Resins (Kunshan) Co., Ltd., Kunshan (China), is classified as a fully consolidated company due to the 57% share of voting rights.

In addition, the following joint operation has been included in the consolidated financial statements in line with Covestro’s shares of its assets, liabilities, revenues and expenses:

The following associates 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 associates were recognized at cost due to their immateriality:

* In accordance with IAS⁠ ⁠28 (Investments in Associates and Joint Ventures), Covestro has significant influence on the basis of specific contractual rights, even though it does not hold the requisite share of the capital.

The following consolidated domestic subsidiaries made use of the exemption provisions pursuant to Section⁠ ⁠264, Paragraph⁠ ⁠3 HGB in fiscal⁠ ⁠2025:

5.2 Acquisitions and Divestitures

On May⁠ ⁠1, 2025, Covestro successfully completed the sale of its business activities at the East Providence site, Rhode Island (United States). The production of polyurethane dispersions (PUD) located there was part of the Solutions & Specialties segment. The relevant contract documents were signed on April⁠ ⁠28, 2025. The transaction comprised the transfer of property, plant and equipment with a carrying amount of €7⁠ ⁠million and inventories valued at €1⁠ ⁠million. The agreed consideration totals €8⁠ ⁠million, of which €6⁠ ⁠million was received immediately. Another amount of €2⁠ ⁠million was agreed as contingent consideration, payable within 12 months of entering into the agreement. In the course of the transaction, an impairment test in accordance with IAS⁠ ⁠36 (Impairment of Assets) was performed, which resulted in goodwill impairment of €1⁠ ⁠million. This was recognized in other operating expenses.

Effective August⁠ ⁠28, 2025, Covestro successfully completed the acquisition of Pontacol AG, Schmitten⁠ ⁠FR⁠ ⁠(Switzerland), a manufacturer of multilayer thermoplastic adhesive films, from LAS Holding AG, Sempach Station (Switzerland). The acquisition was made as part of a share deal involving the purchase of 100% of the shares. In addition to the acquisition of shares, certain assets were also acquired, in particular a property located in Switzerland and credit balances with an electricity supplier. Covestro is strengthening its Solutions & Specialties segment with this acquisition by adding complementary technologies, production capacity, and long-standing customer relationships. At the same time, the company is expanding its portfolio in the field of thermoplastic adhesive films, enabling it to offer greater added value in a variety of industrial applications, in particular in the automotive, textile, electronics, and medical technology sectors. Pontacol comprises the two operating companies, Pontacol AG and Pontacol GmbH, Buxtehude (Germany), each with one production site, and the distribution company Pontacol Inc., Dover, Delaware (United States).

The acquisition was accounted for in accordance with IFRS⁠ ⁠3 (Business Combinations), which requires identifiable assets acquired, liabilities assumed, and any contingent consideration to be recognized at fair value at the acquisition date.

Covestro and LAS Holding AG agreed transferred consideration of €28⁠ ⁠million, which was settled in cash. In addition, earn-out payments of up to €5⁠ ⁠million were agreed. The earn-out is structured in two tranches. As the performance parameters for fiscal 2025 were not achieved, the earn-out payment provided for this will not be made, meaning that only a reduced earn-out compared with the maximum amount originally agreed can be paid out for fiscal 2026.

In the context of the business combination, assets with a fair value of approximately €45⁠ ⁠million were recognized as of the acquisition date. These consisted mainly of property, plant and equipment of €22⁠ ⁠million, intangible assets of €8⁠ ⁠million, inventories of €6⁠ ⁠million, receivables of €5⁠ ⁠million, cash and cash equivalents of €2⁠ ⁠million, and deferred tax assets of €2⁠ ⁠million. The assumed liabilities totaled approximately €5⁠ ⁠million and comprised liabilities of €2⁠ ⁠million, deferred tax liabilities of €2⁠ ⁠million, and provisions of €1⁠ ⁠million. Purchase price allocation resulted in a negative difference (bargain purchase) of €12⁠ ⁠million due to the difference between the consideration transferred and the fair value of the net assets acquired, i.e., an acquisition at a price below fair value. After reviewing the measurement parameters and confirming the carrying amounts of the identified assets and liabilities, this negative difference was recognized as a bargain purchase in the income statement in accordance with IFRS⁠ ⁠3. The bargain purchase resulted from the current challenging market conditions, particularly in the automotive and textile customer markets, which have led to low capacity utilization. Based on the expected earnings power, the consideration transferred represents a valuation that is favorable for Covestro. In conjunction with the recent capacity expansions, this resulted in relatively low consideration in relation to the net assets acquired. In accordance with IFRS⁠ ⁠3, a purchase price allocation may remain provisional for up to twelve months after the acquisition date. The reported fair values of the acquired assets and liabilities assumed reflect the current stage of purchase price allocation. There were only minor adjustments compared with the preliminary fair values reported in the quarterly report for the third quarter of 2025.

After the reporting date, on January⁠ ⁠9, 2026, the sale of a disposal group assigned to the Performance Materials segment, which mainly consisted of real estate in Linyuan District, Kaohsiung City (Taiwan, Greater China), to Lijinn Enterprise Co. Ltd., Linyuan District, Kaohsiung City (Taiwan, Greater China), was successfully completed. The disposal group had already been classified as “held for sale” in accordance with IFRS⁠ ⁠5 (Non-current Assets Held for Sale and Discontinued Operations) in the fourth quarter of 2025. The net disposal gain totaling €27⁠ ⁠million was recognized in the other operating result in January⁠ ⁠2026.