Published financial reporting standards that have not yet been applied

IFRS 15 (Revenue from Contracts with Customers) is the new standard for revenue recognition that is to be applied for annual reporting periods beginning on or after January 1, 2018.

Bayer will implement IFRS 15 on the basis of the modified retrospective method, accounting for the aggregate amount of any transition effects by way of an adjustment to retained earnings as of January 1, 2018, and presenting the comparative period in line with previous rules. All of the established business models for the Bayer Group’s Life Science divisions were examined in the course of the implementation project. The previous assessment that the new standard is not expected to materially affect the timing of revenue recognition for the transactions concerned or their components has been confirmed for companies examined since then. The analysis has not yet been completed in a number of material consolidated companies. Possible but currently not quantifiable effects in the Covestro segment can result with regard to the timing of revenue recognition for certain storage agreements, a number of customer-specific products and the provision of services such as transport or freight services. Furthermore, the evaluation of certain individual licensing agreements has not yet been completed for Bayer. With regard to total Group sales, there are indications of immaterial transition effects due to the different accounting of milestone payments in connection with right-to-access licenses that would result in an increase in retained earnings on the transition date. IFRS 15 clarifies the allocation of individual topics to (new) line items in the statement of financial position and to functional cost items in the income statement, and whether gross or net amounts are to be presented. Determination of the effects on the level of sales or selling expenses has not yet been completed. Based on current knowledge, however, we do not anticipate any material effects on these items. Overall, based on current knowledge, we do not anticipate any material effects on the presentation of the Life Science businesses’ financial position or results of operations, or on earnings per share. A similar statement concerning the Covestro segment cannot yet be made at the present point in time.