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Annual Report2014Annual Report2014

Financial SummAry

Key FigureS in CHF m

2014 2013

Sales1  6 116 6 076

EBITDA before exceptionals1 867 858

EBITDA margin before exceptionals1 (%)  14.2 14.1

EBIT before exceptionals 1 585 574

Net income 1 235 323

Basic earnings per share 1  0.55 0.98

Adjusted earnings per share 1  1.12 1.16

Operating cash flow  334 301

Investment in property, plant and equipment 310 292

Research & Development expenditures 1 213 199

Total assets 7 915 8 174

Equity 2 733 2 780

Equity ratio (%) 34.5 34.0

Net debt 1 263 1 500

Gearing ratio  (%) 46 54

Employees 17 003 18 099

1 Continuing operations

SAleS by buSineSS AreA in CHF m

Total 2014: 6 116

Care Chemicals 1 511 25 %

Catalysis & Energy 729 12 %

Natural Resources 1 297 21 %

Plastics & Coatings 2 579 42 %

SAleS by region in CHF m

Total 2014: 6 116

Europe 2 232 37 %

Asia/Pacific 1 433 23 %

Middle East & Africa 461 8 %

Latin America 984 16 %

North America 1 006 16 %

Appre- CiAtion

Performance.Growth.Innovation. WhAt mAKeS ClAriAnt SpeCiAl?

We hAve A bAlAnCed portFolio With high proFitAbility, loW CyCliCAlity, And SigniFiCAnt groWth potentiAl

We Apply A vAlue SyStem With A FoCuS on perFormAnCe, people, And plAnet

Sustainable company successes and value generation can only be realized in a corporate culture that is embraced by everyone involved, and which achieves a balance between business per-formance, social interests, and environmental targets.

Where We WAnt to go – our viSionWe aim to be the global leading company for specialty chemicals and to stand out through above-average value creation for all of our stakeholders.

hoW We Aim to get there – our miSSionWe build leading positions in the businesses we are active in, and we adopt functional excellence as part of our culture. We create value through appreciating the needs of: · our customers – by providing competitive and innovative

solutions · our employees – by adhering to our corporate values· our shareholders – by achieving above-average returns· our environment – by acting sustainably

CAre ChemiCAlS

Sales 2014 in CHF m 1 511 Growth potential + 4 – 5 % p.a.

EBITDA* margin 2014 17.1 %

CAtAlySiS & energy

Sales 2014 in CHF m 729 Growth potential + 6 – 7 % p.a.

EBITDA* margin 2014 23.5 %

nAturAl reSourCeS

Sales 2014 in CHF m 1 297 Growth potential + 6 – 7 % p.a.

EBITDA* margin 2014 14.7 %

plAStiCS & CoAtingS

Sales 2014 in CHF m 2 579

Growth potential global gdp

EBITDA* margin 2014 14.0 %

1. 2.

* before exceptional items

From AverAge to the top – AdvAnCing into the top tier in SpeCiAlty ChemiCAlS

EBITDA* 2001 – 2009 2010 – 2014 mid-term

* before exceptional items

ClAriAnt

ClAriAnt

ClAriAnt

> 20 %

16 – 19 %

10 – 15 %

< 10 %

1Increase Profitability

2Reposition Portfolio

3Add Value with Sustainability

4Foster Innovation and R&D

5Intensify Growth

StrAtegy to inCreASe perFormAnCe

We hAve A CleArly deFined CorporAte StrAtegy bASed on Five CentrAl pillArS

3.We meASure our progreSS bASed on SpeCiFiC tArgetS For the FutureClariant’s key performance indicators (KPIs):

Our aim is to make Clariant one of the most profitable specialty chemicals companies by continuously improving the EBITDA* margin.

mid-term tArgetS

Organic sales* > global gdp growth EBITDA** margin 16 – 19 % ROIC > peer group average

* in local currencies

** before exceptional items

4.

2 »We steered Clariant onto a profitable course«

2 Interview with Rudolf Wehrli and Hariolf Kottmann

7 One Clariant

7 Mini's Momentum

37 The Clariant Story

38 How Clariant Creates Value 41 Financial Targets 43 The Five-Pillar-Strategy

58 Operational Implementation in the Four Business Areas

60 Care Chemicals 68 Catalysis & Energy 76 Natural Resources 84 Plastics & Coatings

92 Financial Review

93 Business Performance in 2014 98 Segment Analysis 102 Summary of Financial Statements 106 Clariant Stock 109 Outlook 111 The Executive Committee

112 Corporate Governance

130 Compensation Report

146 Financial Report

COnSOlIdATed FInAnCIAl STATemenTS OF The ClARIAnT GROup

148 Consolidated Balance Sheets 149 Consolidated Income Statements 150 Consolidated Statements of Comprehensive Income 151 Consolidated Statements of Changes in Equity 152 Consolidated Statements of Cash Flows 153 Notes to the Consolidated Financial Statements 210 Report of the Statutory Auditor

RevIeW OF TRendS 211 Five-Year Group Overview

FInAnCIAl STATemenTS OF ClARIAnT lTd, muTTenz

212 Clariant Ltd Balance Sheets 213 Clariant Ltd Income Statements 214 Notes to the Financial Statements of Clariant Ltd 220 Appropriation of Available Earnings 221 Report of the Statutory Auditor 222 Forward-looking Statements

223 Financial Calendar

Index AnnuAl RepORT 2014

1Clariant AnnuAl RepoRt 2014

Mr. Kottmann, how would you sum up last year?

—hARIOlF KOTTmAnn The year 2014 was heterogeneous. Surpri-singly strong months in terms of sales and results were followed by weaker ones – we had fluctuations in both directions and some-times even within one quarter. This was mainly caused by external factors. We set more ambitious targets and lagged behind our expectations. Yet, we were able to increase the EBITDA margin to 14.2 % compared to 14.1 % in the previous fiscal year. Therefore, we are currently at the highest level seen in recent years.

—RudOlF WehRlI Indeed, the international financial and econom-ic crisis could not be overcome completely in 2014. In addition, we had to cope with the political crises in the Middle East and in Russia. The market participants responded accordingly. For several years we have observed stagnation in the European region. Even in China, growth fell below general expectations. In addition, the negative currency effects affected us primarily during the first six months.

How does this affect your medium-term targets – your intended EBITDA margin lies in the range of 16 – 19 % starting in 2015?

—hARIOlF KOTTmAnn This target is still valid. The range is ambi-tious but absolutely realistic as it reflects the strength and the quali-ty of our portfolio. Since 2010 we have been progressing every year towards this target, despite sometimes quite adverse circumstances. For 2015 we will make another step towards an EBITDA profitabili-ty margin of 16 – 19 %. Given however the increased volatility in the economic environment, as exemplified with the Swiss franc's appreciation and the significant oil price reduction, we will not reach this profitability range in 2015 but will certainly further im-prove when compared to the 14.2 % we achieved in 2014.

» We steered Clariant OnTO A pROFITABle COuRSe«

So, you continue to focus on increasing profitability?

—hARIOlF KOTTmAnn Yes, but the margin is only one aspect. It has developed well over the past years. Now, we are able to pur-sue other financial goals. These include an annual low to mid single-digit growth in local currencies and a significant increase in cash flow generation. In 2015 and the following years, we will establish the foundation for the long-term development of the company. Therefore, we cannot only focus on optimizing profits in the short term. We must increase our competitiveness in general and we must invest specifically in research and development as well as in the development of new markets in China, India, Latin America, and in the United States.

—RudOlF WehRlI According to the International Monetary Fund, in 2015 developing and emerging markets can expect a growth of 4.3 % and those in Asia even 6.4 %. The US continues its positive development. Here, we will benefit from the expected growth of 3.6 %.

How do you distribute investments in order to ensure future growth?

—hARIOlF KOTTmAnn We invest increasingly in regions with above-average growth rates and a high result potential. In 2014, we invested 54 % in emerging markets and in North America compared to only 36 % in 2013. In our fields of operation, we take a similar course of action: During the previous fiscal year, we only invested 34 % in profitable areas with growth potential; in 2014, we already invested 52 %. This is also our strategic course for the future.

2

—RudOlF WehRlIChairman of the Board of Directors

—hARIOlF KOTTmAnnChief Executive Officer

3Clariant AnnuAl RepoRt 2014

Is this adjusted investment strategy also reflected in the figures for 2014?

—hARIOlF KOTTmAnn Yes, you can see it in the example of growth in Asia and Latin America. The figures of 2014 prove that we have expanded in a timely and strategically sensible manner. In the Asia/Pacific region, sales in local currencies increased by 9 % and in Latin America even by 18 %. The reason for this is not only the general local economic growth, which was actually not all that great in Brazil during the year under review, but because we are able to serve the needs of local customers through local production capacities and good products.

How do you know that your research and development activities will meet the future needs of your customers?

—hARIOlF KOTTmAnn Instead of conducting research behind closed laboratory doors, we focus on the dialogue with our custom-ers and within the company. The secret of successful innovation is the precise knowledge of the needs and desires of customers. We have not offered any of our average off-the-shelf products for a long time. Instead, we offer solutions which we develop together with the customer. This generates added value for the customers and for Clariant. We follow this purpose with a clearly defined strategy. In this context, the continuous review of the portfolio is just as im-portant as the ability to transfer new applications interdepartmen-tally to other work areas.

» Generating value for our customers, our employees, our company and our share-holders is our top priority.« Rudolf Wehrli

4

Added value through sustainability became part of your strategy in September. Can you earn money with it?

—hARIOlF KOTTmAnn Yes, of course, you can make money with it. For years, sustainability has ranked high with us. And I am con-vinced that in five to ten years, companies will no longer be able to conduct business without being sustainable. In addition to the soci-etal aspects, we profit operationally on two levels: On the one hand we have costs. The more efficient use of resources, the consumption of less energy and the lower environmental costs are reflected by lower expenses. On the other hand, we already show a significant growth by offering sustainable products. Today, you cannot be innovative and grow without sustainability. Our customers world-wide expect sustainability from us just like we expect it from our suppliers.

—RudOlF WehRlI Our vision is to become the global leading company for specialty chemicals. Furthermore, it is our goal to raise awareness of us being a leader in sustainability. Both complement one another excellently. Sustainability not only contributes to prof-

itable growth, but more so to the reputation of Clariant. We are very much aware of the responsibility we have toward society and the environment and we want to fulfill it with exemplary conduct and with the greatest possible transparency. In addition, we would like to position ourselves as an attractive employer. For this reason, we invest in our employees and we fulfill our social responsibility at the local level. Our efforts are internationally acknowledged and honored. We are proud to have been accepted in the Dow Jones Sustainability Index (DJSI) also in 2014. This time, we even made the DJSI World among the top 10 % of the chemical industry.

Give us an outlook for 2015. What can we expect from Clariant?

—hARIOlF KOTTmAnn In 2015, we will continue on the course we have taken. As I said before, we want to keep the growth in local currencies on a high level and we want to increase the cash flow significantly. Just as in 2014, our focus is increasingly on innovation excellence in research and development, technical application as well as on commercial excellence in marketing and sales. The cus-tomers and their needs are in the focus of our work.

» Today, you can-not be innovative and grow without sustainability.« Hariolf Kottmann

5Clariant AnnuAl RepoRt 2014

—RudOlF WehRlI The world around us will continue to change rapidly and we as a company must keep pace. In recent years we were able to create a more stable and profitable Clariant. We have risen to midfield from the lowest level of profitability in the specialty chemical industry. We are not at the finishing line. In 2015 another milestone will be accomplished on the way to the top tier.

—hARIOlF KOTTmAnn Clariant has undergone multiple changes and we have achieved much of which we can be proud. But this change does not stop. We have started a new corporate culture, which has not yet taken root everywhere in the company. We do not need industry servants but people with the ability to think and act as entrepreneurs. Yet, I do not see this across all levels of the com-pany. Particularly middle management must change its views. The silo mentality must now come to an end. With Clariant Excellence we have the tools on board; we now have leaner structures and a leaner portfolio. Therefore, we have become more flexible and we have a unique innovation culture. Now, it’s time to live our company values even if it is unpleasant and takes some people out of their comfort zone.

Finally, one quick question: Why should anyone buy Clariant stocks precisely now?

—RudOlF WehRlI Clariant is a very solid company with a promis-ing potential to increase in value. It is a company that expands and advances continuously. We have taken a course, which is seen positively also by the financial markets. Today, we have significantly more investors who focus on the long term. Generating value for our customers, our employees, our company and our shareholders is our top priority. During the past two years, we enjoyed an in-crease in share price of 35 %. In 2015 we want to continue to create value by delivering an above-average growth, increasing profita-bility and improving cash flow generation.

hARIOlF KOTTmAnn

Born in 1955Chief Executive Officer (CEO) since 1 October 2008Member of the Board of Directors since 10 April 2008

RudOlF WehRlI

Born in 1949Chairman of the Board of Directors since 27 March 20122008 – 2012 Vice Chairman of the Board of Directors 2007 – 2012 Member of the Board of Directors

6

One ClariantMini's momentum. Everyday life resumes quickly when one returns from a long trip; it hits like a whirl-wind. This turns out to be the case for the woman in the pumpkin-colored blouse, whose plane from Paris has just landed at Mumbai's International Airport. She has the style and the attitude of a globe-trotting lady who likes to be noticed: Sunglasses pushed back in raven-black hair, chin resolutely stretched out to greet the morning.Concept and photography by Jo Röttger

Text by Bertram Job

Mini Nair has numerous messages waiting for her in the mailbox of her smart-phone and she listens to them as she sinks back into the seat of the car, surrounded by the familiar chaos of the streets. Hooting motor rickshaws and taxis, heaving buses and whole families on scooters. Most of the messages are the usual office gossip, as she calls it. The stuff that is always circulated in a global company where decision-makers pop up at every level.

In the Paris office, her international boss, Andy, has news about a French-Indian joint venture project. A colleague from Paris asks if she could be at an upcoming appointment in Slovenia in order to possibly initiate a very promising business deal. In New Mexico, USA, there are a few details about regulatory aspects of the products indented by pharmaceutical companies in India. And here in Mumbai, her Indian boss, Ketan, would like to hear how it went in Paris.

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So the woman in the back of the white car immediately decides to return the calls in order to get a clearer picture of things. But waiting until the driver brings her to somewhere with a landline could last the good part of an hour at this time of the day. But she knows this Moloch of a megacity better than anyone else. It might get on her nerves and she might curse it regularly, but she never despairs.

Mini Nair was born into this seething mass and isn’t going to leave it volun-tarily. »This city created me«, she says, »it is my spirit and my energy. Mumbai gets to everyone, invokes a reaction but never lets anyone give up.« And the building sites between time zones, that seem to be almost incessantly under-way – in fact, quite correctly: »That is the best thing about my job. I love it!«

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DEALING with issues as they arise across all borders, contacts and customers, car-ing for and maintaining alliances: That is just part of the description of Mini Nair's job as Global Topic Expert & Sales Manager. She is said to be quite talented in this job. This is because she is never rigid or dogmatic, but appears conciliatory and flexible. Therefore, all parties concerned quickly get the impression they are posi-tively and directly linked with her.

Strategic empathy is also part of the game, when the qualified chemist worries about the product turnover in her business line ›Medical Specialties‹: this includes tubes, canisters and stoppers as well as desiccants that protect the drugs from moisture. A business line where a significant increase is anticipated.

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For nine years Nair carried out a similar mandate for Süd-Chemie. After the ac-quisition of the company she was the first face of Clariant Chemicals (India) Ltd in her business division. It was more modern and with more amenities. The people in the headquarters continue to be engaged in driving change forward. Dare more, wait less; higher efficiency through flatter hierarchies. And last but not least, well educated women who are keen to take on challenges.

»I think differently and creatively«, she says emphatically, »my out-of-the-box thinking and my determination to get things done, however great the obstacles may be.«

15

So what is still traditional here, and what is modern? Mini Nair prefers to switch between the two, depending on mood and situation. Just like her appearance: One day she might wear a folksy blouse from the Kashmir region and then the next a designer shirt with fad-ed jeans. Sometimes she finds herself humming a kitschy Bollywood tune and at others she’ll sing old Beatles favorites. »Yesterday, all my troubles seemed so far away...«

And when she needs time for reflection she takes advantage of the many options avail-able: a Hindu temple, a mosque, a Sufi shrine, an old synagogue. She doesn’t believe in any one God she says, »But I do believe in the power of work.« In this sense her post-modern life is a cornucopia of cultures and styles, in which the qualified chemist picks and chooses: »We are less dogmatic about this than anywhere else in the world.«

Definitely further along than 15 or 20 years ago. Whilst the West was mesmerized by China, the subcontinent quietly developed into one of the twelve most important indus-trial nations in the world. With annual growth rates of between four and nine percent and a new, predominantly urban, middle class, which in ten years is estimated to repre-sent 130 million households. This represents not just buying-power but also a middle class that is receptive to the rest of the world.

Mini Nair is already in the second generation of this middle class, and she has a serious hobby. She writes, as often as she can find time for it. Her first book was a children’s story which was followed by a biography of the Indian pharmacologist B. V. Patel. Then there was a novel in 2011 ›The Fourth Passenger‹: A story of four women who overcome funda-mentalism and riots during the clashes between the Hindus and the Muslims in Bombay in 1992. In addition she writes a blog (http://minieatsinbombay.blogspot.com), in which she can be almost anything: socialist from a sense of justice, fashion icon, poet, patriot, feminist and passionate cook.

Colleagues and lecturers, companies and publishing houses: these are all very different worlds that she flits between, but this isn't a problem for her. On the contrary: »As an author I can read the subtext of what isn't said in negotiations. That’s a distinct advantage for me in my job.« And what does it mean to her apart from the salary? »A platform for me to prove myself, to express myself... effectively where I can be myself.«

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17

BOM BAIA, good bay – this is what the Portuguese sailors are believed to have named the area with the seven islands off Maharashtra's coast. The marshland between the islands was reclaimed and later the British were to found a complete city on it, from where they shipped what effectively turned into gold to the rest of the world: Ginger, silk, saffron and tea. The first global trade was with very one-sided preferential treatment. Over time this has grown into the largest city in the subcontinent, with more than 18 million inhabitants. This is where the heartbeat of the world's largest democracy beats: 1.2 billion people in 36 states including union territories. Only now it’s no longer spices, but software, pharmaceutical and entertainment that drive the pulse.

The chemical engineer T. N. C. Nair also tried his luck when he moved here in the 60s with his wife. From Kerala, the state with the green landscape and red soil, he brought with him an excellent education and the original spirit of the south. He passed both on to his daughter, who grew up in central Bombay with all the

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privileges of a son: school, college, university. A »pampered only child,« she admits with a laugh in order to deflect possible criticism. »My father taught me to break all the barriers«, she says. »He was also the person who said to me, the world is your oyster...«

The early years come flooding back when Mini Nair travels through her old stomping ground of South Mumbai (her index finger still bears the mark that she was given that morning when her vote for Maharashtra’s regional assembly was registered). She points out the ›Metro‹ and ›Regal‹ cinemas with their art deco facades, where she saw her first films on Sunday afternoons, her favorites being those of Charlie Chaplin. Or Kyani & Co, the spacious café with the wooden framed vitrines that the Parsis (followers of the old Parsi religion) opened more than a century ago: College girls with a few rupees could sit around here for hours over their masala chai.

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And on to the promenade on Marine Drive with its numerous benches where she devoured so many books from Dickens to Dostoyevsky, caressed by the gentle sea breeze. Then on to the Rhythm House in Kala Ghoda, the first port of call for every record from Pink Floyd to movie soundtracks. Her taste has always been ›eclectic‹, she explains, before she dons the headset. As if it weren't already abun-dantly clear that this is her guiding principle.

From an early age Mini Nair lived in numerous worlds, a true Mumbaikar, which has given her the ability to switch levels so effortlessly today. And as for languag-es: first English then Marathi, then four further Indian idioms and a smattering of French. She seems to be perfectly cut out for India's ›new way‹ which aims at breaking down barriers. It is a path to the future but at the same time harks back to the maxim of Mahatma Gandhi: »Think globally, act locally.« But the city in which she now spends the vast majority of her time is no longer on the peninsula. It lies east of it.

22

NAVI MUMBAI, new Mumbai: Founded in the 70s under the direction of a state company. On the mainland beyond Thane Creek, one of the world's largest planned cities was built, intended to relieve some of the density of the population of Mumbai, which was full to bursting. It has separate city districts and industrial parks for sunrise industries which are accessible via two interchanges and several railway lines.

Vashi quickly developed into the most popular district. With its tree-lined streets and small parks it offers a safe, nevertheless, lively retreat. This is where Mini Nair and her husband, who works at a bank, have set up home with their eight-year old twin daughters Aaliyah and Aaria, and a household help. The day often begins there in the dark when Mini gets ready to jog in the park.

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After breakfast, mother and daughters jump into the car that is waiting for them in the street. The girls are dropped off at the Delhi Public School, a vast institution with riding arenas and British-style hockey pitches, whilst their mother is driven further northwards to Airoli. There, in one of the industrial parks, is where she works: She has a separate office on the eighth floor, which is full of dynamic open-plan offices and laboratories. On her desk there are a few paintings and pieces of craft work made by her kids next to her thermos. From the window, the foothills of the Western Ghat are visible, before which lies a settlement of impro-vised huts.

Four men form her staff. Together they account for the diversity of faith that is tradition in the Indian republic. At best, groups with the same objectives could only benefit from this diversity. »If you respect people’s dignity, teamwork be-comes incredibly finely tuned«, she believes. »You don't make the person at the bottom of the hierarchy aware of his position, nor do you make the person at the top of the hierarchy aware of his position. This egalitarian way of dealing with people makes teamwork totally undogmatic.«

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However, a lot of the time it is difficult for her to maintain her noble outlook. This is when everything moves too slowly, with too much bureaucracy and red tape. At the end of the day – and of the quarter – it is not a case of gender or belief, as she knows, but about targets and the bottom line. What is fundamentally important for her: »I would prefer to be remembered as the lady who broke a new turnover limit rather than just a woman.«

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HOWEVER, there is still another India, and Mini Nair finds it of great impor-tance that her visitors get acquainted with it. The car hardly takes up speed as it negotiates the potholes of the small streets beyond Navi Mumbai towards the south of Maharashtra. It drives along the gently undulating Sahyadhri Hills and through towns on the coast that were founded by the French and the Portuguese. Green fields with the lushest rice in the country, white beaches populated with happy young people.

It takes almost four hours to reach Murud, a sleepy little town by the sea. This is where Mini and her husband had their modest house built over ten years ago by a German architect. In the center of a slope covered with mango trees and coconut palms, some of which were uprooted in the last storm. The lady of the house wants to check just how many these are.

»This is where I would like to put my feet up one day«, she says. Until then it’s a question of good, honest, hard work. To be carried out by them all, when they are there for the weekend (and not just relaxing), as well as primarily by Sandeep and Supriya – the long-established couple who manage three fields further on and who take care of the house and the orchard throughout the year.

It is precisely such farmers, with their lives of hard labor, who contribute to the national well-being. Thanks to them India is still able to provide enough food for its population and so retain its independence. In addition, her twins get a taste of a modest lifestyle here from time to time. In Vashi they are too often caught up in a bubble of luxury, »and I'm not particularly happy about that.«

This time only three trees were blown down on the plantation. The lady of the house can visit Sandeep and Supriya with a light heart and leave them some money for their hard work, and also admire the refrigerator, which is the mag-nificent new arrival in the little house. Supriya beams as she relates how she no longer has to bother her neighbors when her husband asks for a glass of cold water in the evening. The academic in blue jeans thinks this is also a sign of the times. But there are millions and millions of Supriyas and Sandeeps who now want to have electrical appliances and televisions in their homes. A domestic market is therefore growing which will be highly interesting for many compa-nies and sectors: Like an elephant that suddenly rises at a secret signal.

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31

MINI NAIR is wearing her pumpkin-colored blouse again, as she once more runs through Mumbai’s Airport terminal a couple of days later. The plane for Ahmed-abad, the city in the state of Gujarat with seven million, already leaves shortly before six in the morning. That is no problem for the declared ›High Performer‹: The main thing is that she can stay in contact with the resident pharmaceutical com pany for which her company supplies various pharmaceutical packaging so-lutions.

An important customer, she notes, and lets her long fingers slide over the smart-phone again until she finds the page about the Ashram where Gandhi lived for 12 long years. It was long ago developed into a memorial in Ahmedabad. She wants to sit on the bench there between the buildings and meditate again today before business begins. Because here, peace and tranquility reign that could be infectious. »This is my favorite place,« she says while she shows the photo. Then she disap-pears in the direction of the gate, with the confident stride of a lady who wants to make a difference.

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»Think globally, act locally.« This is part of Mini’s momentum, just as it is the mo-mentum of the country that can no longer be stopped. »We have our own spirit and we fear nothing,« she says with palpable pride, »we are the creeping tiger.«

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One Clariant »think globally,

aCt loCally.«Mahatma Gandhi

Three Phases of sTraTegy ImPlemenTaTIon since 2009

2009 2010 2011 2012 2013 2014 2015

ProfITable growTh

ClarIanT exCellenCe

Comprehensive restructuring

Change has already been present at all levels in the last six years: the Group structures were optimized and programs were initiated for continued improvements. This enabled the restructuring of the company, which led to a profitable growth trajectory. The corporate culture has also been radically changed with a new brand appear­ance and the definition of a new corporate mission and vision were unified. Meanwhile, the corporate strategy is based upon five cen­tral pillars: the increase in profitability, the repositioning of the portfolio, focus on innovations and research & development and the

maximization of growth potential. Furthermore, the increase in value by sustainability became a central building block of the company. Clariant succeeded in the turnaround of the Group with profitable growth. The reputation of the company has clearly improved. The foundation was thereby laid to make Clariant into one of the leading specialty chemical companies worldwide, like it was defined in the corporate vision. In order to bring the company to the next level, a further acceleration of change is necessary.

»Accelerate Change« is this year’s motto. With this slogan, the company is linked to the central strategic target of top management, which was given to all employees by Hariolf Kottmann: We have to change the way we operate in order to successfully master the challenges of the dynamically changing global world economy.

The Clariant Story

37Clariant AnnuAl RepoRt 2014

Care ChemICals

naTural resourCes

CaTalysIs & energy

PlasTICs & CoaTIngs

The four busIness areas of Clariant

The achieved successes just in the recent past and the clearly im­proved reputation of the company are based on a unique strategic positioning: Clariant generates value by focusing on sustainability and innovation. In order to reach this goal, all stakeholders with their specific wishes and needs must be equally addressed; on the one hand the customers and shareholders, on the other hand the employees and society as a whole. Only this way can the differen­tiation from other companies and the announced above­average value generation succeed.

which Demands Do Clariant's Customers make?Added value, innovations, profitability, sustainability, safety, part­nership, as well as communication and interchange – the demands of the Clariant customers are so different, just like the markets in which they are active. Therefore, the decisive question to the cus­tomers is always: »What is precious to you?« In order to satisfy these challenges, it is fundamentally important to listen to the cus­tomers, to develop and deliver answers to their questions and wishes. For this purpose, Clariant has expanded its corporate Research & Development into a true think tank, from which about more than 300 projects, thereof 63 important (Class 1) projects, have currently evolved with a total sales potential of CHF 1.8 billion (Net Present Value = NPV of CHF 1.2 billion). Understanding the projects is just as important as the permanent further optimization and con­sideration of the total value chain, including all suppliers. This is a key prerequisite for a successfully accelerated change.

Clariant's focused Portfolio After the successfully executed optimization in the 2014 reporting year, Clariant possesses a focused portfolio that distinguishes itself by an above­average growth rate, promising future prospects and high profitability with upside potential.

what Drives Clariant? Toward which Values Is the Company oriented? Besides the Group’s transformation at all operative levels, Clariant has designated a change to a new corporate culture by the introduc­tion of a new brand and value system in 2012, a »change in mindset.« This made it possible to establish a newly united corporate culture after the years of restructuring and important changes to the portfolio.

How Clariant Creates ValueThrough aPPreCIaTIon anD unIQue PosITIonIng

38

The Core of The branD anD branD Values of Clariant

appreciation as the motor of Daily businessThe core of the Clariant brand focuses on appreciation in order to support the customers in maintaining or expanding their leading market positions. This applies to all areas in which the company is active and which it can influence: Performance, People, Planet.

Brand Value Performance – The customer’s success as guarantor of own successClariant can only be successful if the company’s customers are also successful. Their performance must thus be the motor of daily busi­

ness for the optimal offer of customer­specific, innovative, quali­tatively high and sustainable products and solutions. This is again reflected in an improved performance by Clariant.

Brand Value People – Permanent exchange between all participants The dialogue is the basis for all Clariant activities, namely for two important reasons. Firstly, it is a crucial ability to listen what cus­tomers desire and expect in order to fulfill their needs. Secondly, the company’s success is based on competence to ensure an effective exchange between all interested parties. Therefore, the basis for this necessary dialogue is the appreciation of customers and colleagues in the company. Respect, transparency and honesty are essential and characterize daily cooperation. This contributes to Clariant be­ing perceived as an attractive employer by the best in the industry.

Brand Value Planet – Responsible handling of resources and the environmentClariant is a part of the economy, society and the environment. The absolute commitment to ecological sustainability is an ethical obligation for Clariant as a global company with the pursuit to be counted among the leading suppliers of the specialty chemical industry. Therefore, appreciation is also reflected in a responsible approach to all resources and the environment. The sustainability of products has become an important decision criterion for con­sumers. This is why Clariant strives to set new benchmarks by ap­plying sustainable, leading­edge technologies and developing inno­vative solutions to improve environmental standards, and it allows itself to be measured on the basis of clearly defined environmental objectives.

39Clariant AnnuAl RepoRt 2014

The Clariant Story

enTerPrIse Values as a founDaTIon for sustainable value creation

Drive for exCellenCe

Courageous and Decisive

leaDershIP

Sustainable Value CreaTIon

Deliver to PromIse

Lived aPPreCIaTIon

Corporate resPonsIbIlITy

Disciplined PerformanCe

Management

Turning appreciation into Value CreationThe main objective for all of Clariant’s implemented activities is sustainable value creation for all stakeholders and the company. That requires the alignment of the actions of everyone in the com­pany on the basis of six values: drive for excellence, disciplined performance management, deliver to promise, courageous and de­cisive leadership, lived appreciation, corporate responsibility.

The goal of a long Journey: Clariant as the global leading Company for specialty ChemicalsThe Vision of Clariant is to be the global leading company for specialty chemicals, which stands out through above­average value creation for all stakeholders.

In order to achieve this, a clearly defined Mission was formulated that is based upon building up leading positions and fostering a high functional excellence as part of the corporate culture for the businesses in which Clariant is active. Added value will be created for the customers by providing competitive and innovative solu­tions, for the employees by adhering to the consistent life of corpo­rate values, for the environment by sustainable actions on all levels, and for the shareholders by achieving above­average returns.

The vision shall be achieved by the implementation of the Mission Five-Pillar-Strategy: Increase in profitability, repositioning of the portfolio, adding value through sustainability, focus on innova­tion and research & development, as well as generation of growth potentials.

Continuous Improvement connected to cultural change is the foundation for a sustainable value creation. Therefore, the Clariant Excellence initiative was started in 2009. It is oriented towards optimizing competitiveness through efficiency savings and the cre­ation of added value for the customers. Clariant Excellence com­prises the areas of Operational Excellence, Commercial Excellence, Innovation Excellence, and People Excellence.

40

EBITDA* MArgIn in %

2014 14.2

2013 14.1

2012 13.5

2011 13.2

2010 12.7

0 5 10 15

Financial Targets On ThE SprIngBOArD TO ThE nExT lEvEl Of prOfITABIlITy

Clariant's profitability has been raised step by step through cost ef-ficiency, innovation, growth and portfolio restructuring. By the 2014 reporting year the EBITDA margin (before exceptional items) has improved to 14.2 % and the portfolio is expected to generate a target range of 16 – 19 %. In 2015 the company will make signifi-cant steps in this direction.

growth Initiatives Will Enable a Sales Increase of Approximately 5 % AnnuallyBased on the growth initiatives already implemented, the success-ful portfolio adjustments and the launch of more than 300 innova-tion projects, thereof 63 Class 1 projects, with a sales potential of approximately CHF 1.8 billion (NPV CHF 1.2 billion), Group sales is excpected to increase in the coming years by about 5 % annually in local currencies, under the assumption of a steady development of the global economy. Clariant further maintains its objective to raise the return on invested capital (ROIC) above that of the peer group.

hOW WIll ThE TArgETED EBITDA* MArgIn rAngE Of 16 – 19 % BE AchIEvED? · 1 – 2 percentage points margin increase from growth in above-average

profitability businesses and the introduction of innovations· 1 – 2 percentage points through cost efficiency measures and productivity

improvements throughout the Group

*before exceptiontal items

41Clariant AnnuAl RepoRt 2014

Mr. Jany, is Clariant financially well-prepared for future growth?

—pATrIck JAny Our balance sheet is very healthy. Since the acquisition-driven high indebtedness of 2012, we have again reduced our net financial debts from CHF 1.8 billion to less than CHF 1.3 billion. The equity ratio of 34.5 % and the gear-ing of 46 % are also more than solid.

How will it continue from the CFO’s point of view?

—pATrIck JAny From a financial per-spective, we are focusing on a conservative financing policy. We have a well-distrib-uted debt maturity profile throughout 2024, and starting in 2015 we will strive toward significantly improved free cash flow generation.

What is the use of this cash flow?

—pATrIck JAny As the company be-comes more profitable and turns towards profitable growth the use of cash is logi-cally distributed between investment in growth, further reduction of debt and increased dividend to our shareholders.

What does an increased dividend mean specifically?

—pATrIck JAny We want to distribute 25 to 35 % of the available earnings before restructuring expenses to share-holders. Since 2011 we have increased the dividend per share steadily to CHF 0.36. With the expected earnings trend, there will surely be room for further improvement.

You mentioned future investments. How much are you allocating for them in the future?

—pATrIck JAny Our investments in tangible assets have risen in 2014 to CHF 310 million, which is almost twice than in 2009. The research and devel-

opment expenses have increased to CHF 213 million, or about 3.5 % of sales; this is paying off. We strictly focus on the al-location of investments in areas with high growth potential and in promising markets world-wide.

With the portfolio having been shaken up considerably, how are the invest-ment flows being directed?

—pATrIck JAny Very definitely, our portfolio has been restructured to enable growth and profitability. Accordingly, we are directing our investments more toward attractive future markets. There-fore, 52 % of the money went to high-growth areas in 2014, compared to only 34 % the previous year. The same is true for the regional allocation: 54 % of our investments flowed into emerging coun-tries and North America during the 2014 reporting year.

—pATrIck JAnyClariant’s Chief Financial Officer

» Our focus will be on the generation of free cash flow to be used for debt reduction, investment and distribution to shareholders.«

42

generate

business

ThE fIvE-pIllAr-STrATEgy of Clariant

1Increase

Profitability

2Reposition Portfolio

3Add Value with Sustainability

4Foster

Innovation and R&D

5Intensify Growth

STrATEgy TO IncrEASE pErfOrMAncE

Performance, growth and innovation characterize thinking and ac-tion at Clariant. In the specialty chemical industry, Clariant should be a synonym for businesses with above-average profitability (per-formance) in attractive, fast growing markets (growth), as well as for innovative technologies, products and applications (innovation). These three themes are the driving forces for a sustainable success,

that ultimately benefits customers, employees, the environment and shareholders alike, and helps to generate value. In order to accom-plish this mission Clariant has implemented the five-pillar-strategy: Increase profitability, reposition portfolio, add value with sustain-ability, foster innovation and R&D, intensify growth.

The Five-Pillar-Strategy AchIEvIng fInAncIAl TArgETS AnD SUSTAInABlE SUccESS

43Clariant AnnuAl RepoRt 2014

nET BEnEfITS crEATED By clArIAnT ExcEllEncE in CHF m

2014 125

2013 115

2012 102

2011 87

2010 47

0 25 50 75 100 125

pIllAr 1: IncrEASE prOfITABIlITy

The Group-wide focus on cost discipline is an important strategic element for the improvement of the EBITDA margin (before excep-tional items) by 1 to 2 percentage points. At the end of 2008, this became a clear priority in order to optimize the cost structure on all levels. »Project Clariant« 2009 and 2010 initiated the change in mindset (»Change«) for all employees by focusing on cash genera-tion and cost reduction. At the same time, the number of locations has been reduced in the course of the so-called Global Asset Net-work Optimization (GANO) by the middle of 2012. A multitude of measures has thus led to a reduction of personnel costs, and therefore, the break-even point of the Group by a total of CHF 180 million.

clariant Excellence as the foundation for Sus-tained profitable growthIn parallel Clariant Excellence (CLNX) – an initiative for further sustained improvement – has been implemented in 2009. This ini-tiative focuses on the continuing improvement and the cultural change. Originating from the LeanSigma approach – a method for efficiency improvement and quality management – Clariant Excel-lence is geared toward optimizing competitiveness through effi-ciency gains and the creation of added value for the customers. En-trepreneurial thinking is paramount here. Clariant Excellence encompasses the four areas of Operational Excellence, Commercial Excellence, Innovation Excellence and People Excellence.

positive Effects from continuing ImprovementClariant Excellence has become a complete success for the com-pany. Together with the added value in the amount of approxi-mately CHF 125 million that was generated in 2014, positive effects from cost reduction, additional sales due to increased efficiency and optimization of the net working capital in the amount of CHF 475 million have been achieved within the past five years. In 2015 an additional CHF 100 million should be added to this. In 2014 more than 9 000 projects were under way, more than 4 300 employees have been trained in Clariant Excellence programs.

The key for the success of the initiative is a comprehensive training of as many employees as possible to so-called »Belts«. By the end of 2014, there were more than 75 Black Belts, more than 800 Green Belts and more than 2 600 Yellow Belts. As project managers or as project team members, they are responsible for carrying out the op-timization measures in all organizational areas.

44

OpErATIOnAl IMprOvEMEnT through the Linkage of the Functional Excellence Programs

3 Accelerated Business Transformation

2 Explore Growth

1 Intensify Lean Management

Operational Excellence Commercial Excellence Innovation Excellence

linking the four Areas of Excellence A cross-linking of all four areas of Clariant Excellence is critical for its success. While Operational Excellence mainly deals with effi-ciency improvements in all operative areas, Innovation Excellence focuses closely on the establishment of Clariant as a global driver of innovation in the specialty chemicals industry. Design Thinking, ideation jointly with customers and suppliers translates unmet cus-tomer needs into future Clariant offerings. Therewith and support-ed by a stringent Idea to Market process, 1 – 2 % of annual topline growth will be achieved. Commercial Excellence is focused on strengthening sales processes and strategic marketing. In this con-text for example, after conclusion of the pilot phase the previous year, the implementation of Marketing Excellence as a key building

block for all Business Units began worldwide in 2014. Marketing Excellence systematically assesses possible markets for Clariant and finally defines market growth plans. Afterwards, these market growth plans are converted into sales opportunities by the entire sales force. At this stage Marketing Excellence and Clariant Cus-tomer- and Sales Management play together to accelerate the con-version of sales opportunities into sales. Enabling Clariant people to stringently manage organizational performance is the key purpose of People Excellence. People Excellence strives to make Clariant Excellence possible for all employees in the first place by translating all Clariant Excellence content into capability building programs comprising leadership as much as content skills.

» The cumulated positive effects of Clariant Excellence will markedly surpass the CHF 500 million threshold in 2015.«

BErnD högEMAnnHead of the Clariant Excellence initiative

45

The Clariant Story

Clariant AnnuAl RepoRt 2014

OpTIMIzED pOrTfOlIO for Sustainable Profitability

Süd-chemie (germany)

Acquisitions

plastichemix Industries (India)

vitapac (hong kong)

Aerochem (Sweden)

crM (france)

champion, gulf of Mexico Oil Business (USA)

BayInk (germany)

Organic pigments Business, Jiangsu Multicolor (china)

Divestments

Textile chemicals, paper Specialties, Emulsions

Detergents & Intermediates, leather Services,

Water Treatment (South Africa)

ASk chemicals /Joint venture

Energy Storage Business

2011 2012 2013 20152014

companhia Brasileira de Bentonita (Brazil)

pIllAr 2: rEpOSITIOn pOrTfOlIO

Clariant has significantly changed its company portfolio by active portfolio management, commencing with the major acquisition of Süd-Chemie in 2011. The strategic goal is always the establishment of a leading market position in highly profitable growth markets. The achievement of this goal results on the one hand from acquisi-tions of businesses with a high return of investment and growth potential, and on the other hand, by means of selling businesses with low returns and growth potentials. Altogether, business activi-ties with a sales volume of about CHF 1.6 billion and an EBITDA

return of over 15 % were purchased, whereas the company separat-ed itself from a total sales share of almost CHF 2.0 billion and a profitability of under 8 %. The profitability has risen over the past three years by improving the quality and the strategic positioning of the portfolio. After the new structures and the corporate strategy within the Clariant Group will be fully established, the earning dy-namics resulting from the portfolio restructuring should again be accelerated. Thereby, Clariant also benefits from the lowered cycli-cality caused by these transactions and the focus on global trends such as environmental protection and energy efficiency.

46

Adjustments to the portfolio leading to Sustain-able Improvement The announced sales of five Business Units at the end of 2012 was completed in April 2014 with the separation of Leather Services. Additionally, in the reporting year, adjustments have been made as part of the permanent review of competitiveness, such as the sale of the Water Treatment business in South Africa and the sale of the joint venture shares of ASK Chemicals. The divestment of the un-profitable Energy Storage business, as announced in October 2014, is expected to be closed in the first half of 2015.

portfolio Supplements in Asia to Expand local Market positions Clariant has also continued to complement its company portfolio with minor acquisitions, which improve market access and the extension of value creation. Already a total of four transactions were effected since 2011, three more followed in the reporting year, two of them in the Asian region. By acquiring the Indian Plasti-chemix Clariant became one of the leading masterbatch producer in the dynamically growing Indian market. Furthermore the Chinese healthcare packaging specialist VitaPac was acquired in December as well as the Swedish and Norwegian de-icing specialist Aerochem.

47

The Clariant Story

Clariant AnnuAl RepoRt 2014

MIlESTOnES Of clArIAnT'S cOMMITMEnT to Sustainability

2009 2011 20122010 2013 2014

rESpOnSIBlE cArE® glOBAl chArTErsigned

fIrST SUSTAIn-ABIlITy rEpOrTpublished

EnvIrOMEnTAl TArgETS 2020established

SUSTAInABIlITy rEpOrTrated at GRI A+

Un glOBAl cOMpAcTsigned

DJSI InDEx EUrOpEentered

DJSI InDEx WOrlD AnD EUrOpE top ranking

SUSTAInABIlITy anchored in Corporate Strategy

fIrST rSpO cErTIfIcATIOn received

TOgEThEr fOr SUSTAInABIlITy (TfS) membership

grI4 rEpOrTIng STAnDArD applied

pIllAr 3: ADD vAlUE WITh SUSTAInABIlITy

Clariant extended the corporate strategy to an additional pillar at the beginning of September 2014: add value with sustainability. This theme plays a key role in reaching the Group’s growth objec-tives. On the one hand, sustainability is an important element of the innovation process and therefore meets global trends like envi-ronmental protection and conservation of resources; on the other hand, it ensures that costs are saved and Clariant and customers are positioned as positive companies in public awareness, and this dur-ing the entire value creation. In summary, one can say: For Clariant,

sustainable economic practices mean the creation of long-term added value and benefits for all interested groups – in economic, ecological and social respects. The entire organization and all em-ployees have been sensitized for this purpose; sustainability com-mittees were established in all regions that would again report to a central sustainability council, which is personally led by CEO Hariolf Kottmann. This is also a further building block to »Accelerate Change«.

48

Involvement in numerous Sustainability Initiatives and projectsClariant obligates itself to an ethical and sustainable strategy, whether it is related to the environment, social responsibility, gov-ernance criteria, health and safety, sustainability in the value chain, product responsibility, up to personnel development. The signing of the »Responsible Care® Global Charter« was the start signal. This and the 2013 initiated »UN Global Compact« – containing the ten respective fundamental principles of the topics of human rights, work and environmental protection, as well as combating corrup-tion – function worldwide as central operational principles for the topic of sustainability for Clariant. In addition to this, the company has imposed self-initiated obligations beyond the»Code of Con-duct« and the »Code of Conduct for Suppliers«. The respective cor-porate function has herein defined binding policies for all employees and suppliers for business conduct. For example, these include the topics of fair competition, anti-corruption policies, prevention of discrimination and child labor. Moreover, numerous initiatives and projects were started; for example, the »Sustainability@Clariant Portfolio Value Program«, established in 2012/ 13. In this program, clear sustainability criteria for the product portfolio were estab-lished. On this basis, company products and solutions are classified as sustainable. Upon this, measures for communication, the market-ing, but also strategic decisions are being built. Products with an outstanding sustainability profile will be identified with the Eco-Tain® label. In order to make development projects comparable and to be able to assess their advantages Clariant has also introduced the »Corporate Sustainability Index« for research and development projects (CSIR&D). In the social area, Clariant joined the chemical industry initiative »Together for Sustainability« in 2014, which has the common goal of improving sustainability in the supply chain of the industry. Therefore, delivery evaluations and audits by inde-pendent experts, among other things, will be conducted, which all participating companies have access to.

Sustainability on All levelsClariant has defined its key areas of sustainability activities follow-ing an intensive exchange with various stakeholders. Over 150 internal and external stakeholders helped to identify and prioritize material areas by analyzing external market trends and business drivers. These areas include employment opportunities, environ-mental targets, emissions, resource and water management, as well as efforts in the community as part of the company’s commitment to corporate responsibility. These topics are regularly reviewed by Clariant’s Sustainability Council and adapted where necessary. The materiality matrix lists the key areas of Clariant's sustainability activities based on this assessment. The examples above show how for two of these aspects Clariant is monitoring its success against concrete targets and how this creates value for the whole company.

AccIDEnT prEvEnTIOn pAyS Off Work safety is one of the top priorities for Clariant. The company takes all necessary measures to convey the corporate culture and achieve the goal of »Zero Accidents«. In this manner, accident and absenteeism figures have decreased to a historic level over the past years. This is not only for the benefit of employees, but also for the company as for example lost work days (LWD) saved in the past eight years correspond to the performance of 50 employees during the same period.

Sustainability Report 2014

OpTIMIzED prODUcTIOn prOcESSES prOTEcT ThE EnvIrOnMEnT AnD SAvE cOSTS A great number of individual measures merge together with the optimization of the production process to create a whole. In particular, Clariant celebrates energy efficiency’s great success, and with the in-house program eWatch alone, saves approximately CHF 6 million from year to year thanks to targeted investments and employee training.

Sustainability Report 2014

49

The Clariant Story

Clariant AnnuAl RepoRt 2014

· Human rights

· Social engagement

· Water

· Biodiversity

· Demographic changes

· Food security

· Urbanization

· Wealth & consumption shifts

· Employee training & development

· Logistics

· Occupational health & safety

· Process safety

· Waste

· Business ethics & Compliance

· Corporate Governance

· Emissions

· Employment conditions

· Energy

· Life-cycle integration

· Product Stewardship

· Renewable raw materials

· Stakeholder dialogue

· Substitution & alternatives for hazardous substances

· Sustainable innovation

· Sustainable supply chains

· Transparency

· Value chain collaboration

rE

lATI

vE

IMp

Or

TAn

cE

TO

STA

kE

hO

lDE

rS

rElATIvE IMpAcT On clArIAnT

moderate

mod

erat

e

high

high

MATErIAlITy MATrIx by Clariant

The area work safety is reflected by the figures of industrial acci-dents with at least one day of absenteeism in relation to 200 000 work hours. This is represented in the so-called LTAR-quota (Lost Time Accident Rate), which dropped since 2007 from 0.92 to 0.23 in 2014. In the area compliance, employees worldwide are trained periodi-cally on topics related to the code of conduct such as corruption or

bribery. A multitude of training programs take place at the Clariant Academy to prepare the employees optimally for their tasks. The firm’s own Product Stewardship organization ensures that the total product portfolio complies with international safety and environ-mental criteria, such as REACH (Registration, Evaluation, Authori-zation of Chemicals) or the »Global Product Strategy« (Internation-al Council of Chemical Associations, ICCA).

50

new Environmental Targets until 2025In 2011, Clariant had, for the first time, exactly defined environ-mental targets by 2020 (2005 baseline), on which the company al-lowed itself to be measured. In view of the fact that these targets were already expected to be not only met but exceeded in 2014 due to the comprehensive portfolio restructuring, Clariant has decided to define new targets at the beginning of 2015, which take into ac-count these circumstances. These refer to reference values of the 2013 business year and focus on the following six main criteria with regards to emission values of the Group:

In these guidelines, the clear commitment of management to trans-parency and credibility regarding the topic of sustainability mani-fests itself both internally and externally. Only with continuous opti-mization of the production system and employee training can the ambitious goals be reached.

clariant Again in the Dow Jones Sustainability Index A confirmation that Clariant has succeeded in establishing itself successfully among the most sustainable specialty chemicals com-panies worldwide was the renewed inclusion of the company in one of the globally most prestigious sustainability indices, the Dow Jones Sustainability Index (DJSI). After the first listing in DJSI Eu-rope in September 2013, Clariant was one year later additionally included in the DJSI World. As a result, analysts from RobecoSAM acknowledged the outstanding role of Clariant in economic, ecolog-ical and social respects and graded the company within the top 10 % of companies in the chemical industry.

– 40– 35

– 35

– 35

– 30 – 30

reduce Energy consumption

reduce Water consumption

reduce Direct cO2 Emissions

reduce volume of Waste

Water

reduce Emissions from

greenhouse gases

reduce volume of Waste

EnvIrOnMEnTAl TArgETS by 2025 in %

51

The Clariant Story

Clariant AnnuAl RepoRt 2014

InnOvATIOn fIgUrES

~ 1 050  People in R&D in 8 global R&D centers & > 50 Technical Application Centers

3.5 % of Group sales 2014 R&D expenditures (CHF 213 m)

> 7 000 patents

> 130scientific collaborations

InnOvATIOn pIpElInE fIllED TO cApAcITy

Sales Potential at maturity of Clariant Innovations in CHF m

Jan 2013

1 100

Jan 2012

540

Jan 2014

1 600

End of  2014

1 800

pIllAr 4: fOSTEr InnOvATIOn AnD r&D

The Capital Markets and Media Days took place at the end of June at the Clariant Innovation Center (CIC), the newly constructed center for research & development (R&D) in Frankfurt am Main. Clariant's management presented the Group's strategies and objectives for the subject of innovations. A sales growth of 1 – 2 percentage points should be generated with the introduction of new innovations year by year. The current innovation pipeline of more than 300 projects, thereof 63 Class 1 projects, shows that these numbers were not pulled out of the air, but based on facts, which have a sales potential of more than CHF 1.8 billion. This can be converted into a total net present value of clearly over CHF 1.2 billion. The sales potential of the innovation pipeline climbed compared to 2012 by more than a billion Swiss francs.

52

glOBAl InnOvATIOn nETWOrk global coordination* – regional presence

R&D Center for Biotechnology

R&D Center for Chemistry & Materials

R&D Center for Process Technologies > 50 Technical Centers** (Application Development) *R&D at Clariant is globally coordinated via Clariant International Ltd in Switzerland.

** Not all shown.

R&D Center for Catalysis

BUSInESS UnIT fUncTIOnSgrOUp TEchnOlOgy & InnOvATIOn (gTI) grOUp fUncTIOnS

frAnkfUrT | gEnDOrf | hEUfElD | MUnIchGermany

MUMBAIIndia

ShAnghAIChina

lOUISvIllEUSA

pAlO AlTOUSA

Innovation and Sustainability closely InterwovenIn order to also reach these ambitious goals for the coming year, around 1 050 employees work in approximately 60 research and de-velopment facilities of the Group. All R&D activities at Clariant are globally coordinated via Clariant International Ltd in Switzerland. CHF 213 million flowed into this area in 2014, which corresponds to about 3.5 % of Group sales. In research intensive areas such as Catalysts, the investment is above 7 %. Clariant focuses on the current global trends when it comes to R&D: environmental protec-tion, globalization and urbanization, as well as resources and ener-gy efficiency. For example, the main focus of research themes are on the future markets of biotechnology, efficient catalysts for coal-to-gas and coal-to-chemicals transformations, functional packaging, oil and gas production as well as nutrition and medical products. Innovation and sustainability are nowadays driven by steadily in-creasing consumer and customer requirements across the entire value chain of products.

value creation at All levels of the Innovation processValue creation also stands in strategic focus on the subject of inno-vation. Here every innovation passes through a four-stage process covering the entire value creation. Project leaders of all important (Class 1) projects are supported by Clariant Innovation Excellence. The starting point here is the necessary understanding of existing and emerging needs and requirements of the global markets and customers. A structured developmental concept is then drafted that transforms these needs into value-added products and solutions. Crucial for the commercial success is the period of time between the idea and the market launch, and must be correspondingly mini-mized. In order to be able to guide the available resources efficiently into the very promising markets and areas of operation, it further requires a permanent screening for the trends that will drive growth in the future. Finally, coordinated technology and application plat-forms are important to be able to obtain synergies over the respec-tive areas of application.

53

The Clariant Story

Clariant AnnuAl RepoRt 2014

Trend analysisunmet need

analysis

Piloting andtesting with

lead customers

Launchfeedback

monitoring

Needinterviews(detailed)

Customersampling

clArIAnT’S IDEA-TO-MArkET prOcESS – Example Glucamide

cUSTOMEr & MArkET InpUT

Ideation workshops withtechnology and market expert

participation

Technology platforms, project management,coaching and workshop moderation

InnOvATIOn ExpErT & TEchnOlOgy InpUT

prOcESS

IDEATIOn gATE rEvIEW gATE rEvIEW MArkET lAUnch

fUll prODUc-TIOn

CSIR&D project assessment is mandatory at stage gate from Scope to Execute phase since 2013 for all Class 1 projects and projects with NPV > CHF 10 m and therefore drives R&D projects towards more sustainability already in early stages.

Nov 2010 Jan 2011 Oct 2012 Oct 2014 Q1 2016

ScOUT ScOpE ExEcUTE cOMMErcIAlIzE

ConductOpportunity

Ideation

MonitorMarket

Introduction

EvaluateOppor-

tunity

DevelopOffering

ConductDeep

Dive

PilotOffering

EstablishProof of

Concept

PrepareLaunch

Develop Business

Opportunity

CloseProject

cooperation between customers and clariant r&DThe example of Glucamide demonstrates a typical model for the innovation chain from the generation of an innovative idea to the market launch of the finished product. Glucamide refers to novel, sugar-based surfactants with performance advantages for multiple market applications. Close collaboration with customers and early product sampling were key to validate the potential of this new

product class. The development process lasted from 2010 until October 2014, and showed that Glucamides clearly promise more application possibilities than originally planned. So Glucamides are the foundation of new Clariant products for the application fields of Personal Care (GlucoTain®), Industrial & Home Care (GlucoPure™), as well as Crop Solutions (Synergen GA®).

54

Mr. Kohlpaintner, why was the subject of innovation the main focus of your Capital Markets and Media Days this year?

—chrISTIAn kOhlpAInTnEr Long-term growth and profitability of a spe-cialty chemicals enterprise can only be secured by a well filled and success-fully executed innovation pipeline.

Describing and explaining our efforts and status in this regard provides orien-tation and comfort to our shareholders, so that they know, what they can expect from Clariant.

What facts do you have to support your assertion?

—chrISTIAn kOhlpAInTnEr Our inno-vation pipeline is well filled with a totalsales potential at maturity of 1.8 billionCHF. We have focused our project portfolio and put the proper resources behind. Also our track record in the past years was quiet successful here.

A typical R&D project takes several years, so how do you avoid the risk of losing money here?

—chrISTIAn kOhlpAInTnEr Clariant applies a clearly structured Idea-to-Mar-ket-Process. During project selection we pay utmost attention to the unmet needs of our customers by involving them very early in the development process. The same applies to other relevant internal functions which get involved at well de-fined stages to guarantee a smooth and speedy commercialization process. Cross-functional discussions ensure that we capture the full potential of a new idea, even in market segments we had not originally targeted.

—chrISTIAn kOhlpAInTnErMember of the Executive Committee

» Our innovation pipeline is well filled with a sales potential at maturity of CHF 1.8 billion.«

55

The Clariant Story

Clariant AnnuAl RepoRt 2014

Industry Attractiveness

Harvest**

39 %

Watch List**

6 %* Distribution of growth Capital Expenditure 2014

** Share of revenues 2014

Grow**

34 %

Improve**

21 %

Com

petit

ive

Posi

tion

AllOcATIOn Of InvESTMEnTS in Growth Areas (Total CHF 310 m)

25 % of 2014 investments*

52 % of 2014 investments*

23 % of 2014 investments*

pIllAr 5: InTEnSIfy grOWTh

In order to achieve an average sales growth of approximately 5 % per year, Clariant focuses on the allocation of investments in areas with excellent growth potential and on expanding regions with the most promising sales potential worldwide.

Based on these growth areas, the following businesses promise high potential: catalysts, crop protection, solutions for the mining and oil industry, personal care and biotechnology. This is also increasingly reflected in the allocation of investments. The comprehensive portfolio realignment which took place in the last couple of years helped as well. Thus, 52 % of the total investments of CHF 310 mil-lion were channeled into growth areas in 2014, compared to only 34 % the previous year, and 23 % (2013: 21 %) of the expenditures went into areas where the improvement of structures were pre-dominant, and only 25 % (compared to 39 % the previous year) went into cash flow-oriented activities during the reporting year.

future growth Will come from Asia and north AmericaThe predictions of the International Monetary Fund (IMF) make it clear that the bulk of global economic growth in 2015 and beyond will happen in emerging countries. The growth forecast for 2015 is 4.3 % in those countries. On the other side, it only reaches 2.4 % in the industrialized countries with exception of the U.S., that has been predicted a comparatively solid growth of 3.6 %. Clariant's high in-vestments in previous years are reflected in the shift of the propor-tion of sales in these regions. During the reporting year, Clariant invested about 54 % of its total investments in emerging countries and North America.

56

InDIA kEy fAcTS

> 900employees

chf 141 m 2014 sales

7locations

SAlES ShIfT to Emerging Markets continues

2005

15 %

49 %

13 %

6 %

17 %Asia / Pacific North America

Europe

Middle East /Africa

Latin America

2014

16 %

37 %16 %

8 %

23 %Asia / PacificNorth America

Europe

Middle East /Africa

Latin America

clariant in the promising Market of IndiaAs second most populous country, India is one of the markets with the largest future potential. Accordingly, the strengthening of its market position in this country is one of Clariant’s strategic goals. In this context, the acquisition of Plastichemix was completed in 2014, which ensured Clariant a leading position in the Indian mas-terbatch market. Furthermore, the production capacities for pig-ments will be expanded considerably at the sites in Roha and Cud-dalore. The new regional Group headquarters in Mumbai was opened in June. The location has room for 400 employees and in-cludes a regional innovation center with space for about 100 em-ployees in chemical research, application development and analytics. (see also pages 7 – 36: »One Clariant« with main emphasis on India)

» With over 1.2 billion inhabitants India promises enormous potential. With seven locations Clariant is well-positioned in India to profit from the dynamic growth.«

Dr. DEEpAk pArIkh Region Head India

57

The Clariant Story

Clariant AnnuAl RepoRt 2014

Operational Implemen­tation IN THE FOUR BUSINESS AREAS

58

SAlES By BUSINESS AREA EBITDA By BUSINESS AREA

Care Chemicals CHF 1 511 m 25 %

Catalysis & Energy CHF 729 m 12 %

Natural Resources CHF 1 297 m 21 %

Plastics & Coatings CHF 2 579 m 42 %

Group Sales: CHF 6 116 m

Care Chemicals CHF 259 m

Natural Resources CHF 191 m

Plastics & Coatings CHF 360 m

Group EBITDA (before exceptional items) 2014: CHF 981 m; including corporate costs: CHF 867 m

Catalysis & Energy CHF 171 m

THE RIgHT PORTFOlIO FOR FUTURE gROwTH

Serve global Trends with Innovative SolutionsCan you help us build a car that drives in the most environmentally compatible way possible? What ingredients do I need for a skin cream that addresses allergies in children? What should I pay attention to if I want to successfully reach consumers in India? These are exam­ples of questions that our employees receive daily from our custom­ers. One can only become the world’s leading specialty chemicals company if one is able to meet these customer needs with the right products and solutions. Under this assumption, Clariant has aligned its company portfolio and is focusing on markets with good future prospects, above­average growth and Business Units where the Group has substantial price­setting power due to a leading compet­itive and technology position. In this context, the global trends mo­bility, resource conservation and energy efficiency are just as much in the forefront as the consequences implied by increasing urbanization in emerging markets.

The four Business Areas of Care Chemicals, Catalysis & Energy, Natural Resources and Plastics & Coatings reflect this claim perfect­ly. Each of these areas has a significant growth potential, above­ average profitability, strong innovative capacity and a clear commit­ment to sustainability.

CARE CHEmICAlS combines Industrial & Consumer Specialties (ICS) with the activities of the New Business Development and the innovative biotechnology business.

CATAlySIS & ENERgy represents Catalysts and Energy Storage. The Business Area offers a broad portfolio of catalysts and adsor­bents for many chemicals and fuels processes, including those that enable the use of alternative raw materials, such as natural gas, coal, and biomass. In addition, the start­up business Energy Stor­age, which will be sold in the first half of 2015, provides solutions for battery materials.

NATURAl RESOURCES consists of Oil & Mining Services and Functional Minerals. Oil & Mining Services offers products and ser­vices for oil extraction on land and in deepwater environments. Refinery Services additives help customers to operate their diesel vehicles in extreme temperatures. Mining Solutions provides chemical additives to enable the efficient extraction of minerals and metals worldwide. Functional Minerals provides specialized puri­fication solutions for various industrial processes, for example the purification of edible oils.

PlASTICS & COATINgS comprises Additives, Pigments and Masterbatches. This Business Area designs products for customers from various industries – from the packaging industry, the electro and electronics industry to paints & coatings.

59Clariant AnnuAl RepoRt 2014

Business AreasAT A GLANCE

Care Chemicals – PRESERVE BODyAND NATURE

ORIENTATED TO glOBAl TRENDS

With a margin of 17.1 % with regard to EBITDA before exceptional items, the Care Chemicals Business Area already meets the target for the Clariant Group. However, the yardstick for Care Chemicals is even higher at 18 – 19 %. How will the gap between these ambi­tious numbers be closed?

The key is expansion of market shares in the consumer products business as well as in crop solutions for agriculture. It will be crucial to have a good hunch for global trends. This can be accom­plished through close customer relationships and a corresponding innovation pipeline. Thereby, regional growth focus lies with emerging markets, particularly in Latin America, India and China. Here, the surge in disposable income of the growing middle class increases consumer behavior in a sustainable manner. Soaring urbanization, diminishing agricultural areas and correspondingly higher demand for more productive agriculture are important growth drivers for Care Chemicals. This is also true for the dynami­cally growing demand for environmentally compatible applications and innovations from renewable substances and raw materials.

Furthermore, the positive impact on margins will be complemented by Clariant’s efforts to reduce the importance of activities with weaker margins in 2015.

The success story of the Business Area Care Chemicals is based mainly on the aspirations of mankind all over the world for a higher standard of living and an improved lifestyle. The global population is growing and the average life expectancy is rising while wealth and purchasing power are increasing, particularly in the aspiring emerging regions. Therefore, it is no surprise that the relevant market for Clariant, esti­mated for the Consumer Care Area alone to be considerably above CHF 42 billion, is supposed to increase by 4 – 5 % annu­ally. Clariant customers expect innova­tive products and solutions that depict the requirements of sustainability and efficiency. Clariant delivers just that!

Business AreaCARECHEmICAlS

62

STRATEgIC FOCUS ON PROFITABlE gROwTH

18 – 19 %EBITDA target margin (before exceptional items)

17.1 %Current EBITDA margin (before exceptional items)

259 + 3 %EBITDA* in CHF m in local currencies

*  before exceptional items

KEy FINANCIAl FIgURES

1 511 + 1 % Sales in CHF m in local currencies

INCREASINg wEAlTH

60 % BElONgINg TO mIDDlE ClASS

INCREASINg ENERgy DEmAND

+ 40 %

wORlD POPUlATION

8.3 BIllION

PEOPlE AgED 65+

1 BIllION

INCREASINg FOOD CONSUmPTION

+ 50 %

URBANIzATION

60 %lIVE IN CITIES

glOBAl TRENDS AS A DRIVER FOR INNOVATION

Data source: KPMG, Future State 2030: The global megatrends shaping governments, 2014, KPMG International Cooperative

· Expansion of market shares for consumer products and crop solutions

· Increased demand for personal and home care products

· Need for sustainable and efficient crop protection· Chemicals based on renewable raw materials· Future market biotechnology· Increased demand for sustainable building

materials· Expansion of the innovation pipeline· Reduction in the importance of activities with

smaller margins

63Clariant AnnuAl RepoRt 2014

Business Area CArE ChEmiCALs

ClARIANT AS AN INNOVATIVE PARTNER FOR PERSONAl CARE AND CROP SOlUTIONS

Within Clariant’s second­largest Business Area with sales of about CHF 1.5 billion, the Business Unit Industrial & Consumer Special­ ties (ICS) plays a dominant role. ICS manufactures its products at 14 locations and has five application and development centers. In spite of the fact that very different products are being manufac­tured in the represented areas of operation, all of them incorporate similar technologies and common production capacities. The Con­sumer Care Area with specialty chemicals for personal care, home care and agricultural markets have great growth potential and small cyclical effects with profit­friendly margins. In addition, industrial markets are supplied with lubricants, additives for paints and coat­ings, as well as de­icing fluids for the aviation industry. Feedstocks such as amines are produced by »The Global Amines Company« in Singapore, a Clariant­Wilmar joint venture.

INVESTmENTS FOR THE FUTURE

Besides ICS, the Care Chemicals Area also includes Clariant activi­ties in the growth area of biotechnology. An excellent example here is certainly bioethanol of the second generation made from agricul­tural residues and cellulose as an alternative fuel for the automobile industry. In addition, under the management of New Business Development, special food supplements are sold, such as fats and oils, special carbohydrates, preservatives, antioxidants, as well as sweeteners for dairy, bakery, and meat industries. The focus lies in these areas of operation, especially in investments into technologies and innovations for the future benefit of the Group. Accordingly, the use of renewable raw and agricultural residue materials for new and sustainable products constitutes a focal point of Clariant Group Biotechnology. The sales are very small, and as is customary for start­up projects, the start­up costs accrue, which strain the actual profitability, but promise great long­term potential.

64

STRONgER FOCUS ON CONSUmER CARE PRODUCTS

Share of the Sales Distribution in ICS in % Industrial Applications  Consumer Care

PORTFOlIO · Personal Care· Crop Solutions· Industrial and Home Care· Industrial Applications· Group Biotechnology· New Business Development

2014 Long-term objective

60 % 60 %

40 % 40 %

lEADINg mARKET POSITION IN All SEgmENTS

Crop Solutions2No. Personal Care4No. Industrial & Home Care4No.

Europe CHF 693 m 46 %

Latin America CHF 317 m 21 %

Asia/Pacific CHF 190 m 13 %

North America CHF 262 m 17 %

Middle East/Africa CHF 49 m 3 %

SAlES By REgION

Total 2014: CHF 1 511 million

Aviation (De-Icing)1No.

65Clariant AnnuAl RepoRt 2014

Business Area CArE ChEmiCALs

Clariant has proven together with Haltermann and Mercedes in fleet testing how the fuel of the future might look. Cellulose ethanol is obtained from wheat straw with help from the Clariant Sunliquid® process. One­fifth of the newly designed Sunliquid®20 fuel consists of cellulose ethanol. This is manu­factured in a demonstration plant in Straubing, Germany, from agricultural residue materials and con­tributes to lowering the greenhouse gas emissions in the Mercedes vehicles tested by 20 %.

» We are proud to perform the pioneering work of responsible use and procurement of raw materials.«ANDRE KOlTERmANN, Head of Group Biotechnolgy

· Clariant supports sustainability of care products· EcoTain® concept expanded to the care

product area· 25 innovative cosmetic active substances awarded

with EcoTain® label

· Clariant incorporates certified sustainable palm oil­based materials into its assortment

· Broad portfolio with RSPO (Roundtable of Sustainable Palm Oil) certified ingredients

· Application for sustainable procurement of palm­based oleo chemicals

gROwTH THROUgH SUSTAINABIlITy

SUNlIqUID®20 – FUEl THAT lOwERS gREENHOUSE gAS EmISSIONS By ~20 %

LOCALLY RESOURCEDImports can be replaced by

local fuel production.

ENERGY SELF-SUFFICIENTThe Sunliquid® process

is energy self­suffcient, as no additional energy is needed.

MORE GREEN JOBSSunliquid® can create more

green jobs and additional income for regional agriculture.

Media News from 20 August 2014 Media News from 21 August 2014

66

» On track for further growths.«

what is so special about the Care Chemicals Business Area?—mICHAEl wIllOmE We serve a whole series of global trends at Care Chemicals, and in particular, with Consumer Care products: the world population growth; the need for a better lifestyle with an increasing standard of living, particularly

in the emerging regions of the world; urbanization, and especially the increas­ing demand for sustainability in all areas of application.

What potential exists for Clariant?

—mICHAEl wIllOmE We want top­line growth of 4 – 5 % per year and increased profitability up to 18 – 19 %. Our address­able market is gigantic; in Consumer Care alone it is CHF 42 billion. We want to cut ourselves a large slice of the pie.

What differentiates Clariant from the competition?

—mICHAEl wIllOmE Above all, our unique innovation pipeline and our focus on sustainability at all levels. At Consum­er Care, with the innovative products launched in 2011 alone, we anticipate an additional sales potential of CHF 120 mil­lion for the 2015 business year. The majority of the innovations are clearly geared towards conservation of resourc­es, eco­compatibility and emissions protection – our customers appreciate these benefits.

—mICHAEl wIllOmEHead Business Unit ICS

»We want a large slice of the pie.«

glucamide – a New Product Platform with a Total Sales Potential of more than CHF 50 millionGlucamides are novel, sugar­based surfactants with performance advantages for multiple market applications. Glucamides are the foundation of new Clariant products for the application fields Personal Care (GlucoTain®), Home Care (GlucoPure®) and Crop Solutions (Synergen® GA). They have an excellent environmental profile with a high percentage of non­tropical biomass and exhibit an RCI (Renewable Carbon Index) of 95 %; based on glucose and natural oils, which originate from the RSPO certified palm oil derivative, they have an excellent overall ecological profile.

Home Care: glucoPure™· A breakthrough of bio­based ingredients

for homecare products such as dish washing or cleaning detergents

· Combination of the highest cleaning power and ideal for products with environmentally compatible labels

INNOVATION HIgHlIgHTS HIGH PERFORMANCEHighly efficient raw materials

facilitate affordable costs

CERTIFIED PRODUCTRSPO certified fatty acid

esters or triglycerides

Personal Care: glucoTain®· A true innovation that offers added

sensory benefits compared to conven­ tional mild surfactants

· Minimizes traditional trade­offs through cost­effective new formulation possi­bilities

· Product range embraces mildness without compromising cleansing BIO-DEGRADABLE

Higher usage of renewable resources and bio­based raw materials

67Clariant AnnuAl RepoRt 2014

Business Area CArE ChEmiCALs

Catalysis & Energy – EFFICIENCy FOR CHEmICAl PROCESSES

SOlID FUNDAmENTAlS FOR ORgANIC gROwTH

Despite challenging macroeconomic developments in 2014 which includes sanction, an unstable economic situation in Eastern Europe and slower growth in China, the Business Area achieved revenue growth of 7 % in local currencies with an EBITDA margin before exceptional items of 23.5 %. The foundation is solid for the business area to achieve 1 ­ 2 % higher than industry­average organ­ic growth mid to long term. The Clariant Catalysts portfolio cap­tures opportunities driven by new projects based on shale gas in the US and coal in China. In addition, existing and newly formed part­nerships with process licensors who are market leaders in their re­spective applications enhanced the market position of the Catalysts business in a number of areas. Key to organic growth are innovation strength and a well­filled R&D pipeline that enables efficiency improvements for existing and new processes with alternative feedstocks.

Besides pressing ahead with this creation of significant growth potential, continuing cost efficiency and the concerted allocation of existing resources to core activities with above­average margins are a key strategic focus as well. Against this backdrop, the planned divestment of the Energy Storage Business, announced at the end of October 2014, needs to be put into context. Due to its start­up character the business, which is the world’s largest producer of lithium­ion cathode material for electric vehicles, has reported a loss through 2014 and sales of CHF 26 million. The transaction is expected to be completed during the first half of 2015.

More efficient use of raw materials and energy, improved operations, and new innovative processes are the value enhancements the Clariant Catalysis & Energy Business Area offers to its global customer base. 90 % of all chemi­cal products are manufactured with the help of catalysts. Clariant is one of the market and technology leaders for providing solutions to the petrochemi­cal, chemical, fuel and plastic industries. The Business Area is non­cyclical due to the nature of its business.

Business AreaCATAlySIS & ENERgy

70

STRATEgIC FOCUS ON PROFITABlE gROwTH

24 – 26 %EBITDA target margin (before exceptional items)

23.5 %Current EBITDA margin (before exceptional items)

171 + 13 %EBITDA* in CHF m in local currencies

*  before exceptional items

KEy FINANCIAl FIgURES

729 + 7 % Sales in CHF m in local currencies

CHINA

69 %OF TOTAl ENERgy CONSUmPTION PRODUCED wITH COAl· Booming of

coal­to­x· Diversifying into

gas and import for downstream development

AFRICA

93 %OF TOTAl ENERgy PRODUCTION COVERED wITH FOSSIlE RESOURCES· High development potential

mIDDlE EAST

98 %OF TOTAl ENERgy PRODUCTIONCOVERED wITH OIl AND gAS· Refinery integration· Focus on diversification to

downstream applications

EUROPE AND EURASIA

> 30 %PUSH FOR RENEwABlES· Shale gas import being investi­

gated· Focus on specialty

chemicals

NORTH AmERICA

30 %OF PRImARy ENERgy CONSUmPTION COVERED wITH SHAlE gAS· Shale gas boom in the US· Oil sands in Canada

SOUTH AmERICA

20 %INCREASE OF RENEwABlES FROm 2011 TO 2012· Major new oil and gas source· High potential for renewables

Data source: BP, Statistical review of world energy 2013

ENERgy FEEDSTOCK wORlDwIDE

· Expansion of a leading market position in all areas of operation with increased innovations and organic growth enables annual sales growth potential of 6 – 7 %

· New projects based on shale gas in the US and coal in China

· Partnerships with leading technology providers to provide best combined innovative solutions to customers

· Concentration on the portfolio and shifting of the resources towards core activities with high returns and growth potential

71Clariant AnnuAl RepoRt 2014

Business AreaCATALysis & ENErGy

» Our new catalyst ShiftMax®120 HCF helps our ammonia and hydrogen customers to achieve their safety and sustainability targets while maxi­mizing the efficiency of their process.«HARAlD DIAlER Head Segment Syngas, Business Unit Catalysts

INNOVATIVE TECHNOlOgy TO REmOVE HARmFUl SUBSTANCES IN SyNgAS-BASED POwER PlANTS

Clariant delivers catalysts and adsorbents for a new, proprietary process to clean syngas in a demonstration plant at the Tampa Electric Company in Polk County, Florida. This technology, developed by the well­known US Research Institute RTI International with Clariant as Catalyst supplier, lowers the costs to remove harmful substances such as sulfur and heavy metals due to a largely improved thermal efficiency. The project, funded by the US Department of Energy, will also test the large­scale capture of > 90 percent of the CO2 from the demonstration facility, thereby improving the efficiency and environmental impact of coal gasification.

lICENSE AgREEmENT wITH PETRONAS SIgNED

PETRONAS’ HycaPure™ Hg is a solid­supported ionic liquid mercury removal technology. It effectively removes elemental, organic and inorganic mercury from Natural Gas with an expected service lifespan up to 3 times greater than its competitors. It will add on to the portfolio of Clariant’s ActiSorb® GP series adsorbents and complement the other extensive and excellent performing ActiSorb® products, providing integrated solutions to meet the strin­gent requirements of the industry.

gROwTH THROUgH SUSTAINABIlITy

Media News from 14 May 2014

Media News from 27 March 2014

72

Europe CHF 132 m 18 %

Latin America CHF 36 m 5 %

Asia/Pacific CHF 308 m 42 %

North America CHF 132 m 18 %

Middle East/Africa CHF 121 m 17 %

SAlES By REgION

Total 2014: CHF 729 million

STRONg COmmITmENT TO INNOVATIONS

7 % of sales will be reinvested into Research & Development

3 Research & Development Centers worldwide directly at the customer's premises

More than 300 employees work in the area of Research & Development300

mARKET POSITION

Chemical catalysts 2No. Catalysts for the polymerization of alkenes

4No.Syngas catalysts2No.Catalysts for petrochemistry

1No.

9 Technical Centers worldwide directy at the customer's premises

73Clariant AnnuAl RepoRt 2014

Business AreaCATALysis & ENErGy

COST EFFICIENTincreased productivity leads to

higher economic efficiency

ENERGY EFFICIENT reduction of energy consumption

up to 10 %

HIGH PERFORMANCE up to 3 % higher yield

INNOVATION HIgHlIgHTSIncreased yield and Reduced Energy Consumption Enabled by new Catofin® Catalysts Design · The catalyst leads to an increase in the yield of the propane dehydrogenation reaction of 2 – 3 % and reduces

the energy consumption for propane dehydrogenation plants by 5 – 10 % · Significant, positive effect on the efficiency of the plant because it enables an increase in production without

additional operation costs· Process Technology is licensed through Chicago Bridge & Iron Company (CB&I).

Special mention at the ICIS Award Presentation for Innovations· Newly developed material for heat generation improves Catofin® catalysts· Higher efficiency in the use of resources reduces CO2 emission of a typical Catofin® unit by 10 000 tons per year

SHIFTmAx®120 HCF mAKES AmmONIA AND HyDROgEN PRODUCTION SAFER

The enhanced high temperature shift (HTS) catalyst ShiftMax®120 HCF reduces health and safety risks in ammo­nia and hydrogen production as it contains essentially no hexavalent chromium (Cr6+). With a new production process reducing the content of hexavalent chromium to non­detectable levels (< 200 ppm), Clariant is proactively incorporating sustainability and responsible care into the design of its products and is even going beyond the strict REACH criteria of the European Community. The new ShiftMax®120 HCF provides the same advantages as its predecessor with 30 years of proven performance in terms of energy savings and longevity.

PEOPLE easy and safe handling during commissioning

STRONG CHEMISTRY highly active catalyst with

excellent mechanical stability

CERTIFIED PRODUCT confirmed by the independent

institute Seibersdorf laboratories

74

» On track for further growths.«

JUNE

COAl AND NATURAl gAS TO PlASTICS, wORlD'S FIRST PlANTS wITH mTPROP® CATAlySTS · Catalysts for the transformation of coal

and natural gases for the petrochemical industry and plastic production

· Joint development with the technology partners Air Liquide/Lurgi

· Successful production start at two Chinese locations

· Great potential for the US market, particularly for shalegas conversion

What are catalysts being used for?

—STEFAN HEUSER 90 % of all chemical products are being manufactured with the help of catalysts. In other words, without them, many products in our par­

ticularly strong areas, such as the petro­chemical, plastic, chemical and refinery industries would not be feasible; and their significance keeps growing.

What does this mean for Clariant?

—STEFAN HEUSER We foresee an annual growth potential of 6 – 7 %. Our custom­ers appreciate Clariant products because they help them design their processes more efficiently. They can save costs and often drastically lower the use of re­sources and energy consumption.

This implies that sustainability is once again the requirement of the day?

—STEFAN HEUSER By now each custom­er demands this from us. It has become a guarantee for success. This trend will even accelerate. Future growth will mostly revolve around the theme of cata­lysts' sustainability, and we are prepared for it.

—STEFAN HEUSERHead Business Unit Catalysts

»The added value for the customers is sustainability.«

mAy

COOPERATION wITH SIEmENS FOR COAl-TO-CHEmI-CAlS PROJECTS · Exclusive supplier of innovative sour gas

shift catalysts for Siemens gasifier · Appplicable to all coal to chemical/fuel applications· Primary market is China

Media News from 25 June 2014 Media News from 28 May 2014

JUly

DyNAmIC gROwTH IN POlyPROPylENE CATAlySTS · Formed long­term strategic partnership

with Lummus Novolen Technology of CB&I, a major polypropylene process licensor

· New manufacturing plant in Louisville (USA) will go on stream in 2016 as planned

Media News from 22 July 2014

75Clariant AnnuAl RepoRt 2014

Business AreaCATALysis & ENErGy

NaturalResources –SATISFy THE HUNgER FOR ENERgy

NaturalResources –SATISFy THE HUNgER FOR ENERgy

PROVIDINg TRENDS IN RESOURCE ExPlORATION

The management of the Natural Resources Business Area has laid claim to a 6 – 7 % sales growth and an increase of the EBITDA margin to 15 – 17 %. Natural Resources includes two very different businesses with Oil & Mining Services and Functional Minerals. Oil & Mining Services is a leading provider of a broadly diversified range of products and services for the exploration and production of crude oil, refineries and mining industries. Growth drivers at Oil Services are particularly new trends and technologies, such as deepwater drilling, unconventional oil and gas production (shale oil and gas), expanded oil exploration and an increasing range of environmental technologies. The same is the case for Mining Solu­tions, whose particular expertise is the development of innovative solutions and products for iron and copper ores. Clariant’s strength for its refinery customers lies in the provision of cold flow additives and ability to cover the entire supply chain. From a regional point of view, North America has the largest growth potential.

The number of newly discovered oil deposits has been in decline since the beginning of the 1980s – quite contrary to the continuous rise in consumption. Technologically, it is becoming more and more costly to reach those dwindling resources; this is equally the case for other important raw materials, such as gas and iron ore. In the future, deep sea or shalegas extraction is supposed to satisfy the hunger of the growing world econ­omy. The Natural Resources Business Area benefits from the rising technological require­ments and serves the growing demand for innovative solutions with its specialty chemi­cals. Close attention will be paid to the criteria of sustainability and to the best possible protection of the environment.

Functional Minerals is a leading global provider of a large spec­trum of bentonite­based specialty products and solutions for different areas of application. Key markets of Functional Minerals are, among others, the processing of edible oils, foundry applica­tions, but also additives for drilling muds in the building and tun­nel construction industry. In addition, Functional Minerals pro­vides solutions for feed additives, stabilizers for the plastic industry and additives for paper and laundry care. The strategic strength of Functional Minerals lies in the fully integrated value chain from exploration to the operation of the mines, and the refinement of the natural raw material bentonite to industry­ and customer­specific solutions. In the future, growth is supposed to be generated particularly in the areas of sediment management and feed additives, as well as in emerging markets for metal cast­ing and edible oil refinement. In addition, profitability shall be increased with improved cost efficiency, technology platforms and the focus on high­margin applications areas.

Business AreaNATURAl RESOURCES

78

STRATEgIC FOCUS ON PROFITABlE gROwTH

15 – 17 %EBITDA target margin (before exceptional items)

14.7 %Current EBITDA margin (before exceptional items)

191 + 5 %EBITDA* in CHF m in local currencies

*  before exceptional items

KEy FINANCIAl FIgURES

1 297 + 8 % Sales in CHF m in local currencies

CONVENTIONAl AND UNCONVENTIONAl NATURAl gAS AND CRUDE OIl PRODUCTION AND PROCESSINg

RESOURCESUNCONVENTIONAl

RESOURCESUNCONVENTIONAl

RESOURCESCONVENTIONAl

RESOURCESCONVENTIONAl

RESERVES RESERVES

CUmUlATED PRODUCTION

CUmUlATED PRODUCTION

NATURAl gAS in trillion cubic meter

CRUDE OIl in gigatonnes

Data source: Federal Institute for Geosciences and Natural Resources (BGR): Energy Study 2014 – Reserves, Resources and Availability of Energy Resources

321320198107

173161219175

· Generating a sales growth of 6 – 7 % per year· Increasing demand triggered by the trends in the

oil and gas industry: especially deepwater drilling, unconventional oil and gas extraction

· Expansion of market leadership in the area of ore flotation and opening up new markets through innovations

· Increase of the profitability of Functional Minerals by improved cost and technology platforms

· Growth in sediment management and feed additives as well as in emerging markets for metal casting and edible oil refinement

79Clariant AnnuAl RepoRt 2014

Business AreaNATurAL rEsourCEs

FlOATREAT® Ensures maximum Oil Production under Challenging ConditionsThe conditions in oil production are becoming more complex, whether it may be on the high seas with deep drill­ing of more than 1 000 meters in depth, or in icy temperatures of colder than – 51 degrees Celsius (– 60 degrees Fahrenheit). Contaminations or cold­related viscosity of the oil can lead to catastrophic chain reactions and envi­ronmental problems. The Floatreat® range of down­hole treatments removes and prevents asphaltene and paraffin deposits and also resolves emulsions that have formed in the near­wellbore. Where Floatreat has been applied, significant increases in hydrocarbon production have resulted. Floatreat technology is also applied as a drag reduc­er, increasing fluid throughput to water injection, or disposal wells, as well as multiphase or hydrocarbon transpor­tation systems. Floatreat drag reducers therefore allow more fluid to be transported with often a lower energy input and with greater productivity.

PERFORMANCEprocessing advantages

HIGH PERFORMANCE greater productivity

ENERGY EFFICIENTlower energy input

INNOVATION HIgHlIgHTS

INCREASED ACCURACYimproved material reliability

and durability

HIGH PERFORMANCE improved profitability

COST EFFICIENT use of cost effective raw material

ARKOmON® xP 1014 Emulsifier Improves the Efficiency and Reliability of Explosives for miningUsing cost­effective raw material is crucial for the Clariant Mining Solutions explosive emulsifier customers. Traditionally only high­grade materials were suitable for use in mining explosive emulsifier applications. Clariant’s Arkomon® XP 1014 allows customers, for the first time, to use lower­cost products without the poor blasting con­sistency and low durability problems of the past. Clariant's Arkomon® XP 1014 is an emulsifier that improves reli­ability and increases profitability

80

Europe CHF 429 m 33 %

Latin America CHF 359 m 28 %

Asia/Pacific CHF 226 m 17 %

North America CHF 180 m 14 %

Middle East/Africa CHF 103 m 8 %

SAlES By REgION

Total 2014: CHF 1 297 million

mARKET POSITIONS

Refinery Services2No.Adsorbents1No. Mining Services4No.Oil Services3No.

120

100

80

60

40

20

0 1950 1965 1980 1995 2010 2025

Offshore deep Offshore Onshore (incl. unconventional reserves)

TREND TOwARDS INCREASED DEEPwATER OIl PRODUCTION

Global Oil Production in million barrels Source: Douglas Westwood, Spain, 2010

81Clariant AnnuAl RepoRt 2014

Business AreaNATurAL rEsourCEs

gROwTH THROUgH SUSTAINABIlITyCleaning of a Ten Mile Long Oil Pipe-line? No Problem thanks to SURFTREAT®· Specialty chemical for environmentally

acceptable cleaning of oil and gas pipelines· Extends durability with protection from

corrosion and prevention from deposits· High water tolerance

Geko® LE Reduces Volatile Aromatic Hydrocarbons by up to 50 %· Bentonite­based, environmentally compat­

ible additive for the foundry industry· BTEX (benzene, toluene, ethyl­benzene

and xylene) emissions can be reduced by up to 50 %

· Supports foundries in order to meet growing environmental demands

Container Dri® II for Fresh Arrival of Coffee and Cocoa Around the World· Innovation of Functional Minerals

increases durability of cocoa and coffee during time­consuming sea transports

· Significantly reduces percentage of spoiled merchandise

· Contribution to sustainable transportation chain

» Roha is developing into the most important Clariant location in India. The new laboratory helps us to meet the local needs of our custom­ers even better.«

CHRISTIAN KOHlPAINTNER Member of the Executive Committee

82

» On track for further growths.«

APRIl

ClARIANT mININg SOlUTIONS OPENS NEw lABORATORy IN ROHA / INDIA · Research facility opened to provide

customers with locally tailored solutions to meet the unique demands for mineral extraction in the India region

Media News from 22 April 2014

JUly

IN THE COURSE OF THE CONTINUOUS PORTFOlIO mAN-AgEmENT ACROSS THE gROUP, THE wATER TREATmENT BUSINESS IN AFRICA wAS SOlD IN THE mIDDlE OF 2014· Buyer was the South African company AECI · Sales price was around CHF 34 million

Media News from 1 July 2014

AUgUST

DOUBlINg OF PRODUCTION CA-PACITy FOR ETHER AmINES IN BRAzIl FOR THE mININg INDUSTRy · Increased yield from lower quality ores · Expansion will be concluded by the end of 2015

Media News from 14 August 2014

Mr. Dunne, the improved results in 2014 have been remarkable. What was the reason?

—JOHN DUNNE This has really been a very successful year. We have seen growth in all areas, notably the emerging markets have been particularly dynamic.

We have won business with new custom­ers encouraged by our infrastucture in­vestments in key geographies – the Unit­ed States, Latin America and Africa – as well as in people and innovative technol­ogy. Through Clariant Excellence we have benefitted, and continue to benefit, from optimizing our cost base, which has had a positive impact on the margin trend.

Where are the trends of the future?

—JOHN DUNNE The drilling for, and pro­duction of oil and gas is becoming more technologically challenging. Searching for innovative solutions our customers have come to recognize us as leaders in the development of new technology,

for example for deepwater drilling, fluid separation, and enhanced oil recovery. Protecting the environment will contin­ue to be a major driver and where we will continue to invest in the sustainabil­ity of our products.

What has been planned specifically in terms of growth for the coming years?

—JOHN DUNNE Our success in 2014 has shown the Oil and Mining Services team's ability to deliver and we are con­fident in our prediction to increase sales by 6 – 7 % annually. We will continue to invest in the growth of our global busi­ness by expanding in North America, Latin America and Africa.

—JOHN DUNNEHead Business Unit Oil & Mining Services

» Searching for innovative solutions our customers have come to recognize us as leaders in the development of new technologies, e.g. for deepwater drilling.«

83Clariant AnnuAl RepoRt 2014

Business AreaNATurAL rEsourCEs

Plastics & Coatings – INNOVA-TIONS FOR EVERy DAy

INNOVATIVE HElPER IN (AlmOST) All lIFE SITUATIONS

Because of the broad spectrum of applications across almost all industries, the Plastics & Coatings Business Area grows in approxi­mately the same dynamics as the global world economy. Going forward, profitability is expected to enhance through continuously improved cost efficiency, the rise in the large growth potential of the emerging countries, the increasing focus on sustainability, and a high innovative capacity, which make the development of margin­strong products and applications possible.

Plastics & Coatings is composed of the three Business Units: Masterbatches, Additives and Pigments.

masterbatchesBU Masterbatches is a worldwide leading provider of color and additive concentrates, as well as technical composite materials for the plastics industry. It also serves the markets for packaging, consumer goods, medicine and pharmaceuticals, textiles, transpor­tation and agriculture. From over 50 production plants worldwide – the trend is on the rise – customers locally and internationally are supplied. The strategic focus is on regional growth and attrac­tive market sectors with future­oriented perspectives.

Additives BU Additives is an important provider of products with functional effects in plastics, coatings, printing inks and other applications. Innovative products like non­halogenated flame retardants offer an environmentally compatible protection for electrical and electronic devices. Additionally, Additives produces waxes for plastic appli­cations, hot melt adhesives, polishes and protective coatings. Poly­mer additives improve the heat, light and weather resistance of plastics and coatings. A core element of strategy is to strengthen Clariant's presence in the emerging markets.

Pigments BU Pigments has established itself as a worldwide leading provider of organic pigments, pigment preparations and special colorants. The broadly diversified portfolio comprises high performance pig­ments and colorants, which meet the high requirements of indus­trial, automotive, and architectural coatings, the plastics industry, special applications as well as traditional, inkjet and laser printing. The central objectives of the Business Unit are strengthening its position as a leading innovative provider of color solutions and the expansion into emerging markets.

How can laundry be made even whiter, how can buildings be insulated even more efficiently, how can cell phones be protected from self­ignition – all of these are themes with which the experts from the Plastics & Coatings Business Area occupy themselves daily. A large range of high­tech products and innovations are hidden behind supposedly trivial things of daily life, which originate from Clariant’s Busi­ness Area with the strongest sales. Because of the rising standard of living and the dynamic demand in the emerging countries, the resources of this Business Area are increasingly used there.

Business AreaPlASTICS & COATINgS

86

STRATEgIC FOCUS ON PROFITABlE gROwTH

16 – 19 %EBITDA target margin (before exceptional items)

14.0 %Current EBITDA margin (before exceptional items)

360 + 5 %EBITDA* in CHF m in local currencies

1  before exceptional items

KEy FINANCIAl FIgURES

2 579 + 6 % Sales in CHF m in local currencies

· Expansion of presence in the emerging markets· Development of innovative products with special

consideration of the heightened ecological awareness, as well as the increased legal require­ ments and regulations identified for plastics, inks, and coatings· Continuous improvement of cost efficiency· Specific initiatives with dynamic growth product

groups, for example, with flame retardants

CROSS FUNCTIONAl ExPERTISE FOR INNOVATIVE EVERyDAy PRODUCTS

CONSUMER PACKAGING

MARKET

P.A.

P.A.

P.A.+5.5%

»GREEN« PACKAGINGMATERIALS

+5.7%

FUNCTIONALPACKAGING

MAJOR PACKAGING TRENDS AND GROWTH POTENTIAL

+8.0%

ADDITIVES

· Additives for masterbatchers and converters to ease the production and to improve the performance of plastic packages

· Single and multilayer films for functional packaging

PIgmENTS

· Package coloring and printing pigments for exact brand color

· Safe pigments for indirect food contact approval and other sensitive applications

mASTERBATCHES

· Products and services to the plastic converting industry

· Multilayer bottles and biaxial oriented films for transport packaging, smart packaging and solar panels

· Moisture and oxygen protective packaging for healthcare applications

Data sources: Freedonia, Active and intelligent packaging, 2011; Smithers RAPRA Study 2012; ICB 2011

87Clariant AnnuAl RepoRt 2014

Business AreaPLAsTiCs & CoATiNGs

· Announcement of more targeted investment projects for the plastics industry in China

· Expansion of the manufacturing plants at the location of Zhenjiang for Ceridust®, Polymer­additives (Addworks®), and Pigment Violett 23

· Doubling of the production capacity for Masterbatches in Guangzhou

Media News from 29 September 2014

ExPANSION IN THE ASIAN/PACIFIC REgION IN 2014

CESA®-absorb: Sustainability is Trump with Masterbatches for Packaging· Active oxygen barrier in PET packaging like bottles

and foils lengthens the product shelf life for foods in an environmentally compatible way

· Good recyclability and high transparency of the plastics

Exolit®: Ideal Flame Retardant for a Multitude of Applications· Unique product range of environmentally

compatible flame retardants· Exolit® OP 560 rated by US authorities as especially

safe flame retardant with polyurethane foams · Exolit® OP 1400 for use in high­quality polyamide

plastic parts, particularly when used in humid and hot conditions

Hostaperm® Pink E : High-Performance Pigment Made From Renewable Raw Materials· Improved environmental friendliness with the

same quality from biotechnologically­constructed succinic acid

· High­performance pigment for printing ink, also suited for other applications

gROwTH THROUgH SUSTAINABIlITy

» We see enormous growth potential in the plastics area in China and we can better serve the needs of our customers with these investments.« mATHIAS lüTgENDORF Member of the Executive Committee

88

Europe CHF 978 m 38 %

Latin America CHF 272 m 11 %

Asia/Pacific CHF 709 m 27 %

North America CHF 432 m 17 %

Middle East/Africa CHF 188 m 7 %

SAlES By REgION

Total 2014: CHF 2 579 million

Decorative paints1No. Automotive coatings2No.

20 – 25 %Consumer goods

< 15 %Transportation, Agriculture, Medicine and Pharmaceuticals, Textiles

mOST ImPORTANT INDUSTRIES FOR mASTERBATCHES SAlES

30 – 40 %Packaging

Masterbatches1No.

mARKET POSITION

89Clariant AnnuAl RepoRt 2014

Business AreaPLAsTiCs & CoATiNGs

Additives: Ceridust® 8330 A new bio­based and outperforming additive for printing inks, which improves the surface properties while dosage can be reduced up to 50 %

HIGH PERFORMANCE efficiency

PLANET 50 % bio­based

COST EFFICIENThigher economic efficicency

masterbatch: Hydrocerol® Enables the Production of Energy-Saving Insulation Panels· Market launch in the first quarter of 2015· Nucleating agent for the new generation of insulating construction materials· Effective and energy­saving insulation with simultaneously thinner, space­saving panels· Great potential because poorly insulated buildings are responsible for almost 40 % of the global CO2 emissions

HIGH PERFORMANCE up to 3 % higher yield

COST EFFICIENTincreased productivity leads to

higher economic efficiency

ENERGY EFFICIENT reduction of energy consumption

up to 10 %

Pigments: Sanolin lave liquid non-staining colorants A rainbow of colors mainly for the coloration of detergents, fabric softeners and stationery products· The requirements of well­recognized Ecolabels such as the EU Ecolabel or the Nordic Swan are fulfilled· These colors do not stain textiles or skin, thus eliminating the need for additional cleaning efforts

(to remove color stains )· The liquid and non­dusting handling form ensures easy and safe application of the colors and reduces

cleaning efforts in production

HIGH PERFORMANCE efficiency in coloration

PLANET less water for cleaning

fulfilling Eco­label requirements

PEOPLESafe workplace & handling

INNOVATION HIgHlIgHTS

90

» On track for further growths.«

AUgUST

NEw mASTER- BATCHES PlANT NEAR SyDNEy / AUSTRAlIA · Focus on color and additive master­ batches for Australian customers · Close collaboration with the plant in Albany /New Zealand

SEPTEmBER

DOUBlINg OF THE CAPACITy FOR PIgmENTS AND PIgmENT PREPARATIONS IN ROHA / INDIA · Improved market coverage in India and neighboring countries · Investment of CHF 3.2 million · Strategy: direct delivery to the customers in their markets according to local and international requirements

JUNE

ExPANSION OF A NEw PlANT AND DOUBlINg OF CAPACITy FOR PIg-mENT PREPARATION IN TANgERANg / IN-DONESIA · Focus on high­quality pigments for products with eco­seal · Certification of the location according to ISO 50001 for improved energy conser­ vation and environmental protection

Mr. Bohnen, why is innovation partic-ularly crucial for Masterbatches?

—HANS BOHNEN Our future success de­pends to a large extent on how success­ful we are in the development and mar­ket establishment of innovative products.

Therefore this is one the four strategic pillars of the Masterbatches area of operations.

Which projects can you highlight here?

—HANS BOHNEN One of our highlights is certainly the newly opened Master­batches project house in Pogliano, Italy at the end of 2013 for the research of pioneering concepts and solutions for Masterbatch products and procedures. As a result of this, we connect the indus­try know­how here from experts throughout the world in interdisciplin­ary, cross­functional teams including scientists, technicians, marketing spe­cialists, academics, and suppliers.

Which innovation highlights does Clariant presently have in the Master-batches operation?

—HANS BOHNEN Two examples: Firstly, CESA®­absorb minimizes the oxygen permeability of PET packaging, and therefore makes food more durable, and at the same time, it helps save packaging material, waste, and energy. We project here a market potential of approximately CHF 100 million. Secondly: Hydrocerol® enables the production of energy­con­serving insulation panels. The size of the market here is approximately CHF 460 million.

—HANS BOHNEN,Former Head of Busi­ness Unit Master­batches New Head Global Business Services

»Cost efficiency will be the key to higher margins.«

Media News from 12 August 2014 Media News from 12 June 2014 Media News from 17 September 2014

91Clariant AnnuAl RepoRt 2014

Business AreaPLAsTiCs & CoATiNGs

Financial Review

92

Clariant continued to deliver in 2014 thanks to a balanced, growth-oriented portfolio. The local currencies sales growth was above the growth of the industry and profitability showed again an improvement despite of unfavorable currency movements and a conti-nued lack of growth in the European economies.

Business PeRfoRmance in 2014

summary statement for the Business Year 2014 Clariant recorded a 5 % growth in local currencies in 2014 (1 % in Swiss francs) and was significantly above the specialty chemical industry as a whole. Growth was driven by its strong presence in Latin America and Asia, which is reflected in double-digit and high single-digit growth rates respectively. While the North Ameri-can business reported a slight increase in sales, the sales in Europe declined slightly. However, as in the preceding year, the clear vol-ume and slight price increases were partially offset by negative cur-rency effects so that the Group sales of CHF 6 116 million from continuing operations were slightly above the comparable level of the previous year.

In view of an improved cost efficiency and a favorable product mix, Clariant succeeded in increasing the comparable results before interest, taxes, depreciation and amortization (EBITDA) before ex-ceptional items by 1 % to CHF 867 million. Correspondingly, the EBITDA margin improved slightly from 14.1 % to 14.2 %.

Net debt was reduced to CHF 1 263 million from CHF 1 500 million recorded at year-end 2013 thanks to a strong cash generation and was therefore below the targeted CHF 1 300 million.

Business operations

Corporate Strategy Extended to Five PillarsAs a consequence of the significance to the topic of sustainability and further underlining the strong commitment of the company to sustainable practices it was announced at the beginning of Septem-ber 2014 to add sustainability to the corporate strategy. Sustainabil-ity plays a key role for the future profitable growth and Clariant’s innovations.

In order to reach the mid-to long-term objectives, Clariant focuses its corporate strategy on five central pillars:· Increase Profitability· Reposition Portfolio· Add Value with Sustainability· Foster Innovation and R&D· Intensify Growth

Clariant’s corporate strategy will help to position the company as the world’s leading specialty chemicals company with a return on invested capital (ROIC) above peer group average and an EBITDA margin target range of 16 – 19 %.

The EBITDA margin target of 16 – 19 % should be achieved by im-plementing the following measures:· 1 – 2 percentage points margin increase from growth in above-av-

erage profitability businesses and the introduction of innovations· Further potential of 1 – 2 percentage points through cost efficiency

measures and productivity improvements throughout the Group

93

Financial Review

Clariant AnnuAl RepoRt 2014

» 2015 will mark a further progress towards Clariant’s mid-term target of achieving a position in the top tier of the specialty chemicals industry.«

 Patrick Jany, Chief Financial Officer

General conditions

Growth in the World Economy Slowed Significantly in the Course of the YearThe decelerated growth in developing countries, the persistent un-certainty within Europe and numerous geopolitical crises, in the Ukraine for example, have made the economic environment in the course of the 2014 reporting year increasingly bleaker. The Inter-national Monetary Fund (IMF) had still projected a global econom-ic growth of 3.9 % in its prognosis in January 2014, but it was gradually reduced to only 3.3 % by January 2015. Therefore, a simi-lar growth dynamic was recorded as in 2013. The economies of the industrial world expanded 1.8 % overall. In Europe, the econo-my grew by a moderate 0.8 %. While the German economy gained 1.5 %, growth stagnated in France (0.4 %), whereas in Italy it de-clined (– 0.4 %). North America’s national product grew in 2014 by 2.4 %; Japan’s economy continued to stagnate (0.1 %).

The growth dynamic of the developing and emerging industrial countries was 4.4 %, again below the previous year of 4.7 %. China continued to report the largest gain in percentages with 7.4 %, which was, however, also below the growth rate of the previous year. There were very different developments with the remaining BRIC nations. Brazil (+ 0.1 %) is experiencing a persistent invest-ment slump, Russia (+ 0.6 %) suffers under the economic sanctions due to the Ukraine crisis. In contrast, India’s economy again in-creased significantly (+ 5.8 %).

Persistent Volatility on the Foreign Exchange Markets While the exchange rate of the Swiss franc to the Euro remained stable during the year 2014 and close to the 2011 defined minimum exchange rate of 1.20, some important currencies for Clariant were devalued to the Swiss franc in 2014. The US dollar gained 11 % and the Indian rupee gained 9 % against the Swiss franc. The Japanese

yen and the Brazilian real remained relatively stable compared to other years of higher volatility. Overall, the adverse currency im-pact decreased somewhat in the second half of the year compared to the first six months.

Profit, Financial, and Asset Situation

KeY fiGuRes foR continuinG oPeRations in CHF m

2014

2013 

Change in  %

Sales  6 116 6 076 1

Gross profit on sales 1 772 1 744 2

EBITDA before exceptional items 867 858 1

Margin (%) 14.2 14.1

EBIT before exceptional items 585 574 2

Margin (%) 9.6 9.4

EBIT 525 470 12

Financial result – 146 – 125 17

Income before taxes 379 345 10

Net income 235 323 – 27

Basic earnings per share  0.55 0.98

Adjusted earnings per share  1.12 1.16

Significant Sales Growth Driven by Volumes and Slight Price IncreasesWith respect to a notable volume growth of 4 % and a slight price increase (+ 1 %), the Group sales increased in local curren- cies by 5 % compared to the preceeding year. As a result of the negative exchange rate effect, Clariant demonstrated a slight increase of 1 % to CHF 6 116 million in the 2014 reporting year (2013: CHF 6 076 million). Sequentially an improving sales progres-sion was observed during the year. In the fourth quarter, sales increased, driven by sales price increases.

94

GRouP sales – five YeaR oveRview in CHF m

2014 1 6 116

2013 1 6 076

2012 1 6 038

2011 7 370

2010 7 120

0 2 000 4 000 6 000 8 000

1  continuing operations

Dynamic Sales Development in Latin America and AsiaThe positive sales development in the expanding Latin American and Asian economies also had a positive effect on the Clariant Group sales in 2014. The regional sales development was however curbed again by significant currency effects. Therefore, Clariant attained a clear sales growth of 18 % in Latin America in local cur-rencies. However, after conversion into Swiss francs, growth re-mained at 6 %. The depreciation of the Brazilian real compared to the Swiss franc was mainly responsible for this effect. Across-the-board, the Brazilian activity showed only a moderate growth of 4 % in local currencies (– 6 % in CHF) due to the cautious development of the local economy. Only moderate sales growth in local curren-cies of 3 % was generated in North America, which corresponded to growth of 1 % in CHF. Europe showed a slight decline in sales of 2 % in local currencies (– 5 % in Germany), which was primarily due to the foregoing of sales from lower margin activities (like-for-like Europe + 0 %, Germany + 0 %). A highly diversified increase in demand in the Middle East and Africa resulted in sales growth of 7 % in local currencies compared to 2013 (+ 2 % in CHF). The Asian activi-ties could increase their sales growth in local currencies by 9 % (+ 4 % in CHF). Sales increased 9 % in local currency in the impor-tant Chinese market.

Against this backdrop, the importance of the developing countries and the emerging markets increased, expanding their share of the Group sales to 47 % from 46 % in the year under review.

sales BY ReGion – continuinG oPeRations in CHF m

2014

2013

Change in  %

Change in LC  2 in  %

Europe 2 232 2 321 – 4 – 2

MEA 1 461 452 2 7

North America 1 006 996 1 3

Latin America 984 931 6 18

Asia/Pacific 1 433 1 376 4 9

1 Middle East/Africa 2 LC = Local currency

cost stRuctuRe BY cuRRencies 2014 in %

Euro 46

US dollar 32

Japanese yen 3

Swiss franc 4

LC Emerging markets 15

sales stRuctuRe BY cuRRencies 2014 in %

Euro 41

US dollar 38

Japanese yen 3

LC Emerging markets 18

95

Financial Review

Clariant AnnuAl RepoRt 2014

sales BY Business aRea in CHF m

Care Chemicals2014 1 511

2013 1 561

Catalysis & Energy2014 729

2013 713

Natural Resources2014 1 297

2013 1 281

Plastics & Coatings2014 2 579

2013 2 521

0 2 000 4 000

chanGe in sales (lc) BY Business aRea in %

Care Chemicals + 1

Catalysis & Energy + 7

Natural Resources + 8

Plastics & Coatings + 6

Gross and EBITDA Margins Further Improved In view of slightly receeding raw material prices, a good product mix, a higher capacity utilization due to higher volume and the successful »Clariant Excellence« initiative, Clariant could improve the gross margin despite the negative currency effects from 28.7 % to 29.0 %.

eBitDa* – five YeaR oveRview in CHF m

2014 867

2013 858

2012 817 1

2011 975 2

2010 901

0 200 400 600 800 1 000

*before exceptional items 1 adapted for IAS 19 2 as reported

The Group’s EBITDA before exceptional items improved by 6 % in local currencies, which translates in a 1 % increase in Swiss francs or CHF 867 million (2013: CHF 858 million). Accordingly, the cor-responding EBITDA margin slightly improved from 14.1 % to 14.2 %.

eBitDa* maRGin – five-YeaR oveRview in %

2014 14.2

2013 14.1

2012 13.5 1

2011 13.2 2

2010 12.7

0 4 8 12 16

*before exceptional items 1 adapted for IAS 19 2 as reported

The developments in the underlying business operations were posi-tive in 2014. Three of four Business Areas were able to increase sales in Swiss francs. Sales of Care Chemicals increased by 1 % in local currencies (– 3 % in CHF) due to the reduction of the exposure to lower margin products. On a comparable basis, a gain would have been achieved. The Catalysis & Energy Business Area profited from a higher demand and could gain 7 % in local currencies (+ 2 % in CHF). Also Natural Resources (+ 1 % in CHF; + 8 % in local cur-rencies) and Plastics & Coatings (+ 2 % in CHF; + 6 % in local currencies) showed a solid sales development, where different trends were recorded within the businesses.

96

eBitDa* BY Business aRea in CHF m

2014

2013

Change in  %

Change in LC  1 in  %

Care Chemicals 259 263 – 2 3

Catalysis & Energy 171 159 8 13

Natural Resources 191 195 – 2 5

Plastics & Coatings 360 356 1 5

*before exceptional items 1 LC = Local currency

The improvement was driven by the Business Areas Catalysis & Energy (+ 8 % in CHF; + 13 % in local currencies) and Plastics & Coatings (+ 1 % in CHF; + 5 % in local currencies). Natural Resources and Care Chemicals contributed less EBITDA compared to last year. Natural Resources demonstrated solid EBITDA growth of 5 % in local currencies, which was however offset by currency effects (– 2 % in CHF). Lower contributions from the high-margin De-icing business in the Care Chemicals Business Area was the cause that the previous year’s profits were not completely attained (– 2 % in CHF; + 3 % in local currencies).

eBitDa* maRGin BY Business aRea in  %

2014 2013

Care Chemicals 17.1 16.8

Catalysis & Energy 23.5 22.3

Natural Resources 14.7 15.2

Plastics & Coatings 14.0 14.1

*before exceptional items

The adjusted operating earnings improved by keeping selling, gen-eral and administrative costs (SG&A costs) on a constant level. The SG&A costs as a percentage of sales remained stable with 17.2 % (2013: 17.0 %). A significant improvement would have been achieved without the positive exceptional items registered in the previous year due to an acquisition in Natural Resources. In absolute figures, this was expressed in a slight increase from CHF 1 034 million to

CHF 1 049 million. As in the previous years, the strategic focus on innovations as part of the »Innovation Excellence« initiative was reflected by an increase in the R&D (research and development) expenditures in the year under review from CHF 199 million to CHF 213 million. With regard to sales, this corresponds to an in-crease from 3.3 % to 3.5 %.

EBIT (earnings before interest and taxes) before exceptional items of CHF 585 million was above the value of the previous year of CHF 574 million, which is 2 % (+ 8 % in local currencies).

As announced, exceptional items decreased to CHF 60 million compared to CHF 104 million a year before. Non-recurring expens-es for the year in review were accrued for streamlining the compa-ny’s portfolio, restructuring measures at various locations (mainly European), as well as impairments, which totaled CHF 228 million and were clearly above the previous year’s level of CHF 123 million. A land sale in India improved the gain from disposals not qualifying as discontinuing operations to CHF 168 million compared to CHF 19 million reported in 2013. Therefore the operative earnings (EBIT) compared to the previous year (CHF 470 million) increased by 12 % to CHF 525 million. The corporate costs remained stable at CHF 114 million in the year under review (2013: CHF 115 million). Excluding central administrative costs and focusing solely on business area income, EBITDA in 2014 before exceptional items came to CHF 981 million (2013: CHF 973 million).

The negative financial result increased mainly due to negative cur-rency effects in the amount of CHF – 25 million (2013: CHF – 6 mil-lion) from CHF 125 million to CHF 146 million. Income before taxes increased accordingly to CHF 379 million (2013: CHF 345 mil-lion). Due to not tax deductible exceptional items, the tax burden has significantly increased compared to last year from CHF 22 mil-lion to CHF 144 million.

97

Financial Review

Clariant AnnuAl RepoRt 2014

seGment analYsis

care chemicals

caRe chemicals KeY fiGuRes in CHF m

2014 2013

Sales 1 511 1 561

EBITDA before exceptional items 259 263

Margin ( %) 17.1 16.8

EBIT before exceptional items 211 219

Margin ( %) 14.0 14.0

Headcount 2 203 1 850

· Sales growth in local currencies – Dynamic growth with Crop Solutions and Personal Care

· Improved profitability, phasing out of lower margin business

At first glance, in the Care Chemicals Business Area the sales de-clined in the reporting year 2014 by – 3 % to CHF 1 511 million (+ 1 % in local currencies). However, this was solely due to the con-scious renouncement of sales contributions from lower-margin products. A small plus would be achieved by adjusting for this ef-fect. In local currencies, the area showed a like-for-like growth of 3 %. Latin America as well as the Middle East and African region achieved a strong growth, while North America and Asia grew at a low single-digit level compared to the previous year. The sales in Europe turned out to be lower due to the above-mentioned effects. The Consumer Care as well as the Industrial Applications business achieved a solid growth. In the year under review, Consumer Care especially benefited from a double-digit percentage growth in Crop Solutions and a high single-digit growth in Personal Care. The Aviation business (i.e. de-icing agents) suffered from a virtually non-existent winter in Q1 and Q4 2014 in Europe.

Disposal of Discontinuing Operations Leads to Improved Quality of Underlying ProfitsOn a comparable basis the net profit came in lower than last year due to positive one-time gains from portfolio transactions in 2013, which lowered taxes in the previous year. The mentioned factors resulted in a declining net profit from continuing operations of CHF 235 million (2013: CHF 323 million) resulting in earnings per share of CHF 0.55 (2013: CHF 0.98). Not accounting for these one-off movements, the adjusted earnings per share amounted to CHF 1.12 (2013: CHF 1.16). This calculation is based on the slightly increased weighted average number of shares outstanding of 319 689 210 compared to 312 611 085 in the preceding year. Because the majority of the discontinued operations were already disposed of in 2013, the net loss from discontinued operations was CHF – 18 million, very clearly below the figure of 2013 of CHF – 318 million. Taking into account these losses, the Clariant Group attained a net profit of CHF 217 million (including discontinued operations) for the year under review (2013: CHF 5 million).

Considering the solid business development, Clariant’s Board of Directors have decided to propose to the general assembly an increase of the distribution per share for 2014 from CHF 0.36 to CHF 0.40 per share. The corresponding proposal will be presented to the 20th Annual General Meeting on 31 March 2015 for a vote.

98

The EBITDA margin before exceptional items showed with 17.1 % a slight increase compared to the previous year (16.8 %). The nega-tive currency effect has been partially compensated by a positive product mix, which can be traced back to a larger contribution by the more profitable Personal Care and Crop Solutions businesses.

For the coming years, the Care Chemicals Business Area expects growth to be driven by innovations and product introductions in Personal Care, Crop Solutions and Home Care. For instance, Clariant has underlined its commitment to sustainability in August 2014 with the introduction of its EcoTain® concept for the area of care products. EcoTain® products are characterized by an ex-traordinary sustainability profile across the entire value chain.

catalysis & energy

catalYsis & eneRGY KeY fiGuRes in CHF m

2014 2013

Sales 729 713

EBITDA before exceptional items 171 159

Margin ( %) 23.5 22.3

EBIT before exceptional items 113 91

Margin ( %) 15.5 12.8

Headcount 1 790 1 918

· Dynamic gains in sales and results in the core activities· Sold Energy Storage business as a result of the active portfolio

management

In 2014, sales in the Catalysis & Energy Business Area increased by 7 % in local currencies and by 2 % in Swiss francs. The prime rea-sons for this were significant increases in demand in all important activities. Therefore, a strong single-digit sales growth was attained in the Specialty Catalysts segment. The Petrochemical Catalysts profited from a replenishment cycle as a consequence of the invest-

ment reluctance in the previous year. Syngas recorded a solid, but smaller growth than Specialty Catalysts and Petrochemicals. Sales in the Energy Storage business were significantly above the level of the previous year.

As expected, the EBITDA margin before exceptional items of the Business Area increased in 2014 compared to the previous year from 22.3 % to 23.5 %, stemming from a favorable mix effect and a smaller dilution by the Energy Storage business.

As a result of the strategic focus to continuously reposition the portfolio towards core activities, Clariant agreed to sell the Energy Storage business at the end of 2014. The transaction is expected to close in the first half of 2015. Thereafter the Business Area will operate under the name Catalysis from 2015 onwards.

New alternative feedstock sources, the further development of new procedures, as well as contributions from new strategic alliances will drive growth in this Business Area. CB&I’s Lummus Novolen Technology is a partner for polypropylene catalysts, and there is a collaboration with Siemens’ Fuel Gasification Technology for SGS (sour gas shift) catalysts for the production of chemicals and fuel from coal. In addition, the Business Area will introduce innovative and sustainable solution to the market. The Business Area expects an above-average market growth middle to long-term, particularly in the USA and China based on the occurrence of shale gas, the coal-to-chemicals and the fuel production.

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natural Resources

natuRal ResouRces KeY fiGuRes in CHF m

2014 2013

Sales 1 297 1 281

EBITDA before exceptional items 191 195

Margin ( %) 14.7 15.2

EBIT before exceptional items 154 151

Margin ( %) 11.9 11.8

Headcount 2 878 3 012

· Significant gain in sales in all areas in local currencies· Divested parts of the Water Treatment business

The Natural Resources Business Area benefited from a stimulation in all business segments in 2014 and attained a sales growth of 8 % in local currencies and 1 % in Swiss francs. Oil & Mining Services achieved a double-digit sales growth in an annual comparison. The business was able to gain double-digit percentage points in all regions with the exception of Asia and Europe where the business remained stable. The Oil Services business benefited from a strong growth in North America. Mining Services continued to record a good double-digit sales growth, driven primarily by the demand in Latin America.

Underlying sales growth of Functional Minerals continued to be stable in most geographical areas and was especially strong in North America and Latin America. A very solid growth was regis-tered in the Purification business, whereas the growth dynamic with Foundry Additives decreased in the second half of the year. The reported figure was, however, negatively influenced by the sale of the African Water Treatment business in the second quarter of the year. Sales of Functional Minerals were therefore below the level of the previous year in local currencies and in Swiss francs.

The EBITDA margin before exceptional items of the Natural Re-sources Business Area declined from 15.2 % to 14.7 %. This was due to the fact that EBITDA of the previous year benefited from a one-time book gain in the third quarter of 2013. This profit was connect-ed with the acquisition of the deepwater business in the Gulf of Mexico. Without this one-time effect, the EBITDA margin actually improved based on higher volumes, sales prices, lower cost base resulting from efficiency measures, as well as a better product mix, all of which over-compensated the considerably negative currency influence.

For the future Functional Minerals will focus on an accompanied growth in the emerging markets, whereby selective investments are made in those regions. Oil & Mining Services will continue to offer first class services and benefit from the introduction of innovations.

Plastics & coatings

Plastics & coatinGs KeY fiGuRes in CHF m

2014 2013

Sales 2 579 2 521

EBITDA before exceptional items 360 356

Margin ( %) 14.0 14.1

EBIT before exceptional items 275 273

Margin ( %) 10.7 10.8

Headcount 6 907 6 307

· All areas and geographical regions contributed to the growth in local currencies

· Stable profitability in spite of negative foreign exchange effects

The sales in the Plastics & Coatings Business Area increased com-pared to the previous year by 6 % in local currencies and by 2 % in Swiss francs. All three businesses, Pigments, Masterbatches and

100

Additives, and all geographical regions contributed to the growth in local currencies. A particularly strong demand existed in North America, Latin America, and the Asia/Pacific region.

All segments within Pigments contributed to the growth. Printing registered a strong growth in the double-digit percentage range. This was due to the decision to opportunistically capture more vol-umes in lower margin product groups in order to increase the ca-pacity utilization. Coatings as well as Plastics repeatedly generated high single-digit growth rates in local currencies.

Sales for Masterbatches increased in Automotive, Packaging and Consumer Goods. In September 2014 the company announced the acquisition of VitaPac, an innovative, technology-oriented Chinese specialist for healthcare packaging with a focus on active sorbents. VitaPac manufactures a large selection of high-quality protective packaging for the pharmaceutical, nutraceutical and food industries, as well as the logistics and electronic sectors.

Additives attained a high sales growth in the Flame Retardants area. Sales in Polymer Additives increased, whereas Waxes re-mained unchanged. The demand for halogen-free flame retardants for use in electrical applications and in electronics has picked up considerably. In the event of stricter environmental regulations/recommendations, the demand for other applications will also ben-efit in the future.

The EBITDA margin before exceptional items of Plastics & Coat-ings remained with 14.0 % on roughly last year’s level of 14.1 %. Higher volumes could compensate for the unfavorable mix effect, which was linked to the opportunistic production of more low-margins products in order to increase the capacity utilization. In addition, the profitability continued to be influenced by unfavor-able currency developments.

In the future, Plastics & Coatings expects a continuously robust de-mand in most regions. In view of the difficult economic general conditions in Europe, the capacities are aimed towards the regions and markets with strong growth in Asia and Latin America.

Discontinued operations

DiscontinueD oPeRations KeY fiGuRes in CHF m

2014 2013

Sales 98 1 457

EBITDA before exceptional items 15 100

Margin ( %) 15.3 6.9

EBIT before exceptional items 15 100

Margin ( %) 15.3 6.9

Sales reported under discontinued operations amounted to CHF 98 million, while EBITDA margin before exceptionals resulted in 15.3 %. These numbers mainly include pro-rata sales and earnings contributions from the Leather Services business, which has been sold to the Dutch Stahl Group effective 30 April 2014.

Accordingly, there is no comparable estimate to be expected for the financial statement of the 2015 reporting year.

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consoliDateD Balance sheets

at 31 December 2014 and 2013 31.12.2014 in CHF m

in %

31.12.2013 in CHF m

in %

assets

Non-current assets

Property, plant and equipment 2 104 2 041

Intangible assets 1 487 1 549

Investments in associates and joint ventures 635 608

Financial assets 44 27

Prepaid pension assets 18 43

Deferred tax assets 271 245

Total non-current assets 4 559 57.6 4 513 55.2

Current assets

Inventories 930 846

Trade receivables 985 905

Other current assets 385 482

Current income tax receivables 56 60

Near cash assets 180 147

Cash and cash equivalents 748 770

Total current assets 3 284 41.5 3 210 39.3

Assets held for sale 72 0.9 451 5.5

Total assets 7 915 100.0 8 174 100.0

equity and liabilities

Equity

Share capital 1 228 1 228

Treasury shares (par value) – 45 – 49

Other reserves 852 881

Retained earnings 574 654

Total capital and reserves attributable to Clariant shareholders 2 609 2 714

Non-controlling interests 124 66

Total equity 2 733 34.5 2 780 34.0

Liabilities

Non-current liabilities

Financial debts 1 761 1 830

Deferred tax liabilities 72 120

Retirement benefit obligations 924 669

Provision for non-current liabilities 210 223

Total non-current liabilities 2 967 37.5 2 842 34.8

Current liabilities

Trade and other payables 1 147 1 227

Financial debts 430 589

Current income tax liabilities 313 274

Provision for current liabilities 315 334

Total current liabilities 2 205 27.9 2 424 29.7

Liabilities directly associated with assets held for sale 10 0.1 128 1.5

Total liabilities 5 182 65.5 5 394 66.0

Total equity and liabilities 7 915 100.0 8 174 100.0

summaRY of financial statements

102

Continued Healthy Balance Sheet – Significantly Reduced DebtAs of 31 December 2014, the balance sheet total has been further re-duced from CHF 8 174 million in the previous year to CHF 7 915 mil-lion 2014, primarily due to a comprehensive portfolio optimization. In addition, cash, cash equivalents, and near-cash assets were used to reduce liabilities. This led to a decline of the liquid assets from CHF 770 million to CHF 748 million. The total cash position in-cluding near-cash assets remains at a sound CHF 928 million (2013: CHF 917 million).

The investments in associates and joint ventures increased in the year-to-year comparison from CHF 608 million to CHF 635 million. The first consolidation of the indirect holding of 23 % investment in the Dutch Stahl Holdings B.V., which Clariant acquired in return to the sale of Leather Services, had a positive effect in the amount of CHF 187 million. However, the sale of the 50 % investment in ASK Chemicals GmbH had a reverse effect of CHF 158 million. The assets held for sale decreased from CHF 451 million to CHF 72 mil-lion due to the sale of Detergent & Intermediates and the Leather Services activities.

In the reporting period, Clariant’s equity decreased from CHF 2 780 million to CHF 2 733 million. The main reason for this was dis-tributions from reserves in the amount of CHF 115 million, as well as negative effects in the amount of CHF 265 million net of tax with regard to remeasurements of pension plans. This negative effect could be partially compensated by the consolidated net results of CHF 217 million and the positive currency effects in the amount of CHF 72 million. Consequently, the equity ratio of 34.5 % was roughly the same as last year when it was 34.0 %.

Due to the positive cash flow development, the portfolio measures, as well as the land sale in India, the net debt decreased from CHF 1 500 million to CHF 1 263 million. This figure includes current and non-current liabilities, cash and cash equivalents, near-cash assets, and financial instruments with positive market values. The gearing ratio (net financial debt to equity) has been reduced to 46 % after 54 % in the previous year.

Solid Liquidity Structure Based on Long-Term Structured Maturity ProfileClariant’s financing structure has continued to be very sound at the end of the fiscal year 2014. The company has a broadly diversified maturity structure of its external liabilities and has provided for fa-vorable financing terms. In 2014, the main emphasis continued to be the further reduction of the gross and net debt. At the end of September 2014, Clariant has successfully issued a domestic bond in the amount of CHF 160 million with a term until the end of 2024 and a coupon of 2.125 %. Therefore further improving the maturity profile of the company.

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Financial Review

Clariant AnnuAl RepoRt 2014

430

165

710

254285

174

200

148 99

599

16

212

16

12

2

1

928

Cash* 2015 2016 2017 2018 2019 2020 2021 2022 2023

12025

12

249

5

2024

160

1

284

Derivatives

Cash*

Uncommitted short-term loans

and other liabilities

Long-term loans

Certificate of indebtedness

EUR Bond

CHF Bond

Liquidity Headroom Maturities of Financial Debt

DeBt matuRitY PRofile PeR 31 DecemBeR 2014 in CHF m

1 000

900

800

700

600

500

400

300

200

100

0

*  incl. near cash assets and financial instruments at positive fair values

104

Two credit rating agencies maintain credit ratings for all seven bonds issued by Clariant: Moody’s assigned the bonds a long-term rating of Ba1 with a stable outlook. Standard & Poor’s long-term rating for the bonds is BBB- with a stable outlook. The most up-to-date ratings can be found on the following website: www.clariant.com/creditratings

cash flow impacted by Portfolio measures and Debt ReductionCash flow before changes in net working capital decreased from CHF 595 million to CHF 583 million. The lower net income after reversal of non-cash items of CHF 730 million (previous year: CHF 824 million) was overcompensated by lower payments on re-structuring (CHF – 89 million vs CHF – 133 million previous year), higher dividends received from associates and joint ventures (CHF 50 million vs CHF 30 million previous year) and lower in-come tax paid (CHF – 108 million vs CHF – 126 million previous year).

Changes in net working capital including provisions amounted to CHF 249 million in 2014 (2013: CHF 294 million). The ratio of net working capital to sales rose accordingly from 17.1 % to 19.1 % and continues to be below the Group's target of 20 %.

Above factors explain the increase of cash flow from operating activities from CHF 301 million in the previous year to CHF 334 million.

Cash flow from investing activities decreased to CHF 31 million (2013: CHF 100 million). This figure was influenced by cash inflow from M&A activities, such as the land sale in lndia, the sale of the ASK participation and the African Water Treatment business in 2014, and the disposal of Textile Chemicals, Paper Specialties and Emulsions in 2013.

Cash flow before financing activities amounted to CHF 365 million at the end of 2014 compared to CHF 401 million in fiscal year 2013. The outflows from financing activities in the amount of CHF 403 million (2013: CHF 974 million) were mostly influenced by the con-tinuous debt reduction of the company.

cash flow 2014 in CHF m

1 100

1 000

900

800

700

600

500

400

300

200

100

0

EBITDA Other cash items

(taxes, etc.)

Change in

working capital,

incl. provisions

Investment

activities

Cash flow

before financing

activities

923 – 340

– 249

 31 365

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Financial Review

Clariant AnnuAl RepoRt 2014

After adjustments for these effects, the Group's cash balance (in-cluding near-cash assets) rose from CHF 917 million in the previous year to CHF 928 million by December 2014.

investmentsInvestments in property, plant and equipment rose from CHF 292 million to CHF 310 million.

investments fRom 2010 thRouGh 2014 in CHF m

2014 310

2013 292

2012 311

2011 370

2010 224

0 100 200 300 400

claRiant stocK

Global stock markets affected Differently by economic fearsAfter a record year for the stock exchange in 2013, the development in the capital markets in 2014 was marked by a heterogenous en-vironment with high volatility and geopolitical risks, which mani-fested itself differently in the development of regional stock ex-changes worldwide. The central banks stuck with their expanding monetary and low interest policies, which enhanced the demand for stocks. The US Federal Reserve Bank as well as the European Central Bank (ECB) lowered the prime rate to an all-time low close to zero percent.

extRact of cash flow statement in CHF m

31.12.2014 31.12.2013

Net Income 217 5

Reversals of non-cash items 513 819

Cash flow before changes in net working capital and provisions 583 595

Operating cash flow 334 301

Cash flow from investing activities 31 100

Cash flow from financing activities – 403 – 974

Net change in cash and cash equivalents – 22 – 602

Cash and cash equivalents at the beginning of the period 770 1 372

Cash and cash equivalents at the end of the period 748 770

106

This, coupled with solid economic growth, helped the Dow Jones Industrial Index reach a record high of above 18 050 points during the month of December. In a year-to-year comparison, the Dow Jones Index registered a significant increase of 8.4 %. The Nasdaq technology index generated an even larger profit of 14.3 %. Japan’s stock exchange benefited from massive cash injections by the Japa-nese central bank and also showed a gain of 9.7 %. In contrast, the European stock exchanges stagnated in a year-to-year comparison with high fluctuations, especially during the last quarter of the year. This affected the Euro Stoxx 50 (+ 2.8 %), the German DAX (+ 4.3 %), and also the Swiss leading index SMI (+ 8.6 %).

clariant stock Gains slightlyIn the reporting year, the Clariant stock was able to separate itself, often significantly in a positive way, from the general development on the stock market. On the one hand, the company benefited from the successful implementation of the portfolio repositioning, and on the other hand, from the expectations for an improved profit-ability, which was reflected in positive analyst assessments. In early March (peak price: 6 March with CHF 18.83) and early June, the stock reported a gain of just under 15 %, but in light of the weaken-ing economic outlook and a deteriorating European economy, the stock had to endure profit-takings through the middle of Octo-ber 2014. This resulted in a low for the year of CHF 14.55. Solid numbers for the third quarter stimulated the demand for the stock again, allowing the Clariant shares to finish the trading year with a market price of CHF 16.72 and a positive share price performance of 2.3 %. In view of this gain and the number of shares of 331 939 199, the market capitalization of Clariant rose to CHF 5.6 billion, while the Enterprise Value (EV) amounted to roughly CHF 6.9 billion.

In September 2014, the Clariant stock has been confirmed a mem-ber of the Dow Jones Sustainability Index. According to the assess-ment of the analysts of RobecoSAM, when it comes to sustainabili-ty, Clariant belongs to the top 10 % of chemical companies worldwide.

increased Distribution Proposed for 2014Clariant continues to strive to make dividend payments as a way of allowing shareholders to participate in the Group’s successes without losing sight of solvency (solid investment grade). In view of the solid operating performance, the Board of Directors of Clariant Ltd have decided to propose the distribution of CHF 0.40 per share to the Annual General Meeting on 31 March 2015 for the 2014 financial year.

claRiant stocK PRice DeveloPment 2005 – 2015 in CHF

20

16

12

8

4

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Financial Review

Clariant AnnuAl RepoRt 2014

whY invest in claRiant?

1. Clear strategyFuture valuation potential driven by transformation from a diversified chemicals company into a leading specialty chemicals company.

2. Strong market positions Clariant holds top three positions in most of its markets and has set strate-gies in place to gain and retain leadership positions through developments in all its markets.

3. Well-balanced portfolioThe portfolio changes have turned Clariant into a specialty chemicals com-pany with a broad geographical footprint with close to 50 % of sales coming from emerging markets. The majority of the end-markets have inherent growth drivers.

4. Increasing returns for shareholdersStrong future cash flow generation and a sound balance sheet will allow Clariant to continuously distribute 25 to 35 % of recurring net income to its shareholders.

KeY fiGuRes foR claRiant shaRes

2014 2013

Closing price on 31 December (CHF) 16.72 16.31

Peak price (CHF) 18.83 16.56

Lowest price (CHF) 14.55 11.98

Number of shares on 31 December (m) 331.94 331.94

In free float ( %) 87 100.00

Average daily trading volume (SIX) 1 617 067 1 741 859

Market capitalization on 31 December (CHF m) 5 550 5 414

Basic earnings per share (CHF) 1 0.55 0.98

Adj. earnings per share (CHF) 1 1.12 1.16

Distribution per share (CHF) 2 0.40 0.36 

1  continued operations 2  payout from capital contributions reserves

More detailed information about Clariant can be found on the web-site: www.clariant.comContact Investor Relations: Hardstrasse 61, CH-4133 Pratteln, Switzerland, Telephone: + 41 61 469 63 73, Fax: + 41 61 469 67 67

events suBsequent to the Balance sheet Date

On 12 January 2015, Clariant announced it has signed an agreement to acquire the remaining 50 % shares of Companhia Brasileira de Bentonita (CBB) from Geosol. This transaction aims to secure valu-able clay reserves for its bleaching earth operations and allows full ownership of a bentonite plant and mine. The expected purchase price amounts to CHF 6 million.

On 15 January 2015 the Swiss National Bank announced that it was discontinuing the minimum exchange rate of CHF 1.20 per euro. The numbers presented in the Annual Financial Report

108

do not reflect any changes in the exchange rates after 31 December 2014. Since Clariant presents its consolidated accounts in Swiss francs, the changes in exchange rates after 15 January 2015 will ma-terially affect the consolidated accounts of the Clariant Group. Clariant is still in the process of assessing the impact these changes will have both on Clariant’s activities and the financial reporting.

outlooK

economic environment

Slight Acceleration in Global Growth Expected for 2015In their latest outlook from January 2015, the experts at the Inter-national Monetary Fund (IMF) forecast global economic growth of 3.5 %, which is slightly higher than the dynamics in 2014 (+ 3.3 %). The oil price decline, the appreciation of the Swiss franc and the US dollar, the depreciation of the Euro and the Japanese yen as well as geopolitical risks have changed the economic environment in the past few months with far-reaching implications for 2015. The Euro area is expected to grow by 1.2 % benefitting from lower oil prices, further monetary policy easing and the Euro depreciation, though these factors will be offset by weaker investment prospects. Germa-ny is projected to grow 1.3 % and countries such as France and Italy are expected to experience growth for the first time in several years (+ 0.9 and + 0.4 % respectively). Compared to 2014, an accelerated growth of 3.6 % is being forecast for the US economy. Overall, the industrialized nations can hope for a plus of 2.4 %. Japan’s economy (+ 0.6 %) is struggling to recover despite massive cash injections by their central bank. The IMF expects the emerging and developing countries to follow a similar growth dynamics as last year of + 4.3 %. China will remain the thriving force with a growth of 6.8 %. In the

other BRIC countries, the mixed picture continues: While India’s economy continues to make big gains (+ 6.3 %), Brazil will struggle with + 0.3 %, while Russia will continue to suffer heavily in 2015 (– 3.0 %), due to the impacts from the low oil price and the econom-ic sanctions imposed by important industrial partners.

outlook:focus on Performance, Growth and innovationClariant expects an ongoing challenging environment character-ized by an increased volatility in commodity prices and currencies. In emerging markets, the economic environment is expected to remain favorable but at a lower level and with increased volatility. Moderate growth should continue in the United States. However, growth in Europe is expected to remain weak. The combined effect of the appreciation of the Swiss franc with the weakening of the Euro will impact Clariant’s sales and profitability in absolute terms but will be fairly neutral in terms of relative margins.

In 2015 Clariant will improve its operational efficiency by imple-menting a lean service organization; it will further improve its mar-keting excellence and will continue to launch innovations that generate value for its customers.

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Financial Review

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For 2015 Clariant expects low to mid single-digit sales growth in local currencies. In light of the volatile economic conditions, Clariant currently does not anticipate achieving its mid-term EBITDA margin target in 2015. However, the company will further increase its EBITDA margin before exceptional items above full-year 2014 and increase cash flow generation.

Clariant confirms its mid-term target to achieve a position in the top tier of the specialty chemicals industry. This corresponds to an EBITDA margin before exceptional items range of 16 – 19 % and a return on invested capital (ROIC) above peer group average in 2015 and beyond.

taRGets foR 2015

· Low to mid single-digit sales growth in local currencies

· Improved EBITDA* margin compared to 2014

· Increased cash flow generation

*before exceptional items

miD-teRm taRGets

Organic sales* > global GDP growth EBITDA** margin 16 – 19 %ROIC > peer group average

* in local currencies, ** before exceptional items

110

the executive committee

—chRistian KohlPaintneRResponsibilities:Industrial & Consumer Specialties, Catalysts, Oil & Mining Services, Group Sustainability & Regulatory Affairs, Group Technology & Innova-tion, Biofuels & Derivatives, Commer-cial Excellence, Innovation Excel-lence, and the regions North America, Latin America, Greater China, India, and South East Asia & Pacific

—mathias lütGenDoRfResponsibilities:Additives, Pigments, Masterbatches, Functional Minerals, Group Procure-ment, Group Logistics, Operational Excellence, Supply Chain Excellence, and the regions Europe, Middle East & Africa, and Japan

—haRiolf Kottmann, ceoResponsibilities:Group Human Resources, Group Talent Management Review, Corporate Planning & Strategy, Group Communications, Investor Relations, Group Legal, and Clariant Excellence with a focus on People Excellence

—PatRicK JanY, cfoResponsibilities:Group Finance Services, Corporate Accounting, Corporate Treasury, Corporate Tax, Corporate Controlling, Corporate Merger & Acquisitions, Group Information Technology, Group Compliance, and Group Internal Audit

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Financial Review

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Corporate Governance

112

PrIncIPLeS oF corPoraTe Governance

In defining the management structure, organization, and processes of the Clariant Group, the corporate governance principles aim to provide stakeholder value and transparency to promote sustainable long-term success. The Group is committed to Swiss and interna-tional standards of corporate governance by following the respective statutory provisions, the rules issued by the SIX Swiss Exchange and by implementing the revised principles of the Swiss Code of Best Practices for Corporate Governance. The principles and regulations on corporate governance are described in the Swiss Code of Obliga-tions, the Ordinance Against Excessive Compensation in Listed Stock Corporations, the Articles of Association of Clariant Ltd, the Bylaws, the Organizational Group Regulations of the Clariant Group, and the Clariant Code of Conduct. The Board of Directors adapts these documents regularly. The Articles of Association, the Bylaws of the Board of Directors, and the Clariant Code of Con-duct can be viewed on the internet at www.clariant.com/ corporate-governance

GroUP STrUcTUre anD SHareHoLDerS

Group structureThe registered address of Clariant Ltd is Rothausstrasse 61, 4132 Muttenz, Switzerland. The company’s business operations are con-ducted through Clariant Group companies. Clariant Ltd, a holding

company organized under Swiss law, directly or indirectly owns all Clariant Group companies worldwide. With the exception of Clariant Chemicals (India) Ltd, these companies’ shares are not publicly traded. The important subsidiaries of Clariant Ltd are listed in Note 34 of the »Notes to the consolidated financial state-ments of the Clariant Group« (pages 206 to 208).

The Group conducts its business through seven Business Units (Additives; Catalysts; Functional Minerals; Industrial & Consumer Specialties; Masterbatches; Oil & Mining Services and Pigments) and reports in the following four Business Areas: Care Chemicals; Catalysis & Energy; Natural Resources; Plastics & Coatings. Clariant owns 63.4 % of the publicly traded company Clariant Chemicals (India) Ltd, based in Thane, India, and listed on the Bombay Stock Exchange (ISIN INE492A01029, symbol: CLARICHEM) and the National Stock Exchange of India (symbol: CLNINDIA).

Significant shareholdings of 3 % or more of total share capital Based on the notifications received by Clariant and published by SIX Exchange Regulation, as at 31 December 2014 the following shareholders held more than 3 % of voting rights in Clariant Ltd:

Clariant is committed to international compliance standards, ensuring checks and balances between the Board and Management, as well as a sustainable approach to value creation.

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Corporate Governance

Clariant AnnuAl RepoRt 2014

Shareholders Voting rights

Group of former shareholders of Süd-Chemie AG 1 13.89 %

Thereof (as a separate sub-group): Blue Beteiligungsgesell-schaft mbH, Am Holzmaierfeld, 82064 Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Am Holzmaierfeld, 82064 Grossdingharting (Germany) 2

3.73 %

Cymbria, Canada EdgePoint Global Portfolio, Canada EdgePoint Canadian Growth and Income Portfolio, Canada EdgePoint Canadian Portfolio, Canada EdgePoint Global Growth and Income Portfolio, Canada St. James Place Global Equity Unit Trust, UK

3.06 %

APG Asset Management N.V., Amsterdam, Netherlands 3.01 %

1 The following former shareholders of Süd-Chemie AG form a group:

Wilhelm, Dr. Winterstein, Germany Konstantin Alfred Winterstein, Germany

Dolf, Dr. Stockhausen, Switzerland Max-Theodor, Dr. Schweighart, Germany

Axel, Dr. Schweighart, Germany Peter, Dr. Schweighart, Germany

Rosemarie Schweighart, Germany Moritz Ostenrieder, Germany

Dominique Kraus, Germany Christian Ratjen, Germany

Karl, Dr. Wamsler, Germany Bettina Wamsler, Germany

Irene W. Banning, USA Pauline Joerger, USA

Susanne Wamsler-Singer, USA Marianne Kunisch, Germany

Caroline A, Dr. Wamsler, USA Maximilian Ratjen, Germany

Amelie Ratjen, Germany Julius Ratjen, Germany

Christof Ratjen, Germany Elisabeth Prinzessin zu Sayn-Wittgenstein, Germany

Christopher Weitnauer, Germany Georg A. Weitnauer, Germany

Johanna Bechtle, Germany Charlotte Bechtle, Germany

Kaspar Bechtle, Germany Clara Redetzki, Germany

Luisa Redetzki, Germany Marie Redetzki, Germany

Karl T. Banning, USA Sophia P. Joerger, USA

Schuyler H. Joerger, USA

2 According to a disclosure notification published on 18 January 2013, a group consisting of Konstantin

Winterstein, 80333 München, Germany and Elisabeth Prinzessin zu Sayn-Wittgenstein, 80333 Mün-

chen, Germany holds 3.73 % partially through Blue Beteiligungsgesellschaft mbH, Grossdingharting

(Germany) and partially through Maple Beteiligungsgesellschaft mbH, Grossdingharting (Germany).

The 3.73 % held by this group are included in the 13.89 % mentioned under footnote 1, but build a

separate sub-group.

Disclosure notifications during the financial year 2014 reported to the Stock Exchange Disclosure Office pursuant to Art. 20 of the Stock Exchange Act as well as further information in relation to disclosure notifications can be found on the SIX Swiss Exchange reporting platform: www.six-exchange-regulation.com/ obligations/disclosure/major_shareholders_de.html

As of 31 December 2014, former shareholders of Süd-Chemie AG, who had exchanged their shares against Clariant shares in April 2011, held a total of 13.89 % of the share capital of Clariant Ltd. These shareholders were affiliated with each other for family or other reasons (especially the Wamsler, Winterstein, Schweighart and Stockhausen families). According to a disclosure notification to SIX Exchange Regulation dated 21 October 2013, they were no lon-ger considered a single group; however, they formed a group again holding 13.3 % of Clariant shares, according to a disclosure notice to SIX Exchange Regulation dated 11 February 2014, and increased their holding to 13.89 % pursuant to a disclosure notice to SIX Ex-change Regulation dated 12 December 2014.

At 31 December 2014 Clariant AG itself held 12 087 920 shares in treasury, corresponding to 3.64 % of the share capital.

croSS-SHareHoLDInGSThere are no cross-shareholdings.

caPITaL STrUcTUre

capitalAs of 31 December 2014, the fully paid nominal share capital of Clariant Ltd totaled CHF 1 228 175 036.30 and was divided into 331 939 199 registered shares, each with a par value of CHF 3.70. Clariant Ltd shares are listed on the SIX Swiss Exchange since 1995

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(symbol: CLN, ISIN CH0012142631). Clariant Ltd does not issue non-voting equity securities (Genussscheine or Partizipations-scheine). Based on the closing price of the Clariant share of CHF 16.72 on 31 December 2014, the company’s market capitali-zation at year-end amounted to CHF 5.6 billion.

conditional capitalA CHF 300 million senior unsecured convertible bond was issued on 2 July 2009 with a conversion price of CHF 8.29, a coupon of 3 % per annum and maturing on 7 July 2014. On 31 December 2012, the conditional capital consisted of 39 998 831 shares, of which 36 186 971 were allocated to this CHF 300 million senior unsecured convertible bond. As a consequence of the company making use of its rights under an issuer call option the bond was completetly converted into equity by 20 March 2013 whereby the company’s conditional capital was reduced by 36 186 971 shares. Hence the company’s share capital may be increased by no more than CHF 14 103 978.20 by issuing the remaining 3 811 886 regis-tered shares each with a par value of CHF 3.70.

The details are set out in article 5 of the Articles of Association. The Articles of Association can be found on our website at www.clariant.com/corporate-governance

Distribution of capital reservesIn the 2014 calendar year a distribution of CHF 0.36 per share from capital reserves was decided by the Annual General Meeting. The total amount of CHF 114 900 581 was paid out on 2 April 2014. A table with additional information on the distribution of capital reserves can be found on page 177 (Note 15) of this Annual Report.

Transferability of sharesThe transfer of registered shares requires the approval of the Board of Directors that may delegate this function. Approval is granted if the acquirer discloses his/her identity and confirms that the shares have been acquired in his/her own name and for his/her own account.

nominee registrations and voting rightsEach registered share entitles the holder to one vote at the Annual General Meeting. Special rules according to Article 6 of the Articles of Association apply to nominees who fail to disclose the identity of the persons they represent and whose shareholding exceeds 2 %.

optionsThe Clariant option program for employees was terminated in 2013. Details of the option program can be found on page 201 (Note 29, »Employee Participation Plans«).

Further information on the Clariant share can be found on page 106 of this Annual Report.

THe BoarD oF DIrecTorS

The Board of Directors of Clariant Ltd comprises at least six and no more than twelve members pursuant to the Articles of Association of Clariant Ltd.No member of the Board of Directors exceeds any of the maximum number of mandates as stipulated in Article 38 of the Articles of Association.

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Members of the Board of Directors

Rudolf Wehrli, Swiss citizenFunction at Clariant: Chairman, non-executive member of the Board of Directors Born: 1949Year of first election: 2007

Professional career: Following studies at the Universities of Zurich and Basel, where he earned doctorates in Theology, Philosophy, and German Literature, Rudolf Wehrli began his career at McKin-sey & Co. in 1979. In 1984 he joined the Schweizerische Kredit-anstalt (now Credit Suisse) as a member of the company’s Senior Management. In 1986 he became Marketing Manager and member of the Executive Committee of the Silent Gliss Group. Five years later he took over the management of the Group’s German subsid-iary. In 1995 he transferred to the Gurit-Heberlein Group as a mem-ber of the Executive Committee, and was promoted to Chief Oper-ating Officer in 1998 and Chief Executive Officer in 2000. He remained in this position until the company split up in 2006. As a Member of the Board of Directors of Clariant Ltd since 2007 he be-came Chairman 2012.

Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) Berner KantonalbankMandates according to Article 38 para 1 lit. b) three: Kambly AG, Switzerland; Rheinische Kunststoff-Werke SE, Germany; Chairman of the Board of Directors of Sefar Holding AG, SwitzerlandMandates according to Article 38 para 1 lit. c) nine (including mem-ber of the Board of Trustees of Avenir Suisse and member of the Board of Clariant Foundation).

Günter von Au, German citizenFunction at Clariant: Vice Chairman, non-executive member of the Board of DirectorsBorn: 1951Year of first election: 2011*

Professional career: After studying Textile and Polymer Chemistry at Reutlingen University and Chemistry at the University of Tübingen, where he obtained a doctorate, Günter von Au began his career in 1980 in Burghausen at Wacker-Chemie AG. He held a number of different management positions at the company through 2001 in Germany, Brazil, and the United States – most recently as Head of Wacker’s division for polymers, specialty chemistry, and basic chemistry in Munich. He was also CEO of Wacker Polymer Systems GmbH & Co. KG in Burghausen, Germany. He joined Süd-Chemie in 2001 as President and CEO of Süd-Chemie Inc. In 2004 he be-came CEO of the Management Board of Süd-Chemie AG in Munich and held this position until 31 March 2012. On 1 April 2012, Mr. von Au joined the Board of Directors at Clariant Ltd and has, since then, acted as Vice Chairman of the Board of Directors.

Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association:Mandates according to Article 38 para 1 lit. a) none. Mandates according to Article 38 para 1 lit. b) four: Member of the Supervisory Board of Bayernwerk AG, Regensburg; Member of the Advisory Committee of Gebr. Röchling KG, Mannheim; Mem-ber of the Shareholder Committee at Pfeifer & Langen KG, Co-logne; Chairman of the Board of CeramTec GmbH, PlochingenMandates according to Article 38 para 1 lit. c) three: Chairman of the Board of Directors of the Bavarian Chemical Industry Associa-tion, Munich; Member of the Senate of the Fraunhofer Society, Munich; Vice President of the German Institute of Economic Re-search Cologne.

*Election was conditional to the termination of Günter von Au’s position as the CEO

of the Management Board of Süd-Chemie AG which took place 31 March 2012.

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Hariolf Kottmann, German citizenFunction at Clariant: Chief Executive Officer (CEO) and executive member of the Board of Directors Born: 1955Year of first election: 2008

Professional career: Hariolf Kottmann earned his PhD in Organic Chemistry at the University of Stuttgart in 1984. In 1985 he launched his career at the former Hoechst AG in Frankfurt, where he held several key management positions across the company’s chemical divisions and functions. In 1996 he was appointed Deputy Head of the Basic Chemicals Division at Hoechst AG and took re-sponsibility for the Inorganic Chemicals BU. In 1998 he joined Celanese Ltd in New Jersey (United States) as a member of the Ex-ecutive Committee and Head of the Organic Chemicals BU. In April 2001, he was appointed as member of the Executive Committee of SGL Carbon AG, where he was responsible for the Graphite Spe-cialties, Corrosion Protection and Advanced Materials Divisions as well as the Eastern Europe and Asia regions until 30 September 2008. He was also in charge of the SGL Excellence and Technology & Innovation corporate functions. He has been a member of the Board of Directors of Clariant Ltd since April 2008 and became CEO of Clariant on 1 October 2008.

Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) noneMandates according to Article 38 para 1 lit. b) Plansee Holding AG, AustriaMandates according to Article 38 para 1 lit. c) six: Member of the Board of Trustees of ETH Foundation Zurich; Member of the Board of Trustees of Aventis Foundation, Frankfurt; Member of the Exec-utive Committee of Science Industries, Zurich; Member of the Board of CEFIC (European Chemical Industry Council) and Mem-

ber of its Executive Committee and Chairman of the Product Stew-ardship Program Council; Member of the Board of ICCA (Inter-national Council of Chemical Associations); Chairman of the Board of Clariant Foundation.

Peter Chen, US and Swiss citizenFunction at Clariant: Non-executive member of the Board of Directors Born: 1960Year of first election: 2006

Professional career: Peter Chen studied chemistry at the University of Chicago and in 1987 received a doctorate from Yale University in New Haven, Connecticut. He then served as an assistant professor (1988 to 1991) and associate professor (1991 to 1994) at Harvard University in Cambridge, Massachusetts. Since September 1994 he has been a full Professor of Physical-Organic Chemistry at ETH Zurich. From 2007 to 2009 he was Vice President of Research and Corporate Relations at ETH Zurich.

Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) noneMandates according to Article 38 para 1 lit. b) noneMandates according to Article 38 para 1 lit. c) four: Consultant at Givaudan, Switzerland; Gesellschaft zur Förderung von Forschung und Ausbildung im Bereich der Chemie (Zurich); Member of the National Research Council of the Swiss National Science Founda-tion and since 2013 also member of the Executive Board; Director of The Branco Weiss Fellowship.

Peter R. Isler, Swiss citizenFunction at Clariant: Non-executive member of the Board of Directors Born: 1946Year of first election: 2004

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Professional career: Peter R. Isler studied Law at the University of Zurich, completing his studies with a doctorate. He then attended a master’s program for a LL.M. at Harvard Law School. From 1974 onward he worked for two Swiss law firms and in 1981 became a partner at the Zurich law firm Niederer Kraft & Frey AG. He has been a lecturer in Corporate and Commercial Law at the University of Zurich since 1978 and a member of the Anwaltsprüfungskom-mission (Bar Examination Commission) of the canton of Zurich since 1984.

Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) noneMandates according to Article 38 para 1 lit. b) Schulthess Group AG, SwitzerlandMandates according to Article 38 para 1 lit. c) eight (including Member of the Board of Trustees of the University of Zurich Foundation).

Dominik Koechlin, Swiss citizenFunction at Clariant: Non-executive member of the Board of Directors Born: 1959Year of first election: 2008

Professional career: Dominik Koechlin earned his doctorate in Law from the University of Berne and holds an MBA from INSEAD in Fontainebleau, France. He started his career in 1986 as a financial analyst at Bank Sarasin. In 1990 he founded Ellipson, a manage-

ment consultancy firm. From 1996 to 2000 he was a member of the Executive Committee of Telecom PTT, which later became Swiss-com AG, where he was responsible for corporate strategy and inter-national operations. He was Chairman of the Board of Directors at Plant Health Care until April 2012. He is Chairman of the Board of Sunrise Communications AG and Chairman of the Board of Direc-tors of the Sunrise Communications Group AG since January 2015.

Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) noneMandates according to Article 38 para 1 lit. b) three: Chairman of the Board of Sunrise Communications AG, Switzerland; Member of the Board of Trustees of LGT; Member of the Board of Avaloq Group AG, SwitzerlandMandates according to Article 38 para 1 lit. c) three (including Member of the Board of Economiesuisse).

Carlo G. Soave, British citizenFunction at Clariant: Non-executive member of the Board of Directors Born: 1960Year of first election: 2008

Professional career: Carlo G. Soave studied languages and Econom-ics at Heriot-Watt University in Edinburgh, Scotland. He launched his career in 1982 at Oerlikon-Bührle in Switzerland, moving to Procter & Gamble in 1984. There he held various senior management positions, including Vice President of Global Purchasing for the Fabric and Home Care Division. In 2004 he founded Soave & Asso-ciates, a consulting company based in Brussels, Belgium. He is an Advisory Board member of MonoSol LLC, a company based in Indi-ana (United States) that belongs to the Kuraray Group (Japan).

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Other activities: Board of Directors / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) noneMandates according to Article 38 para 1 lit. b) two: Advisory Board MonoSol LLC; Member of the Board of Sharp Global Ltd (India)Mandates according to Article 38 para 1 lit. c) Managing Director of Soave & Associates, Belgium.

Dolf Stockhausen, Austrian citizenFunction at Clariant: Non-executive member of the Board of DirectorsBorn: 1945Year of first election: 2011

Professional career: Dolf Stockhausen studied Business, Economics and Law at the Universities of Freiburg and Münster, before gain-ing his doctorate in Economics from the University of Munster. He began his career at Bayer AG and a number of its foreign subsidi-aries. He then held various positions at Chemische Fabrik Stock-hausen GmbH in Krefeld, Germany, where he was ultimately Man-aging Director and CEO. From 1996 to 2011 he was a member of the Supervisory Board of Süd-Chemie and from 2008 to 2011 Vice Chairman of the Supervisory Board. He is also Chairman of the Management Committee of EAT GmbH, CEO of Dr. Dolf Stockhau-sen Beteiligungs s.à.r.l., Luxemburg (Luxemburg) and Chairman of the Board of Directors of Dr. Dolf Stockhausen Beteiligungs AG, Stans (Switzerland). Effective as of 19 November 2014 Dr. Dolf Stockhausen Beteiligungs s.à.r.l. was merged into Dr. Dolf Stock-hausen Beteiligungs AG.

Other activities: Board of Directors  /  Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: Mandates according to Article 38 para 1 lit. a) noneMandates according to Article 38 para 1 lit. b) Chairman of Dr. Dolf Stockhausen Beteiligungs AG, SwitzerlandMandates according to Article 38 para 1 lit. c) Member of the Board of Directors of Lightwing AG, Stans.

Konstantin Winterstein, German citizenFunction at Clariant: Non-executive member of the Board of DirectorsBorn: 1969Year of first election: 2011

Professional career: Konstantin Winterstein studied at the Techni-cal Universities in Darmstadt and in Berlin, where he completed a degree in Production Engineering. In 2004 he received his MBA from INSEAD in Fontainebleau and Singapore. From 1997 to 2014 he has held various positions with the BMW Group. Since 2014 he is managing director of H.P.I. Holding AG in Munich. From 2006 to 2011 he served on the Supervisory Board of Süd-Chemie AG.

Other activities: Board of Directors  / Supervisory Board mandates as stipulated in Article 38 para 1 of the Articles of Association: none.

cross-involvementThere are no cross-involvements.

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BoarD oF DIrecTorS – coMMITTee reSPonSIBILITIeS anD MeeTInGS

Member of the Board of Directors

Chairman’s Committee

Audit Committee

Compen sation Committee

Technology and Inno vation Committee

Number of meetings in 2014 3 * 7 * 3 * 3 *

Rudolf Wehrli since March 2012 3 since April 2008 3

Peter Chen since April 2006 3

Peter R. Isler since March 2012 3 since March 2012 7

Dominik Koechlin since April 2008 6 since March 2012 3

Hariolf Kottmann

Carlo G. Soave since March 2012 3 since March 2012 3 since April 2008 3

Dolf Stockhausen since March 2012 3

Konstantin Winterstein since March 2012 6

Günter von Au since March 2012 3 since March 2012 2

Chairman

Member

*= Number of meetings attended in 2014

eLecTIonS

As of 2014 members of the Board of Directors will stand for election or reelection for one year terms as a consequence of the implemen-tation of the Ordinance Against Excessive Compensation in Stock Listed Corporations. In addition, the Chairman of the Board of Direc-tors of Clariant Ltd as well as the members of the Compensation Committee will be elected individually for a term of one year by the Annual General Meeting. Only members of the Board of Directors are eligible.

InTernaL orGanIZaTIonaL STrUcTUre

The Board of Directors and its committeesThe Board of Directors consists of the Chairman, one or more Vice Chairpersons, and the other members. With the exception of Mr. Günter von Au, who was Chairman of the Board of Directors at Süd-Chemie AG until 31 March 2012, no non-executive member of the Board of Directors held a senior management position at Clariant Ltd or any current or former Clariant Group company between

2011 and 2014 or has any significant business relationship with Clariant Ltd or any other Clariant Group company. The members of the Board of Directors constitute the following committees:· Chairman’s Committee· Compensation Committee · Audit Committee· Technology and Innovation Committee

The Board of Directors appoints the members of the committees. The Board of Directors meets at least once a quarter. At the invita-tion of the Chairman, the CEO, the CFO, and other members of the Executive Committee and / or other employees and third parties attend the meetings of the Board of Directors for the purpose of re-porting or imparting information. Each committee has a written charter outlining its duties and responsibilities. The committees’ charters are published on Clariant’s website (www.clariant.com/Corporate-Governance/Committees). The committees report on their activities and results to the Board of Directors. They prepare the business of the Board of Directors in their respective areas.

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The Chairman’s Committee (CC) comprises the Chairman, the Vice Chairman, and two other members of the Board of Directors. The CC prepares the meetings of the Board of Directors. The CC meets as needed. It makes decisions on financial and other matters delegated by the Board of Directors in accordance with the Bylaws of the Board of Directors. In addition, the CC passes resolutions for which the Board of Directors is responsible when matters cannot be postponed. The CC draws up principles for the selection of can-didates for election and reelection to the Board of Directors and for the office of CEO, and prepares the corresponding recommenda-tions. Furthermore, the CC considers and submits to the Board of Directors the CEO’s proposals concerning candidates for Executive Committee positions.www.clariant.com/committees

The Compensation Committee (CoC) comprises three members of the Board of Directors. The majority of the members shall be non-executive members of the Board of Directors. The CoC meets at least twice a year. It reviews and proposes to the Board of Direc-tors the compensation and benefits policies and programs, reviews the performance criteria relevant to compensation and determines individual executive compensation and benefits of the members of the Board of Directors and the Executive Committee, subject to the approvals of the total compensations by the Annual General Meeting. Furthermore, the CoC reviews fringe benefit regulations and dismissal regulations with the CEO, members of the EC, Heads of Global Functions and Global Business Units, and Region Heads always in accordance with the Articles of Association and Ordi-nance Against Excessive Compensation in Stock Listed Corpora-tions.www.clariant.com/committees

The Audit Committee (AC) comprises three members of the Board of Directors. The Chairman must be an independent, non-executive member of the Board of Directors. A majority of the members of the AC must have financial and accounting experience.

The AC reviews the activities of the external auditors, their collab-oration with the internal auditors, and their organizational ade-quacy. It also reviews the performance, compensation, and indepen-dence of the external auditors as well as the performance of the internal auditors and reports back to the Board of Directors. Further-more, the AC reviews the company’s internal control and risk management systems, and reviews compliance with the law and in-ternal regulations – in particular with the Code of Conduct. In collaboration with the Group’s external and internal auditors and financial and accounting management, the AC reviews the appro-priateness, effectiveness, and the compliance of accounting policies and financial controls with applicable accounting standards. The AC meets at least six times a year. The AC reviews and recommends the Group’s financial statements for the first three quarters of each year, and the annual financial results to the Board of Directors for approval.www.clariant.com/committees

The Technology and Innovation Committee (TIC) comprises four members of the Board of Directors with experience in re-search, innovation management, and technology. The TIC meets at least twice a year. The tasks of the TIC include assessing the company’s innovative activities on behalf of the Board of Directors. The TIC also reviews measures to stimulate research and devel-opment, and optimize innovative potential, as well as submitting appropriate recommendations to the Board of Directors.www.clariant.com/committees

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Definition of Working Methods and areas of responsibilityIn accordance with the law and the Articles of Association, the Board of Directors is the ultimate decision-making authority for Clariant Ltd in all matters except those decisions reserved by law or the Ar-ticles of Association for the shareholders. The Board of Directors has sole authority, particularly for the following, in accordance with and supplementary to Article 716a of the Swiss Code of Obligations (non-transferable and inalienable duties of the Board of Directors) and Article 22 of the Articles of Association (www.clariant.com/corporate-governance):· Providing the strategic direction of the Group;· Approving the basic outline of the Group’s organization and

its corporate governance;· Supervising the overall business operations;· Evaluating the performance of the CEO and members of the

Executive Committee;· Appointing and dismissing the CEO and members of the Execu-

tive Committee, the Head of Corporate Auditing, and other key executives;

· Approving the basic accounting system and financial planning and control of the Group;

· Approving the Group’s annual budget;· Reviewing and approving the quarterly financial statements and

results release for Clariant Ltd and the Group;· Approving the Group’s consolidated financial statements at the

end of the fiscal year for submission to the Annual General Meeting;

· Approving major M&A transactions and financial transactions of considerable scope or those involving special risks, particularly capital market transactions and other financing transactions (e.g. large loans) as well as changes in conditions associated therewith;

· Ensuring a management and corporate culture that is appropriate for the company’s objectives;

· Ensuring an internal control system and adequate risk and com-pliance management, particularly with regard to financial, corpo-rate governance and citizenship, personnel, and environmental protection matters;

· Ensuring succession planning and management development;· Convening the Annual General Meeting (AGM), determining the

items on the agenda and the proposals to be made to the AGM.

Working methodsIn 2014 the Board of Directors held six meetings in person (of which two meetings lasted for two days each) at the Corporate Center in Pratteln or at other locations, mainly in Switzerland, and also two meetings by phone. All eight board meetings were attended by nine board members (except for the meetings of 27 October and 11 De-cember that were attended by eight board members). The compa-ny’s strategy is reviewed and further developed once a year during a two-day meeting. Members of the Executive Committee are invited to attend the meetings of the Board of Directors. For the October meeting the Board of Directors met in Munich, Germany. On this occasion the Board also met with the local management teams and visited the sites in Gendorf and Gersthofen on this occasion. The views of external and internal consultants are heard, if necessary, in the case of projects of considerable scope.

Management of the GroupThe Board of Directors has delegated the executive management of the Clariant Group to the CEO and the other members of the Executive Committee. The Executive Committee is mainly respon-sible for implementing and monitoring the Group strategy, for the financial and operational management of the Group, and for the ef-ficiency of the Group’s structure and organization. The members of the Executive Committee are appointed by the Board of Directors

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on the recommendation of the Chairman’s Committee. Subject to the responsibility of the Board of Directors and the Annual General Meeting the CEO and, under his supervision, the Executive Com-mittee are responsible for:· Drawing up strategic plans and policies for approval by the Board

of Directors;· Implementing Group strategies and policies as well as strategies

and action programs for individual Business Units and sub-sidiaries;

· Managing the Business Units and functions to ensure efficient op-erations, including regularly assessing the achievement of goals;

· Regularly informing the Board of Directors and its committees of all matters of fundamental significance to the Group and its busi-nesses;

· Ensuring compliance with legal requirements and internal regu-lations;

· Establishing a management and corporate culture in line with the company’s objectives;

· Promoting an active internal and external communications policy;· Appointing and dismissing senior management, including appro-

priate succession planning.

The Executive Committee is supported by the Corporate Center that defines Group-wide policies and guidelines. Whilst reporting in the four Business Areas Care Chemicals (BU ICS), Catalysis & Energy (BU Catalysts), Natural Resources (BU Oil & Mining Servic-es, BU Functional Minerals) and Plastics & Coatings (BU Additives, BU Masterbatches, BU Pigments) the seven Business Units are the highest-level operating units within the Group. They have global responsibility for the activities assigned to them, particularly sales, marketing, product management, and production. The Business Units also have global responsibility for short- and long-term reve-nue and earnings generated from the operations and assets assigned to them. This includes fully exploiting existing business potential, identifying new business opportunities, and pursuing the active

management of their products and services portfolio. The Business Units’ activities are complemented and supported by global Group functions (e.g. Procurement, Finance, Information Technology, Legal, Human Resources, and Group Technology & Innovation), which are organized as service centers.

Information and control instruments vis-à-vis the executive committee The Board of Directors ensures that it receives sufficient informa-tion from the Executive Committee to perform its supervisory duties and make decisions that are reserved for the Board of Direc-tors. The Board of Directors obtains the information required to perform its duties in various ways:· The CEO and the CFO inform all directors regularly about cur-

rent developments, including through the regular submission of written reports, such as key performance indicators for each business;

· The minutes of the meetings of the Executive Committee are made available to the directors;

· Informal meetings and teleconferences are held, as required, be-tween the CEO and the members of the Chairman’s Committee;

· The members of the Executive Committee are invited to attend meetings of the Board of Directors to report on Business Units under their responsibility;

· The members of the Board of Directors are entitled to request information from members of the Executive Committee or any other Clariant senior manager.

Board committees The Chairman’s Committee meets regularly with members of the Executive Committee and other members of senior management to review the business, better understand applicable laws and policies affecting the Group, and support the Executive Committee in meet-ing the requirements and expectations of stakeholders. The Tech-

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BoarD oF DIrecTorS – coMMITTeeS

Number of meetings

Duration/h

Invited CEO/CFO

Other attendees

Board of Directors 8 4 – 10* Yes Executive Committee

Chairman’s Committee 3 3 – 4 Yes

Audit Committee 7 3 – 4 CFO Auditors, Risk Management, Internal Audit and General Counsel

Compensation Committee 3 1 – 2 Yes Head of Group Human Resources

Technology and Innovation Committee 3 3 – 4 CEO Head of Group Technology and Innovation

*Duration/h per day of meeting

nology and Innovation Committee invites members of the Execu-tive Committee and members of senior management as necessary to discuss selected aspects of innovative activities. The CFO and representatives of the external auditor are invited to Audit Com-mittee meetings. Furthermore, the Heads of Corporate Auditing and Risk Management, the Group Compliance Officer, and Clariant’s General Counsel report on a regular basis to the Audit Committee. The Audit Committee reviews the financial reporting processes on behalf of the Board of Directors. For each quarterly and annual

reporting of financial information an internal team reviews the in-formation for accuracy and completeness of disclosures, reporting to the Audit Committee before publication. The Compensation Committee generally meets at least twice per year to adjust the de-velopment of the compensation structures to changing conditions, as necessary. In this context, the long-term incentive program for the Executive Committee and the senior management team is also aligned with current market and business developments and corre-sponding adjustments are made, if required.

Internal audit (corporate auditing)Corporate Auditing carries out operational and system audits in ac-cordance with a plan adopted by the Audit Committee. By assisting organizational units in the accomplishment of objectives, it pro-vides an independent approach for the evaluation, improvement, and effectiveness of the internal control framework. Corporate Auditing also prepares reports on the audits it has performed, and reports actual or suspected irregularities to the Audit Committee and the Chairman of the Board of Directors. The Audit Committee regularly reviews the scope, plans, and results of Corporate Audit-ing. The Group pursues a risk-oriented approach to auditing and coordinates internal audit activities with the external auditors on a regular basis. Detailed information on Clariant’s risk management system can be found on page 128 of this report.

GroUP ManaGeMenT

The executive committeeThe Executive Committee consists of the CEO, the CFO, and two other members. The Executive Committee regularly holds meetings at the Corporate Center in Pratteln or at other Clariant sites world-wide. It uses such external meetings to discuss business perfor-mance with the management of the local companies in person.

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Members of the Executive CommitteeAt the end of 2014, the Executive Committee comprised the follow-ing members:

Hariolf Kottmann, German citizenChief Executive Officer (CEO)Professional career: Hariolf Kottmann earned his PhD in Organic Chemistry at the University of Stuttgart in 1984. In 1985 he launched his career at the former Hoechst AG in Frankfurt where he held several key management positions across the company’s chemical divisions and functions. In 1996 he was appointed Deputy Head of the Basic Chemicals Division at Hoechst AG and took responsibility for the Inorganic Chemicals BU. In 1998 he joined Celanese Ltd in New Jersey (United States) as member of the Exec-utive Committee and Head of the Organic Chemicals BU. In April 2001 he was appointed member of the Executive Committee of SGL Carbon AG, where he was responsible for the Graphite Specialties, Corrosion Protection, and Advanced Materials Divisions as well as the Eastern Europe and Asia regions until 30 September 2008. He was also in charge of the SGL Excellence and Technology & In-novation corporate functions. He became CEO of Clariant on 1 October 2008.

Patrick Jany, German citizenChief Financial Officer (CFO)Patrick Jany studied economics at the École Supérieure de Com-merce de Paris. He has been Chief Financial Officer at Clariant since 1 January 2006. In 1990 he joined Sandoz – one of Clariant’s predecessor companies. He held various positions in Finance and Controlling at Sandoz and Clariant, including Chief Financial Officer for the ASEAN region and Head of Controlling for the Pigments & Additives Division. From 2003 to 2004 he was Head of Country Organization for Clariant in Mexico. Prior to his appointment as CFO, he was Clariant’s Head of Corporate Development with responsibility for Group strategy and mergers and acquisitions.

Christian Kohlpaintner, German citizenChristian Kohlpaintner studied Chemistry at the Technical Univer-sity of Munich and completed his PhD in 1992. Between 1993 and 1997 he worked in various research departments of Hoechst AG in Germany and the United States. In 1997 he joined Celanese Ltd and held a number of leadership roles at Celanese Chemicals Corpora-tion. In 2002 he became Vice President, Innovation of Celanese Ltd and Executive Director of Celanese Ventures Corporation. From 2003 he was a member of the Executive Committee of Chemische Fabrik Budenheim. In 2005 he became CEO. On 1 October 2009 he was appointed a member of the Executive Committee of Clariant.

Mathias Lütgendorf, German citizenMathias Lütgendorf studied Chemistry at RWTH in Aachen, Ger-many, and earned his doctorate in 1984. In the same year he joined the Research and Development department of the Fine Chemicals and Dyes Division of Hoechst AG. From 1990 he was responsible for various, mainly operational fields at Hoechst AG. From 1995 un-til 2008 he worked at DyStar-, the textile dyes joint venture of Bay-er and Hoechst. BASF also integrated its textile dyes business into DyStar in 2000, becoming the third equal partner in the venture. Mathias Lütgendorf led the global operations of the Disperse Dyes business unit and later also the Special Dyes business unit. From 2000 he was responsible for purchasing, production, and Supply Chain Management at the company as Head of Global Operations. In 2004 he was appointed member of the DyStar management board. On 1 April 2009 he was appointed member of the Executive Committee of Clariant.

Other activities and functionsThe members of the Executive Committee neither undertake other activities, nor hold consultancy functions or other offices, except for Hariolf Kottmann, who is a member of the Board of Directors of Clariant Ltd and whose other activities can be found on page 117, and of Christian Kohlpaintner, who is chairman of the university foundation of the Technische Universität München [TUM] in Mu-nich, Germany.

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Management contracts with third partiesThere are no management contracts with third parties.

Contractual arrangements for members of the Executive CommitteeAll members of the Executive Committee hold employment contracts with Clariant International Ltd, the Clariant Group’s management company. The contractual provisions are governed exclusively by Swiss law. Contracts of the members of the Executive Committee are subject to a standard notice period of 12 months.

Compensation, shareholdings and loansPlease refer to the Compensation Report, beginning on page 130 and Note 12 (page 217) to the Financial Statements of Clariant Ltd.

reMUneraTIon, SHareHoLDInGS anD LoanS

All information on the remuneration of the Board of Directors and the Executive Committee of Clariant Ltd can be found in the Com-pensation Report, beginning on page 130.

SHareHoLDerS’ ParTIcIPaTIon rIGHTS

Each registered share entitles the holder to one vote at the Annual General Meeting. Shareholders have the right to receive dividends and such other rights as are granted by the Swiss Code of Obliga-tions. However, only shareholders entered in the Clariant share register may exercise their voting rights.

voting right restrictions and representationA registered shareholder may be represented at the Annual General Meeting by another shareholder with the right to vote, a legal representative or by the independent proxy (unabhängiger Stimm-rechtsvertreter). The shares held by any one shareholder may be represented by only one representative. There are no special rules for waiving any voting rights restrictions laid down in the Articles

of Association. The Articles of Association also do not contain any rules on participation in the Annual General Meeting that differ from the standard terms proposed by law.

Statutory quorumsThe quorums laid down in the Articles of Association correspond to those in Article 704 of the Swiss Code of Obligations.

convocation of the annual General MeetingThe Articles of Association do not contain any rules that differ from the standard terms proposed by law.

Proposal of agenda items for the 2016 annual General Meeting The Articles of Association do not contain any rules that differ from the standard terms proposed by law. Shareholders representing shares with a total par value of CHF 1 million have the right to sub-mit written requests that an item be included on the agenda, at least 45 days prior to the 21st Annual General Meeting on 21 April 2016. Items to be included on the agenda – with regard to the 2015 finan-cial year – must be submitted no later than 8 March 2016. Such requests must specify the item(s) to be included on the agenda and must contain a proposal on which the shareholder requests a vote.

entries in the share registerThere are no statutory rules concerning deadlines for entry in the share register. However, for practical reasons, the share register will be closed to entries several days before a shareholder meeting. With regard to the financial year 2015, this applies as of Monday, 18 April 2016. Shareholders who have been entered into the share register by Friday, 15 April 2016, may exercise their right to vote at the Annual General Meeting on 21 April 2016. There are no vot-ing rights restrictions except those mentioned above.

126

cHanGe oF conTroL anD DeFenSe MeaSUreS

The limit beyond which the duty to make an offer applies is the same as the statutory minimum, 33 %. There are no clauses on changes of control in agreements with members of the Board of Directors and the Executive Committee as well as other management execu-tives, other than those set forth in paragraph 4.8 of the Clariant Stock Option Plan (see remarks in Notes to the consolidated finan-cial statements, Note 29 »Employee Participation Plans«, page 201 of the Annual Report). This authorizes the Board of Directors, at its discretion, to transfer granted options early to participating staff (»accelerated vesting«) or enable the early exercise of the options (»accelerated exercise«) in the case of a change of control.

InForMaTIon PoLIcY

Notices are published, in accordance with Article 42 of the Articles of Association, in the Swiss Official Gazette of Commerce and in daily newspapers specified by the Board of Directors (currently Basler Zeitung, Neue Zürcher Zeitung). Clariant releases its annual financial results in the form of an annual report. In addition, de-tailed business figures for the first, second, and third quarters are published in April, July, and October, respectively. The Annual Re-port and quarterly results are published in printed and electronic form and announced in a media conference. Current publication dates can be found online in English on our website (www.clariant.com/UpcomingEvents). All information pertaining to media con-ferences, investor updates, and presentations at analyst and inves-tor conferences can be obtained online (www.clariant.com) or from the following contact address:

Clariant International Ltd, Investor Relations, Hardstrasse 61, 4133 Pratteln, investor-relations@clariant.com,Phone + 41 61 469 63 73, Fax + 41 61 469 67 67.

The results for the 2015 financial year will be published as follows:· Interim Report on the first quarter of 2015 29 April 2015· Interim Report on the first half of 2015 30 July 2015· Interim Report on the third quarter of 2015 29 October 2015

The annual General Meeting for the 2015 financial year will take place on the following date:21 April 2016

Weblinks:

Clariant website:www.clariant.com

E-mail distribution list (push system):www.clariant.com/SubscriptionForm

Adhoc messages (pull system):www.clariant.com/AdHocNews

Financial reports:www.clariant.com/Publications

Corporate calendar:www.clariant.com/UpcomingEvents

aUDITorS

Duration of the mandate and term of office of the lead auditorPricewaterhouseCoopers (PwC) has held the mandate since Clariant Ltd was established in 1995. The principle of rotation applies to the lead auditor, Dr. Daniel Suter, who was appointed in March 2011. The Audit Committee ensures that the position of lead auditor is changed at least every seven years.

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Corporate Governance

Clariant AnnuAl RepoRt 2014

auditing feesPricewaterhouseCoopers received a fee of CHF 5.2 million for auditing the 2014 financial statements (2013: CHF 5.9 million).

additional feesPricewaterhouseCoopers received a total fee of CHF 3.9 million for additional services (2013: CHF 4.0 million). These services com-prise audit-related services of CHF 0.9 million, consulting services of CHF 0.9 million and tax services of CHF 2.1 million.

Supervisory and control instruments vis-à-vis the auditorsThe Audit Committee of the Board of Directors is responsible for overseeing and evaluating the performance of the external auditors on behalf of the Board of Directors and recommends to the Board of Directors whether PwC should be proposed to the Annual Gen-eral Meeting for reelection. Criteria applied for the performance assessment of PwC include technical and operational competence, independent and objective view, employment of sufficient resourc-es, focus on areas of significant risk to Clariant, ability to provide ef-fective and practical recommendations, and open and effective communication and coordination with the Audit Committee, Cor-porate Auditing, and management. In 2014 seven joint meetings were held with the external auditor’s representatives. These meet-ings were attended by members of the Audit Committee, the part-ner and senior manager of the audit firm, Clariant’s CFO, the Group Accountant, the Head of Corporate Auditing, and the General Counsel. Depending on the topics to be discussed, the meetings were also attended by the Group Risk Manager. The auditors com-municate audit plans and findings to the Audit Committee and issue reports to the Board of Directors in accordance with article 728b of the Swiss Code of Obligations. The Audit Committee’s approval is required for all services provided by PwC exceeding a fee volume of CHF 0.2 million. These services may include

audit and audit-related services, as well as tax and other services. PwC and the Executive Committee report to the Audit Committee on a regular basis regarding the extent of services provided in con-junction with this approval.

enTerPrISe rISK ManaGeMenT (erM) IDenTIFIcaTIon, aSSeSSMenT, anD ManaGeMenT

Under the Group Risk Management Policy, and based on the risk management standard of the Institute of Risk Management, a tool is used to prepare regular risk assessments. Business Units, Service Units, and Regions deliver updates assessing threats and opportuni-ties that will impact the general business objectives set for Clariant. These objectives are a result of the overall strategy of the company, as set by the Board of Directors and implemented by the Executive Committee.

The Executive Committee is responsible for monitoring the results of risk assessments for relevance and consistency.

Objective setting is finalized during the last quarter of the year. These objectives, together with the threats and opportunities to them, are scrutinized by the Executive Committee during meetings with each Business Unit. Also reviewed and discussed are the measures proposed to maximize opportunities and reduce or con-tain threats.

The Group and the Regions are also required to make risk assess-ments on the same criteria. All Business Units and Business Ser-vices are required to report significant changes to existing identified risks, as well as new threats and opportunities as they arise.

128

Risk Registers are maintained using financial, operational, reputa-tional, and likelihood assessments to score and rank all identified risks. The assessment also addresses the measures in place to man-age the risk identified, setting deadlines for completion of the mea-sures. The effectiveness of the measures is also assessed.

Threats and opportunities are identified, quantified, and delegated to responsible, named individuals who are required to deliver effec-tive risk management. The nature of the risk classification requires different skills to be applied to risk management. The assessments are shared among the different Business Units, Services, and indi-viduals, and are subject to reassessment on a quarterly basis.

Consolidated risk assessments are presented to the Audit Commit-tee and the Board of Directors. There is also a process for accelerat-ed reporting of new or changed risks.

Summaries of Business Units’, Regions and Services’ risk assess-ments are shared within Clariant to deliver the Group summary to all key senior managers.

To support functional responsibility, certain functions have access to risk assessments to support them in their roles. Examples are Environmental Safety & Health Affairs (ESHA), which uses the as-sessments to identify key sites for their property risk survey program, as well as Corporate Auditing and Group Procurement.

The consolidated risk assessment is benchmarked against pub-lished surveys dealing with risk management. Industry-specific, company-wide surveys with broad economic coverage are also included in the benchmarking process.

Examples of identified risks included in the Risk Register:

Regulation & Compliance: Clariant is subject to many rules and regulations as well as compliance standards. These include chemical industry, country, government, and customer requirements, partic-ularly the European Community’s Regulations on Registration, Evaluation, Authorization, and Restriction of Chemical substances (REACH). Controlling and managing these risks was particularly delegated to the Human Resources, Legal, Corporate Sustainability and Regulatory Affairs (CSRA), and Logistics functions.

Sites & Locations: This includes sites, plants, and equipment that are important for the production of Clariant products for sale to customers. Also addressed are country and cultural issues and issues concerning competitors that could create threats to, and opportuni-ties for Clariant’s business objectives. The objective is to maintain high-quality production facilities in key locations. The supervision of the relevant risks is delegated to CSRA and Regional Services.

Raw Material supply: The identified risks include price volatility of major raw materials as well as their supply security. The market situation and development is monitored closely by Group Procure-ment and the business units. Single supply materials are identified with the objective to have alternative materials approved or long-term supply agreements in place.

Competitor activity: The identified risks include merger and ac-quisition activities that could affect the nature and extent of the competitive environment. Clariant is a leading player in its industrial sectors. Each sector is monitored to identify changes, as well as to consider and plan how to deal with the consequences of changes to customers.

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Corporate Governance

Clariant AnnuAl RepoRt 2014

Compen­sation RepoRt

130

CoMpeNSAtIoN FRAMeWoRKThe purpose of this Compensation Report is to provide a compre­hensive overview of Clariant’s Compensation Concept and Pro­grams. In addition it includes the compensation levels of the Board of Directors and the Executive Committee; accordingly, some infor­mation in Note 12, pages 217 to 218, of the Financial Statements of Clariant Ltd is repeated here.

1. Members and responsibilities of the compensa-tion committee of the Board of DirectorsThe Compensation Committee (CoC) is currently composed of three non­executive members of the Board of Directors: Dominik Koechlin (Chairman), Rudolf Wehrli and Carlo G. Soave. The Sec­retary to the CoC is the Head of Corporate Human Resources. The Chairman of the CoC may invite the CEO to discussions on individ­ual agenda items for consultation, taking into account potential conflicts of interest which would oblige him to abstain. The CoC establishes principles for the compensation of members of the Board of Directors and submits these to the Board of Directors for approval. The Committee approves the employment contracts of the CEO and members of the Executive Committee (EC), subject to the approval of the total compensation by the Annual General Meeting (AGM). The Committee also takes note of employment contracts for the Heads of Global Functions, Global Business Units, and Region Heads, including their respective compensation. All appointments and dismissals that are within the purview of the Board of Directors are submitted in advance to the CoC which, with regard to compensation aspects, makes a recommendation to the Board of Directors.

The CoC reviews global bonus, option, and share plans, and makes recommendations to the Board of Directors. Furthermore, the Committee reviews fringe benefit regulations, dismissal regulations, and contractual severance compensation with the CEO, members of the EC, Heads of Global Functions, Global Business Units and Region Heads (always in accordance with the Ordinance Against Excessive Compensation in Stock Listed Corporations OaEC).

As a rule the CoC holds at least three meetings per year: a) Winter: Discussion regarding the executive bonus plan alloca­tion, determination of bonus payments for members of the EC. b) Summer: Fundamental matters concerning the Group’s HR pri­orities.c) Autumn: Preparation of the Compensation Report and planning of compensation changes in the following year.

The CoC also meets as needed. In 2014 the CoC met three times and held several bilateral discussions and telephone conferences.

2. Compensation conceptClariant wants to be an attractive employer with the ability to attract and retain qualified employees and experts throughout the world. In particular, Clariant’s compensation policy for manage­ment is based on the following main principles:

a) The level of total compensation should be competitive and in line with market conditions, and enable Clariant to recruit inter­national, experienced managers and experts, as well as secure their long­standing commitment to the Group. Our understanding of competitiveness is defined in our Positioning Statement (page 132). We are aiming for a range between the median and upper quartiles of total compensation in the relevant local markets. Through this

Clariant's compensation philosophy is aimed at promoting and reinforcing the quality and commitment of employees.

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Compensation Report

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GloBAl pAy MIx (RelAtIve StRuCtuRe) in % of total compensation

CEO

EC

ML 1

ML 2

ML 3

ML 4

0 25 50 75 100

Base salary Short­Term Incentives (STI) Long­Term Incentives (LTI)

65 26 9

53 26 21

47 30 23

42 33 25

36 36 28

29 39 32

ongoing benchmarking, we are able to define local compensation structures, e.g. annual pay bands, which will be applied as an impor­tant factor in all salary decisions. For the update and accuracy of market conditions, we participate in local compensation bench­marking in all major countries and align all activities through global contracts with the global compensation consultants Hay Group and Mercer. Mercer also has other assignments for Clariant, e.g., in the benefits area. In addition, we encourage local HR managers to par­ticipate in local compensation networks and club benchmarks with­in the chemical industry to ensure access to relevant market infor­mation.

poSItIoNING StAteMeNt

Benefits Benefits represent local market practice and are aligned with Clariant’s global policies.

Long-Term Incentives (LTI) (only ML* 1 – 4)

Investment reflects long­term commitment and supports our strong dedication to sustainable performance orientation.

Short-Term Incentives (STI)

The annual cash bonus targets aim to be more aggressive than market norms.

Base Salary (BS) In general, we aim to be at median level in our respective markets and use different sources of compensation surveys (country­oriented, conduct­ed by external consultants, including relevant peer companies in the chemical industry).

*ML: Management Level

b) The structure of total remuneration should be highly perfor­mance­ and success­oriented in order to ensure that shareholder and management interests are aligned. Clariant also defines in the global pay mix that with increasing responsibilities Short­Term and Long­Term Incentives will be increased. Success, in terms of bonus payouts, will generally be measured only in relevant financial

Group Performance Indicators. Only if Clariant is successful profits can be shared with our employees. Details are disclosed in chap­ ter 3, beginning on page 133. Individual performance – measured through a consistent, global Performance Management system – is addressed in career development and annual salary reviews. Thus, each manager’s or employee’s performance is discussed on a yearly basis. In conjunction with other factors, such as internal and exter­nal market conditions, this results in transparency and consistent salary decisions. In general, we apply a four­eyes principle, speci­fically, the line manager and next level supervisor, as well as obtain­ing additional guidance from global or local HR processes.

c) Compensation components should be straightforward, transpar­ent and focused, so as to guarantee all participants (shareholders, members of the Board of Directors, the CEO, members of the EC, and all global Management Levels) the highest degree of clarity and objectives orientation.

132

LTISTI

GEBP & G-SIP

GMBP

~ 670 Positions 1

~  16 050 Positions 1

~ 160 Positions 1

~ 120 Positions 1

1 Number of positions as at 31.12.2014

* ML: Management Level

Performance Share Unit (PSU)-PlanMatching

Share

eC

Ml *  1  – 3

Ml *  4

Ml *  5

local Managers, professionals,

employees

BoNuS lANDSCApe of Clariant

In order to uphold these principles, the CoC analyzes and discus­ ses market developments at regular intervals and considers the im­plications of these developments for Clariant. The new articles – which have been approved in the AGM 2014 –therefore reflect Clariant’s commitment to market practice.

3. overview of existing bonus plans During the previous years, all relevant bonus plans for Short­Term Incentives (STI) and Long­Term Incentives (LTI) have been re­viewed and redesigned to ensure the transition of Clariant, and to align with the business model. The key principles have been to reduce complexity, increase transparency, and ensure a coordinated and unified »One Clariant« approach throughout all employee groups and countries.

The following variable programs are currently in place for Clariant:

3.1. STI: Short-Term Incentive Plans (cash bonus)a) Group Management Bonus Plan (GMBP) – started in 2010b) Group Employee Bonus Plan (GEBP) – started in 2010/2011c) Global Sales Incentive Program (G­SIP) – started in 2011

3.2. LTI: Long-Term Incentive Plans (equity-linked Bonus)a) Performance Share Unit (PSU) Plan – newly introduced in 2013b) Group Senior Management – Long­Term Incentive Plan (GSM­LTIP or Matching Share Plan) – started in 2010c) Restricted shares for the Board of Directors –started in 2012

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Compensation Report

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3.1. Short-Term Incentive Plans (cash bonus) a) The Group Management Bonus Plan (GMBP) is anchored in the overall performance cycle at Clariant. Through intensive dis­cussions and systematic alignment meetings, this cycle ensures a challenging business­specific target agreement for each Business Unit and Service Unit (BU/SU).

The individual amount of bonus payments generated in a year is determined by the achieved result of the Clariant Group measured against clear objectives. The achievement is calculated by means of three elements: financial result of the Group; financial results of Business and Service Units; and defined top priorities (Group Per­formance Indicators and strategic projects).

As Clariant Performance Cycle agreements with each BU lead to challenging business­specific target settings, and in order to ex­clude any »windfall profiting« or »hidden buffers«, the maximum bonus payout is explicitly capped at 100 % (= target). These target settings have been defined in the fourth quarter of 2013 and there was no change and no amendment during the year. As outlined in our compensation concept, we aim for a more aggressive pay­mix than is the norm in international markets; thus, this 100­percent approach ensures competitive positioning compared with other companies.

The Performance Cycle of Clariant is based on a 12­month rota­tion, which starts in November each year with objective discussions focusing on the next business year. Group Performance Indicators (GPI), top priorities, and related projects are included. In January, alignment meetings take place with key leaders of the company in order to cascade GPI objectives and priorities for the new year.

GeNeRIC peRFoRMANCe CyCle of Clariant

Strategy Review

Alignment Meeting

Objec

tive D

iscussion

Jan

Feb

Mar

Apr

May

JunJul

Aug

Sep

oct

Nov

Dec

Busi

ness

Rev

iew

Stra

tegy

Dis

cuss

ion

Business Review

Busi

ness

Rev

iew

134

GRoup

AChIeveMeNt

How do we as a company perform with regard to our targets?

GRoup

AChIeveMeNt

How do we as a company perform with regard to our targets?

top

pRIoRItIeS

Have we acted focused and aligned on our unit priorities?

top

pRIoRItIeS

Have we acted focused and aligned on our unit priorities?

BuSINeSS / SeRvICe

AChIeveMeNt

What are the business results /contributions of my unit?

BuSINeSS / SeRvICe

AChIeveMeNt

What are the business results /contributions of my unit?

1) Improve Gross Margin 2) Improve Productivity

3) Growth4) Performance toward customer5 + 6) Ensure sustainable results

(CLNX benefits and LTAR)

ROIC (aei)

Operating Cash Flow (aei)

EBIT (aei) ROS %

Cash Flow BU (aei)

SU Costs*

EC:

ROIC (aei) 30 %

Operating Cash Flow (aei) 30 % 40 %

40 %

GRoup MANAGeMeNt BoNuS plAN (GMBp) 2014 – Three pillars to balance the Bonus Plan

GRoup

AChIeveMeNt

How do we as a company perform with regard to our targets?

top

pRIoRItIeS

Have we acted focused and aligned on our unit priorities?

SUs:

ROIC (aei) 15 %

Operating Cash Flow (aei) 15 %SU Costs 40 % 30 %

BUs:

ROIC (aei) 12.5 %

Operating Cash Flow (aei) 12.5 %

EBIT (aei) ROS 17.5 %

Cash Flow BU (aei) 17.5 %

GpIs

target Set (weighting) 2014

Achievements & payouts 2014

BuSINeSS / SeRvICe

AChIeveMeNt

What are the business results /contributions of my unit?

* as defined in Objective

Discussions for Functions

Legend:

ROIC = Return on invested

capital

EBIT = Earnings before

interest & tax

aei = After exceptional items

ROS % = Return on Sales in %

NWC = Net working capital

BU = Business Unit

SU = Service Unit

LTAR = Lost Time Accident

Rate

100 % 76 % to 100 % 40 % to 100 %

The corresponding bonus payouts for continued businesses ranges between 61 % and 100 % (eC = 92  %)

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Compensation Report

Clariant AnnuAl RepoRt 2014

As a principle, only collective/management team­related target achievements can serve as the basis for individual bonus payouts. An employee’s individual performance will be honored in the annu­al review of total compensation and his/her career development. The prerequisite for this is an integrated People Performance Man­agement, which plays a key role in building a High Performing Workforce and High Performance Culture – as defined in our Peo­ple Excellence Strategy. In 2012, an adjusted People Performance Cycle was re­launched, including 360­degree feedback for all ML 1 – 5 grades.

The annual evaluation of the achievement of objectives and alloca­tion of funds for the GMBP is conducted by the CoC in February, following the financial year in question, and approved by the Board of Directors. This system ensures that the bonus payments made to employees are closely aligned with the Group’s overall results.

b) Cash bonus for non­management­levels: The Group Employee Bonus Plan (GEBP) ensures further alignment and standardiza­tion to all local bonus plans of the legal entities around the world. In general (where legally compliant and possible), all legal entities will apply the global Group Achievement or a combination of Group results (75 %) and local Top Priorities (25 %) as the bonus payout.

c) For the sales force: The Global Sales Incentive Plan (G-SIP) aims to establish dedicated and globally aligned local Sales Incentive Plans (SIPs) for all Sales Representatives, Sales Managers and Key Account Managers with clearly allocated annual sales budgets and commercial responsibilities (ML 1 – 4 excluded). The G­SIP focus is on the individual sales performance and underlying Key Perfor­mance Indicators in the areas of sales (40 %), margin (40 %) and trade receivables (20 %). As an example, a Sales Representative will receive tailor­made individual objectives for his allocated set of clients, which means a concrete sales target in local currencies, a »Deal Score« target, as an important indicator to measure the mar­gin, and overdues and receivables as an indicator for trade receiv­ables. Each objective is weighted and can be monitored using exist­ing reporting systems. Thus, the direct impact of individual success and payout can be easily calculated. In 2011 the global roll­out started, and in 2014, approximately 1 100 employees from every re­gion were included. Employees can participate only in one global bonus plan (G­SIP or GMBP/GEBP).

3.2. Long-Term Incentive Plans (equity-linked Bonus)Clariant uses equity­based income components for approximately 280 of its senior managers worldwide (EC and ML 1 – 4).

a) The Performance Share Unit (PSU) Plan was introduced in 2013 for all senior managers and replaced the former Tradable Option Plan (»TOP@Clariant«). Key objective is a strong commit­ment to a higher profitability for Clariant and therefore to achieve our 2015 strategic targets.

136

The term of Clariant’s Performance Share Unit Plan is a three­year vesting period. The vesting is conditional upon achievement of the performance target (check after three years). The relevant underly­ing Key Performance Indicator is EBITDA (before exceptional items) in percentage of sales and the performance target is to be at or above median of a defined peer group. If vesting and perfor­mance targets are achieved, 1 PSU will be converted to one Clariant share. The first PSUs were granted 2013 and in Summer 2016 per­formance criteria will be checked (vesting in September 2016).

Membership is limited to the Executive Committee and selected senior managers of ML 1 – 4 (approximately 1.7 % of employees). Eligible participants will receive a fixed number of PSUs, in accor­dance with an underlying share price defined over a 10 day trading period. Eligibility and endowment will be reviewed each year that the scheme is in operation. For 2014, it was decided in March to grant PSUs for 2014. The underlying share price was CHF 17.35. The grant was endorsed on 17 September 2014.

If an employee should voluntarily leave Clariant before the vesting period (three years) expires, all rights to shares which have not yet been transferred at that point in time become invalid. In case of retirement, disability or death of the participant, the employees (respectively the estate and /or heirs of the participant in case of death) will receive an immediate vesting on a pro­rata basis, in ac­cordance with published regulations. The vested PSUs remain subject to the performance condition and will be allocated only at the end of the vesting period.

lISt oF RelevANt peeRS

AZ Electronics * Du Pont LG Chemicals

Albermarle Ashland Chemtura

Croda Wacker Braskem

Eastman Solvay Borealis

Rockwood* Valspar Huntsman

Shinetsu Cabot Polyone

ICL PPG DIC

WR Grace Evonik Omnova

Celanese Lyondell Basel Kemira

EMS Axiall Kraton

Johnson Matthey BASF Lanxess

Symrise Sherwin Williams Mitsubishi

Cytec Dow Schulman

Altana HB Fuller H & R

Lonza Akzo West Lake Chem

Umicore Ferro Mitsui

Honeywell DSM

*impacted by M&A activities

b) Group Senior Management – Long-Term Incentive Plan (GSM-LTIP) = Matching Share PlanThe Matching Share Plan requires a personal investment decision and fosters the commitment of key managers (approximately 120 positions; EC and ML 1 – 3) for the long­term success of Clariant. Under this plan key managers have to invest part of their compen­sation in Clariant shares. Thus, this plan supports senior managers in meeting their requirement to permanently hold a minimum of 20 000 up to 100 000 shares depending on their management level. New participants will now have six years to catch up to the re­quired investment thresholds.

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Compensation Report

Clariant AnnuAl RepoRt 2014

Under the plan, eligible senior managers are entitled to receive a certain fixed percentage (investment quota of 20 %) of their annual cash bonus for the respective bonus year in the form of investment shares. Title and ownership in the shares are transferred at alloca­tion (grant after the AGM) of the investment shares. These invest­ment shares will then be blocked and held in a custody account for a period of three years. At the end of the blocking period, the par­ticipant is entitled to obtain for each investment share an additional share free of charge (matching share). This matching is subject to the condition of continued employment with Clariant throughout the blocking period. In case of termination of employment before the end of the blocking period, the right to matching shares lapses and a cash amount will be paid instead, equal to the pro rata tempo­ris portion (considering employment during the blocking period).

The senior managers who do not participate in this plan, or do not invest according to the plan regulations, will forfeit 50 % of their annual cash bonus (with minimum level at 40 % of target cash bo­nus) and the eligibility to participate in any Long­Term Incentive Programs (including PSU Plan).

The decision to implement this plan was made to create a strong and sustainable link between the Clariant business cycle and the value development of the company. Senior managers therefore strengthen the entrepreneurial and value­creating spirit of the Clariant Group.

c) Restricted shares for the Board of Directors This share plan introduced in 2012 allocates shares of Clariant Ltd to members of the Board of Directors. Board Members will receive a fixed portion of the annual fee allocated in the form of shares sub­ject to a blocking period (»Restricted Shares«). The blocking period is three years from the date they are allocated. From the first busi­ness day after the blocking period, the Board member may freely

dispose of and trade these shares without any further restrictions (legal restrictions will remain applicable). The allocation is made once a year, at the end of the mandate year, four weeks prior to the Annual General Meeting (AGM).

The value of a grant is determined by the role & responsibility:

Chairman of the Board CHF 200 000

Vice Chairman CHF 150 000

Member of Board CHF 100 000

4. Structure of compensation for members of the Board of DirectorsThe compensation structure for members of the Board of Directors follows the outlined compensation concept for the performance year 2014.

According to the aforementioned guidelines, remuneration of mem­bers of the Board of Directors is made up of the following compo­nents:a) Annual basic feeb) Committee membership feesc) Share­based remuneration

Since the performance year 2012, the Board of Directors has decid­ed to abandon option­based compensation for non­executive direc­tors. It was replaced by the grant of restricted stock to enable the Board to participate in the long­term value creation of the company. In addition a new compensation policy was implemented with effective date 1 April 2012, which focuses more on a stronger ac­knowledgment of responsibilities and activities inside the commit­tees.

The following graph illustrates the relative structure of the three components for 2014:

138

RelAtIve StRuCtuRe oF totAl CoMpeNSAtIoN (BoARD oF DIReCtoRS) in % of total compensation

Chairman of the Board of Directors

Vice Chairman of the Board of Directors

Member of the Board of Directors*

0 10 20 30 40 50 60 70 80 90 100

Honorarium Committee fee* Shares (value at grant) * Activity­based (assumption for members is minimum = CHF 30 000)

20 3545

23 3146

14 4343

CoMMIttee Fee

Chair Member

Chairman’s Committee 120 000 60 000

Audit Committee 80 000 40 000

Compensation Committee 60 000 30 000

Technology & Innovation Committee 60 000 30 000

ANNuAl CoMpeNSAtIoN oF the BoARD oF DIReCtoRS (StRuCtuRAl oveRvIeW oNly) in CHF

Chairman

of the Board

Vice Chairman

of the Board

Member of the Board of

Directors

 Total

2014

Total 2013

Cash compensation

Honorarium 1 300 000 200 000 100 000 1 100 000 1 100 000

Committee fee 1 According to individual activity (see table below) 730 000 730 000

Social contribution

Relevant amount According to individual situation2

Shares

Value (at grant) 200 000 150 000 100 000 950 000 950 000

1  The fees are paid in cash, in equal parts in March and September. 2 Actual details 2014 see table page 140

139

Compensation Report

Clariant AnnuAl RepoRt 2014

In order to fulfill the reporting needs outlined in the Ordinance against Excessive Compensation (OaEC) we will disclose the relevant Fair Market Value (FMV) figures in the following audited table.

2014 ANNuAl CoMpeNSAtIoN – eMoluMeNtS to MeMBeRS oF the BoARD oF DIReCtoRS (FAIR MARKet vAlue = FMv) in CHF

Rudolf Wehrli

Günter von Au

Peter Isler

Peter Chen

Dominik Koechlin

Carlo G. Soave

Hariolf Kottmann 1

Dolf Stockhausen 

Konstantin Winterstein

Totals 2014

Cash compensation

Honorarium 300 000 200 000 100 000 100 000 100 000 100 000 0 100 000 100 000 1 100 000

Committee fee 150 000 90 000 140 000 60 000 100 000 120 000 0 30 000 40 000 730 000

Social contribution

Relevant amount 41 786 30 039 20 089 24 286 20 747 23 211 0 12 895 0 173 053

Shares

Fair market value (FMV) 200 012 150 009 100 006 100 006 100 006 100 006 0 100 006 100 006 950 057

Total 2014 (Fair market value 2014) 691 798 470 048 360 095 284 292 320 753 343 217 0 242 901 240 006 2 953 110

2013 ANNuAl CoMpeNSAtIoN – eMoluMeNtS to MeMBeRS oF the BoARD oF DIReCtoRS (FAIR MARKet vAlue = FMv) in CHF

Rudolf Wehrli

Günter von Au

Peter Isler

Peter Chen

Dominik Koechlin

Carlo G. Soave

Hariolf Kottmann 1

Dolf Stockhausen 

Konstantin Winterstein

Totals 2013

Cash compensation

Honorarium 300 000 200 000 100 000 100 000 100 000 100 000 0 100 000 100 000 1 100 000

Committee fee 150 000 90 000 140 000 60 000 100 000 120 000 0 30 000 40 000 730 000

Social contribution

Relevant amount 43 053 29 742 20 242 19 017 20 889 22 307 0 12 993 0 168 243

Shares

Fair market value (FMV)2 200 010 150 016 100 005 100 005 100 005 100 005 0 100 005 100 005 950 056

Total 20132 (Fair market value 2013) 693 063 469 758 360 247 279 022 320 894 342 312 0 242 998 240 005 2 948 299

1 After taking over the function as CEO, no further Board of Directors compensations are extended. Please refer to the Executive Committee table.2 Correction needed due to adjustments of final share price at grant.

In both years there were no payments to former members of the Board of Directors nor were any loans or credits outstanding and or granted.

Please find on the next page the information about the actual share and option ownership of the Board of Directors.

140

optIoNS helD By MeMBeRS oF the BoARD oF DIReCtoRS

Number of options

granted for 2014

Number of options

granted for 2013

Number of options within vesting

period for 2014

Number of options within vesting

period for 2013

Number of privately held

options for 2014

Number of privately held

options for 2013

Rudolf Wehrli 0 0 0 0 30 120 61 870

Günter von Au 0 0 0 0 0 0

Peter Isler 0 0 0 0 47 946 47 946

Peter Chen 0 0 0 0 0 47 946

Dominik Koechlin 0 0 0 0 47 946 47 946

Carlo G. Soave 0 0 0 0 24 096 47 946

Hariolf Kottmann – 1 – 1 – 1 – 1 – 1 – 1

Dolf Stockhausen 0 0 0 0 0 0

Konstantin Winterstein 0 0 0 0 0 0

Total 0 0 0 0 150 108 253 654

1  See EC overview on page 144. 2Number of shares will be defined in March 2015. Underlying assumption here is a share price of CHF 15.50. 3 Correction needed due to adjustments of final share price at grant:

Underlying assumption was CHF 16.00. Final allocation of shares with CHF 17.766, therefore the numbers of shares are different.

ShAReS helD By MeMBeRS oF the BoARD oF DIReCtoRS

Number of shares granted

for 2014 2 

Number of shares granted

for 2013 3

Number of shares within vesting

period for 2014

Number of shares within vesting

period for 2013

Number of privately held

shares for 2014

Number of privately held

shares for 2013

Rudolf Wehrli 12 904 11 258 (correction of 12 500)

0 0 43 132 26 874

Günter von Au 9 678 8 444 (correction of 9 375)

0 0 26 732 18 288

Peter Isler 6 452 5 629 (correction of 6 250)

0 0 64 375 56 746

Peter Chen 6 452 5 629 (correction of 6 250)

0 0 12 821 12 923

Dominik Koechlin 6 452 5 629 (correction of 6 250)

0 0 23 921 18 292

Carlo G. Soave 6 452 5 629 (correction of 6 250)

0 0 27 921 22 292

Hariolf Kottmann – 1 – 1 – 1 – 1 – 1 – 1

Dolf Stockhausen 6 452 5 629 (correction of 6 250)

0 0 11 594 625 11 783 396

Konstantin Winterstein 6 452 5 629 (correction of 6 250)

0 0 6 002 861 5 985 040

Total 61 294 53 476 (correc-tion of 59 375)

0 0 17 796 388 17 923 851

141

Compensation Report

Clariant AnnuAl RepoRt 2014

Ceo CoMpeNSAtIoN*

2013Total target CHF 4.58 m

2014Total target CHF 4.1 m

29 %

39 %

32 %

BS

tCB

MS pSu

IS

MS pSu

26 %

42 %

32 %

BS

tCB

IS

PSU CHF 500 000

MS CHF 480 000

TCB, thereof IS (20 % Invest)

CHF 2 400 000 (CHF 480 000)

BS CHF 1 200 000

PSU CHF 500 000

MS CHF 400 000

TCB, thereof IS (20 % Invest)

CHF 2 000 000 (CHF 400 000)

BS CHF 1 200 000

eC CoMpeNSAtIoN*

2013Total target CHF 2.73 m

2014Total target CHF 2.25 m

36 %

36 %

28 %

BS

tCB

ISMSpSu

29 %

41 %

30 %

BS

tCB

IS

MSpSu

PSU CHF 250 000

MS CHF 280 000

TCB, thereof IS (20 % Invest)

CHF 1 400 000 (CHF 280 000)

BS CHF 800 000

PSU CHF 250 000

MS CHF 200 000

TCB, thereof IS (20 % Invest)

CHF 1 000 000 (CHF 200 000)

BS CHF 800 000

Legend:

BS = Base salary

TCB = Target Cash Bonus

IS = Investment Share

Investment (minimum 20 %) from Actual Cash

Bonus into 3 years blocked shares (Value at

Grant)

MS = Matching Shares

1:1 match of investment Shares after 3 years

vesting period (Value at Grant)

PSU = Performance Share Unit

3 years vesting period with defined performance

hurdle (Value at Grant)

*without other benefits

ReMuNeRAtIoN StRuCtuRe of the Clariant Executive Committee

The compensation for members of the Board of Directors is subject to the Swiss taxation and social security laws, with Clariant paying the employer contributions which are required. The members of the Board of Directors do not receive any lump­sum reimbursement of entertainment expenses above and beyond actual expenditure on business trips. For additional information for the Board of Direc­tors, refer to Note 12 of the Notes to the Financial Report of Clariant Ltd, on pages 217­218.

5. Compensation of members of the executive committeeThe CoC regularly reviews the level and structure of the compensa­tion packages for members of the EC. In 2013 we conducted select­ed market benchmarks regarding the chemical peers for the EC and the Board of Directors and enlarged our survey activities for all global positions around the world. In our Individualized Chemical Benchmark analysis, we focused on companies which are defined in our relevant peer group of the newly introduced Performance Share Unit (PSU) Plan (see page 137).

Key focus elements are:a) Comparison of management remuneration packages of European chemical companies with global scope b) Comparison of management remuneration of Swiss­based multi­national companies

The bonus amounts of the total compensation packages are paid out in relation to the achieved results for a particular financial year. The actual bonus amounts may vary between zero and target values (= 100 %) in the financial year in question.

Base salary and variable remuneration It is important to highlight that the Executive Committee partici­pates in the same bonus programs as the senior managers. There­ fore, they participate in the GMBP, Performance Share Unit Plan and the GSM­LTIP.

As an outcome of the benchmarking exercise, the remuneration structure of the EC was adjusted in 2013 (after a fixation of terms in 2011 and 2012) to the following general structure for 2013 and 2014. Key trigger was a shift inside the pay­mix (see chart above).

142

other benefitsThe members of the EC participate in the pension plans of the Clariant Group, notably the Clariant pension fund with an insured income of up to CHF 200 000 per annum, and the management pension fund with an insured income of up to a further CHF 642 400 per annum. The maximum insured income under the pension plans therefore stands at CHF 842 400 per annum. The CEO participates in Clariant’s pension and insurance plans. Additional pension pro­visions are accrued over time in order to match contractually grant­ed retirement plans.

Clariant’s pension plans conform with the legal framework of the occupational pension scheme (BVG). In future, the maximum contribution will be dynamically aligned with Art. 79c BVG. For members of the EC and all other Clariant employees, the insured income is defined as the base salary plus 50 % of target cash bonus.

2014 ANNuAl CoMpeNSAtIoN to MeMBeRS oF the exeCutIve CoMMIttee (FAIR MARKet vAlue, FMv) in CHF

Hariolf Kottmann Other EC members  Totals 2014

Base salary 1 200 000 2 400 000 3 600 000

Cash bonus 1 1 472 000 2 208 000 3 680 000

Share­based bonus (FMV) 1 141 409 1 712 139 2 853 548

Other benefits 2 1 563 048 1 411 275 2 974 323

Total 5 376 457 7 731 414 13 107 871

2013 ANNuAl CoMpeNSAtIoN to MeMBeRS oF the exeCutIve CoMMIttee (FAIR MARKet vAlue, FMv) in CHF

Hariolf Kottmann Other EC members  Totals 2013

Base salary 1 200 000 2 400 000 3 600 000

Cash bonus 1 766 400 3 091 200 4 857 600

Share­based bonus (FMV) 3 1 381 080 2 286 378 3 667 458

Other benefits 2 1 816 146 1 272 021 3 088 167

Total 3 6 163 626 9 049 599 15 213 225

1   Mandatory to invest 20 % of cash bonus into shares. Cash bonus displayed is already without the mandatory investments, which are included in the share­based bonus. Assumptions: share price at grant =

CHF 15,50 (not fixed yet, final share price will be fixed in April 2015 and therefore the numbers of shares can change); cash bonus payout = 92 %2  Other benefits include contributions to pension funds and accrued pension benefits using IAS 19 (68 %) and social security (32 %).3  FMV difference to Annual Report 2013 based on adjusted share price for the PSU grant (share price at booking 15.30 CHF instead of share price at grant of 13.74 CHF)

Equity­linked income components are not subject to pensionable income. The usual term insurance policies for death and disability form part of Clariant’s pension plans. The total employer contribu­tion is approximately 11 % of the insured income in the case of the Clariant pension fund, and 22 % of the insured income in the case of the Clariant management pension fund. These contributions cover both the contributions to the formation of retirement capital, and the risk components. Under IFRS the Clariant pension fund is a de­fined benefit plan. The management pension fund provides the members solely with retirement capital upon retirement, and does not incorporate pension payments.

During the year 2014, there was no personnel change within the Executive Committee.

In order to fulfill the reporting needs outlined in the Ordinance against Excessive Compensation (OaEC) we will disclose the rele­vant Fair Market Value (FMV) figures in the following audited table.

In both years there were no payments to leaving members of the Executive Committee nor were any loans or credits outstanding and or granted.

Please find on the next page the information about the actual share and option ownership of the Members of the Executive Committee.

143

Compensation Report

Clariant AnnuAl RepoRt 2014

explANAtIoN oF NuMBeRS oF ShAReS GRANteD

Hariolf Kottmann

Patrick Jany

Christian Kohlpaintner

Mathias Lütgendorf

Total

Number of investment shares1 23 742 11 871 11 871 11 871 59 355

Number of matching shares1 23 742 11 871 11 871 11 871 59 355

Number of performance share units 28 819 14 410 14 410 14 410 72 049

Total number of shares 76 303 38 152 38 152 38 152 190 759

ShAReS helD By the MeMBeRS oF the exeCutIve CoMMIttee

Number

of shares granted for 2014 1

Number

of shares granted for 20132 

Number of shares within

vesting period for 2014

Number of shares within

vesting period for 2013

Number of

privately held shares for 2014

Number of

privately held shares for 2013

Hariolf Kottmann 76 303 87 627 (correc­tion of 91 591)

212 289 205 489 444 814 521 098

Patrick Jany 38 152 48 084 (correc­tion of 50 396)

115 569 114 559 265 168 221 880

Christian Kohlpaintner 38 152 48 084 (correc­tion of 50 396)

115 569 114 559 201 307 158 019

Mathias Lütgendorf 38 152 48 084 (correc­tion of 50 396)

115 569 114 559 292 213 305 613

Total 190 759 231 879 (correc-tion of 242 779)

558 996 549 166 1 203 502 1 206 610

optIoNS helD By the MeMBeRS oF the exeCutIve CoMMIttee

Number of options

granted for 2014

Number of options

granted for 2013

Number of options within vesting period

for 2014

Number of options within vesting period

for 2013

Number of privately

held options for 2014

Number of privately

held options for 2013

Hariolf Kottmann 0 0 0 263 200 383 682 263 382

Patrick Jany 0 0 0 131 600 191 841 290 241

Christian Kohlpaintner 0 0 0 131 600 120 000 50 241

Mathias Lütgendorf 0 0 0 131 600 0 120 241

Total 0 0 0 658 000 695 523 724 105

1 Number of shares only estimated (underlying assumption CHF 15.50 per share and 92 % bonus payout), will need correction in next year’s Annual Report.2  Correction needed due to adjustments of final share price at grant: Underlying assumption was CHF 16.00 per share. Final allocation was done at CHF 17.24.

144

RepoRt oF the StAtutoRy AuDItoRto the GeNeRAl MeetING oN theReMuNeRAtIoN RepoRt 2014

We have audited pages 140 and 143 of the compensation report of Clariant Ltd for the year ended 31 December 2014.

Board of Directors’ responsibilityThe Board of Directors is responsible for the preparation and over­all fair presentation of the compensation report in accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance). The Board of Di­rectors is also responsible for designing the compensation system and defining individual compensation packages.

Auditor’s responsibilityOur responsibility is to express an opinion on the compensation re­port. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical re­quirements and plan and perform the audit to obtain reasonable as­surance about whether the compensation report complies with Swiss law and Articles 14 – 16 of the Ordinance.

An audit involves performing procedures to obtain audit evidence on the disclosures made in the compensation report with regard to compensation, loans and credits in accordance with Articles 14 – 16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material mis­statements in the compensation report, whether due to fraud or er­ror. This audit also includes evaluating the reasonableness of the methods applied to value components of compensation, as well as assessing the overall presentation of the compensation report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

opinionIn our opinion, pages 140 and 143 of the compensation report of Clariant Ltd for the year ended 31 December 2014 comply with Swiss law and Articles 14 – 16 of the Ordinance.

PricewaterhouseCoopers AG

Dr. Daniel Suter Ruth SigelAudit expert Audit expertAuditor in charge

Basel, 16 February 2015

PricewaterhouseCoopers AG, St. Jakobs­Strasse 25, Postfach, CH­4002 Basel, Switzerland,

Telephone: +41 58 792 51 00, Facsimile: +41 58 792 51 10, www.pwc.ch

PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms,

each of which is a separate and independent legal entity.

145Clariant AnnuAl RepoRt 2014

Financial RepoRt

146

CoNSolIDAteD FINANCIAl StAteMeNtS oF the ClARIANt GRoup

148 Consolidated Balance Sheets 149 Consolidated Income Statements 150 Consolidated Statements of Comprehensive Income 151 Consolidated Statements of Changes in Equity 152 Consolidated Statements of Cash Flows 153 Notes to the Consolidated Financial Statements 210 Report of the Statutory Auditor

RevIeW oF tReNDS 211 Five­Year Group Overview

FINANCIAl StAteMeNtS oF ClARIANt ltD, MutteNz

212 Clariant Ltd Balance Sheets 213 Clariant Ltd Income Statements 214 Notes to the Financial Statements of Clariant Ltd 220 Appropriation of Available Earnings 221 Report of the Statutory Auditor 222 Forward­looking Statements

147

Financial Report Consolidated FinanCial statements oF the Clariant Group

Clariant annual report 2014

148

Consolidated balanCe sheets

at 31 December 2014 and 2013 Notes 1 31.12.2014 in CHF m in %

31.12.2013 in CHF m

in %

assets

Non-current assets

Property, plant and equipment 5 2 104 2 041

Intangible assets 6 1 487 1 549

Investments in associates and joint ventures 7 635 608

Financial assets 8 44 27

Prepaid pension assets 17 18 43

Deferred tax assets 9 271 245

Total non-current assets 4 559 57.6 4 513 55.2

Current assets

Inventories 10 930 846

Trade receivables 11 985 905

Other current assets 12 385 482

Current income tax receivables 56 60

Near-cash assets 13 180 147

Cash and cash equivalents 14 748 770

Total current assets 3 284 41.5 3 210 39.3

Assets held for sale 22, 23 72 0.9 451 5.5

Total assets 7 915 100.0 8 174 100.0

equity and liabilities

Equity

Share capital 15 1 228 1 228

Treasury shares (par value) 15 – 45 – 49

Other reserves 852 881

Retained earnings 574 654

Total capital and reserves attributable to Clariant shareholders 2 609 2 714

Non-controlling interests 124 66

Total equity 2 733 34.5 2 780 34.0

Liabilities

Non-current liabilities

Financial debts 16 1 761 1 830

Deferred tax liabilities 9 72 120

Retirement benefit obligations 17 924 669

Provision for non-current liabilities 18 210 223

Total non-current liabilities 2 967 37.5 2 842 34.8

Current liabilities

Trade and other payables 19 1 147 1 227

Financial debts 20 430 589

Current income tax liabilities 313 274

Provision for current liabilities 18 315 334

Total current liabilities 2 205 27.9 2 424 29.7

Liabilities directly associated with assets held for sale 22, 23 10 0.1 128 1.5

Total liabilities 5 182 65.5 5 394 66.0

Total equity and liabilities 7 915 100.0 8 174 100.0

1 The notes form an integral part of the consolidated financial statements.

Clariant annual report 2014 149

Financial Report Consolidated FinanCial statements oF the Clariant Group

Consolidated inCome statements

for the years ended 31 December 2014 and 2013 Notes 1

2014 in CHF m

in %

2013 in CHF m

in %

Sales 21 6 116 100.0 6 076 100.0

Costs of goods sold – 4 344 – 4 332

Gross profit 1 772 29.0 1 744 28.7

Selling, general and administrative costs – 1 049 – 1 034

Research and development costs – 213 – 199

Income from associates and joint ventures 7 75 63

Gain from disposals not qualifying as discontinued operations 23 168 19

Restructuring, impairment and transaction related costs 25 – 228 – 123

Operating income 525 8.6 470 7.7

Finance income 26 14 14

Finance costs 26 – 160 – 139

Income before taxes 379 6.2 345 5.7

Taxes 9 – 144 – 22

Net result from continuing operations 235 3.8 323 5.3

Attributable to:

Shareholders of Clariant Ltd 175 306

Non-controlling interests 60 17

Net result from discontinued operations 22 – 18 – 318

Attributable to:

Shareholders of Clariant Ltd – 23 – 326

Non-controlling interests 5 8

Net income/loss 217 5

Attributable to:

Shareholders of Clariant Ltd 152 – 20

Non-controlling interests 65 25

Basic earnings per share attributable to the shareholders of Clariant Ltd (CHF/share)

Continuing operations 27 0.55 0.98

Discontinued operations 27 – 0.07 – 1.04

Total 0.48 – 0.06

Diluted earnings per share attributable to the shareholders of Clariant Ltd (CHF/share)

Continuing operations 27 0.54 0.98

Discontinued operations 27 – 0.07 – 1.04

Total 0.47 – 0.06

1 The notes form an integral part of the consolidated financial statements.

150

Consolidated statements of Comprehensive inCome

for the years ended 31 December 2014 and 2013 Notes 1

2014 in CHF m

2013 in CHF m

Net income 217 5

Other comprehensive income:

Remeasurements:

Actuarial gain / loss on retirement benefit obligations 17 – 443 51

Return on retirement benefit plan assets, excluding amount included in interest expense 17 118 77

Total items that will not be reclassified subsequently to the income statement, gross – 325 128

Deferred tax effect 9 60 – 32

Total items that will not be reclassified subsequently to the income statement, net – 265 96

Net investment hedge 28 20 – 18

Currency translation differences 72 – 160

Share of other comprehensive income of associates and joint ventures 7 – 9 – 11

Effect of the reclassification of foreign exchange differences on previously held net investments in foreign entities 3 19

Total items that will be reclassified subsequently to the income statement, gross 86 – 170

Deferred tax effect – –

Total items that will be reclassified subsequently to the income statement, net 86 – 170

Other comprehensive income for the period, net of tax – 179 – 74

Total comprehensive income for the period 38 – 69

Attributable to:

Shareholders of Clariant Ltd – 36 – 78

Non-controlling interests 74 9

Total comprehensive income for the period 38 – 69

Total comprehensive income attributable to shareholders of Clariant Ltd arising from:

Continuing operations – 17 263

Discontinued operations – 19 – 341

Total comprehensive income attributable to shareholders of Clariant Ltd – 36 – 78

1 The notes form an integral part of the consolidated financial statements.

Clariant annual report 2014 151

Financial Report Consolidated FinanCial statements oF the Clariant Group

Consolidated statements of Changes in equity in CHF m

at 31 December 2014 and 2013Other reserves

Total share

capital

Treasury shares

(par value)

Share premium reserves

Cumulative translation

reserves

Total other

reservesRetained earnings

Total attributable

to equity holders

Non- controlling

interestsTotal

equity

Balance 31 December 2012 1 094 – 59 1 647 – 668 979 566 2 580 86 2 666

Net income/loss – 20 – 20 25 5

Net investment hedge – 18 – 18 – 18 – 18

Remeasurements:

Actuarial gain/loss on retirement benefit obligation (see note 17) – 51 51 51

Return on retirement benefit plan assets, excluding amount included in interest expense (see note 17) – 77 77 77

Deferred tax on remeasurements (see note 9) – – 32 – 32 – 32

Share of other comprehensive income of associates and joint ventures (see note 7) – – 11 – 11 – 11

Effect of the reclassification of foreign exchange differences on previously held net investments in foreign entities 19 19 19 19

Currency translation differences – 144 – 144 – 144 – 16 – 160

Total comprehensive income for the period – – – – 143 – 143 65 – 78 9 – 69

Increase of share capital (see note 15) 134 150 150 284 284

Dividends to non-controlling interests – – 15 – 15

Distributions – 105 – 105 – 105 – 105

Change in non-controlling interests as a result of the disposals – – – 13 – 13

Acquisition of non-controlling interests (see note 15) – – 1 – 1 – 1 – 2

Employee share & option scheme:

Effect of employee services – 25 25 25

Treasury share transactions 10 – – 1 9 9

Balance 31 December 2013 1 228 – 49 1 692 – 811 881 654 2 714 66 2 780

Net income 152 152 65 217

Net investment hedge 20 20 20 20

Remeasurements:

Actuarial gain/loss on retirement benefit obligation (see note 17) – – 443 – 443 – 443

Return on retirement benefit plan assets, excluding amount included in interest expense (see note 17) – 118 118 118

Deferred tax on remeasurements (see note 9) – 60 60 60

Share of other comprehensive income of associates and joint ventures (see note 7) – – 9 – 9 – 9

Effect of the reclassification of foreign exchange differences on previously held net investments in foreign entities 3 3 3 3

Currency translation differences 63 63 63 9 72

Total comprehensive income for the period – – – 86 86 – 122 – 36 74 38

Dividends to non-controlling interests – – – 24 – 24

Distributions – 115 – 115 – 115 – 115

Disposal of non-controlling interests (see note 15) – 17 17 8 25

Employee share & option scheme:

Effect of employee services – 17 17 17

Treasury share transactions 4 – 8 12 12

Balance 31 December 2014 1 228 – 45 1 577 – 725 852 574 2 609 124 2 733

The notes form an integral part of the consolidated financial statements.

152

Consolidated statements of Cash flows

for the years ended 31 December 2014 and 2013 Notes 1

2014 in CHF m

2013 in CHF m

Net income 217 5

Adjustment for:

Depreciation of property, plant and equipment (PPE) 5 221 220

Impairment and reversal of impairment 25 116 121

Amortization of intangible assets 6 61 64

Impairment of working capital 59 64

Income from associates and joint ventures 7 – 75 – 64

Tax expense 9 152 4

Net financial income and costs 123 150

Gain from disposals not qualifying as discontinued operations 23 – 168 – 19

Loss on disposals of discontinued operations 22 15 307

Other non-cash items 9 – 28

Total reversal of non-cash items 513 819

Dividends received from associates and joint ventures 7 50 30

Income taxes paid – 108 – 126

Payments for restructuring 25 – 89 – 133

Cash flow before changes in net working capital and provisions 583 595

Changes in inventories – 116 – 111

Changes in trade receivables – 73 – 163

Changes in trade payables – 76 103

Changes in other current assets and liabilities – 1 – 168

Changes in provisions (excluding payments for restructuring) 17 45

Cash flow from operating activities 334 301

Investments in PPE 5 – 310 – 292

Investments in financial assets, associates and joint ventures – 2 – 7

Investments in intangible assets 6 – 13 – 27

Changes in current financial assets and near-cash assets – 28 126

Sale of PPE and intangible assets 181 24

Acquisition of companies, businesses and participations 24 – 41 – 18

Proceeds from disposals of discontinued operations 22 132 293

Proceeds from disposal of activities not qualifying as discontinued operations 23 112 1

Cash flow from investing activities 31 100

Proceeds from the disposal of non-controlling interests 15 25 –

Distribution from the reserves to the shareholders of Clariant Ltd 15 – 115 – 105

Acquisition of non-controlling interests 15 – – 2

Purchase of treasury shares – 20 – 17

Sale of treasury shares 28 32

Proceeds from financial debts 265 188

Repayments of financial debts – 471 – 913

Dividends paid to non-controlling interests – 24 – 15

Interest paid – 105 – 157

Interest received 14 15

Cash flow from financing activities – 403 – 974

Currency translation effect on cash and cash equivalents 16 – 29

Net change in cash and cash equivalents – 22 – 602

Cash and cash equivalents at the beginning of the period 14 770 1 372

Cash and cash equivalents at the end of the period 14 748 770

1 The notes form an integral part of the consolidated financial statements.

Clariant annual report 2014 153

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

notes to the Consolidated finanCial statements

1. accounting policies

1.01 – General information Clariant Ltd (the »Company«) and its consolidated subsidiaries (to- gether the »Group«) are a global leader in the field of specialty chemicals. The Group develops, manufactures, distributes and sells a broad range of specialty chemicals which play a key role in its customers’ manufacturing and treatment processes or add value to their end products. The Group has manufacturing plants around the world and sells mainly in countries within Europe, the Amer icas and Asia.

Clariant is a limited liability company incorporated and domiciled in Switzerland. The address of its registered office is Rothausstrasse 61, CH-4132 Muttenz, Switzerland. The Company is listed on the SIX Swiss Exchange.

The Board of Directors approved the consolidated financial state-ments for issue on 16 February 2015. They will be subject to approval by the Annual General Meeting of Shareholders sched-uled for 31 March 2015.

1.02 – Basis of preparationThe consolidated financial statements of the Clariant Group have been prepared in accordance with the International Financial Report-ing Standards (IFRS) and the IFRIC interpretations applicable to companies reporting under IFRS, and with the significant account-ing policies set out below.

The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of cer-tain financial assets and liabilities (including derivative instru-ments) at fair value through profit or loss.

The preparation of financial statements in conformity with the IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. These estimates and judgment affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of income and expenses during the reporting period. Although these are based on management’s best knowledge of current events and cir-cumstances, actual outcomes may ultimately differ from those estimates. The areas involving a higher degree of judgment or com-plexity, or areas where estimates are significant to the consolidated financial statements, are disclosed under note 4.

1.03 – Standards, interpretations and amendments effective in 2014The following new standards, interpretations and amendments have been adopted by Clariant starting on 1 January 2014. However, none of them had a significant impact on the Group’s consolidated financial statements:

Amendment to IAS 32, Financial instruments: Presentation, on off-setting financial assets and liabilities. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally enforceable for all counterparties in the normal course of business, as well as in the event of default, insol-vency or bankruptcy. The amendment also considers settlement mechanisms. This amendment did not have a material impact on the Group financial statements.

IFRIC 21, Levies, sets out the accounting for an obligation to pay a levy if that liability is within the scope of IAS 37, Provisions. The interpretation addresses what the obligation event is that gives rise to pay a levy and when a liability should be recognized. The Group is currently not subject to significant levies so the impact on the Group financial statements is not material.

Amendment to IAS 36, Impairment of assets, addresses the disclo-sure of information about the recoverable amount of impaired assets if that amount is valued at fair value less costs of disposal. This amendment, effective as of 1 January 2014 had been early adopted by Clariant in 2013.

Other standards, amendments and interpretations which are effec-tive for the financial year starting 1 January 2014 are not material to the Group.

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1.04 – Standards, interpretations and amendments not yet effectiveThe following standards, interpretations and amendments already issued but not yet effective will be adopted as they become effective.

IFRS 9, Financial Instruments, addresses the classification, mea-surement and recognition of financial assets and financial liabili-ties. The complete version of IFRS 9 was issued in July 2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. The standard is effective for accounting periods beginning on or after 1 January 2018. The Group is yet to assess the full impact of IFRS 9.

IFRS 15, Revenue from contracts with customers, deals with reve-nue recognition and establishes principles for disclosing useful information about revenue and cash flows arising from these con-tracts. This standard replaces IAS 18, Revenue, and IAS 11, Con-struction Contracts, and related interpretations. It is effective for accounting periods beginning on or after 1 January 2017. The Group is in the process of assessing the impact of IFRS 15 on its financial statements.

There are no other already issued standards, interpretations or amendments that are not yet effective that would be expected to have a material impact for the Group.

1.05 – Scope of consolidation · Subsidiaries: Subsidiaries are those entities over which the

Group has control. This is the case when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and they are deconsolidated from the date the control ceases.

· Associates: Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20 % and 50 % of the voting rights. Investments in associates are accounted for using the equity method.

· Joint arrangements: The Group applies IFRS 11, Joint Arrangements, to all joint arrangements. Under IFRS 11, invest-ments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. Clariant has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method.

All associates and joint ventures apply the same accounting princi-ples as the Group.

1.06 – Principles and methods of consolidationThe annual closing date of the individual financial statements is 31 December. The consolidated financial statements are prepared applying uniform presentation and valuation principles.

The results of non-controlling interests are separately disclosed in the income statement and the balance sheet.

1.07 – Revenue recognitionSales of goods, interest income and dividends are recognized in line with the requirements of IAS 18, Revenue.

1.08 – Exchange rate differencesExchange rate differences are recognized in line with the require-ments of IAS 21, The Effect of Changes in Foreign Exchange Rates. The consolidated financial statements are presented in Swiss francs, which is the functional and presentation currency of the parent company.

Income statements and cash flow statements of foreign entities are translated into the Group’s presentation currency at sales weighted average exchange rates for the year and their balance sheets are trans-lated at the exchange rates prevailing on 31 December.

1.09 – Property, plant and equipmentProperty, plant and equipment, except the ones pertaining to mining activities, are valued at historical acquisition or production costs and depreciated on a straight-line basis to the income statement, using the following estimated useful lives in accordance with the Group guidelines: · Buildings 15 to 40 years · Machinery and equipment 10 to 16 years · Furniture, vehicles, computer hardware 3 to 10 years · Land is not depreciated

Property, plant and equipment pertaining to mining activities are valued at historical costs and depreciated over their useful lives to the income statement using the units of production method.

When the entity has a present legal or constructive obligation to dismantle an item of property, plant and equipment or restore a site, its initial costs includes an estimate of the costs of dismantling and removing the item and restoring the site on which it is located. A corresponding provision is recorded for the amount of the asset component.

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Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Financing costs directly associated with the acquisition, construction or production of qualifying property, plant and equipment are cap-italized as a part of the costs of these assets.

1.10 – Intangible assetsGoodwill is recognized as per the requirements of IFRS 3, Business Combinations, IAS 38, Intangible Assets and IAS 28, Investment in Associates and Joint Ventures. Goodwill is not amortized, but tested annually for impairment as required by IAS 36, Impairment of Assets.

Trademarks and licenses are capitalized at historical costs and amortized on a straight-line basis to the income statement over their estimated useful lives, with a maximum of ten years.

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. They are amortized on a straight-line basis to the income statement over their estimated useful lives (three to five years). Costs directly associated with the production of identifiable and unique software products controlled by the Group, that will probably generate eco-nomic benefits beyond one year, are recognized as intangible assets. Direct costs include software development costs, personnel costs and advisory costs directly related to the software development and an appro priate portion of the relevant overheads. Costs associated with developing and maintaining common software programs are recognized as an expense when incurred.

Intangibles acquired in a business combination with the exception of mining rights are amortized using a straight-line method over their remaining useful lives as follows: · Technology 3 to 15 years · Customer relationships 12 to 20 years · Tradenames 10 years · Order backlog 2 years

Mining rights are depreciated over their useful lives using the units of production method.

On 1 June 2007, a European Union regulation on chemicals and their safe use came into effect. It deals with the Registration, Evalu-ation, Authorization and Restriction of Chemical Substances (REACH). REACH applies to all substances manufactured, placed

on the market and used in the European Union, either on their own, in mixtures or in products. REACH requires the registration of certain substances, with annual volumes exceeding a consumption of 1 000 metric tons, by 2010 and various other substances depend - ing on their category by 2018. As a company active in the chemical industry, Clariant has incurred costs in connection with REACH. Due to their nature, these costs are considered within the context of IAS 38, Intangible Assets, and those qualifying for capitalization are reported as intangible assets. As the initial two phases of the registration were completed in 2010 and 2013 respectively, the cor-responding costs capitalized as intangible assets are amortized since 2011 for the first phase and since January 2014 for the second phase on a straight-line basis to the income statement over their estimated useful lives of twelve years.

1.11 – Impairment of assetsImpairment of assets are recognized and disclosed as per the requirements of IAS 36, Impairment of Assets.

1.12 – Non-current assets and disposal groups held for saleNon-current assets and disposal groups are classified as held for sale when their carrying amount is to be recovered through a sale transaction and a sale is considered highly probable. They are stated at the lower of the carrying amount and fair value less costs of disposal, as per the requirements of IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.

1.13 – InventoriesPurchased goods are valued at acquisition costs, while self-ma nufac-tured products are valued at manufacturing costs including related production overhead costs. Inventory held at the balance sheet date is primarily valued at standard costs, which approxi-mates actual costs on a weighted average basis. This valuation method is also used for valuing the costs of goods sold in the income state-ment. Adjustments are made for inventories with a lower net realizable value. Unsaleable inventories are fully written off. These adjustments are recorded as valuation allowances, which are deducted directly from the inventory value in the balance sheet. The allowances are reversed when the inventories concerned are either sold or destroyed and as a consequence are removed from the balance sheet.

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1.14 – Trade receivablesTrade receivables are recognized in accordance with IAS 39, Finan-cial Instruments: Recognition and Measurement.

1.15 – Cash and cash equivalentsCash and cash equivalents comprise cash in hand, deposits and calls with banks, as well as short-term investment instruments with an initial lifetime of 90 days or less. Bank overdrafts are shown within financial debt in current liabilities on the balance sheet.

1.16 – Derivative financial instruments and hedgingDerivative financial instruments and hedges are recognized in accordance with IAS 39, Financial Instruments: Recognition and Measurement.

1.17 – LeasingThe Group classifies leases into finance and operating leases and recognizes them based on the requirements of IAS 17, Leases.

1.18 – Current income taxThe taxable profits (losses) of Group companies are calculated in accordance with the rules established by the taxation authorities of the countries in which they operate. They are the basis for the determination of income tax payments (reimbursements) for the reporting period in accordance with the prevailing local income tax rates. Current income tax is accounted for in accordance with the requirements of IAS 12, Income Taxes.

1.19 – Deferred income taxDeferred income tax is calculated using the comprehensive liability method as per the requirements of IAS 12, Income Taxes.

No deferred income tax is calculated for the temporary differences on investments in Group companies, provided that the investor (parent company) is able to control the timing of the reversal of the temporary differences and it is probable that the temporary differ-ences will not reverse in the foreseeable future.

1.20 – Employee benefitsGroup companies operate various post-employment schemes, in-cluding both defined benefit and defined contribution pension plans, post-employment health care plans and other benefits. Obli-gations for employee benefits are determined and recorded in line with the requirements of the revised IAS 19, Employee Benefits.

Defined contribution plans: Contributions to defined contribution plans are recorded in the income statement in the period to which they relate.

Defined benefit plans: For defined benefit plans, the amount to be recognized in the provision is determined using the projected unit credit method. Independent actuaries perform the actuarial valuations for the defined benefit plans on a regular basis. For the larger plans these valuations take place annually. For the smaller ones valuations are performed at least every three years, with systematic roll-forwards in the years in between.

The liability recognized in the balance sheet in respect of the defined benefit pension plans is the present value of the obligation at the end of the reporting period less the fair value of plan assets.

Actuarial gains and losses are charged or credited to equity in other comprehensive income in the period in which they arise. Past service costs are recognized immediately in the income statement.

Some Group companies provide post-retirement health care benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits are accrued over the period of employment using an accounting method similar to that for the defined benefit pension plans. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.

The charges for defined benefit plans, defined contribution plans and termination benefits are included in personnel expenses and reported in the income statement under the corresponding func-tions of the related employees or in expenses for restructuring and impairment.

Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) which do not fall wholly due within twelve months after the end of the period in which the employees render the related service. These include long-term compensated absences such as long-service or sabbatical leave and jubilee or other long-service benefits. The accounting policy for other long-term employee benefits is equal to that for post-employment benefits, with the exception that actuarial gains and losses are recognized immediately in the income statement.

Short-term employee benefits are employee benefits (other than termination benefits) which fall due wholly within twelve months after the end of the period in which the employees render the related service.

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Financial Report Notes to the coNsolidated fiNaNcial statemeNts

1.21 – ProvisionsProvisions are recognized as per the requirements of IAS 37, Provi-sions, Contingent Liabilities and Contingent Assets.

1.22 – Research and developmentDevelopment expenses are capitalized to the extent that the recog-nition criteria set up by IAS 38, Intangible Assets, are met.

Considering the uncertainties inherent to the development of new key products, Clariant does not capitalize the associated develop-ment costs. Experience has proven, that the structure of research and development in the industries that Clariant engages in, makes it difficult to demonstrate how single intangible assets will generate probable future economic benefits.

Laboratory buildings and equipment included in property, plant and equipment are depreciated over their estimated useful lives.

1.23 – Segment reportingSegment information is presented in the same manner as in the internal reporting on behalf of the chief operating decision maker. The chief operating decision maker, responsible for strategic decisions, for the assessment of the segments’ performance and for the alloca-tion of resources to the segments, is the Executive Committee.

As of 1 January 2014, Clariant divested the Detergents & Interme-diates business to International Chemical Investors Group (ICIG).

As of 30 April 2014, Clariant divested the Leather Services busi-ness to the Dutch group Stahl.

As of 30 September 2013, Clariant divested the Business Units Textile Chemicals, Paper Specialties and Emulsions to SK Capital.

For these reasons, since end of 2012, all these business units are reported as discontinued operations in the financial report.

On 29 October 2014, Clariant signed an agreement to divest the Energy Storage activities (part of the segment Catalysis & Energy) to Johnson Matthey. The assets and liabilities pertaining to that activity were reclassified to held for sale during the 4th quarter of the year.

Clariant has seven Business Units (BU) for external reporting purposes, grouped into four Business Areas (BA) (reportable seg-ments), in accordance with IFRS 8, Operating Segments: · Care Chemicals (BU ICS) · Catalysis & Energy (BU Catalysts, Energy Storage activities

intended to be sold in 2015) · Natural Resources (BU Oil & Mining Services, BU Functional

Minerals) · Plastics & Coatings (BU Additives, BU Masterbatches,

BU Pigments)

These four business areas have full responsibility for their operat-ing results. The business areas can be described as follows:

The Business Area Care Chemicals comprises the Industrial & Consumer Specialties (ICS) BU, food additives as well as the future Industrial Biotechnology business. It demonstrates a clear focus on highly attractive, high-margin, and low-cyclicality segments. The BA follows a lifestyle-driven megatrend and strengthens Clariant’s image of being a supplier of green and sustainable products.

The Business Area Catalysis & Energy develops, manufactures, and sells a wide range of catalyst products for the chemical, fuel and automotive industries and produces materials for electric vehicles and energy storage systems. The BA is the smallest within Clariant but is highly profitable with low cyclicality. These Energy storage activities related activities will be divested in 2015.

The Business Area Natural Resources comprising BUs Oil & Min-ing Services and Functional Minerals, is characterized by high growth and low cyclicality as well as strong megatrend orientation. Main drivers are the rising demand for high-value added specialty chemicals used in the oil, mining, food and packaging industries, and increased consumption of oil, gas and base metals, driven by the fast-growing economies. The Business Area Plastics & Coatings comprises the BUs Additives, Pigments and Masterbatches. The BA has a large exposure to Europe and, as such, is subject to lower growth and to economic cycles. Main drivers are the increasing use of plastics with tailor-made properties in applications such as mobile phones, cars, construction, as well as the rising consumption of plastics in line with increasing wealth.

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Corporate: Income and expenses relating to Corporate include the costs of the Corporate headquarters and those of corporate coor-dination functions in major countries. In addition, Corporate includes certain items of income and expenses, which are not directly attributable to specific business areas.

The Group’s business areas are segments offering different prod-ucts. These segments are managed separately because they manu-facture, distribute and sell distinct products, which require differ - ing technologies and marketing strategies. These products are also subject to risks and returns that are different from those of other segments.

Segment revenue is revenue reported in the Group’s income state-ment directly attributable to a segment and the relevant portion of the company income that can be allocated on a reasonable basis to a segment, whether from sales to external customers or from transactions with other segments.

Segment expense is an expense resulting from the operating activi-ties of a segment directly attributable to the segment and the relevant portion of an expense that can be allocated on a reasonable basis, including expenses relating to sales to external cus tomers and expenses relating to transactions with other segments.

Inter-segment transactions are entered into under the normal circumstances and terms and conditions that would also be available to unrelated third parties.

The segment net assets consist primarily of property, plant and equipment, intangible assets, inventories and receivables less seg-ment liabilities. Usually, no allocation of Corporate items is made to the segments. Corporate assets and liabilities principally consist of net liquidity (cash, cash equivalents and other current financial assets less financial debts) and deferred and current taxes.

The Executive Committee assesses the performance of the operat-ing segments based on income statement parameters like third-party sales, EBITDA, and operating result. Interest income, interest expense and taxes are not allocated to the segments. The return on the capital invested in each segment is measured by the Return on Invested Capital (ROIC).

1.24 – Share capital and other reservesAll issued shares are ordinary shares and as such are classified as equity. Incremental costs, directly attributable to the issue of new shares or options, are shown in equity as a deduction, net of tax, from the proceeds.

Written put options, where Clariant Ltd shares are the underlying, are reported as obligations to purchase Clariant Ltd shares if the number of shares is fixed and physical settlement for a fixed amount of cash is required, in case the option is exercised. At inception the obligation is recorded at the present value of the settlement amount of the option. A corresponding effect is recog-nized in shareholders’ equity and reported as equity classified as an obligation to purchase Clariant Ltd shares.

The liability is measured subsequently at amortized costs using the effective interest method. Upon settlement of such written put options, the liability is extinguished and the charge to equity is re-classified to the treasury shares.

Clariant Ltd shares, subject to such put options, are not considered to be outstanding for the purpose of basic earnings per share calculations, but are considered for the dilutive earnings per share calculations to the extent that they are dilutive.

Other reserves comprise the following items: · Share premium: The share premium comprises the excess price

paid over the par value of the share at the time of issuance of the share capital.

· Cumulative translation reserves: The translation reserves comprise the foreign exchange differences arising on the trans-lation of the financial statements of the foreign subsidiaries stated in a currency other than the Group’s functional currency. In addition, the cumulative translation reserves comprise the foreign exchange differences arising on the translation of financial liabilities denominated in a currency other than the functional currency of the parent company Clariant Ltd, which are at the same time designated as a hedge of a net investment in a foreign entity.

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Financial Report Notes to the coNsolidated fiNaNcial statemeNts

1.25 – Treasury sharesTreasury shares are deducted from equity at their par value of CHF 3.70 per share. Differences between this amount and the amount paid for acquiring, or received for disposing of treasury shares are recorded in retained earnings.

1.26 – Financial debtFinancial debt is recognized based on the requirements of IAS 39, Financial Instruments: Recognition and Measurement.

1.27 – Financial assetsFinancial assets are classified, recognized, measured and, if neces-sary, impaired based on the requirements of IAS 39, Financial Instruments: Recognition and Measurement. Purchases and sales of financial assets are recognized on settlement date, which is the date on which the Group receives or delivers the asset.

1.28 – Business combinationsThe Group applies the acquisition method to account for business combinations in accordance with IFRS 3, Business Combinations, and recognises any non-controlling interest in the acquiree at fair value (full goodwill method). Acquisition-related costs are expensed as incurred.

2. enterprise risk management identification, assessment and managementUnder the Group Risk Management Policy, based on the risk man-agement standard of the Institute of Risk Managers, a tool is used to prepare risk assessments every year with quarterly updates by Business Units, Business Services and Regions assessing threats and opportunities that will impact the objectives set for Clariant overall. These objectives are a result of the overall strategy of the company as set by the Board of Directors (BoD) and implemented by the Executive Committee (EC).

The Investment Sub-Committee of the Executive Committee is responsible for monitoring the risk management assessments for relevance and consistency.

Objective setting is finalized during the last quarter of the year. These objectives together with the threats and opportunities to them are subject to scrutiny by the Executive Committee (EC) during meetings with each Business Unit (BU). Also reviewed and discussed are the measures proposed to maximize opportunities and reduce or contain threats.

The Group and the regions are also required to make risk assess-ments on the same criteria. All BUs, functions and business services are required to report significant changes to existing identified risks and new threats and opportunities as they arise.

Risk Registers are maintained using financial, operational, reputa-tional and likelihood assessments to score and rank all identified risks. The assessment also addresses the measures in place to man-age the risk identified with dates for completion of the measures. Effectiveness of the measures is also assessed.

Threats and opportunities have been identified, quantified and delegated to responsible named individuals who are required to deliver effective risk management. The nature of the risk classifica-tion requires different skills to be applied to risk management. The assessments are shared between the different BUs, services and indi viduals and subject to reassessment on a quarterly basis.

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Consolidated risk assessment is presented to the Audit Committee and the Board of Directors. There is a process for accelerated reporting of new or changed risks. Summaries of BUs, Regions and Services risk assessments are shared within Clariant to deliver the Group summary to all key senior managers.

To support functional responsibility, certain functions have access to risk assessments to support them in their roles. Examples are Environmental Safety & Health Affairs (ESHA) to identify key sites for their property risk survey programme, internal audit and Group procurement.

The consolidated risk assessment is benchmarked against published surveys dealing with risk management. Surveys that are industry specific, business-wide and with broad economic coverage are also included in the benchmarking process.

Examples of identified risks included in the Risk Register:

2.1 – Regulation & Compliance: Environmental and product risksClariant is subject to many rules and regulations as well as compli-ance standards. These include chemical industry, country, govern-ment and customer requirements as well as the European Union’s (EU) Regulations on Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH). Group Responsible Care is responsible for the management of this risk. Certain specific tasks are delegated to HR, Legal, ESHA and Logistics functions.

2.2 – Site and location This includes sites, plant and equipment that are important for the production of Clariant products for sale to customers. Also ad-dressed are country and culture issues that could create threats and opportunities to business objectives. The objective is to maintain high-quality production facilities in key locations. Risk man agement is delegated to ESHA and Regional Services.

2.3 – Competitor activityA number of identified risks include evaluating the merger and acqui-sition activity that could affect the nature and extent of competi-tion. Clariant is a leading participant in its industrial sectors and each sector is monitored to identify changes and consider and plan to deal with the consequences of changes to customers and competitors.

3. financial risk management

3.1 – Financial risk factorsThe Group’s activities expose it to a variety of financial risks: mar-ket risk (including foreign exchange risk, interest rate risk and price risk), credit risk, liquidity risk, counterparty risk, (re-)financ-ing and funding risk, and also settlement risk. The Group’s overall risk management program focuses on the unpredictability of finan-cial markets and seeks to reduce potential adverse effects on the Group’s financial performance at reasonable hedging costs. The Group uses derivative financial instruments, non-derivative financial instruments and operating strategies to hedge certain risks.

Financial risk management is carried out by the central treasury department (Corporate Treasury) under policies approved by the Executive Committee and the Board of Directors. Corporate Treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units and functions. Written principles for the management of overall foreign exchange risk, credit risk, for the use of derivative financial instruments, non-derivative financial instruments and investing excess liquidity (counterparty risk) are in place.

Market riskForeign exchange risk · Exposure to foreign exchange risk: The Group operates inter-

nationally and is exposed to foreign exchange risks arising from various currency exposures, primarily with respect to the euro and the US-dollar and to some extent the currencies of emerging countries. Foreign exchange risks arise from future commercial transactions, recognized assets and liabilities and net invest-ments in foreign operations, when they are denominated in a cur-rency that is not the respective subsidiary’s functional currency.

· Foreign exchange risk management: To manage the foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use spot transactions, FX forward contracts, FX options and FX swaps according to the Group’s foreign exchange risk policy. Corporate Treasury is responsible, in close co-ordination with the Group’s operating units, for managing the net position in each foreign currency and for putting in place the appropriate hedging actions.

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Financial Report Notes to the coNsolidated fiNaNcial statemeNts

The Group’s foreign exchange risk management policy is to selec-tively hedge net transaction exposures in major foreign currencies.

Currency exposures arising from the net assets of the Group’s foreign operations are managed primarily through borrowings denominated in the relevant foreign currency.

Detailed information regarding foreign exchange management is provided in note 28.

· Foreign exchange risk sensitivity: The estimated percentage change of the following foreign exchange rates used in this calcu-lation is based on the foreign exchange rate volatility for a term of 360 days in the future observed at 31 December 2014.

At 31 December 2014, if the euro had strengthened / weakened by 4 % (2013: 5 %) against the Swiss franc with all other variables held constant, pre-tax profit for the year would have been CHF 11 million higher / lower (2013: CHF 16 million), mainly as a result of foreign exchange gains / losses on translation of the euro-denominated financing, cash and cash equivalents, intra-group financing and trade receivables from third parties. Equity would have been CHF 32 million lower / higher (2013: CHF 54 million), arising mainly from foreign exchange gains/losses on translation of the euro-denominated hedging instruments.

At 31 December 2014, if the US-dollar had strengthened / weak-ened by 7 % (2013: 8 %) against the Swiss franc with all other variables held constant, pre-tax profit for the year would have been CHF 9 million higher / lower (2013: CHF 12 million) mainly as a result of foreign exchange gains / losses on translation of US- dollar denominated cash and cash equivalents and trade receivables.

Interest rate risk · Exposure to interest rate risk: Financial debt issued at variable

rates and cash and cash equivalents expose the Group to cash-flow interest rate risk; the net exposure as per 31 December 2014 was not significant. Financial debt issued at fixed rates does not expose the Group to fair value interest rate risk because it is recorded at amortized costs. At the end of 2014, 100 % of the net financial debt was at fixed rates (2013: 100 %).

· Interest rate risk management: It is the Group’s policy to man-age the costs of interest using fixed and variable rate debt and interest-related derivatives. Corporate Treasury monitors the net debt fix-to-float mix on an ongoing basis.

· Interest rate risk sensitivity: To calculate the impact of a potential interest rate shift on profit and loss, a weighted average interest rate change was determined, based on the terms of the financial debt issued at variable rates, fix term deposits and the movements of the corresponding interest rates (interest rates comparison between the end of 2014 and end of 2013).

At 31 December 2014, if the euro interest rates on net current finan-cial debt issued at variable interest rates had been 77 basis points higher / lower with all other variables held constant, pre-tax profit for the year would have been CHF 0.1 million lower / higher (2013: CHF 0.3 million for a euro interest rate shift of 6 basis points).

Other price riskWith regard to the financial statements as per 31 December 2014 and 2013, the Group was not exposed to other price risks in the sense of IFRS 7, Financial Instruments: Disclosures.

Credit risk · Exposures to credit risk: Credit risk arises from deposits of

cash and cash equivalents, from entering into derivative financial instruments and from deposits with banks and financial institu-tions, as well as from credit exposures to wholesale and retail customers, including outstanding re ceiv ables and committed trans-actions with suppli ers. Customer credit risk exposure is triggered by customer default risk and country risk. As per 31 December 2014, the Group had a diversified portfolio with more than 44 000 active credit accounts (2013: 56 000), with no significant concen-tration neither due to size of customers nor due to country risk.

· Credit risk management: The Group has a Group credit risk policy in place to ensure that sales are made to customers only after an appropriate credit risk rating and credit line allocation process. Procedures are standardized within a corporate customer credit risk policy and supported by the IT system with respective credit management tools. Credit lines are partially backed by credit risk insurance.

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Ageing balance of trade receivables – continuing operations 31.12.2014 31.12.2013 

Not due yet 90 % 87 %

Total overdue 10 % 13 %

– less than 30 days 9 % 11 %

– more than 30 days 1 % 2 %

Net trade receivables per Group internal risk category – continuing operations 31.12.2014 31.12.2013 

A – low credit risk 28 % 24 %

B – low to medium credit risk 33 % 35 %

C – medium to above-average risk 29 % 29 %

D – high credit risk 9 % 10 %

N – customers awaiting rating  1 % 2 %

Financial instruments contain an element of risk that the coun ter-party may be unable to either issue securities or to fulfill the settlement terms of a contract. Clariant therefore – whenever pos-sible – only cooperates with counterparties or issuers that are at least »A-«- rated when it comes to enter into deposits with such counterparties. The cumulative exposure to these counterparties is constantly monitored by Corporate Treasury, therefore there is no expectation of a material loss due to counterparty risk in the future.

The Group maintains a large cash pooling structure with a leading European bank, over which most European subsidiaries execute their cash transactions denominated in euro. As a result of this cash pool the Group at certain times has substantial current financial assets and at other times substantial current financial liabilities.

In view of the bank being rated »A+« (2013: »A+«) by the most important rating agencies, Clariant does not consider this to pose any particular counterparty risk.

At the balance sheet date 72 % (2013: 72 %) of the total cash and cash equivalents and near cash assets were held with six banks, each with a position between CHF 58 and 214 million (2013: between CHF 45 and 235 million). All of these banks are rated »A« (2013: »A-«) and better.

The table below shows in percent of total cash and cash equivalents the share deposited with each of the three major counterparties at the balance sheet date (excluding the bank managing the euro cash pool):

Counterparty Rating 31.12.2014

Bank A A 20 %

Bank B A+ 8 %

Bank C A 8 %

Counterparty Rating 31.12.2013

Bank 1 A+ 20 %

Bank 2 A- 9 %

Bank 3 A+ 7 %

Liquidity risk · Liquidity risk management: Cash flow forecasting is performed

in the subsidiaries of the Group and in aggregate by Corporate Treasury. Corporate Treasury monitors the forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet its operational needs while maintaining sufficient head-room on its undrawn borrowing facilities. At all times the Group aims to meet the requirements set by the covenants of any of its borrowing facilities. Corporate Management therefore takes into consideration the Group’s debt financing plans and financ-ing options. At the balance sheet date, there are no covenants.

Cash which is not needed in the operating activities of the Group is invested in short-term money market deposits or marketable securities, if an interest advantage compared with the normal bank account interest is applicable. At 31 December 2014, the Group held money market funds of CHF 457 million (2013: CHF 355 mil-lion), thereof money market funds of CHF 180 million with an initial tenor of more than 90 days (2013: CHF 147 million).

The following table analyzes the maturity profile of the Group’s financial liabilities. The amounts disclosed are the contractual undiscounted cash flows and do therefore not reconcile with the financial liabilities presented in the consolidated balance sheet.

Clariant annual report 2014 163

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

At 31 December 2014CHF m Less than

1 year

Between 1 and 2

years

Between 2 and 5

yearsOver

5 years

Borrowings 429 165 1 249 347

Interest on borrowings 75 69 107 36

Finance lease liabilities 2 2 4 22

Trade and other payables 1 147 – – –

Derivative financial instruments 2 – – –

At 31 December 2013CHF m Less than

1 year

Between 1 and 2

years

Between 2 and 5

yearsOver

5 years

Borrowings 585 218 1142 470

Interest on borrowings 80 71 143 22

Finance lease liabilities 2 2 4 23

Trade and other payables 1227 – – –

Derivative financial instruments 10 – – –

The Group covers its liabilities out of operating cash flow gener-ated, liquidity reserves in form of cash and cash equivalents including money market deposits (31 December 2014: CHF 928 million vs. 31 December 2013: CHF 917 million), uncommitted open cash pool limits and bank credit lines of Corporate Treasury (31 December 2014: CHF 187 million vs. 31 December 2013: CHF 166 million), addi-tional uncommitted net working capital facilities and through issu-ance of capital market instruments.

3.2 – Fair value measurementIFRS 13, Fair Value Measurement, requires the disclosure of fair value measurements for financial instruments that are measured at fair value in the balance sheet in accordance with the fair value mea-surement hierarchy.

The fair value hierarchies are defined as follows:

· Level 1: Quoted prices (unadjusted) in active markets for identi-cal assets or liabilities.

· Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

· Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

As per 31 December 2014, all derivative financial instruments held are classified as »Level 2«.

Valuation methods As per 31 December 2014, the open derivative financial instruments held were valued using the following valuation methods:

Forward exchange rate contracts: The valuation of forward exchange rate contracts are based on the discounted cash flow model, using observable inputs as interest curves and spot rates.

Exchange rate Options: FX Options are valued based on a Black-Scholes model, using major observable inputs as volatility and exer-cise prices.

The financial instruments measured at fair value through profit or loss relate to derivatives of level 2 only for 2014 and 2013 (see note 28). There were no transfers between the levels.

164

3.3 – Capital risk managementThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for the shareholders and benefits for other stakeholders and to maintain a capital structure suitable to optimize the cost of capital. This includes aspects of the credit rating.

In order to maintain or adjust the capital structure, the Group may adjust the amount of pay-outs to the shareholders, return capital to the shareholders, issue new shares, or sell assets to reduce debt.

The Group monitors capital on the basis of invested capital as part of the return on invested capital concept. Invested capital is calcu-lated as the sum of total equity as reported in the consolidated balance sheet plus current and non-current financial liabilities as reported in the consolidated balance sheet plus estimated liabilities from operating leases, plus estimated cash needed for operating purposes, less cash and cash equivalents and near-cash assets not needed for operating purposes.

Invested capital for the Group was as follows on 31 December 2014 and 2013 respectively:

CHF m 2014 2013

Total equity 2 733 2 780

Total current and non-currentfinancial liabilities 2 191 2 419

Estimated operating lease liabilities 412 417

Less cash and cash equivalents and near cash assets * –928 – 917

Cash needed for operating purposes 122 122

Invested capital 4 530 4 821

** Near-cash assets represent deposits over 90 days.

At the end of 2014, Clariant considers the invested capital to be adequate.

4. Critical accounting estimates and judgmentsEstimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and takes assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and as sump-tions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

4.1 – Estimated impairment of goodwill and property, plant and equipmentThe Group tests annually whether goodwill has suffered any im-pairment in accordance with the requirements of IAS 36, Impair- ment of Assets. The recoverable amounts of all cash generating units have been determined based on value-in-use calculations.

The recoverable value of property, plant and equipment is also assessed applying value-in-use calculations. These calculations require the use of estimates, in particular in relation to the expected growth of sales, the discount rates, the development of raw material prices and the success of restructuring measures implemented (see notes 5 and 6).

4.2 – Environmental liabilitiesThe Group is exposed to environmental regulations in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for environmental remediation. The Group constantly monitors its sites to ensure compliance with legislative requirements and to assess the liability arising from the need to adapt to changing legal demands. The Group recognizes liabilities for environmental remediation based on the latest assessment of the environmental situation of the individual sites and the most recent requirements of the respective legislation. Where the final remediation results in expenses that differ from the amounts previously recorded, such differences impact the income statement in the period in which such determination is made (see notes 18 and 32).

Clariant annual report 2014 165

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

4.3 – TaxesThe Group is subject to income and other taxes in numerous juris-dictions. Significant judgment is required in determining the worldwide provision for income and other taxes. There are many transactions and calculations for which the ultimate tax determina-tion is uncertain at the time a liability must be recorded. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts initially recorded, such differences impact the income tax and deferred tax provisions in the period in which such determination is made.

Some subsidiaries generate tax losses. Often these can be used to offset taxable gains of subsequent periods. The Group constantly monitors the development of such tax loss situations. Based on the business plans for the subsidiaries concerned, the recoverability of such tax losses is determined. In the case that a tax loss is deemed to be recoverable, the capitalization of a deferred tax asset for such a tax loss is then decided. The time horizon for such a cal-culation is in line with the mid-term planning scope of the Group.

4.4 – Estimates for the accounting for employee benefitsIAS 19 (revised), Employee Benefits, requires that certain assump-tions are made in order to determine the amount to be recorded for retirement benefit obligations and pension plan assets, in particular for defined benefit plans. These are mainly actuarial assumptions such as expected future salary increases, long-term increase in health care costs, employee turnover and discount rates. Substan-tial changes in the assumed development of any of these variables may significantly change the Group’s retirement benefit obligation and pension assets (see note 17).

4.5 – Assets held for sale and liabilities directly associated with assets held for saleIn the wake of the decision to divest several of its Business Units, Clariant reclassified the assets and liabilities pertaining to those activities to »held for sale« in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations (see notes 1.12 and 22). In distinguishing between the assets and liabilities pertaining to continuing operations and those pertaining to discon-tinued operations judgment had to be applied, as a part of those assets and liabilities are used by both types of activities.

All assets and liabilities exclusively pertaining to one Business Unit are allocated to that Business Unit. In all other cases a critical assessment is conducted as to whether it could be reasonably expected that the asset or liability concerned would be transferred in a disposal. The signed contracts are used as a basis. The allocations made may have to be adjusted when the disposals are actually consummated.

Judgments and estimates are also applied for valuation assumptions.

166

5. Property, plant and equipment

in CHF m Land Buildings

Machinery and

equipment

Furniture, vehicles,

computer hardware

Assets under

construc-tion Total 2014

Cost

As per 1 January 455 1 902 2 917 349 76 5 699

Additions – 21 62 25 202 310

Acquired in business combinations (see note 24) 3 5 6 – – 14

Reclassifications – 37 79 16 – 132 –

Reclassified to held for sale (see notes 22, 23) – 2 – 26 – 54 – 1 – 1 – 84

Disposals – – 22 – 72 – 31 – – 125

Exchange rate differences – 4 19 67 11 16 109

At 31 December 452 1 936 3 005 369 161 5 923

Accumulated depreciation and impairment

As per 1 January – 125 – 1 259 – 1 986 – 273 – 15 – 3 658

Reclassified to held for sale (see notes 22, 23) – 6 20 1 1 28

Disposals – 22 54 29 – 105

Depreciation – – 49 – 138 – 34 – – 221

Impairment (see note 25) – 1 – 2 – 1 – – – 4

Exchange rate differences 1 – 10 – 56 – 5 1 – 69

At 31 December – 125 – 1 292 – 2 107 – 282 – 13 – 3 819

Net book value 327 644 898 87 148 2 104

Clariant annual report 2014 167

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

in CHF m Land Buildings

Machinery and

equipment

Furniture, vehicles,

computer hardware

Assets under

construc-tion Total 2013

Cost

As per 1 January 458 1 772 2 950 355 113 5 648

Additions – 51 66 23 152 292

Change in the scope of consolidation – – 5 – 9 – 1 – 3 – 18

Acquired in business combinations (see note 24) – – 7 – – 7

Reclassifications 3 137 30 10 – 180 –

Reclassified to held for sale (see note 22) – – 7 – 11 – – – 18

Disposals – – – 84 – 16 – – 100

Exchange rate differences – 6 – 46 – 32 – 22 – 6 – 112

At 31 December 455 1 902 2 917 349 76 5 699

Accumulated depreciation and impairment

As per 1 January – 125 – 1 157 – 1 987 – 261 – 15 – 3 545

Change in the scope of consolidation – 2 4 1 – 7

Reclassifications – – 70 70 – – –

Disposals 1 – 57 14 – 72

Depreciation – – 49 – 139 – 32 – – 220

Impairment (see note 25) – – 7 – 10 – 1 – – 18

Reversal of impairment 1 – – – – 1

Exchange rate differences – 2 22 19 6 – 45

At 31 December – 125 – 1 259 – 1 986 – 273 – 15 – 3 658

Net book value 330 643 931 76 61 2 041

Impairment recognized in 2014 and 2013 arose as a result of restructuring measures, entailing site closures and disposal projects.

As at 31 December 2014, commitments for the purchase of property, plant and equipment concerned various projects mainly in Germa-ny, the United States and in China, and totalled CHF 83 million (2013: CHF 32 million).

As per 31 December 2014, property, plant and equipment acquired by way of finance lease, with costs of CHF 31 million (2013: CHF 31 million) and a net book value of CHF 15 million (2013: CHF 15 million) were recorded.

In a number of cases Clariant companies act as lessors in operating lease arrangements. This concerns exclusively land and buildings, mainly in Germany and Switzerland. The net book value of land and buildings subject to such arrangements amounted to CHF 182 million on 31 December 2014 (2013: CHF 192 million). Leasing income in the reporting period amounted to CHF 14 million (2013: CHF 18 million). Expected minimum lease income varies between CHF 10 million and CHF 14 million (2013: CHF 16 million and CHF 17 million) per annum for the next five years and amounts to CHF 129 million in total for later periods (2013: CHF 65 million).

168

6. Intangible assets

in CHF m Goodwill Technology

Customer relation-

shipsTrade names Other Total 2014

Cost

As per 1 January 1 330 179 178 69 296 2 052

Additions – – – – 13 13

Acquired in business combinations (see note 24) 10 3 2 5 1 21

Disposals – – – – – 60 – 60

Reclassifications – 9 6 3 – –  0

Exchange rate differences – 7 – 1 4 – 9 5

At 31 December 1 324 187 187 74 259 2 031

Accumulated amortization and impairment

As per 1 January – 208 – 50 – 43 – 22 – 180 – 503

Disposals – – – – 59 59

Amortization – – 17 – 8 – 7 – 29 – 61

Impairment (see note 25) – – 20 – – 8 – – 28

Exchange rate differences – 2 1 – – 1 – 9 – 11

At 31 December – 210 – 86 – 51 – 38 – 159 – 544

Net book value 1 114 101 136 36 100 1 487

in CHF m Goodwill Technology

Customer relation-

shipsTrade names Other Total 2013

Cost

As per 1 January 1 305 173 184 81 272 2 015

Additions – – – – 27 27

Acquired in business combinations (see note 24) 14 9 14 – – 37

Disposals – – – – – 2 – 2

Reclassified to held for sale (see note 22) – – – 19 – 12 – 2 – 33

Exchange rate differences 11 – 3 – 1 – 1 8

At 31 December 1 330 179 178 69 296 2 052

Accumulated amortization and impairment

As per 1 January – 209 – 31 – 17 – 16 – 158 – 431

Disposals – – – – 1 1

Reclassified to held for sale (see note 22) – – 6 3 – 9

Amortization – – 20 – 10 – 9 – 25 – 64

Impairment (see note 25) – – – 23 – – – 23

Exchange rate differences 1 1 1 – 2 5

At 31 December – 208 – 50 – 43 – 22 – 180 – 503

Net book value 1 122 129 135 47 116 1 549

Clariant annual report 2014 169

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Amortization is allocated to the line in the income statement, which represents the function to which the intangible asset pertains.

Impairment recognized in 2014 and 2013 arose as a result of the dis-posal project.

As per end of 2014, before reclassification to held for sale, other intangible assets include costs in the amount of CHF 46 million (2013: CHF 49 million) capitalized in connection with the REACH

regulation and CHF 15 million (2013: CHF 25 million) of capital-ized internally generated intangibles.

Impairment test for goodwill. Goodwill is allocated to the Group’s cash generating units (CGU). Cash generating units consist of Business Units which are for external reporting purposes reported under the corresponding business areas (reportable seg-ments, see note 1.23).

Goodwill is allocated to the following CGUs:

in CHF m 31.12.2014 31.12.2013

Industrial & Consumer Specialties 43 34

Masterbatches 185 177

Pigments 25 33

Functional Minerals 158 161

Catalysis 1 685 699

Oil & Mining Services 18 18

Leather Services – 141

Total net book value of goodwill 1 114 1 263

Reclassified to held for sale:

Leather Services – – 141

Total as reported in the balance sheet 1 114 1 122

1 The Energy Storage business intended to be disposed of in 2015 was part of the Catalysis CGU in 2013. No goodwill was allocated to this business.

Continuing operationsThe recoverable amount for all CGUs is determined based on their value in use. The value-in-use calculations use cash flow projec-tions based on financial budgets approved by the Board of Directors covering a five-year period. Beyond this five-year period growth in accordance with market growth is assumed. The main assumptions used for cash flow projections were EBITDA in percent of sales and sales growth. The assumptions regarding these two variables are based on Management’s past experience and future expectations of business performance. The pre-tax discount rates used are based on the Group’s weighted average cost of capital. The assumed pre-tax discount rate was 12.01 % for all cash generating units (2013: 11.78 %).

For all CGUs it was assumed that they achieve sales growth in line with or higher than market growth based on the specific strate-gic plans for those CGUs. It was also assumed that the EBITDA in percent of sales will improve over present performance as a result of the restructuring measures implemented. It was also deter-mined that the net present value of their expected cash flows exceeds the carrying amount of the net assets allocated on a value in use basis.

The estimated recoverable amount of the CGU Functional Minerals exceeds its carrying amount including goodwill by CHF 276 mil-lion. The recoverable amount would be equal to the carrying amount if the assumed average annual sales growth rate during the plan-ning period was reduced by 1.0 %, or alternatively, if the operating margin was reduced by 1.9 % of sales.

Discontinued operationsThe goodwill pertaining to the Leather Services CGU, reclassified to held for sale since end of 2012, was disposed of when the sale of the Leather Business was closed, at the end of April 2014. For fur-ther details on discontinued operations and assets held for sale, see note 22.

170

7. Investments in associates and joint ventures

in CHF m 2014 2013

As per 1 January 608 572

Change in the scope of consolidation – 6 4

Additions 187 5

Impairment (see note 25) – 84 –

Disposals – 74 –

Share of profit 1 75 64

Share of other comprehensive income of associates and joint ventures – 9 – 11

Dividends received – 50 – 30

Exchange rate differences – 12 4

At 31 December 635 608

Thereof joint ventures 190 346

1 Thereof CHF 1 million reported under discontinued operations in 2013.

The key financial data of the Group’s principal associates is as follows:

Investments In assocIates:

in CHF mCountry of

incorporationTotal

AssetsTotal

Liabilities Revenue

Net income / 

lossDividends

receivedBook Value

Interest held %

2014

Associates:

Stahl Group Netherlands 724 518 436 11 – 187 23

Infraserv GmbH & Co. Höchst KG Germany 1 136 776 1 247 102 – 23 123 32

Infraserv GmbH & Co. Gendorf KG Germany 230 131 269 20 – 8 50 50

Infraserv GmbH & Co. Knapsack KG Germany 163 69 203 15 – 3 19 21

Others 376 255 304 – 1 – 6 66

Total 2 629 1 749 2 459 147 – 40 445

2013

Associates:

Infraserv GmbH & Co. Höchst KG Germany 1 250 884 1 174 52 – 8 119 32

Infraserv GmbH & Co. Gendorf KG Germany 220 119 286 18 – 7 50 50

Infraserv GmbH & Co. Knapsack KG Germany 161 66 214 15 – 3 19 21

Others 338 202 278 9 – 3 74

Total 1 969 1 271 1 952 94 – 21 262

On 30 April 2014, Clariant sold its Leather Service Business to the Netherlands-based Stahl group for a cash consideration of CHF 89 million and a 23 % stake in the acquiring group. Stahl is a producer of high-quality chemicals, dyes and coatings for leather and other ap-plications and has about 1 700 employees.

The Infraserv companies were set up by the former Hoechst group to cater to the infrastructure needs of its subsidiaries in Germany prior to 1997. The shareholdings in associates summarized under

»Others« concern mainly companies specializing in selling Clariant products.

On 31 December 2014, accumulated unrecognized losses amount-ed to CHF 14 million (2013: less than CHF 1 million).

Clariant annual report 2014 171

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

The key financial data of the Group’s principal joint ventures is as follows:

Investments In joInt ventures:

in CHF mCountry of

incorporationCurrent

assets

Non-current

assetsCurrent

liabilities

Non-current

liabilities RevenueNet

income

Divi-dends

receivedBook Value

Interest held %

2014

Joint ventures:

ASK Group Germany – – – – 320 6 – – –

Scientific Design Company Inc. USA 87 32 19 19 93 11 – 5 108 50

Süd-Chemie India Pvt Ltd. India 140 13 63 2 94 21 – 5 82 50

Total 227 45 82 21 507 38 – 10 190

2013

Joint ventures:

ASK Group Germany 195 289 108 117 592 14 – 159 50

Scientific Design Company Inc. USA 89 31 26 20 78 14 – 6 109 50

Süd-Chemie India Pvt Ltd. India 108 11 49 2 91 23 – 3 78 50

Total 392 331 183 139 761 51 – 9 346

Scientific Design Company Inc. is a producer of ethylene and oxide catalysts headquartered in the United States and has around 140 employees. Co-owner is the Saudi Arabia-based Sabic Group.

Süd-Chemie India Pvt Ltd. is a producer of syngas, air purification and refinery catalysts. It has around 400 employees and is head-quartered in India. It is co-owned by private investors based in India.

During 2014, Clariant sold its 50 % participation in the ASK Group, a German-based supplier of additives and supplies for the foundry industry. Co-owner was the US-based Ashland group and acquirer is the London and New York-based private equity investment firm Rhône Group LLC (see note 23).

172

9. taxes

in CHF m 2014 2013

Current income taxes – 161 – 39

Deferred income taxes 9 35

Total taxes – 152 – 4

Thereof reported under discontinued operations 8 – 18

Total continuing operations – 144 – 22

The main elements contributing to the difference between the Group’s overall expected tax expense / rate and the effective tax expense / rate are:

2014 in

CHF m

in %

2013 in

CHF m

in %

Income before taxes from continuing operations 379 345

Income before taxes from discontinued operations – 10 – 336

Income before taxes total 369 9

Expected tax expense / rate 1 – 82 22.2 – 3 33.3

Effect of taxes on items not tax-deductible – 110 29.8 – 99 1 100.0

Effect of utilization and changes in recognition of tax losses and tax credits 9 –2.4 50 – 555.6

Effect of tax losses and tax credits of the current year not recognized – 13 3.5 – 17 188.9

Effect of adjustments to taxes recognized in prior periods – 16 4.3 16 – 177.8

Effect of tax exempt income and preferential tax rates 59 – 16.0 51 – 566.7

Effect of other items 1 – 0.3 – 2 22.2

Effective tax expense / rate – 152 41.2 – 4 44.4

Thereof reported under discontinued operations 8 – 80.0 – 18 5.4

Effective tax expense / rate continuing operations – 144 38.0 – 22 6.4

1 Calculated based on the income before tax of each subsidiary (weighted average).

8. Financial assets

in CHF m 2014 2013

As per 1 January 27 17

Additions 17 10

At 31 December 44 27

Financial assets include loans arising on disposals and a number of small-scale participations in companies, mostly in Germany, engaged in activities closely related to the ones of Clariant.

Loans are carried at amortized cost.

Financial assets are mostly denominated in euros and in Swiss francs.

Clariant annual report 2014 173

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

The movement of the net deferred income tax balance is as follows:

in CHF m

PPE and intangible

assets

Retirement benefit

obligations

Tax losses and

tax credits

Other accruals

and provisions Total

Thereof offset

within the same

jurisdiction Total

Deferred tax assets at 1 January 2013 40 178 150 118 486 – 178 308

Deferred tax liabilities at 1 January 2013 – 301 – 3 – – 54 – 358 178 – 180

Net deferred tax balance at 1 January 2013 – 261 175 150 64 128 – 128

Charged / credited to income from continuing operations 7 – 3 1 22 27

Effect of disposals 10 – 1 – – 1 8

Total charged / credited to income statement 17 – 4 1 21 35

Charged / credited to other comprehensive income – – 32 – – – 32

Exchange rate differences 6 2 – 5 – 9 – 6

Net deferred tax balance at 31 December 2013 – 238 141 146 76 125 – 125

Deferred tax assets at 31 December 2013 60 141 146 111 458 – 213 245

Deferred tax liabilities at 31 December 2013 – 298 – – – 35 – 333 213 – 120

At 1 January 2014 – 238 141 146 76 125 – 125

Charged / credited to income from continuing operations 30 – 23 – 20 18 5

Effect of disposals 6 – 3 – 1 4

Total charged / credited to income statement 36 – 26 – 20 19 9

Charged / credited to other comprehensive income – 60 – – 60

Exchange rate differences – 1 – 2 9 –1 5

Net deferred tax balance at 31 December 2014 – 203 173 135 94 199 – 199

Deferred tax assets at 31 December 2014 50 173 135 112 470 – 199 271

Deferred tax liabilities at 31 December 2014 – 253 – – – 18 – 271 199 – 72

Net deferred tax balance at 31 December 2014 – 203 173 135 94 199 – 199

Of the deferred tax assets capitalized on tax losses, CHF 86 million refer to tax losses of the US subsidiaries (2013: CHF 82 million), CHF 11 million to tax losses of the Italian subsidiaries (2013: CHF 9 million), CHF 8 million to tax losses of the Swiss subsidiaries (2013: CHF 21 million) and CHF 12 million to tax losses of the Spanish subsidiaries (2013: CHF 14 million). Clariant considers it is highly probable that these tax losses can be recovered.

Deferred income tax liabilities have not been established for with-holding tax and other taxes that would be payable on the unremitted earnings of certain foreign subsidiaries, as such amounts are currently regarded as permanently reinvested. These unremitted earnings totaled CHF 2 470 million at the end of 2014 (2013: CHF 2 269 million).

The tax losses on which no deferred tax assets are recognized are reviewed for recoverability at each balance sheet date. The largest part of these tax losses arose in Switzerland (with a weighted aver-age tax rate of 8.4 %), in France (with a tax rate of 33.3 %), in China (with a tax rate of 25 %) and in Luxemburg (with a tax rate of 29.2 %). At present their recoverability is not considered probable.

174

Tax losses on which no deferred tax assets were recognized are as follows:

in CHF m 31.12.2014 31.12.2013

ExPIRY BY:

2014 – 5

2015 12 57

2016 13 169

2017 207 63

2018 25 –

after 2018 (2013: after 2017) 318 252

Total 575 546

CHF m 31.12.2014 31.12.2013

Unrecognized tax credits 13 11

Tax credits in the amount of about CHF 0.5 million expire between 2015 and 2018 (2013: Tax credits in the amount of about CHF 0.5 million expire between 2014 and 2017). The remaining tax credits of CHF 12 million expire in and after 2019 (2013: The remaining tax credits of CHF 11 million expire in and after 2018).

Temporary differences on which no deferred tax assets were recog-nized amount to CHF 41 million (2013: CHF 63 million).

10. Inventories

in CHF m 31.12.2014 31.12.2013

Raw material, consumables, work in progress 394 398

Finished products 544 524

Total 938 922

Reclassified to held for sale (see notes 22, 23) – 8 – 76

Total as reported in the balance sheet 930 846

in CHF m 2014 2013

Movements in write-downs of inventories

As per 1 January 35 42

Additions 29 35

Reversals – 25 – 34

Exchange rate differences 1 – 1

Effect of disposals – 5 – 7

At 31 December 35 35

As at 31 December 2014 and 2013, no inventories were pledged as collateral for liabilities.

The costs for raw materials and consumables recognized as an expense and included in »Costs of goods sold« amounted to CHF 2 649 million (2013: CHF 2 637 million) for continuing operations.

11. trade receivables

in CHF m 31.12.2014 31.12.2013

Gross accounts receivable – trade 998 1 033

Gross accounts receivable – associates and joint ventures 22 9

Less: provision for doubtful accounts receivable – 31 – 27

Total trade receivables – net 989 1 015

Reclassified to held for sale (see notes 22, 23) – 4 – 110

Total as reported in the balance sheet 985 905

The following summarizes the movement in the provision for doubtful accounts receivable:

in CHF m 2014 2013

As per 1 January – 27 – 40

Charged to the income statement – 21 – 16

Amounts used 8 12

Effect of disposals – 7

Unused amounts reversed 10 8

Exchange rate differences – 1 2

At 31 December – 31 – 27

Thereof reclassified to held for sale – – 5

Of the total provision for doubtful accounts receivable, the following amounts concern trade receivables that were individually impaired:

in CHF m 31.12.2014 31.12.2013

Trade receivables aged up to six months – 9 – 7

Trade receivables aged over six months – 8 – 16

Total provision for impairment – 17 – 23

There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of internationally dispersed customers.

The Group recognizes the impairment of trade receivables in »Selling, general and administrative costs« in the income statement.

The maximum credit risk on trade receivables is equal to their fair value.

Collaterals are only required in rare cases (2014: CHF 2 million, 2013: CHF 2 million).

Clariant annual report 2014 175

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

The carrying amounts of the Group’s trade receivables are denomi-nated in the following currencies:

in CHF m 31.12.2014 31.12.2013

CHF 2 3

EUR 343 420

USD 278 240

JPY 40 39

BRL 55 55

CNY 80 81

INR 20 19

Other 171 158

Total trade receivables – net 989 1 015

Reclassified to held for sale (see notes 22, 23) – 4 – 110

Total as reported in the balance sheet 985 905

As of 31 December 2014, »Total trade receivables – net« include an amount of CHF 166 million (2013: CHF 185 million) past due, but not impaired. These relate to a number of customers for whom there is no recent history of default.

The ageing analysis of these trade receivables is as follows:

in CHF m 31.12.2014 31.12.2013

Up to three months past due, but not impaired 147 168

Three to six months past due, but not impaired 6 12

More than six months past due, but not impaired 13 5

Total 166 185

12. other current assetsOther current assets include the following:

in CHF m 31.12.2014 31.12.2013

Other receivables 266 363

Current financial assets 68 74

Prepaid expenses and accrued income 54 49

Total 388 486

Reclassified to held for sale (see notes 22, 23) – 3 – 4

Total as reported in the balance sheet 385 482

Other receivables include, among others, staff loans and advances, VAT and sales tax receivables. In 2013, it also included receivables in connection with the disposal activities of Clariant.

Other receivables are recognized at amortized cost in the balance sheet.

Current financial assets are mainly made up of notes receivables and short-term loans. These are classified as loans and receivables and recognized at amortized cost in the balance sheet.

The book value of current financial assets, recognized at amortized cost, equals their fair value.

The maximum exposure to credit risk of other current assets at the reporting date is their fair value.

There was no impairment of current financial assets in 2014 and 2013.

Other receivables are denominated in the following currencies:

in CHF m 31.12.2014 31.12.2013

CHF 23 27

EUR 80 114

USD 26 33

JPY 12 16

BRL 20 32

CNY 10 27

INR 12 11

Other 83 103

Total 266 363

Thereof reclassified to held for sale – 4

Current financial assets are denominated in the following currencies:

in CHF m 31.12.2014 31.12.2013

CHF 20 5

EUR 2 3

CNY – 22

INR 2 1

USD 44 39

Other – 4

Total 68 74

176

13. near-cash assetsNear-cash assets include short term deposits with an original matu-rity between 90 and 365 days.

Near-cash assets are denominated in the following currencies:

in CHF m 31.12.2014 31.12.2013

CHF 86 31

USD – 36

GBP 94 80

Total 180 147

14. cash and cash equivalents

in CHF m 31.12.2014 31.12.2013

Cash at bank and on hand 471 562

Short-term bank deposits 277 208

Total 748 770

Cash and cash equivalents are denominated in the following currencies:

in CHF m 31.12.2014 31.12.2013

CHF 191 204

EUR 141 217

USD 134 194

JPY 12 10

BRL 7 6

CNY 21 12

INR 160 39

Other 82 88

Total 748 770

The effective average annual interest rate on short-term bank deposits in Swiss franc was 0.15 % (2013: 0.18 %); these deposits have an average maturity of 32 days (2013: 12 days).

The effective average annual interest rate on short-term bank deposits in euros was 0.22 % (2013: 0.17 %); these deposits have an average maturity of 38 days (2013: 44 days).

The effective average annual interest rate on short-term bank deposits in US-dollar was 0.22 % (2013: 0.26 %); these deposits have an average maturity of 45 days (2013: 70 days).

At the end of 2014, the effective average interest rate on short-term bank deposits in Indian rupee was 7.56 %. These deposits have an average maturity of 31 days.

There were no material short-term bank deposits denominated in currencies other than the Swiss franc, the euro, the US-dollar and the Indian rupee at the end of the reporting period.

The maximum exposure to credit risk on cash and cash equivalents is equal to their book value.

Clariant annual report 2014 177

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

15. changes in share capital and treasury shares

Registered shares each with a par value of CHF 3.70 (2013: CHF 3.70)

Number of shares

2014

Par value 2014

in CHF m

Number of shares

2013

Par value 2013

in CHF m

Share capital as per 1 January 331 939 199 1 228 295 752 254 1 094

Capital increase – – 36 186 945 134

Share capital at 31 December 331 939 199 1 228 331 939 199 1 228

Treasury shares – 12 087 920 – 45 – 13 204 851 – 49

Outstanding share capital at 31 December 319 851 279 1 183 318 734 348 1 179

Treasury shares (number of shares) 2014 2013

Holdings as per 1 January 13 204 851 16 070 280

Shares purchased at market value 1 200 000 1 208 444

Shares sold to counterparty out of options (management options 2008) – – 2 067 500

Shares sold at market value – 1 580 456 – 507 944

Shares transferred to employees – 736 475 – 1 498 429

Holdings at 31 December 12 087 920 13 204 851

All shares are duly authorized and fully paid in.

Dividends are paid out as and when declared equally on all shares, excluding treasury shares. The information concerning payments per share to the shareholders are disclosed in the notes to the financial statements of Clariant Ltd.

In accordance with article 5 of the company’s Articles of Incorpora-tion, no limitations exist with regard to the registration of shares which are acquired in one’s own name and on one’s own account. Special rules exist for nominees.

In accordance with article 13 of the company’s Articles of Incorpo-ration, each share has the right to one vote.

significant shareholdings of 3 % or more of total share capital Based on the notifications received by Clariant and published by SIx Exchange Regulation, as at 31 December 2014 the following shareholders held more than 3 % of voting rights in Clariant:

Shareholders Voting rights

Group of former shareholders of Süd-Chemie AG 1 13.89 %

Thereof (as a separate sub-group): Blue Beteiligungsgesellschaft mbH, Am Holzmaierfeld, 82064 Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Am Holzmaierfeld, 82064 Grossdingharting (Germany) 2

3.73 %

Cymbria, Canada Edge Point Global Portfolio, Canada Edge Point Canadian Growth and Income Portfolio, Canada Edge Point Canadian Portfolio, Canada Edge Point Global Growth and Income Portfolio, Canada St. James Place Global Equity Unit Trust, UK

3.06 %

APG Asset Management N.V., Amsterdam, Netherlands 3.01 %

1 The following former shareholders of Süd-Chemie AG form a group:

Wilhelm, Dr. Winterstein, Germany Konstantin Alfred Winterstein, Germany

Dolf, Dr. Stockhausen, Switzerland Max-Theodor, Dr. Schweighart, Germany

Axel, Dr. Schweighart, Germany Peter, Dr. Schweighart, Germany

Rosemarie Schweighart, Germany Moritz Ostenrieder, Germany

Dominique Kraus, Germany Christian Ratjen, Germany

Karl, Dr. Wamsler, Germany Bettina Wamsler, Germany

Irene W. Banning, USA Pauline Joerger, USA

Susanne Wamsler-Singer, USA Marianne Kunisch, Germany

Caroline A, Dr. Wamsler, USA Maximilian Ratjen, Germany

Amelie Ratjen, Germany Julius Ratjen, Germany

Christof Ratjen, Germany Elisabeth Prinzessin zu Sayn-Wittgenstein, Germany

Christopher Weitnauer, Germany Georg A. Weitnauer, Germany

Johanna Bechtle, Germany Charlotte Bechtle, Germany

Kaspar Bechtle, Germany Clara Redetzki, Germany

Luisa Redetzki, Germany Marie Redetzki, Germany

Karl T. Banning, USA Sophia P. Joerger, USA

Schuyler H. Joerger, USA

2 According to a disclosure notification published on 18 January 2013, a group consisting of Konstantin

Winterstein, 80333 München, Germany and Elisabeth Prinzessin zu Sayn-Wittgenstein,

80333 München, Germany holds 3.73 % partially through Blue Beteiligungsgesellschaft mbH,

Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Grossdingharting

(Germany). The 3.73 % held by this group are included in the 13.89 % mentioned under footnote 1,

but build a separate sub-group.

178

Disclosure notifications during the financial year 2014 notified to the Stock Exchange Disclosure Office pursuant to Art. 20 of the Stock Exchange Act as well as further information in relation to disclosure notifications can be found on the SIx Swiss Exchange reporting platform: www.six-exchange-regulation.com/obliga-tions/disclosure/major_shareholders_de.html

At 31 December 2014, former shareholders of Süd-Chemie Ltd, who had exchanged their shares against Clariant shares in April 2011, held a total of 13.89 % of the share capital of Clariant. These share-holders were affiliated with each other for family or other reasons (especially the Wamsler, Winterstein, Schweighart and Stockhausen families). According to a disclosure notification to SIx Exchange Regulation dated 21 October 2013, they were no longer considered a single group; however, they formed a group again holding 13.3 % of Clariant shares, according to a disclosure notice to SIx Exchange Regulation dated 11 February 2014, and increased their holding to 13.89 % pursuant to a disclosure notice to SIx Exchange Regulation dated 12 December 2014.

In addition, at 31 December 2013, the following shareholders helda participation of 3 % or more of the total share capital: Dr. Dolf Stockhausen, Ennetbürgen (Switzerland) and Konstantin Winter-stein, München (Germany) (Lock-up Group II), 4.11 %; Blue Beteili-gungsgesellschaft mbH, Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Grossdingharting (Germany), 3.73 %; Credit Suisse Funds AG, Zurich (Switzerland): 3.28 %; UBS Funds Management (Switzerland) AG, Basel (Switzerland): 3.09 %.

At 31 December 2014, Clariant Ltd itself held 12 087 920 shares in treasury, corresponding to 3.64 % of the share capital.

Changes in share capitalOn 24 March 2014, the Annual General Meeting of Clariant Ltd approved a distribution from the confirmed capital contribution reserves of CHF 0.36 per share, thus reducing the capital con-tribution reserves by CHF 115 million.

In 2013, as a consequence of the conversion of a 3 % convertible bond 2009 – 2014 of CHF 300 million, 36 186 945 registered shares were issued representing a share capital increase of CHF 134 million and an increase in reserves of CHF 150 million.

Non-controlling interests On 20 October 2014, Clariant sold its 40 % stake in Clariant Master-batches (Saudi Arabia) Ltd to Rowad National Plastic Co. Ltd. The transaction reduced Clariant’s total stake in Clariant Masterbatches (Saudi Arabia) Ltd from 93 % to 53 % but Clariant retains control of the entity. The total net consideration of the sale amounts to CHF 25 million.

In 2013, the Group increased its stake in Clariant Industrial Miner-als (Korea) Co. Ltd (operating in South Korea) to 100 %. The re-maining non-controlling interests with a total carrying amount of CHF 1 million were purchased for a total consideration of CHF 2 mil-lion. The excess consideration paid in excess of their carrying amount was recognized directly in equity.

At 31 December 2014, non-controlling interests reported are primarily made up of those of the three following companies. They amount to more than 85 % of the minority shares reported:

Clariant Huajin Catalysts (Panjin) Ltd, reported sales in the amount of CHF 38 million in the reporting period and total assets in the amount of CHF 47 million as per 31 December 2014. The non- controlling interest of 40 % of the shares outstanding is held by Northern Huajin Chemical Industry Group Co. Ltd.

Clariant Chemicals (India) Ltd reported sales in the amount of CHF 151 million in the reporting period and CHF 288 million of total assets as per 31 December 2014. The non-controlling interest of 36.6 % of the shares outstanding is traded on the Bombay Stock Exchange (BSE) in Mumbai.

Clariant Catalysts (Japan) K.K. reported sales in the amount of CHF 146 million in the reporting period and CHF 122 million of total assets as per 31 December 2014. The non-controlling interests of 38.6 % of the shares outstanding are held by Nissan Industries Ltd.

Clariant annual report 2014 179

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

16. non-current financial debts

in CHF m Interest rate in % Term

Notional amount Net amount 31.12.2014

Net amount 31.12.2013

Certificate of indebtedness mixed 2011 – 2014 242 EUR m – 297

Certificate of indebtedness mixed 2012 – 2014 25 EUR m – 30

Straight bond 2.750 2011 – 2015 200 CHF m 200 200

Certificate of indebtedness mixed 2011 – 2016 123 EUR m 148 151

Straight bond 5.625 2012 – 2017 500 EUR m 599 610

Straight bond 3.125 2011 – 2017 100 CHF m 99 99

Straight bond 2.500 2012 – 2018 250 CHF m 249 249

Straight bond 3.250 2012 – 2019 285 CHF m 284 284

Straight bond 3.500 2012 – 2022 175 CHF m 174 174

Straight bond 2.125 2014 – 2024 160 CHF m 160 –

Total straight bonds and certificates of indebtedness 1 913 2 094

Liabilities to banks and other financial institutions 35 50

Obligations under finance leases 13 13

Subtotal 1 961 2 157

Less: current portion (see note 20) – 200 – 327

Total 1 761 1 830

Breakdown by maturity 2015 – 217

2016 165 168

2017 710 721

2018 254 253

2019 285 –

after 2019 (2013: after 2018) 347 471

Total 1 761 1 830

Breakdown by currency CHF 967 1 006

EUR 789 820

Others 5 4

Total 1 761 1 830

Fair value comparison (including current portion)

Straight bonds 1 901 1 742

Certificate of indebtedness 148 478

Others 48 63

Total 2 097 2 283

On 17 October 2014, Clariant launched a CHF 160 million domestic bond for a term of ten years, with a coupon of 2.125 % per annum and an issue price of 101.053 % for the first tranche of CHF 150 mil-lion and 101.412 % for the second tranche of CHF 10 million.

On 21 October 2014, the certificates of indebtedness issued in 2011 and 2012 with notional amounts of EUR 242 million and EUR 25 million respectively, reached maturity and were repaid.

180

Valuation. Non-current financial debt is recognized initially at fair value, net of transaction costs incurred. Financial debt is sub-sequently stated at amortized cost. There are no long-term fi-nancial liabilities valued at fair value through profit and loss.

Fair values of straight bonds are determined by quoted market prices (level 1 in the fair value hierarchy).

Certificates of indebtedness and other financial debts are recorded at notional amounts, which are a reasonable approximation of the fair values.

Covenants. There are no financial covenants for non-current financial debts as of end of 2014.

Exposure of the Group’s borrowings to interest rate changes · Bonds: the interest rates of all bonds are fixed. · Certificate of indebtedness: the major part of the existing certif-

icate of indebtedness has a fixed coupon. · Liabilities to banks and other financial institutions: mostly con-

sisting of bank loans with fixed interest rates.

Collateral. In 2014 and 2013, no assets were pledged as collateral.

17. retirement benefit obligations Apart from the legally required social security schemes, the Group has numerous independent pension plans. The assets are principally held externally. For certain Group companies however, no inde-pendent assets exist for the pension and other non-current employ-ee benefit obligations. In these cases the related liability is in-cluded in the balance sheet as part of the non-current liabilities.

Defined benefit post-employment plans. Defined benefit pen-sions and termination plans cover the majority of the Group’s employees. Future obligations and the corresponding assets of those plans considered as defined benefit plans under IAS 19 are reap-praised annually and reassessed at least every three years by inde-pendent actuaries. Assets are valued at fair value. US employees transferred to Clariant with the Hoechst Specialty Chemicals busi-ness remain insured with Hoechst for their pension claims incur-red prior to 30 June 1997.

Pension assets for funded defined benefit pension plans are man-aged principally according to local rules and legislation in each country.

The actual asset allocation is determined by current and expected economic and market conditions and in consideration of specific asset class risks in the risk profile. For this purpose Asset Liability Matching studies are conducted by third party experts on a regular basis to ensure that investment strategies for pension assets are in line with the structure of the plan members of the pension plan concerned.

Clariant annual report 2014 181

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

In all countries with funded defined benefit plans the body govern-ing the investment policy is constituted in accordance with local legal requirements. To the extent legally permitted Clariant Corpo-rate exercises influence to ensure that the investment policy is set in a way to serve best the needs of the pension plan and its members.

The largest defined benefit plans are operated in Switzerland, the United Kingdom, the United States and Germany. These plans make up more than 95 % of the total defined benefit obligation.

The most important German plan is unfunded and covers the sup-plementary pension liabilities for plan members whose salaries exceed the level of the German mandatory social security coverage. Contributions are made primarily by the employer and vary depending on the salary level of the plan members. Lump sum payments are possible to the extent of the voluntary contributions. In addition there exists a smaller, similarly structured funded defined benefit plan for former employees of the Süd-Chemie group, acquired in 2011. All other pension liabilities regarding German staff members are covered by a funded multi-employer plan which is accounted for as a defined contribution plan.

The defined benefit obligation in the United Kingdom is a funded plan covering the pension liabilities of UK employees who joined the company before 31 December 2003. Staff members who joined after this date are covered by a defined contribution plan. Contri-butions are made by employees as a fixed percentage of their pen-sionable earnings, varying in dependence of their salary levels, while the employer covers the difference to the costs of the plan determined in accordance with legal requirements. In general the employer covers more than 90 % of the total plan contributions. Benefits are paid out as lifetime pensions determined based on a ca-reer average calculation. The United Kingdom pension plan is marked by a shrinking operating basis and a resulting smaller num-ber of active plan members as compared to deferred and retired plan members. The pension plan is currently underfunded accord-ing to legal requirements. As a result the parent company Clariant Ltd has agreed to cover the financing gap with additional contribu-tions between GBP 5 million and 7 million per annum until 2017, when the funding deficit is expected to be covered.

In the United States Clariant operates a defined benefit pension plan that is a funded plan covering the pension liabilities of employees who joined the company before 31 December 2000. Con-tributions are paid by the employer exclusively. Benefits are paid out as lifetime pensions determined on the basis of a career average calculation.

Staff members who joined on 1 January 2001 or later are covered by a defined contribution plan. For members of Management whose annual salaries exceed the amount of USD 260 000 an ad-ditional pension scheme is in place in the form of an unfunded defined benefit obligation, which covers the part exceeding this amount. The US pension plan is currently underfunded according to local legal requirements. Additional funding measures in the amount of up to USD 66 million are scheduled over the next five years.

In Switzerland, Clariant operates a funded defined benefit pension plan that covers the pension liabilities of all employees of the Swiss Clariant companies up to a salary level of CHF 200 000.

Both the employer and the employees contribute to the plan, the employer paying two thirds of the total contributions. The pension plan provides lifetime pensions determined based on cumulative savings of the individual plan member and converted into an annual pension at a fixed conversion rate. Lump sum payments are possible to up to 40 percent of the total individual cumulative savings.

The Swiss pension plan is marked by a shrinking operating basis, and as a result, an increasing share of retired members. While this has not resulted in any underfunding, additional contributions by the em-ployer may be necessary in the mid-term future.

For members of Management whose annual salaries exceed the amount of CHF 200 000, an additional pension scheme is in place in the form of a funded defined benefit obligation.

Any shortfalls in funded provisions for pension commitments to members of the Executive Committee are accounted for as an un-funded defined benefit obligation.

Post-employment medical benefits. The Group operates a num-ber of post-employment medical benefit schemes in the United States, Canada and France. The method of accounting for the lia-bilities associated with these plans is largely equal to the one used for defined benefit pension schemes. These plans are not externally funded, but are recognized as provisions in the balance sheets of the Group companies concerned.

Expenses for net benefits are recorded in the same line and func-tion in which the personnel costs are recorded.

182

Changes in the present value of defined benefit obligations are as follows:

in CHF mPension plans

(funded and unfunded)Post-employment

medical benefits (unfunded)

2014 2013 2014 2013

Beginning of the year 2 248 2 355 96 98

Change in the scope of consolidation – 5 – –

Current service cost 39 52 2 2

Past service costs (gains) including curtailments 5 – 32 – 13 –

Losses (gains) on settlements – 6 5 – 2 – 1

Interest costs on obligation 77 76 4 4

Contributions to plan by employees 11 13 – –

Benefits paid out to personnel in reporting period – 113 – 110 – 4 – 4

Remeasurements:

Actuarial losses (gains) arising from changes in demographic assumptions 20 55 – – 4

Actuarial losses (gains) arising from changes in financial assumptions 405 – 62 14 – 3

Actuarial losses (gains) due to experience adjustments 13 – 30 – 9 – 7

Effect of disposals – 8 – – 7 –

Reclassified to held for sale – – 24 –  8

Effect of liabilities extinguished on settlements – 15 – 54 – –

Exchange rate differences 38 – 1 7 3

End of the year 2 714 2 248 88 96

Changes in the fair value of plan assets are as follows:

in CHF m 2014 2013

Beginning of the year 1 718 1 649

Interest income on plan assets 58 49

Contributions to plan by employees 11 13

Contributions to plan by employer 51 98

Benefits paid out to personnel in reporting period – 89 – 87

Remeasurements:

Return on plan assets (excluding amount included in interest income) 118 77

Effect of assets distributed in settlements – 15 – 45

Effect of disposals – 2 – 

Reclassified to held for sale –  – 17

Exchange rate differences 46 – 19

End of the year 1 896 1 718

As at 31 December 2014 and 2013, the pension plan assets did not include any directly held registered shares or bonds issued by Clariant Ltd.

Clariant annual report 2014 183

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

The amounts recognized in the balance sheets are as follows:

in CHF m Defined benefit

pension plans Post-employment

medical benefits Total

31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Present value of funded obligations – 2 062 – 1 687 – – – 2 062 – 1 687

Fair value of plan assets 1 896 1 718 – – 1 896 1 718

Overfunding / Deficit – 166 31 – – – 166 31

Present value of unfunded obligations – 652 – 561 – 88 – 96 – 740 – 657

Net liabilities in the balance sheet – 818 – 530 – 88 – 96 – 906 – 626

Thereof recognized in:

in CHF m 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Retirement benefit obligations – 836 – 573 – 88 – 96 – 924 – 669

Prepaid pension assets 18 43 – – 18 43

Net liabilities in the balance sheet for defined benefit plans – 818 – 530 – 88 – 96 – 906 – 626

The amounts recognized in the income statement and in other comprehensive income are as follows:

in CHF m 2014 2013 2014 2013 2014 2013

Current service costs – 39 – 52 – 2 – 2 – 41 – 54

Net interest cost – 19 – 27 – 4 – 4 – 23 – 31

Past service (costs) gains including curtailments – 5 32 13 – 8 32

(Losses) gains on settlements 6 – 5 2 1 8 – 4

Components of defined benefit expense reported in the income statement – 57 – 52 9 – 5 – 48 – 57

Actuarial (losses) gains arising from changes in demographic assumptions – 20 – 55 – 4 – 20 – 51

Actuarial (losses) gains arising from changes in financial assumptions – 405 62 – 14 3 – 419 65

Actuarial (losses) gains due to experience adjustments – 13 30 9 7 – 4 37

Return on plan assets (excluding amount included in interest income) 118 77 – – 118 77

Components of defined benefit expense reported in other comprehensive income – 320 114 – 5 14 – 325 128

Total defined benefit expense / income – 377 62 4 9 – 373 71

184

The fair value of the plan assets is split into the major assets categories as follows:

in CHF m 31.12.2014 31.12.2013

Equities 545 579

thereof based on quoted market prices 545 579

Bonds 733 623

thereof based on quoted market prices 386 515

Cash 71 103

thereof based on quoted market prices 71 103

Property 276 242

thereof based on quoted market prices 219 188

Alternative investments 271 171

thereof based on quoted market prices 6 5

Total fair value of plan assets 1 896 1 718

The principal actuarial assumptions at the balance sheet dates in percent are as follows:

2014 in %

2013 in %

Group Most important countries Group Most important countries

Weighted average

Switzer-land

United Kingdom

United States Germany

Weighted average

Switzer-land

United Kingdom

United States Germany

Discount rate 2.3 1.0 3.7 3.9 2.0 3.4 2.3 4.6 5.1 3.5

Future salary increases 2.6 1.5 4.4 3.0 2.5 2.8 2.0 4.8 3.0 2.5

Long-term increase in health care costs 7.3 – – 8.0 – 6.7 – – 8.5 –

Current average life expectancy for a 65 year old male in years 19 20 23 22 19 19 20 23 21 19

Current average life expectancy for a 65 year old female in years 21 22 25 24 23 22 22 25 23 23

A one percentage point change in health care cost trend rates would have the following effects on the obligation for post-employment medical benefits:

in CHF mOne percentage

point increaseOne percentage

point decrease

Effect on the aggregate of the service costs and interest costs 1 – 1

Effect on defined benefit obligation 9 – 8

A 25 basis-point change in discount rate would have the following effects on the obligation for pension plans:

in CHF m25 basis-

point increase25 basis-

point decrease

Effect on defined benefit obligation – 88 94

Would life expectancy increase by one year, the defined benefit ob-ligation would increase by CHF 67 million.

Clariant annual report 2014 185

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Defined contribution post-employment plans. In 2014, CHF 23 million were charged to the income statements as contributions to defined contribution plans (2013: CHF 27 million).

In Germany, approximately 4 800 active Clariant employees are in-sured in a defined benefit plan which is a multi-employer plan and as such is accounted for as a defined contribution plan. The reason for this accounting practice is that the plan exposes the participat - ing Clariant companies to actuarial risks associated with the current and former employees of other companies which are members of the same pension plan. There is no consistent or reliable basis for allocating the obligation, plan assets and cost to individual compa-nies participating in the plan.

Based on the statutory actuarial calculation of 2014, the pension fund’s obligations are fully funded. Also for 2015, it is anticipated that the pension plan liabilities are covered by the respective assets.

In case the multi-employer plan faces a situation where the pension plan liabilities exceed the assets, this can be remedied either by increasing the employer’s contributions to the pension plan or by reducing the benefits which are paid out to the entitled parties. In the case of a reduction of the benefits this must be compensated by the employer according to German legislation.

In the case the pension plan were unwound the remaining funds would be distributed among the plan members. In case there are no plan members left, the remaining funds would be transferred to social institutions. If Clariant withdrew from the pension fund, all rights and obligations of the employer against the pension plan would remain in force as long as the pension plan continues to ren-der pension services to the group’s plan members. Based on the number of plan members (active and passive) Clariant’s share in the pension plan amounts to approximately 6 %.

Clariant’s contribution to this pension plan amounted to CHF 16 million in 2014 (CHF 17 million in 2013) and is expected to be CHF 16 million in 2015.

The multi-employer plan originates in the pension plan scheme of the German companies of the former Hoechst Group, to which a part of the activities of Clariant pertained until 1997. Several of the companies which were formerly part of the Hoechst Group continue to participate in this multi-employer plan.

186

in CHF m Pension plans Post-employment medical benefits

2014 2013 2014 2013

Clariant Group’s expected regular and supplemental contributions (employer's contributions):

Actual contributions in 2013 – 98 – –

Actual contributions in 2014 (2013: estimated) 51 52 – –

Estimated contributions in 2015 53 56 – –

Estimated contributions in 2016 48 55 – –

Estimated contributions in 2017 49 56 – –

Estimated contributions in 2018 50 57 – –

Estimated contributions in 2019 40 – – –

Payments to beneficiaries:

Actual payments in 2013 – – 110 – – 4

Actual payments in 2014 (2013: estimated) – 113 – 105 – 4 – 4

Estimated payments in 2015 – 115 – 105 – 5 – 5

Estimated payments in 2016 – 110 – 106 – 5 – 5

Estimated payments in 2017 – 113 – 110 – 5 – 5

Estimated payments in 2018 – 117 – 114 – 5 – 5

Estimated payments in 2019 – 120 – – 5 –

Allocation of defined benefit obligation to plan members:

Active members 898 699 37 54

Deferred members 309 258 5 2

Retired members 1 507 1 291 46 40

Total funded and unfunded obligations at 31 December 2 714 2 248 88 96

Weighted average duration of the defined benefit obligation at the end of reporting period (in years):

At 31 December 15.6 16.0 11.5 12.2

Clariant annual report 2014 187

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

18. movements in provisions

in CHF m

Environ-mental

provisionsPersonnel provisions

Restruct-uring

provisions

Other provisions

Total provisions

2014

Total provisions

2013

As per 1 January 121 147 97 192 557 571

Additions 8 159 117 80 364 448

Disposals – – – 1 – 8 – 9 –

Reclassified to / from held for sale (see notes 22, 23) 8 7 – – 15 – 21

Amounts used – 18 – 159 – 89 – 92 – 358 – 378

Unused amounts reversed – – 6 – 18 – 26 – 50 – 53

Changes due to the passage of time and changes in discount rates 4 1 – 1 6 4

Exchange rate differences 1 2 – 1 – 2 –  – 14

At 31 December 124 151 105 145 525 557

Of which

– Current portion 28 137 86 64 315 334

– Non-current portion 96 14 19 81 210 223

Total provisions 124 151 105 145 525 557

Expected outflow of resources

Within 1 year 28 137 86 64 315 334

Between 1 and 3 years 38 5 14 44 101 114

Between 3 and 5 years 11 2 4 5 22 37

Over 5 years 47 7 1 32 87 72

Total provisions 124 151 105 145 525 557

Environmental provisions. Provisions for environmental li a bil i-ties are made when there is a legal or constructive obligation for the Group which will result in an outflow of economic resources. It is difficult to estimate the action required by Clariant in the future to correct the effects on the environment of prior disposal or release of chemical substances by Clariant or other parties and the associated costs, pursuant to environmental laws and regulations.

The material components of the environmental provisions consist of the costs to fully clean and refurbish contaminated sites and to treat and contain contamination at sites where the environmental exposure is less severe. The Group’s future remediation expenses are affected by a number of uncertainties which include, but are not limited to, the method and extent of remediation and the percent- age of material attributable to Clariant at the remediation sites rela-tive to that attributable to other parties.

The environmental provisions reported in the balance sheet concern a number of different obligations, mainly in Switzerland, the Unit-ed States, Germany, Brazil and Italy.

Provisions are made for remedial work where there is an obligation to remedy environmental damage, as well as for containment work where required by environmental regulations. All provisions relate to environmental liabilities arising in connection with activi-ties that occurred prior to the date when Clariant took control of the relevant site. At each balance sheet date, Clariant critically reviews all provisions and makes adjustments where required.

Personnel provisions. Personnel provisions include holiday en ti-tlements, compensated absences such as sabbatical leave, jubilee, annual leave or other long-service benefits, profit sharing and bonuses. Such provisions are established in proportion to the ser-vices rendered by the employee concerned.

Restructuring provisions. Restructuring provisions are estab-lished where there is a legal or constructive obligation for the Group that will result in the outflow of economic resources. The term restructuring refers to the activities that have as a conse-quence staff redundancies and the shutdown of production lines or entire sites. When the Group has approved a formal plan and has

188

either started to implement the plan or announced its main features to the public, a restructuring provision is created. The restructur- ing provisions newly added in 2014 concern site closures and head-count reductions in various countries with the largest amounts incurred in Germany, France and Switzerland.

Other provisions. Other provisions include provisions for obliga- tions relating to tax and legal cases and other items in various coun-tries for which the amount can be reliably estimated.

All non-current provisions are discounted to reflect the time value of money where material. Discount rates reflect current market assessments of the time value of money and the risk specific to the provisions in the respective countries.

19. trade and other payables

in CHF m 31.12.2014 31.12.2013

Trade payables 704 735

Payables to associates and joint ventures 56 49

Accruals 236 321

Other payables 159 205

Total trade and other payables 1 155 1 310

Reclassified to held for sale (see notes 22, 23) – 8 – 83

Total as reported in the balance sheet 1 147 1 227

The amount recognized for trade payables is equal to their fair value.

20. current financial debts

in CHF m 31.12.2014 31.12.2013

Banks and other financial institutions 230 262

Current portion of non-current financial debts (see note 16) 200 327

Total 430 589

Breakdown by maturity:

in CHF m 31.12.2014 31.12.2013

Up to three months after the balance sheet date 179 171

Three to six months after the balance sheet date 5 43

Six to twelve months after the balance sheet date 246 375

Total 430 589

Current financial debt is recognized initially at fair value, net of transaction costs incurred. Financial debt is subsequently stated at amortized cost. Except for the derivatives, there are no current financial liabilities valued at fair value through profit and loss.

The current portion of non-current financial debts includes a CHF domestic bond with a nominal value of CHF 200 million ex-piring in December 2015. This bond has a tenor of 4.5 years and a fixed coupon of 2.75 % per annum.

The two certificates of indebtedness, reported as current portion of non-current financial debts in 2013, with a total value of EUR 267 million, reached maturity in October 2014 and were repaid.

The fair value of financial debt at banks and other financial institu-tions approximates its carrying amount due to the short-term nature of these instruments.

Clariant annual report 2014 189

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

21. segment informationClariant has grouped its activities into four Business Areas (report-able segments): Care Chemicals (BU ICS), Catalysis & Energy (BU Catalysts, Energy Storage business), Natural Resources (BU Oil & Mining Services, BU Functional Minerals) and Plastics & Coatings (BU Additives, BU Masterbatches, BU Pigments).

Intersegment transactions are entered into under the normal circumstances and terms and conditions that would also be available to unrelated third parties.

Segment assets consist of property, plant and equipment, goodwill, intangible assets, inventories, receivables and investments in asso- ciates. They exclude deferred tax assets, financial assets and operat-ing cash. Segment liabilities comprise trade payables. They ex-clude items such as tax liabilities, provisions, pension liabilities and corporate borrowings. Capital expenditure comprises additions to property, plant and equipment and intangibles.

In the context of the rearrangement of its portfolio of business activities, Clariant disposed of the Business Units Textile Chemicals, Paper Specialties and Emulsions as per 30 September 2013, the Business Units Detergents & Intermediates as per 1 January 2014 and Leather Services as per 30 April 2014. For these reasons, up to the deal closing dates, these Business Units are reported as dis-continued operations in the financial report.

On 29 October 2014, Clariant signed a contract to dispose of its Energy Storage Activities pertaining to the Business Area Catalysis & Energy to UK-based Johnson Matthey. The deal is expected to be closed during the first half of 2015. Therefore, the related assets and liabilities are reported as held for sale at the end of 2014.

190

SEGMENTS in CHF m

Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings

Total segments continuing operations Corporate Total Group

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

Segment sales 1 514 1 568 729 713 1 300 1 287 2 599 2 545 6 142 6 113 – – 6 142 6 113

Sales to other segments – 3 – 7 – 3 – 6 – 20 – 24 – 26 – 37 – – – 26 – 37

Total sales 1 511 1 561 729 713 1 297 1 281 2 579 2 521 6 116 6 076 – – 6 116 6 076

Operating expenses – 1 309 – 1 350 – 633 – 644 – 1 146 – 1 138 – 2 339 – 2 273 – 5 427 – 5 405 – 179 – 160 – 5 606 – 5 565

Income from associates and joint ventures 9 8 17 22 3 8 35 25 64 63 11 – 75 63

Gain from disposals not qualifying as discontinued operations – 20 5 – 1 5 19 163 – 168 19

Restructuring, impairment and transaction-related costs – 2 – 6 – 30 – 10 – 96 – 44 – 10 – 17 – 138 – 77 – 90 – 46 – 228 – 123

Operating income 209 233 83 81 63 106 265 256 620 676 – 95 – 206 525 470

Finance income 14 14

Finance costs – 160 – 139

Income before taxes 379 345

Taxes – 144 – 22

Net result from continuing operations 235 323

Discontinued operations:

Result from discontinued operations – 18 – 318

Net income 217 5

Segment assets 1 014 880 1 627 1 698 997 1 103 1 889 1 806 5 527 5 487 5 527 5 487

Segment liabilities – 224 – 200 – 107 – 79 – 135 – 114 – 226 – 236 – 692 – 629 – 692 – 629

Net operating assets 790 680 1 520 1 619 862 989 1 663 1 570 4 835 4 858 – – 4 835 4 858

Segment assets reported as assets held for sale 64 38 2 66 38 66 38

Corporate assets reported as assets held for sale 6 3 6 3

Segment assets of discontinued operations reported as assets held for sale – 410

Assets held for sale 64 – 38 2 66 38 6 3 72 451

Segment liabilities of discontinued operations reported as liabilities associated with assets held for sale – – 122

Segment liabilities reported as liabilities associated with assets held for sale – 2 – 6 – 2 – 6 – 8 – – 10 – 6

Liabilities directly associated with assets held for sale – 2 – – 6 – – 2 – 6 – 8 – – 10 – 128

Corporate assets without cash 1 388 1 317 1 388 1 317

Corporate liabilities without financial liabilities – 2 289 – 2 218 – 2 289 – 2 218

Net debt 2 – 1 263 – 1 500 – 1 263 – 1 500

Total net assets 790 680 1 582 1 619 862 1 021 1 665 1 570 4 899 4 890 – 2 166 – 2 398 2 733 2 780

Thereof:

Investments in PPE and intangibles for the period 90 51 49 24 38 39 79 75 256 189 65 102 321 291

Investments in associates and joint ventures 59 61 200 197 19 181 165 164 443 603 192 5 635 608

Operating income 209 233 83 81 63 106 265 256 620 676 – 95 – 206 525 470

Add: systematic depreciation of PPE 44 41 38 42 26 28 74 73 182 184 39 36 221 220

Add: impairment – 1 30 7 87 34 – 1 117 43 – 1 – 116 43

Add: amortization of intangible assets 4 3 20 26 11 16 11 10 46 55 15 9 61 64

EBITDA 1 257 278 171 156 187 184 350 340 965 958 – 42 – 161 923 797

Add: restructuring, impairment and transaction-related costs 2 6 30 10 96 44 10 17 138 77 90 46 228 123

Less: impairment (reported under restructuring and impairment) – – 1 – 30 – 7 – 87 – 34 – – 1 – 117 – 43 1 – – 116 – 43

Less: gain from disposals not qualifying as discontinued operations – – 20 – – – 5 1 – – – 5 – 19 – 163 – – 168 – 19

EBITDA before exceptional items 259 263 171 159 191 195 360 356 981 973 – 114 – 115 867 858

Operating income 209 233 83 81 63 106 265 256 620 676 – 95 – 206 525 470

Add: restructuring, impairment and transaction-related costs 2 6 30 10 96 44 10 17 138 77 90 46 228 123

Less: gain from disposals not qualifying as discontinued operations – – 20 – – – 5 1 – – – 5 – 19 – 163 – – 168 – 19

Operating income before exceptional items 211 219 113 91 154 151 275 273 753 734 -168 -160 585 574

1 EBITDA is earning before interest, tax, depreciation and amortization.

Clariant annual report 2014 191

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

SEGMENTS in CHF m

Care Chemicals Catalysis & Energy Natural Resources Plastics & Coatings

Total segments continuing operations Corporate Total Group

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013

Segment sales 1 514 1 568 729 713 1 300 1 287 2 599 2 545 6 142 6 113 – – 6 142 6 113

Sales to other segments – 3 – 7 – 3 – 6 – 20 – 24 – 26 – 37 – – – 26 – 37

Total sales 1 511 1 561 729 713 1 297 1 281 2 579 2 521 6 116 6 076 – – 6 116 6 076

Operating expenses – 1 309 – 1 350 – 633 – 644 – 1 146 – 1 138 – 2 339 – 2 273 – 5 427 – 5 405 – 179 – 160 – 5 606 – 5 565

Income from associates and joint ventures 9 8 17 22 3 8 35 25 64 63 11 – 75 63

Gain from disposals not qualifying as discontinued operations – 20 5 – 1 5 19 163 – 168 19

Restructuring, impairment and transaction-related costs – 2 – 6 – 30 – 10 – 96 – 44 – 10 – 17 – 138 – 77 – 90 – 46 – 228 – 123

Operating income 209 233 83 81 63 106 265 256 620 676 – 95 – 206 525 470

Finance income 14 14

Finance costs – 160 – 139

Income before taxes 379 345

Taxes – 144 – 22

Net result from continuing operations 235 323

Discontinued operations:

Result from discontinued operations – 18 – 318

Net income 217 5

Segment assets 1 014 880 1 627 1 698 997 1 103 1 889 1 806 5 527 5 487 5 527 5 487

Segment liabilities – 224 – 200 – 107 – 79 – 135 – 114 – 226 – 236 – 692 – 629 – 692 – 629

Net operating assets 790 680 1 520 1 619 862 989 1 663 1 570 4 835 4 858 – – 4 835 4 858

Segment assets reported as assets held for sale 64 38 2 66 38 66 38

Corporate assets reported as assets held for sale 6 3 6 3

Segment assets of discontinued operations reported as assets held for sale – 410

Assets held for sale 64 – 38 2 66 38 6 3 72 451

Segment liabilities of discontinued operations reported as liabilities associated with assets held for sale – – 122

Segment liabilities reported as liabilities associated with assets held for sale – 2 – 6 – 2 – 6 – 8 – – 10 – 6

Liabilities directly associated with assets held for sale – 2 – – 6 – – 2 – 6 – 8 – – 10 – 128

Corporate assets without cash 1 388 1 317 1 388 1 317

Corporate liabilities without financial liabilities – 2 289 – 2 218 – 2 289 – 2 218

Net debt 2 – 1 263 – 1 500 – 1 263 – 1 500

Total net assets 790 680 1 582 1 619 862 1 021 1 665 1 570 4 899 4 890 – 2 166 – 2 398 2 733 2 780

Thereof:

Investments in PPE and intangibles for the period 90 51 49 24 38 39 79 75 256 189 65 102 321 291

Investments in associates and joint ventures 59 61 200 197 19 181 165 164 443 603 192 5 635 608

Operating income 209 233 83 81 63 106 265 256 620 676 – 95 – 206 525 470

Add: systematic depreciation of PPE 44 41 38 42 26 28 74 73 182 184 39 36 221 220

Add: impairment – 1 30 7 87 34 – 1 117 43 – 1 – 116 43

Add: amortization of intangible assets 4 3 20 26 11 16 11 10 46 55 15 9 61 64

EBITDA 1 257 278 171 156 187 184 350 340 965 958 – 42 – 161 923 797

Add: restructuring, impairment and transaction-related costs 2 6 30 10 96 44 10 17 138 77 90 46 228 123

Less: impairment (reported under restructuring and impairment) – – 1 – 30 – 7 – 87 – 34 – – 1 – 117 – 43 1 – – 116 – 43

Less: gain from disposals not qualifying as discontinued operations – – 20 – – – 5 1 – – – 5 – 19 – 163 – – 168 – 19

EBITDA before exceptional items 259 263 171 159 191 195 360 356 981 973 – 114 – 115 867 858

Operating income 209 233 83 81 63 106 265 256 620 676 – 95 – 206 525 470

Add: restructuring, impairment and transaction-related costs 2 6 30 10 96 44 10 17 138 77 90 46 228 123

Less: gain from disposals not qualifying as discontinued operations – – 20 – – – 5 1 – – – 5 – 19 – 163 – – 168 – 19

Operating income before exceptional items 211 219 113 91 154 151 275 273 753 734 -168 -160 585 574

Calculation of net debt in CHF m 31.12.2014 31.12.2013

Non-current financial debt 1 761 1 830

Add: current financial debt 430 589

Less: cash and cash equivalents – 748 – 770

Less: Near-cash assets – 180 – 147

Less: Financial instruments with positive fair values – – 2

Net debt 1 263 1 500

Reconciliation of segment assets to total assets in CHF m 31.12.2014 31.12.2013

Segment assets 5 527 5 487

Segment assets reported as assets held for sale 66 38

Corporate assets reported as assets held for sale 6 3

Segment assets of discontinued operations reported as assets held for sale – 410

Corporate assets without cash 1 388 1 317

Cash 748 770

Near-cash assets 180 147

Financial instruments with positive fair values – 2

Total assets 7 915 8 174

2

192

GeoGraphic information

in CHF m Sales 1 Non-current assets 2

2014 2013 31.12.2014 31.12.2013

EMEA 2 693 2 773 2 802 2 779

of which Germany 809 863 1 968 2 083

of which Switzerland 50 49 459 297

of which MEA 461 452 83 83

North America 1 006 996 805 864

of which USA 902 884 779 785

Latin America 984 931 268 252

of which Brazil 405 429 138 138

Asia / Pacific 1 433 1 376 395 330

of which China 519 484 182 152

of which India 141 118 62 29

Total 6 116 6 076 4 270 4 225

1 Allocated by region of third-party sale's destination.2 Non-current assets exclude deferred tax assets and pension plan assets.

All of the Group’s segments generate their revenues to the largest extent from the sale of products. These come in such a great variety that a meaningful grouping below the segment information is not possible. The amounts reported for sales cover only continuing oper-ations for both years.

For a description of the Business Units see note 1.23.

22. Discontinued operations On 1 January 2014, Clariant sold its Detergents & Intermediates business to the Luxembourg-based International Chemical Inves-tors Group (ICIG). The final total consideration of the sale amounts to CHF 23 million split between cash proceeds (CHF 18 million) and vendor loan (CHF 5 million) and the after-tax loss realized in 2014 on the transaction amounts to CHF 23 million.

On 30 April 2014, Clariant sold its Leather Services business to Stahl Holdings B.V., a Dutch company majority owned by Wendel Group. In the transaction, Clariant received 23 % of the shares of Stahl and a cash consideration of CHF 89 million, out of which CHF 4 million are expected to be collected in 2015. The disposal loss after tax amounts to CHF 5 million.

On 30 September 2013, Clariant sold its Business Units Textile Chemicals, Paper Specialties and Emulsions to US-based SK Capital. An after-tax loss of CHF 287 million was realized by Clariant in 2013. The finalization of the purchase price determination reduced this after tax-loss by CHF 8 million in 2014 and extra cash proceeds amounting to CHF 29 million were received.

The Business Units concerned by these transactions are reported as discontinued operations in the financial report and were reclassi-fied to assets held for sale in the balance sheet at the end of 2012.

Clariant annual report 2014 193

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

DISCONTINUED OPERATIONS in CHF m

Activities sold in 2014 1

Activities sold on 30 September 2013 2

Corporate

Total discontinued operations

2014 2013 2014 2013 2014 2013 2014 2013

Sales 98 556 – 901 98 1 457

Operating expenses – 78 – 515 – 5 – 843 – 83 – 1 358

Income from associates and joint ventures – – – 1 – 1

Restructuring and impairment – 7 – 9 1 – 7 – 2 – 2 – 8 – 18

Remeasurement to fair value less costs of disposal on reclassification – – 80 – – – – 80

Operating result 13 – 48 – 4 52 – 2 – 2 7 2

Financial result – 2 – 31

Result from discontinued operations before taxes 5 – 29

Taxes – 3 – 2

Result from discontinued operations after taxes 2 – 31

Loss on the disposal of discontinued operations – 15 – 307

Taxes (current and deferred) – 5 20

Net result from of discontinued operations – 18 – 318

Operating cash flows – 9 42 – 8 – 13 – 2 – 2 – 19 27

thereof: payments for restructuring – 2 – 2 – – 14 – 2 – 16

Investing cash flows 102 – 10 28 275 130 265

thereof: net proceeds from the disposal of discontinued operations 103 – 29 293 132 293

Total cash flow 93 32 20 262 – 2 – 2 111 292

Cash flow from disposals:

Gross proceeds 302 46 364 348 364

Less: cash and cash equivalents transferred – 3 – 7 – 21 – 10 – 21

Less: equity investment – 187 – – 5 – 187 – 5

Less: outstanding amounts – 9 – 10 – 45 – 19 – 45

Net proceeds from disposal 103 – 29 293 – – 132 293

Net assets held for sale

Property, plant and equipment 86 – 86

Inventories 70 – 70

Trade receivables 102 – 102

Other assets 152 – 152

Total assets held for sale – 410 – – – – – 410

Trade payables – 61 – – 61

Retirement benefit obligations – 28 – – 28

Provisions – 14 – – 14

Other liabilities – 19 – – 19

Total liabilities directly associated with assets held for sale – – 122 – – – – – – 122

Total net assets held for sale – 288 – – – – – 288

1 Activities sold in 2014 comprise the Business Units Detergents & Intermediates (sold on 1 January 2014) and Leather Services (sold on 30 April 2014)2 Activities sold on 30 September 2013 comprise the Business Units Textile Chemicals, Paper Specialties and Emulsions

194

The result of the disposal of discontinued operations is as follows:

in CHF m 2014

Total cash proceeds received as of 31 December 2014 142

Outstanding amounts 19

Equity investment 187

Total consideration for the sale 348

Net assets sold including disposal-related expenses and cumulated amounts in equity pertaining to the disposal group which were recycled through income statement upon disposal – 363

Loss on the disposal of discontinued operations before taxes – 15

Taxes (current and deferred) – 5

After-tax loss on disposal – 20

in CHF m 2013

Total cash proceeds received as of 31 December 2013 314

Outstanding amounts 45

Equity investment 5

Total consideration for the sale 364

Net assets sold including disposal-related expenses and cumulated amounts in equity pertaining to the disposal group which were recycled through income statement upon disposal – 671

Loss on the disposal of discontinued operations before taxes – 307

Taxes (current and deferred) 20

After-tax loss on disposal – 287

23. Disposals

Activities not qualifying as discontinued operations In this section, disposals of subsidiaries, associates and activities are reported that do not qualify as discontinued operations in the sense of IFRS 5. The following disposals took place in 2014 and 2013:

On 30 June 2014, Clariant and Ashland Inc. sold their German headquartered Joint Venture ASK Chemicals to Rhône Group LLC, a London- and New York-based private equity investment firm. The selling price of CHF 180 million, out of which CHF 155 million in cash and CHF 25 million as vendor loan, was evenly split between Clariant and Ashland at the closing date. The devaluation of the 50 % participation to the agreed selling price resulted in a CHF 84 million impairment charge in the 1st quarter of 2014. After impairment, the net profit realized on the disposal by Clariant amounts to CHF 6 million.

On 30 June 2014, Clariant sold its Water Treatment Business Line, which was part of the Business Unit Functional Minerals, reported in the Business Area Natural Resources. The final cash proceeds received amount to CHF 34 million and the realized profit amounts to CHF 6 million after tax.

On 29 October 2014, Clariant signed a contract to dispose its Energy Storage Activities pertaining to the Business Area Catalysis & Energy to UK-based Johnson Matthey. After the remeasure-ment to fair value less costs of disposal resulting in an impairment charge of CHF 30 million, the remaining assets with a carrying value of CHF 67 million and liabilities with a total value of CHF 10 million were reported as assets held for sale and liabilities associated with assets held for sale respectively. The deal is expected to be closed during the 1st half of 2015.

On 19 September 2013, Clariant sold its 55 % participation in the Malaysian company Chemindus for a consideration of CHF 0.5 mil-lion with a book loss of CHF 1 million.

In the third quarter of 2013, Clariant set up a joint venture with Wilmar International Ltd, a leading agribusiness group, to estblish a global platform for the production and distribution of amines and selected amine derivatives. Clariant contributed its existing amines business to the joint venture, including trademarks, technology and customers relationships as well as the fixed assets related to a production plant in Germany and an initial level of inventory. The positive result realized by Clariant on that transaction in 2013 amounted to CHF 20 million coming from the fair value valuation of the contributed assets.

Clariant annual report 2014 195

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Other assets held for saleIn December 2014, Clariant sold a plot of land in India, realizing a profit of CHF 163 million before taxes. After tax, the realized gain recorded in 2014 amounts to CHF 129 million.

An amount of CHF 5 million relates to other assets held for sale in the United States, in China and in Italy (2013: CHF 3 million).

The result of the disposal of activities not qualifying as discontin-ued operations is as follows:

in CHF m 2014

Total cash proceeds received, from disposals not qualifying as discontinued operations, as of 31 December 2014 112

Total cash proceeds received, from the sale of land in India, as per 31 December 2014, reported under sale of PPE and intangible assets in the cash flow statement 173

Outstanding amounts 9

Total consideration for the sale 294

Net assets sold, after impairment, including disposal-related expenses and cumulated amounts in equity pertaining to the disposal group which were recycled through income statement upon disposal – 126

Profit before taxes on disposals not qualifying as discontinued operations 168

Taxes (current and deferred) – 27

After-tax profit on disposal 141

in CHF m 2013

Total cash proceeds received, from the disposal of activities not qualifying as discontinued operations, as of 31 December 2013 1

Total consideration for the sale 1

Net assets sold, after impairment, including disposal-related expenses and cumulated amounts in equity pertaining to the disposal group which were recycled through income statement upon disposal – 2

Fair value valuation 20

Profit before taxes on disposals not qualifying as discontinued operations 19

Taxes (current and deferred) –

After-tax profit on disposal 19

24. acquisitions

Acquisition of Plastichemix Industries in India In April 2014, Clariant acquired Plastichemix Industries, a master-batch business in India, for a consideration of CHF 19 million mainly attributed to property, plant and equipment. The goodwill realised on that transaction amounts to CHF 5 million.

Acquisition of Aerochem in ScandinaviaIn September 2014, Clariant acquired Aerochem, a Swedish- and Norwegian-based group, active in the de-icing and anti-icing fluids business. The purchase price mainly attributed to inventories amounts to CHF 15 million and the goodwill amounts to CHF 3 million.

Acquisition of VitaPac in ChinaIn December 2014, Clariant acquired the Hong-Kong-based Vita-Pac, a specialist for healthcare packaging for a consideration of CHF 7 million and a preliminary goodwill of CHF 2 million. The acquisition will complement the Medical Specialties Business Line of Clariant.

Acquisition of the Gulf of Mexico business from Cham-pion TechnologiesOn 4 April 2013, Clariant acquired from Champion Technologies Inc., that company’s Gulf of Mexico business for an amount of CHF 0.5 million. Resulting from the difference between the purchase price and the fair value of the identifiable assets acquired, namely patent technology and customer relationships, a negative goodwill in the amount of CHF 15 million resulted, which Clariant recorded under »Selling, general and administrative costs« in its income statement. The gain arose as a result of antitrust constraints that forced the selling party to dispose of this business at a low price.

Acquisition of the Organic Pigment business from Jiangsu Multicolor Fine Chemical Co Ltd.On 27 September 2013, Clariant acquired the Organic Pigment busi-ness of China-based Jiangsu Multicolor Fine Chemical Co Ltd for a preliminary consideration of CHF 24 million. Of this amount, CHF 18 million were paid during the reporting period. The net assets acquired mainly consist of fixed assets, inventories, trade receiv-ables and trade payables. The preliminary valuations with goodwill in the amount of CHF 14 million, was subsequently finalized and resulted in goodwill in the amount of CHF 5 million.

196

25. restructuring, impairment and transaction-related costs

reStrUctUrinG eXpenSeS, impairment LoSS anD tranSaction-reLateD coStSfor the years ended 31 December 2014 and 2013

in CHF m 2014 2013

Restructuring expenses 96 70

Payments for restructuring 89 133

Impairment loss 116 121thereof charged to PPE (see note 5) 4 18

thereof charged to intangible assets (see note 6) 28 23

thereof charged to investments in associates and joint ventures (see note 7) 84 –

thereof charged to assets reclassified to held for sale (see note 22) – 80

Transaction-related costs 24 30

Total restructuring, impairment and transaction-related costs 236 221

thereof reported under discontinued operations – 8 – 98

Total continuing operations 228 123

In order to increase profitability over a sustained period, Clariant implemented far-reaching measures designed to improve the Group’s performance. The aim of these efforts is to increase the Group’s operating result and to reduce net working capital. The changes that are being made to the processes and structures in order to achieve these goals result in a loss of jobs across the Group.

Restructuring. In 2014, Clariant recorded expenses for restructur-ing in the amount of CHF 96 million. This concerned not only site closures, but also restructuring measures regarding the subsidiaries in Switzerland, Germany and France.

Impairment. Impairment expenses recognized in 2014 and 2013 arose as a result of restructuring measures, the entailing site closures and disposal projects. In 2014, Clariant recorded an impairment loss of CHF 30 million on its Energy Storage activities (see note 23) and an impairment loss of CHF 84 million on its ASK joint venture participation which was subsequently sold. In 2013, a CHF 80 mil-lion impairment loss on the Detergents & Intermediates business and a CHF 23 million impairment loss on the Water Treatment activ-ities were recorded. This was to align the value of the assets and liabilities pertaining to these businesses with the agreed selling prices.

Transaction-related costs totaled CHF 24 million for 2014 mainly pertaining to continuing operations and project costs for continuing and discontinued operations.

Clariant annual report 2014 197

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

26. finance income and costs

finance income

in CHF m 2014 2013

Interest income 11 11

thereof interest on loans and receivables and deposits 7 6

thereof interest on derivative financial instruments 4 5

Other financial income 3 3

Total finance income 14 14

finance coStS

in CHF m 2014 2013

Interest expense – 129 – 154

thereof effect of discounting of non-current provisions – 6 – 4

thereof interest component of pension provisions – 23 – 31

Other financial expenses – 8 – 10

Currency result, net – 25 – 6

Total finance costs – 162 – 170

thereof reported under discontinued operations 2 31

Total continuing operations – 160 – 139

Other financial expenses include bank charges and miscellaneous financial expenses.

In 2014 and 2013, no foreign exchange gains pertaining to the inef-fective part of hedges on net investments were recognized in the income statement.

Interest expense, other than the effect of discounting of non- current provisions and the interest component of pension provi-sions, pertain to financial debts measured at amortized costs.

Interest costs capi talized on qualifying assets for 2014 were CHF 1 million (2013: nil).

198

27. earnings per share (epS)Earnings per share are calculated by dividing the Group net income by the average number of outstanding shares (issued shares less treasury shares).

2014 2013

Net income attributable to shareholders of Clariant Ltd, undiluted and diluted (CHF m)

Continuing operations 175 306

Discontinued operations – 23 – 326

Total 152 – 20

Weighted average number of shares outstanding

As per 1 January 312 611 085 281 075 365

Effect of the issuance of share capital and transactions with treasury shares on the weighted average number of shares outstanding 7 078 125 31 535 720

Weighted average number of shares outstanding at 31 December 319 689 210 312 611 085

Adjustment for granted Clariant shares 2 120 278 1 845 700

Adjustment for dilutive share options 145 410 8 162

Weighted average diluted number of shares outstanding at 31 December 321 954 898 314 464 947

Basic earnings per share attributable to shareholders of Clariant Ltd (CHF / share)

Continuing operations 0.55 0.98

Discontinued operations – 0.07 – 1.04

Total 0.48 – 0.06

Diluted earnings per share attributable to shareholders of Clariant Ltd (CHF / share)

Continuing operations 0.54 0.98

Discontinued operations – 0.07 – 1.04

Total 0.47 – 0.06

The dilution effect is triggered by two different items. One is the effect of Clariant shares granted as part of the share-based payment plan, which have not yet vested. To calculate this dilutive potential it is assumed that they had vested on 1 January of the respective period.

The second item is the effect of options granted as part of the share-based payment plan, which have not yet vested. To calculate this dilutive potential, it is assumed that all options which were in the money at the end of the respective period had been exercised on 1 January of the same period. The effect of the services still to be rendered during the vesting period were taken into consideration.

Diluted earnings per share are calculated adjusting the weighted average number of ordinary shares outstanding to assume conver-sion of all dilutive potential ordinary shares.

In 2014, a payout of CHF 0.36 (2013: CHF 0.33) per share was made out of the capital contribution reserves (see note 15).

Clariant annual report 2014 199

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

28. Derivative financial instrumentsRisk management (hedging) instruments and off-balance sheet risks. Clariant uses forward foreign exchange rate and option con-tracts, interest rate and currency swaps as well as other financial instruments to hedge the Group’s risk exposure to volatility in inter-est rates, currencies and prices and to manage the return on cash and cash equivalents. Risk exposures from existing assets and liabili-ties as well as anticipated transactions are managed centrally.

Interest rate management. It is the Group’s policy to manage the cost of interest using fixed and variable rate debt and interest-related derivatives.

Foreign exchange management. To manage the exposure to the fluctuations in foreign currency exchange rates, the Group follows

a strategy of hedging both balance sheet and revenue risk, partially through the use of forward contracts and currency swaps in various currencies. In order to minimize financial expenses, the Group does not hedge the entire exposure.

The following tables show the contract or underlying principal amounts and the respective fair value of derivative financial instru-ments by type at year-end.

The contract or underlying principal amounts indicate the volume of business outstanding at the balance sheet date and do not repre-sent the amount at risk.

Derivative financiaL inStrUmentS

in CHF mContract or underlying

principal amount Positive fair values Negative fair values

31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Interest rate related instruments

Interest rate swaps – 227 – – – – 2

Currency related instruments

Forward foreign exchange rate contracts 62 72 – 2 – 2 –

Currency options 40 160 – – – –

Total derivative financial instruments 102 459 –  2 – 2 – 2

The fair value of these derivative financial instruments is recorded in Other current assets in the balance sheet in the case of a positive value or as Current financial debts in the case of a negative value and if the instruments expire within the next twelve months.

200

Derivative financiaL inStrUmentS by matUrity

in CHF m 31.12.2014 31.12.2013

Interest rate swaps – 227

Forward foreign exchange rate contracts 62 72

Currency options 40 160

Total derivative financial instruments 102 459

breakDown by matUrity

Up to one month after the balance sheet date 65 65

More than one and up to three months after the balance sheet date 37 151

More than three and up to twelve months after the balance sheet date – 243

Total derivative financial instruments 102 459

If the remaining lifetime exceeds twelve months, the value is recorded in Financial assets in case it is positive and in Non-cur-rent financial debts in case it is negative.

Derivative financiaL inStrUmentS by cUrrency

in CHF m 31.12.2014 31.12.2013

USD 99 226

EUR 1 230

JPY 2 3

Total derivative financial instruments 102 459

financiaL inStrUmentS effective for heDGe-accoUntinG pUrpoSeS

in CHF m 31.12.2014 31.12.2013

Borrowings denominated in foreign currencies – 747 – 1 088

On 24 January 2012, Clariant issued a bond in the amount of EUR 500 million (see note 16), which on 1 June 2012 was designated as a hedge of a net investment in some of Clariant’s European subsidiar-ies. The unrealized foreign exchange rate gain resulting from the translation of the bond into Swiss francs amounting to CHF 12 million for 2014 (2013: CHF 10 million loss) is recorded in the cumulative translation difference in shareholders’ equity.

In October 2011 and January 2012, Clariant issued three certificates of indebtedness amounting to EUR 390 million, denominated in euro (see note 16). The certificates were designated as a hedge of a net investment in some of Clariant’s European subsidiaries. Two of them, amounting to EUR 267 million, have expired in October 2014 and as a consequence were de-designated; the realized foreign exchange rate gain amounting to CHF 5 million was recorded in the cumulative translation difference in shareholders’ equity. The unrealized foreign exchange rate gain resulting from the trans-lation of the existing certificate of indebtedness into Swiss francs amounted to CHF 3 million for 2014 (2013: CHF 2 million loss on this certificate of indebtedness and a CHF 8 million loss on all existing certificates of indebtedness for 2013, respectively) and is recorded in the cumulative translation difference in shareholders’ equity.

Clariant annual report 2014 201

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

29. employee participation plansUnder the Group Senior Management – Long Term Incentive Plan (GSM-LTIP) a certain percentage of the actual bonus is granted to the plan participants in the form of registered shares of Clariant Ltd (investment shares). These shares vest immediately upon grant, but are subject to a 3-year blocking period. The plan partici-pants receive an additional share free of cost (matching share) for each investment share held at the end of the blocking period.

These shares were granted for the first time in 2011, based on the performance achieved in the base year 2010. Similar plans were launched in all subsequent years. The number of shares not yet vested and thus disclosed are the matching shares already granted.

The options granted under the Clariant Executive Stock Option Plan (CESOP) established in 1999 entitle the holder to acquire regis-tered shares of Clariant Ltd (one share per option) at a predeter-mined strike price. They become vested and are exercisable after three years and expire after ten years.

In April 2008, Clariant established a stock option plan for members of management and the Board of Directors. Options granted under this plan entitle the holder to acquire registered shares of Clariant Ltd (one share per option) at a predetermined strike price. Clariant contracted a third-party bank to issue tradable options to the plan participants in accordance with the rules of the plan. The plan participants can sell the options back to this bank after they have vested. The bank in return has the right to claim a share from Clariant at the pre-determined strike price for each option that is sold to it by plan participants. The options become vested and are exercisable after two years and expire after five years.

The last grant of the stock option plan to members of Management and the Board of Directors took place in April 2012.

The Restricted Plan for members of the Board of Directors replacing the Option Plan had its first grant date in early 2014. Another grant will take place in early 2015.

For the first time in 2013, the Performance Share Unit (PSU) Plan was introduced for all senior managers to replace the former Trad-able Option Plan. The term of Clariant’s Performance Share Unit Plan is a three-year vesting period. The vesting is conditional upon achievement of the performance targets at the end of the vesting period. If the performance targets are achieved, each PSU will be converted into one Clariant share.

A new grant took place on 17 September 2014. The review of the target achievements (vesting criteria) for this plan will be held in sum-mer 2017 and vesting is scheduled to take place in September 2017.

The expense recorded in the income statement spreads the costs of each grant over the measurement period and the vesting period. Assumptions are made concerning the forfeiture rate which is adjusted during the vesting period so that at the end of the vesting period there is only a charge for the vested amounts.

During 2014, CHF 15 million (2013: CHF 19 million) were charged to the income statement for equity-settled share-based payments exclusively.

As of 31 December 2014, the total carrying value of liabilities aris-ing from equity-settled share-based payments, entirely recog-nized in equity, is CHF 24 million (2013: CHF 32 million out of which CHF 30 million recognized in equity). In 2014 no liabilities were recognized for cash settled share-based payments (2013: CHF 2 million).

In 2013, an amount of CHF 2 million was reclassified from retained earnings to provisions due to the discontinued operations. No such reclassification was made in 2014.

202

optionS for boarD of DirectorS (non-eXecUtive memberS) 1

Base year Granted Exercisable

from Expiry dateExercise

priceShare price at

grant dateNumber

31.12.2014Number

31.12.2013

2010 2010 2012 2015 15.50 12.74 142 950 222 400

2011 2011 2013 2016 18.00 15.02 192 769 216 865

Total 335 719 439 265

1 Past and current members.

optionS for Senior memberS of manaGement anD eXecUtive committee 1

Base year Granted Exercisable

from Expiry dateExercise

priceShare price at

grant dateNumber

31.12.2014Number

31.12.2013

2003 2004 2007 2014 12.00 18.74 – 49 326

2003 2004 2007 2014 16.30 18.74 – 53 479

2004 2005 2008 2015 19.85 19.85 146 237 146 237

Total 146 237 249 042

optionS for memberS of manaGement anD eXecUtive committee 1

Base year Granted Exercisable

from Expiry dateExercise

priceShare price at

grant dateNumber

31.12.2014Number

31.12.2013

2010 2010 2012 2015 15.50 12.74 358 300 1 384 600

2011 2011 2013 2016 18.00 15.02 825 217 1 586 426

2012 2012 2014 2017 16.50 12.59 2 711 500 5 334 500

Total 3 895 017 8 305 526

1 Past and current members.

As per 31 December 2014, the weighted average remaining contrac-tual life of all share options was 1.71 years (2013: 2.48 years).

ShareS for memberS of manaGement anD eXecUtive committee

Base year Granted Vesting inShare price at

grant dateNumber

31.12.2014Number

31.12.2013

2010 2011 2014 17.15 – 409 423

2010 2013 2015 13.81 50 000 50 000

2011 2012 2015 12.50 480 612 506 082

2012 2012 2016 9.49 32 000 32 000

2012 2013 2016 13.12 591 631 636 590

2013 2013 2016 13.74 676 092 705 546

2013 2013 2015 14.13 15 000 15 000

2013 2013 2016 15.61 5 000 5 000

2013 2013 2016 15.93 4 000 4 000

2013 2013 2015 15.88 10 000 10 000

2013 2014 2017 17.24 266 228 –

2014 2014 2017 17.35 543 297 –

Total 2 673 860 2 373 641

Clariant annual report 2014 203

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Weighted average exercise

priceOptions

2014Shares

2014

Weighted average

exercise price

Options 2013

Shares 2013

Shares/options outstanding at 1 January 16.65 8 993 833 2 373 641 16.27 12 182 937 1 850 195

Granted 1 188 771 2 296 847

Exercised / distributed* 17.66 – 4 489 935 – 736 475 14.46 – 2 911 413 – 1 674 575

Cancelled / forfeited – 126 925 – 152 077 – 277 691 – 98 826

Outstanding at 31 December 16.85 4 376 973 2 673 860 16.65 8 993 833 2 373 641

Exercisable at 31 December 16.85 4 376 973 16.87 3 659 333

Fair value of shares / options outstanding in CHF 6 975 845 44 706 939 16 299 610 38 714 077

* Options exercised / distributed include 2 943 344 options (2013: 1 292 085) pertaining to the 2010, 2011 and 2012 Option Plans, which were sold by the plan participants in the market and are currently held by third parties. Total outstanding options of these plans sold in the market at 31 December 2014 are 4 533 422 (31 December 2013: 1 590 078) with a fair value at 31 December 2014 of 7 052 197 (31 December 2013: 1 628 751 ).

The fair value of shares granted during 2014 is CHF 20 million (2013: CHF 31 million) calculated based on market value of shares at grant date.

No options were granted in 2014 and 2013.

30. personnel expenses

in CHF m 2014 2013

Wages and salaries – 1 056 – 1 235

Social welfare costs – 339 – 344

Shares and options granted to directors and employees – 15 – 19

Pension costs – defined contribution plans – 23 – 27

Pension costs – defined benefit plans – 38 – 25

Other post-employment benefits 13 – 1

Total personnel expenses – 1 458 – 1 651

thereof reported under discontinued operations 23 244

Total continuing operations – 1 435 – 1 407

204

31. related party transactionsClariant maintains business relationships with related parties. One group consists of the associates and joint ventures, where the most important ones are described in note 7. The most important business with these companies is the purchase of services by Clariant (e.g. energy and rental of land and buildings) in Germany, the ren-dering of services to the Stahl group following the disposal of the Leather Business and the rendering of services to Global Amines.

The second group of related parties is key management comprising the Board of Directors and the Executive Committee. The infor-mation required by the ordinance against excessive compensation in stock exchange listed companies regarding the emoluments for the members of the Board of Directors and the Executive Committee is disclosed in the Compensation Report on pages 131 to 144 of this report. More information on the relationship with the Board of Directors is given in the chapter Corporate Governance (non-audited).

The third group of related parties are the pension plans of major subsidiaries. Clariant provides services to its pension plans in Switzerland, the United Kingdom, and the United States. These services comprise mainly administrative and trustee services. The total costs in 2014 of these services is CHF 1 million (2013: CHF 1 million), of which approximately half is charged back to the pension plans. The number of full-time employees corresponding to these is approximately five (2013: approximately five).

tranSactionS with reLateD partieS

in CHF m 2014 2013

Income from the sale of goods to related parties 52 45

thereof joint ventures 12 11

thereof associates 40 34

Income from the rendering of services to related parties 54 13

thereof joint ventures 22 7

thereof associates 32 6

Expenses from the purchase of goods from related parties – 128 – 111

thereof joint ventures – 36 – 21

thereof associates – 92 – 90

Expenses from services rendered by related parties – 235 – 232

thereof joint ventures – 23 – 19

thereof associates – 212 – 213

payabLeS anD receivabLeS with reLateD partieS

in CHF m 31.12.2014 31.12.2013

Receivables from related parties 20 9

thereof joint ventures 6 5

thereof associates 14 4

Payables to related parties 56 48

thereof joint ventures 9 32

thereof associates 47 16

Loans to related parties 59 61

thereof joint ventures 35 35

thereof associates 24 26

Loans from related parties –  1

thereof joint ventures – –

thereof associates –  1

Guarantees to third parties on behalf of related parties 109 82

thereof joint ventures 109 82

tranSactionS with key manaGement

in CHF m 2014 2013

Salaries and other short-term benefits 9 10

Post-employment benefits 3 3

Share-based payments 4 5

Total 16 18

There are no outstanding loans by the Group to any members of the Board of Directors or Executive Committee.

32. commitments and contingenciesLeasing commitments. The Group leases land, buildings, machin-ery and equipment, furniture and vehicles under fixed-term agree-ments. The leases have varying terms, escalation clauses and renewal rights.

Commitments arising from fixed-term operating leases mainly con-cern buildings in Switzerland and Germany. The most important partners for operating leases of buildings in Germany are the Infra-serv companies. There exist no particular renewal options other than annual prolongations in case there is no explicit termination of the lease contract.

Clariant annual report 2014 205

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Expected expenses for operating leases breakdown by maturities as follows:

in CHF m 31.12.2014 31.12.2013

2014 – 44

2015 44 28

2016 29 19

2017 21 14

2018 16 12

2019 13 –

Thereafter 32 23

Total 155 140

Expenses for operating leases were CHF 66 million in 2014 (2013: CHF 74 million).

Guarantees. No guarantees in favor of third parties were issued in 2014 and 2013.

Purchase commitments. In the regular course of business, Clariant enters into relationships with suppliers whereby the Group com -mits itself to purchase certain minimum quantities of materials in order to benefit from better pricing conditions. These commitments are not in excess of current market prices and reflect normal business operations.

In 2013, Clariant signed a contract to buy a minimum quantity of eth-ylene starting in 2015 for the next 10 years. This implies a total pur-chase commitment of about CHF 1.2 billion (2013: CHF 1.6 billion).

Contingencies. Clariant operates in countries where political, eco-nomic, social, legal, and regulatory developments can have an impact on the operational activities. The effects of such risks on the company’s results, which arise during the normal course of business, are not foreseeable and are therefore not included in the accompanying financial statements.

In the aftermath of the procedure to acquire subsequent to the acquisition of Süd-Chemie, the 1.36 % of shares still in possession of third parties (squeeze-out) at the time, a law office initiated appraisal proceedings to reassess the adequacy of the cash compen-sation paid to the minority shareholders. Clariant opines that the cash compensation agreed is fair and complies with all legal and economic requirements. At this time it cannot be detemined to what extent these proceedings will lead to additional financial liabilities.

In connection with the dismantlement of a waste water treatment plant in France Clariant is faced with a claim by the Swiss-based group Novartis in the amount of EUR 10 million. Clariant has the view that this claim is unfounded. The case is currently pending at court.

In India, Clariant is confronted with a demand notice from the Sales Tax Authorities. The claim may lead to obligations of up to CHF 21 million. Clariant is disputing this demand and has filed appeals. Management is confident that it will be able to produce all necessary documentation to achieve a revocation of the claim.

In the ordinary course of business, Clariant is involved in lawsuits, claims, investigations and proceedings, including product liability, intellectual property, commercial, environmental, and health and safety matters. Although the outcome of any legal proceedings cannot be predicted with certainty, Management is of the opinion that, apart from those cases where a provision has already been recognized, there are no such matters pending which would likely have any material adverse effect in relation to its business, financial position, or results of operations.

Environmental risks. Clariant is exposed to environmental liabili-ties and risks relating to its past operations, principally in respect of remediation costs. Provisions for non-recurring remediation costs are made when there is a legal or constructive obligation and the costs can be reliably estimated. It is difficult to estimate the action required by Clariant in the future to correct the effects on the envi-ronment of prior disposal or release of chemical substances by Clariant or other parties, and the associated costs, pursuant to envi-ronmental laws and regulations. The material components of the environmental provisions consist of costs to fully clean and refurbish contaminated sites and to treat and contain contamination at sites where the environmental exposure is less severe.

33. exchange rates of principal currenciesRates used to translate the consolidated balance sheets (closing rate):

31.12.2014 31.12.2013

1 USD 0.99 0.89

1 EUR 1.20 1.23

1 BRL 0.37 0.38

1 CNY 0.16 0.15

100 INR 1.57 1.44

100 JPY 0.83 0.85

Sales-weighted average exchange rates used to translate the consol-idated income statements and consolidated statements of cash flows:

2014 2013

1 USD 0.92 0.93

1 EUR 1.21 1.23

1 BRL 0.39 0.43

1 CNY 0.15 0.15

100 INR 1.50 1.59

100 JPY 0.86 0.95

206

34. important subsidiaries

Country Company name Currency

Share- / paid in capital (in thou-

sands)

Partici- pation

in %

Holding / Finance /

Service Sales Production Research

Argentina Clariant (Argentina) SA, Lomas de Zamora ARS 54 650 100.0 n n

Australia Clariant (Australia) Pty. Ltd, Glen Waverley AUD 4 402 100.0 n n n

Austria Clariant (Österreich) GmbH, Vienna EUR 1 035 100.0 n n

Belgium Clariant Masterbatches Benelux SA, Louvain-la-Neuve EUR 9 629 100.0 n n

Brazil Clariant Administração de Bens Ltda., São Paulo BRL 7 696 100.0 n

Clariant S.A., São Paulo BRL 184 863 100.0 n n n n

British Virgin Islands Clariant Clearwater Technologies Ltd, Tortola USD 1 100.0 n

Clariant Finance (BVI) Ltd, Tortola CHF 10 100.0 n

Canada Clariant (Canada) Inc., Toronto CAD 10 415 100.0 n n n n

Chile Clariant Colorquímica (Chile) Ltda., Maipú-Santiago de Chile CLP 14 797 100.0 n n

China Clariant (China) Ltd, Hong Kong HKD 93 250 100.0 n n n

Clariant Bohai Pigments Preparations (Tianjin) Ltd, Tianjin CNY 49 176 90.0 n n n

Clariant Catalysts (Nanjing) Ltd, Nanjing USD 45 000 100.0 n n n

Clariant Chemicals (China) Ltd, Shanghai USD 10 000 100.0 n n n

Clariant Chemicals (Guangzhou) Ltd, Guangzhou USD 9 500 100.0 n n

Clariant Chemicals (Huizhou) Ltd, Daya Bay, Huizhou USD 27 948 100.0 n n

Clariant China Holding Limited, Hong Kong HKD 8 100.0 n

Clariant Huajin Catalysts (Panjin) Ltd, Panjin City CNY 69 511 60.0 n n

Clariant Masterbatches (Beijing) Ltd, Beijing USD 1 099 100.0 n n

Clariant Masterbatches (Shanghai) Ltd, Shanghai USD 3 199 100.0 n n

Clariant Redhill Bentonite (Liaoning) Ltd, Jianping USD 3 070 100.0 n n

Clariant Specialty Chemicals (Zhenjiang) Co., Ltd, Zhenjiang USD 14 400 100.0 n n

Jiangsu Süd-Chemie Chemical Materials Co., Ltd, Zhenjiang EUR 8 000 100.0 n n

Jiangsu Süd-Chemie Performance Packaging Material Co., Ltd, Changshu EUR 1 225 100.0 n n

Süd-Chemie Investment Management (Shanghai) Co., Ltd, Shanghai USD 3 300 100.0 n

Colombia Clariant (Colombia) SA, Cota (Cundinamarca) COP 2 264 786 100.0 n n

Finland Clariant Masterbatches (Finland) Oy, Vantaa EUR 169 100.0 n

France Clariant Masterbatches (France), Choisy-le-Roi EUR 1 561 100.0 n n

Clariant Production (France), Choisy-le-Roi EUR 6 273 100.0 n n

Clariant Services (France), Choisy-le-Roi EUR 21 200 100.0 n

CRM International EUR 650 100.0 n n

Germany Clariant Advanced Materials GmbH, Frankfurt a.M. EUR 102 100.0 n n n

Clariant Masterbatches (Deutschland) GmbH, Lahnstein EUR 53 100.0 n n n

Clariant Produkte (Deutschland) GmbH, Frankfurt a.M. EUR 9 348 100.0 n n n n

Country Company name CurrencyShare-/paid

in capital

Participa-tion in %

Holding/ Finance/

Service Sales Production Forschung

Clariant annual report 2014 207

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

Clariant SE, Frankfurt a.M. EUR 915 100.0 n n

Clariant Verwaltungsgesellschaft mbH, Frankfurt a.M. EUR 2 560 100.0 n

SC Beteiligungsgesellschaft mbH, Bensheim EUR 32 185 100.0 n

Süd-Chemie IP GmbH & Co. KG, Munich EUR 25 100.0 n n

Great Britain Clariant Distribution UK Limited, Yeadon, Leeds GBP 10 000 100.0 n

Clariant Horsforth Limited, Yeadon, Leeds GBP 50 100.0 n

Clariant Masterbatches UK Ltd, Yeadon, Leeds GBP 3 600 100.0 n

Clariant Oil Services UK Ltd, Yeadon, Leeds GBP 400 100.0 n n n

Clariant Production UK Ltd, Yeadon, Leeds GBP 17 254 100.0 n n n

Clariant Services UK Ltd, Yeadon, Leeds GBP 50 000 100.0 n

Greece Süd-Chemie Hellas Monoprosopi E.P.E., Adamas, Milos EUR 555 100.0 n

Guatemala Clariant (Guatemala) SA, Guatemala City GTQ 14 000 100.0 n n

Clariant Trading (Guatemala) SA, Guatemala City GTQ 10 100.0 n

India Clariant Chemicals (India) Ltd, Thane INR 266 607 63.4 n n n

Clariant India Private Limited, New Delhi INR 500 100.0 n n

Indonesia P.T. Clariant Specialties Indonesia, Tangerang USD 500 100.0 n

P.T. Clariant Adsorbents Indonesia, Cileungsi, Bogor IDR 12 375 000 100.0 n n

PT. Clariant Indonesia, Tangerang USD 23 950 100.0 n n n

Ireland Clariant Masterbatches Ireland Limited, Naas EUR 411 100.0 n n

Italy Clariant (Italia) S.p.A., Milan EUR 36 000 100.0 n

Clariant Masterbatches (Italia) S.p.A., Milan EUR 3 000 100.0 n n n

Clariant Prodotti (Italia) S.p.A., Milan EUR 1 000 100.0 n n n

Società Sarda di Bentonite S.r.l., Santa Giusta EUR 2 050 100.0 n n n

Süd-Chemie Imic Italia S.r.l., Silvano Pietra EUR 3 335 75.0 n n

Japan Clariant (Japan) K.K., Tokyo JPY 450 000 100.0 n n n

Clariant Catalysts (Japan) K.K., Tokyo JPY 543 594 61.4 n n n n

Korea Clariant Industrial Minerals (Korea) Co., Ltd, Pohang, Gyeongbuk KRW 7 067 990 100.0 n n

Liechtenstein Clariant Insurance AG, Triesen CHF 5 000 100.0 n

Luxemburg Clariant Finance (Luxembourg) S.A., Luxemburg EUR 52 990 100.0 n

Malaysia Clariant (Malaysia) Sdn. Bhd., Kuala Lumpur MYR 12 347 100.0 n

Clariant Masterbatches (Malaysia) Sdn Bhd, Petaling Jaya MYR 2 000 60.0 n n

Clariant Oil Services (Malaysia) Sdn Bhd MYR 137 48.9 n

Mexico Clariant (Mexico) S.A. de C.V., Ecatepec de Morelos MXN 23 106 100.0 n n n n

Clariant Productos Químicos S.A. de C.V., Ecatepec de Morelos MXN 5 781 100.0 n

Morocco Clariant (Maroc) S.A., Casablanca MAD 31 250 100.0 n n

Netherlands Clariant Participations (The Netherlands) B.V., Maastricht EUR 20 100.0 n

New Zealand Clariant (New Zealand) Ltd, Auckland NZD 1 000 100.0 n n n

Country Company name Currency

Share- / paid in capital (in thou-

sands)

Partici- pation

in %

Holding / Finance /

Service Sales Production Research

208

Norway Clariant Oil Services Scandinavia AS, Bergen NOK 4 725 100.0 n n

Aerochem AS NOK 200 100.0 n

Pakistan Clariant Chemical Pakistan (Pvt) Ltd, Karachi-Korangi PKR 1 130 226 100.0 n n

Peru Clariant (Perú) SA, Lima PEN 25 063 100.0 n n n

Poland Clariant Polska Spolka z.o.o., Zgierz PLN 1 546 100.0 n n

Süd-Chemie Polska Sp. z o.o., Gdansk PLN 3 885 100.0 n n

Qatar Clariant Qatar W.L.L., Mesaieed QAR 60 000 65.0 n n

Russia Clariant (RUS) LLC, Moscow RUB 12 700 100.0 n

Saudi Arabia Clariant Masterbatches (Saudi Arabia) Ltd, Riyadh SAR 16 000 53.0 n n

Singapore Clariant (Singapore) Pte. Ltd, Singapore SGD 2 500 100.0 n n n

Clariant South East Asia Pte. Ltd, Singapore SGD 1 560 100.0 n

South Africa Clariant Sasol Catalysts (Proprietary) Limited, Chloorkop, Gauteng ZAR 1 417 80.0 n n

Clariant Southern Africa (Pty) Ltd. Chloorkop, Gauteng ZAR 6 100.0 n n n

Spain Clariant Ibérica Producción S.A., El Prat de Llobregat EUR 6 023 100.0 n n n n

Clariant Ibérica Servicios S.L., El Prat de Llobregat EUR 358 100.0 n

Clariant Masterbatch Ibérica S.A., Sant Andreu de la Barca EUR 2 524 100.0 n n

Sweden Clariant (Sverige) Holding AB, Mölndal SEK 10 000 100.0 n

Clariant Masterbatches Norden AB, Malmö SEK 3 200 100.0 n n

Aerochem AB SEK 400 100.0 n n

Switzerland Clariant Beteiligungen AG, Muttenz CHF 100 100.0 n

Clariant Chemiebeteiligungen AG, Muttenz CHF 96 929 100.0 n

Clariant Consulting AG, Muttenz CHF 200 100.0 n

Clariant International AG, Muttenz CHF 180 704 100.0 n n

Clariant Oil Services AG CHF 300 100.0 n

Clariant Produkte (Schweiz) AG, Muttenz CHF 5 000 100.0 n n n

Clariant Reinsurance AG, Muttenz CHF 3 000 100.0 n

EBITO Chemiebeteiligungen AG, Muttenz CHF 202 100.0 n

LiFePO4+C Licensing AG, Muttenz CHF 100 100.0 n

Infrapark Baselland AG CHF 5 000 100.0 n

Taiwan Clariant Chemicals (Taiwan) Co., Ltd, Taipei TWD 23 888 100.0 n n

Thailand Clariant (Thailand) Ltd, Klongton, Bangkok THB 400 000 100.0 n n

Clariant Masterbatches (Thailand) Ltd, Chonburi THB 225 000 100.0 n n n

Turkey Clariant (Türkiye) A.S., Gebze TRY 8 702 100.0 n n

UAE Clariant (Gulf ) FZE, Jebel Ali, Dubai AED 1 000 100.0 n n n

Ukraine Clariant Ukraine LLC, Severodonetsk UAH 28 688 100.0 n n

USA Clariant Corporation, Charlotte, NC USD – 100.0 n n n n

Katapullt LLC, Albany, NY USD 1 100.0 n

Octagon Process, L.L.C., Las Vegas, NV USD 1 100.0 n n n

Venezuela Clariant Venezuela, S.A., Maracay VEF 7 345 100.0 n n

Country Company name Currency

Share- / paid in capital (in thou-

sands)

Partici- pation

in %

Holding / Finance /

Service Sales Production Research

Clariant annual report 2014 209

Financial Report Notes to the coNsolidated fiNaNcial statemeNts

35. events subsequent to the balance sheet date

Acquisition of the remaining 50 % of shares in Companhia Brasileira de Bentonita in BrazilOn 12 January 2015, Clariant announced it has signed an agreement to acquire the remaining 50 % shares of Companhia Brasileira de Bentonita (CBB) from Geosol. This transaction aims to secure valu-able clay reserves for Clariant’s bleaching earth operations and to take full ownership of a bentonite plant. The expected purchase price amounts to CHF 6 million.

Swiss National Bank announcement for the discontinuance of the minimum exchange rate of CHF 1.20 per EUR 1.00On 15 January 2015, the Swiss National Bank announced that it was discontinuing the minimum exchange rate of 1.20 Swiss franc per euro. The figures presented in the Annual Financial Report of Clariant do not reflect any changes in the exchange rates after 31 December 2014. Since Clariant presents its consolidated accounts in Swiss francs the changes in exchange rates after 15 January 2015 will materially affect the consolidated financial statements of the Clariant Group. Clariant is still in the process of assessing in detail the impact these changes will have both on its activities and on the financial reporting.

210

report of the StatUtory aUDitor to the GeneraL meetinG of cLariant LtD, mUttenz

report of the statutory auditor on the consolidated financial statementsAs statutory auditor, we have audited the consolidated financial statements of Clariant Ltd, which comprise the consolidated bal-ance sheet, consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statements of cash flows and notes (pages 148 to 209), for the year ended 31 December 2014.

Board of Directors’ ResponsibilityThe Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes design-ing, implementing and maintaining an internal control system rele -vant to the preparation and fair presentation of consolidated finan-cial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judg-ment, including the assessment of the risks of material misstate-ment of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor con-siders the internal control system relevant to the entity’s prepara-tion and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the cir-

cumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements for the year ended 31 December 2014 give a true and fair view of the financial posi-tion, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.

report on other legal requirementsWe confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circum-stances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submit-ted to you be approved.

PricewaterhouseCoopers Ltd

Dr. Daniel Suter Ruth Sigel Audit expert Audit expertAuditor in charge

Basel, 16 February 2015

PricewaterhouseCoopers Ltd, St. Jakobs-Strasse 25, Postfach, 4002 Basel, Switzerland

Telephone: +41 58 792 51 00, Facsimile: +41 58 792 51 10, www.pwc.ch

PricewaterhouseCoopers Ltd is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

Clariant annual report 2014 211

Financial Report Review of tRends

review of trenDS

five-year Group overview

five-year GroUp overview 2010 – 2014

2014 20132012 3

(restated) 20122011 2

(restated) 2011 2010

Segment sales CHF m 6 142 6 113 6 073 6 073 5 598 7 413 7 190

Change relative to preceding year:

in Swiss francs % 1 1 8 8 – 3 7

in local currency % 5 4 8 8 – 16 13

Group sales 1 CHF m 6 116 6 076 6 038 6 038 5 571 7 370 7 120

Change relative to preceding year:

in Swiss francs % 1 1 8 8 – 4 8

in local currency % 5 4 8 8 – 16 13

Operating income before exceptionals CHF m 585 574 546 531 624 717 696

Change relative to preceding year % 2 5 – 13 – 15 – 3 158

as a % of sales 9.6 9.4 9.0 8.8 11.2 9.7 9.8

Operating income CHF m 525 470 411 396 432 507 366

Change relative to preceding year % 12 14 – 5 – 8 – – 39 –

as a % of sales 8.6 7.7 6.8 6.6 7.8 6.9 5.1

EBITDA CHF m 923 797 690 675 643 786 646

Change relative to preceding year % 16 16 7 5 – 22 146

as a % of sales 15.1 13.1 11.4 11.2 11.5 10.7 9.1

EBITDA before exceptionals 867 858 817 802 835 975 901

Change relative to preceding year % 1 5 – 2 – 4 – 7 8 82

as a % of sales 14.2 14.1 13.5 13.3 15.0 13.2 12.7

Net income CHF m 217 5 228 238 251 251 191

Change relative to preceding year % – – 98 – 9 – 5 31 31 –

as a % of sales – – – – – 3.4 2.7

Investment in property, plant and equipment CHF m 310 292 311 311 370 370 224

Change relative to preceding year % 6 – 6 – 16 – 16 65 65 66

as a % of sales – – – – – 5 3

Personnel costs CHF m 1 435 1 407 1 434 1 452 1 341 1 623 1 646

Change relative to preceding year % 2 – 2 7 8 – – 1 – 6

as a % of sales 23 23 24 24 24 22 23

Employees at year-end Number 17 003 18 099 21 202 21 202 22 149 22 149 16 176

Change relative to preceding year % – 6 – 15 – 4 – 4 37 37 – 8

1 Including trading.2 Restated for the effects of discontinued operations – see note 1.04 of Annual Report 2012.3 Restated for the effects of the revised IAS 19 – see note 1.03 of Annual Report 2013.

212

clariant ltd balance sheets

at 31 December 2014 and 2013 31.12.2014 in CHF

in %

31.12.2013 in CHF in %

assets

Non-current assets

Shareholdings in Group companies 2 371 124 758 1 890 338 974

Loans to Group companies 1 993 354 368 2 209 883 341

Loans to related parties 1 409 323 1 959 760

Loans to third parties 4 590 000 –Intangible assets 22 380 090 27 572 527

Total non-current assets 4 392 858 539 86.6 4 129 754 602 79.3

Current assets

Receivables from Group companies 139 385 258 451 673 940

Other receivables 8 680 135 20 344 554

Accrued income and prepaid expenses 3 739 265 1 123 296

Marketable securities 202 110 022 222 576 621

Short-term deposits 159 494 461 234 671 217

Cash and cash equivalents 165 216 310 146 259 705

Total current assets 678 625 451 13.4 1 076 649 333 20.7

Total assets 5 071 483 990 100.0 5 206 403 935 100.0

equity and liabilities

Total share capital 1 228 175 036 1 228 175 036

Reserves

General reserve 1 495 261 386 1 572 625 867

thereof reserves from capital contributions 1 2 759 559 377 2 836 923 858

thereof from retained earnings 2 – 1 264 297 991 – 1 264 297 991

Reserve for treasury shares 172 957 098 189 774 673

thereof reserves from capital contributions 1 86 873 624 124 409 724

thereof from retained earnings 86 083 474 65 364 949

Free reserves 403 092 363 423 807 861

Total reserves 2 071 310 847 2 186 208 401

Accumulated gains

Gain for the financial year 140 011 069 3 027

Total accumulated gains 140 011 069 3 027

Total equity 3 439 496 952 67.8 3 414 386 464 65.6

Liabilities

Non-current liabilities

Straight bonds 970 000 000 1 010 000 000

Certificate of indebtedness 152 671 000 154 679 233

Loans to third parties 27 853 406 44 647 397

Loans from Group companies 4 590 000 9 406 008

Total non-current liabilities 1 155 114 406 22.8 1 218 732 638 23.4

Current liabilities

Straight bonds 200 000 000 –

Certificate of indebtedness – 327 250 885 Provisions 1 763 055 2 303 305

Liabilities to Group companies 238 499 860 197 791 350

Other liabilities 34 664 757 29 355 153

Accrued expenses 1 944 960 16 584 140

Total current liabilities 476 872 632 9.4 573 284 833 11.0

Total liabilities 1 631 987 038 32.2 1 792 017 471 34.4

Total equity and liabilities 5 071 483 990 100.0 5 206 403 935 100.0

1 The Swiss Federal Tax Administration confirmed qualifying capital contributions of approximately CHF 1.7 billion in 2011. For further information see also note 9 to the financial statements of Clariant Ltd.2 This amount corresponds to capital contribution reserves formerly offset with losses. For further information see also note 9 to the financial statements of Clariant Ltd.

Clariant annual report 2014 213

Financial Report Financial statements oF clariant ltd, muttenz

clariant ltd income statements

for the years ended 2014 and 2013

2014 in CHF

2013 in CHF

Income

Income from participations and interests on loans 191 048 833 526 557 451

Income from cash and cash equivalents, marketable securities and short-term deposits 20 116 709 61 975 770

Exchange rate gains realized 59 922 036 114 178 746

Reversal of tax provision – 14 668 834

Reversal of depreciation of financial assets 141 800 000 –

Other income 20 938 688 15 377 146

Total income 433 826 266 732 757 947

Expenses

Financial expenses 90 055 298 169 745 718

Administrative expenses 91 785 395 101 700 494

Other expenses (including taxes) 8 627 643 3 317 348

Depreciation of financial assets 103 346 861 443 440 981

Exceptional expenses – 14 550 379

Total expenses 293 815 197 732 754 920

Gain for the financial year 140 011 069 3 027

214

notes to the financial statements of clariant ltd

1. accounting policiesIntroduction. The statutory financial statements of Clariant Ltd comply with the requirements of the Swiss company law.

Exchange rate differences. Balance sheet items denominated in foreign currencies are converted at year-end exchange rates. Realized exchange gains and losses as well as all unrealized exchange losses are recorded in the income statement.

Financial assets. These are valued at acquisition cost less adjust-ments for impairment of value.

Provisions. Provisions are made to cover existing liabilities.

2. basis of preparationApplying the transitional provisions of the new accounting law, these financial statements have been prepared in accordance with the provisions on accounting and financial reporting of the Swiss Code of Obligations effective until 31 December 2012.

3. financial assetsAfter a regular review of the cash generating capabilities of all subsidiaries of Clariant Ltd, investments were revalued in the amount of CHF 142 million and written down in the amount of CHF 104 million in the financial year.

In the year 2014, hidden reserves in the net amount of CHF 295 million were reversed.

The principal direct and indirect affiliated companies and other holdings of Clariant Ltd are shown on pages 206 to 208 of the Financial Report of the Clariant Group.

4. cash, marketable securities, and current financial assetsSecurities include treasury shares valued at market value in the amount of CHF 202 million (2013: CHF 215 million). See also note 6.

Because of the increasing share price a revaluation of the treasury shares of CHF 6 million was recorded.

5. share capital

Capital issued 31.12.2014 31.12.2013

Number of registered shares each with a par value of CHF 3.70 (2013: CHF 3.70) 331 939 199 331 939 199

In CHF 1 228 175 036 1 228 175 036

Conditional capital 31.12.2014 31.12.2013

Number of registered shares each with a par value of CHF 3.70 (2013: CHF 3.70) 3 811 886 3 811 886

In CHF 14 103 978 14 103 978

Clariant annual report 2014 215

Financial Report Notes to the fiNaNcial statemeNts of clariaNt ltd

6. treasury shares

2014 2013

Holdings at 1 January 13 204 851 16 070 280

Shares purchased at market value 1 200 000 1 208 444

Shares sold to counterparty out of options (management options 2008) – – 2 067 500

Shares sold at market value – 1 580 456 – 507 944

Shares transferred to employees – 736 475 – 1 498 429

Holdings on 31 December 12 087 920 13 204 851

Each registered share has a par value of CHF 3.70 (2013: CHF 3.70).

The average price of shares bought in 2014 was CHF 17.27 (2013: CHF 13.53).

The average price of shares sold in 2014 was CHF 17.04 (2013: CHF 12.83).

7. reconciliation of equity

in CHF Share capital General reserve Reserve for treasury sharesFree

reserves Net income Total

from capital contribution 1

from retained

earnings 2from capital

contribution 1

from retained earnings

Balance 31 December 2013 1 228 175 036 2 836 923 858 – 1 264 297 991 124 409 724 65 364 949 423 807 861 3 027 3 414 386 464

Treasury share transactions 37 536 100 – 37 536 100 20 718 525 – 20 718 525 0

Reclassification of profit carryfor-ward to free reserves 3 027 – 3 027 0

Distribution – 114 900 581 – 114 900 581

Profit of the financial year 140 011 069 140 011 069

Balance 31 December 2014 1 228 175 036 2 759 559 377 – 1 264 297 991 86 873 624 86 083 474 403 092 363 140 011 069 3 439 496 952

1 The Swiss Federal Tax Administration confirmed qualifying capital contributions of approximately CHF 1.7 billion in 2011. For further information see also note 9 to the financial statements of Clariant Ltd.2 This amount corresponds to capital contribution reserves formerly offset with losses. For further information see also note 9 to the financial statements of Clariant Ltd.

216

8. bonds and certificates of indebtedness

in CHF thousands Interest rate TermAmount

31.12.2014Amount

31.12.2013

Certificate of indebtedness mixed 2011 – 2014 – 299 160

Certificate of indebtedness mixed 2011 – 2016 152 671 152 671

Certificate of indebtedness mixed 2012 – 2014 – 30 348

Straight bond 2.750 2011 – 2015 200 000 200 000

Straight bond 3.125 2011 – 2017 100 000 100 000

Straight bond 3.250 2012 – 2019 285 000 285 000

Straight bond 2.500 2012 – 2018 250 000 250 000

Straight bond 3.500 2012 – 2022 175 000 175 000

Straight bond 2.125 2014 – 2024 160 000 –

Total 1 322 671 1 492 179

On 17 October 2014, Clariant launched a CHF 160 million domestic bond for a term of ten years, with a coupon of 2.125 % per annum and an issue price of 101.053 % for the first tranche of CHF 150 mil-lion and 101.412 % for the second tranche of CHF 10 million.

On 21 October 2014, the certificates of indebtedness issued in 2011 and 2012 with notional amounts of EUR 242 million and EUR 25 million respectively, reached maturity and were repaid.

9. General reservesThe general reserve must be at least 20 % of the share capital of Clariant Ltd as this is the minimum amount required by the Swiss Code of Obligations.

As from 2011, if certain conditions are met, qualifying capital con-tributions made to Clariant Ltd by its shareholders since 1997 can be distributed without being subject to Swiss withholding tax.

Qualifying capital contribution reserves of approximately CHF 1.7 billion are confirmed by the Swiss Federal Tax Administra-tion (SFTA).

The SFTA is of the opinion that capital contribution reserves which were formerly offset with losses of CHF 1.26 billion will not qualify as capital contribution reserves anymore (even if compensated with newly generated retained earnings). Clariant Ltd does not uncondi-tionally share this opinion, why such potential capital contribution reserves are also documented as capital contribution reserves in the balance sheet.

10. reserve for treasury sharesClariant Ltd has met the legal requirements for treasury shares required by the Swiss Code of Obligations.

11. contingent liabilities

in CHF m

Outstanding liabilities

31.12.2014

Outstanding liabilities

31.12.2013

Outstanding liabilities as guarantees in favor of Group companies 822 832

The company belongs to the Swiss value-added tax (VAT) group of Clariant International Ltd, and thus carries joint liability to the Swiss federal tax authority for value-added tax.

Clariant annual report 2014 217

Financial Report Notes to the fiNaNcial statemeNts of clariaNt ltd

12. shareholdings of members of the board of directors and the executive committee

1. Board of Directors

shares held

NameNumber of

shares granted 1Number of

shares granted

Number of shares within

vesting period

Number of shares within

vesting period

Number of privately

held shares

Number of privately

held shares

31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Rudolf Wehrli 12 904 11 258 – – 43 132 26 874

Günter von Au 9 678 8 444 – – 26 732 18 288

Peter Isler 6 452 5 629 – – 64 375 56 746

Peter Chen 6 452 5 629 – – 12 821 12 923

Dominik Koechlin 6 452 5 629 – – 23 921 18 292

Carlo G. Soave 6 452 5 629 – – 27 921 22 292

Hariolf Kottmann 2 See EC Overview

Dolf Stockhausen 6 452 5 629 – 11 594 625 11 783 396

Konstantin Winterstein 6 452 5 629 – 6 002 861 5 985 040

Total 61 294 53 476 – – 17 796 388 17 923 851

options held

NameNumber of

options grantedNumber of

options granted

Number of options within vesting period

Number of options within vesting period

Number of excercisable

options

Number of excercisable

options

31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Rudolf Wehrli – – – – 30 120 61 870

Günter von Au – – – – – –

Peter Isler – – – – 47 946 47 946

Peter Chen – – – – – 47 946

Dominik Koechlin – – – – 47 946 47 946

Carlo G. Soave – – – – 24 096 47 946

Hariolf Kottmann 2 See EC Overview

Dolf Stockhausen – – – – – –

Konstantin Winterstein – – – – – –

Total – – – – 150 108 253 654

1 The number of shares granted as part of the BoD share program will be determined after the balance sheet date. The number disclosed is based on the amount of an estimated fair value of the shares at the

grant date. Therefore corrections are necessary.2 After taking over the function as CEO, no further Board of Directors' compensations are extended. Please refer to the Executive Committee table.

For detailed information regarding emoluments of the Board of Directors and the Executive Committee, please refer to the Compen-sation Report on pages 131 to 144.

218

2. Executive Committee

shares held

NameNumber of

shares granted 1Number of

shares granted

Number of shares within

vesting period

Number of shares within

vesting period

Number of privately

held shares

Number of privately

held shares

for 2014 for 2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Hariolf Kottmann 76 303 87 627 212 289 205 489 444 814 521 098

Patrick Jany 38 152 48 084 115 569 114 559 265 168 221 880

Christian Kohlpaintner 38 152 48 084 115 569 114 559 201 307 158 019

Mathias Lütgendorf 38 152 48 084 115 569 114 559 292 213 305 613

Total 190 759 231 879 558 996 549 166 1 203 502 1 206 610

options held

NameNumber of

options grantedNumber of

options granted

Number of options within vesting period

Number of options within vesting period

Number of excercisable

options

Number of excercisable

options

31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013

Hariolf Kottmann – – – 263 200 383 682 263 382

Patrick Jany – – – 131 600 191 841 290 241

Christian Kohlpaintner – – – 131 600 120 000 50241

Mathias Lütgendorf – – – 131 600 – 120241

Total – – – 658 000 695 523 724 105

1 The number of shares granted as part of the matching share program will be determined after the balance sheet date. The number disclosed is based on a bonus payout of 92 %, the amount of variable esti-

mated remuneration accrued and an estimated fair value of the shares at the grant date. Therefore corrections are necessary.

For detailed information regarding emoluments of the Board of Directors and the Executive Committee, please refer to the Compen-sation Report on pages 131 to 144.

Clariant annual report 2014 219

Financial Report Notes to the fiNaNcial statemeNts of clariaNt ltd

13. Voting and legal registration limitationsIn accordance with article 5 of the Articles of Incorporation, no limi-tations exist with regard to registration of shares which are ac-quired in one’s own name and on one’s own account. Special rules exist for nominees.

In accordance with article 13 of the Articles of Incorporation, each share has the right to one vote.

14. significant shareholdings of 3 % or more of total capitalBased on the notifications received by Clariant and published by SIX Exchange Regulation, as at 31 December 2014 the following shareholders held more than 3 % of voting rights in Clariant:

Shareholders Voting rights

Group of former shareholders of Süd-Chemie AG 1 13.89 %

Thereof (as a separate sub-group), Blue Beteiligungsgesellschaft mbH, Am Holzmaierfeld, 82064 Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Am Holzmaierfeld, 82064 Grossdingharting (Germany) 2

3.73 %

Cymbria, Canada Edge Point Global Portfolio, Canada Edge Point Canadian Growth and Income Portfolio, Canada Edge Point Canadian Portfolio, Canada Edge Point Global Growth and Income Portfolio, Canada St. James Place Global Equity Unit Trust, UK

3.06 %

APG Asset Management N.V., Amsterdam, Netherlands 3.01 %

1 The following former shareholders of Süd-Chemie AG form a group:

Wilhelm, Dr. Winterstein, Germany Konstantin Alfred Winterstein, Germany

Dolf, Dr. Stockhausen, Switzerland Max-Theodor, Dr. Schweighart, Germany

Axel, Dr. Schweighart, Germany Peter, Dr. Schweighart, Germany

Rosemarie Schweighart, Germany Moritz Ostenrieder, Germany

Dominique Kraus, Germany Christian Ratjen, Germany

Karl, Dr. Wamsler, Germany Bettina Wamsler, Germany

Irene W. Banning, USA Pauline Joerger, USA

Susanne Wamsler-Singer, USA Marianne Kunisch, Germany

Caroline A, Dr. Wamsler, USA Maximilian Ratjen, Germany

Amelie Ratjen, Germany Julius Ratjen, Germany

Christof Ratjen, Germany Elisabeth Prinzessin zu Sayn-Wittgenstein, Germany

Christopher Weitnauer, Germany Georg A. Weitnauer, Germany

Johanna Bechtle, Germany Charlotte Bechtle, Germany

Kaspar Bechtle, Germany Clara Redetzki, Germany

Luisa Redetzki, Germany Marie Redetzki, Germany

Karl T. Banning, USA Sophia P. Joerger, USA

Schuyler H. Joerger, USA

2 According to a disclosure notification published on 18 January 2013, a group consisting of Konstantin

Winterstein, 80333 München, Germany and Elisabeth Prinzessin zu Sayn-Wittgenstein,

80333 München, Germany holds 3.73 % partially through Blue Beteiligungsgesellschaft mbH,

Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Grossdingharting

(Germany). The 3.73 % held by this group are included in the 13.89 % mentioned under footnote 1,

but build a separate sub-group.

Disclosure notifications during the financial year 2014 notified to the Stock Exchange Disclosure Office pursuant to Art. 20 of the Stock Exchange Act as well as further information in relation to disclosure notifications can be found on the SIX Swiss Exchange reporting platform: http://www.six-exchange-regulation.com/obli-gations/disclosure/major_shareholders_de.html

At 31 December 2014, former shareholders of Süd-Chemie AG, who had exchanged their shares against Clariant shares in April 2011, held a total of 13.89 % of the share capital of Clariant. These share-holders were affiliated with each other for family or other reasons (especially the Wamsler, Winterstein, Schweighart and Stock-hausen families). According to a disclosure notification to SIX Exchange Regulation dated 21 October 2013, they were no longer considered a single group; however, they formed a group again holding 13.3 % of Clariant shares, according to a disclosure notice to SIX Exchange Regulation dated 11 February 2014, and increased their holding to 13.89 % pursuant to a disclosure notice to SIX Exchange Regulation dated 12 December 2014.

At 31 December 2014, Clariant AG itself held 12 087 920 shares in treasury, corresponding to 3.64 % of the share capital.

In addition, at 31 December 2013, the following shareholders held a participation of 3 % or more of the total share capital: Dr. Dolf Stockhausen, Ennetbürgen (Switzerland) and Konstantin Winter-stein, München (Germany) (Lock-up Group II), 4.11 %; Blue Beteiligungsgesellschaft mbH, Grossdingharting (Germany) and Maple Beteiligungsgesellschaft mbH, Grossdingharting (Germany), 3.73 %; Credit Suisse Funds AG, Zurich (Switzerland): 3.28 %; UBS Funds Management (Switzerland) AG, Basel (Switzerland): 3.09 %.

15. risk managementThe Board of Directors and Group Management annually engage in a comprehensive risk assessment procedure, which includes the risks arising on the activities of Clariant Ltd. In the process, the enterprise risks and their developments are analyzed and it is en-sured that measures to the effect of their containment are imple-mented. Particular attention is paid to the risks of financial reporting. A more detailed description of the risk assessment can be found in the notes of the consolidated financial statements in note 2, Enter-prise risk management, on page 159.

220

appropriation of aVailable earninGsThe Board of Directors proposes to appropriate the profit of 2014 of Clariant Ltd in the amount of CHF 140 011 069 as follows.

Annual result in CHF

Carried forward from previous year –

Profit for the year 2014 140 011 069

Total available unappropriated earnings 140 011 069

Appropriation in CHF

Free reserves as at 31 December 2014 403 092 363

Transfer to free reserves 140 011 069

Free reserves as at 1 January 2015 543 103 432

Balance to be carried forward –

Distribution of CHF 0.40 per share from capital contribution reserves 1 127 950 000

1 Depending on the number of issued shares on the date of the distribution. Shares held by Clariant

Ltd or its subsidiaries are not entitled to a distribution and are not taken into account. The distribu-

tion amount is therefore expected to be in the region of CHF 127 950 000.

distribution of reserves from capital contributionThe Board of Directors proposes a distribution from the confirmed capital contribution reserves of CHF 0.40 per share (following reclassification of the full distribution amount from general reserves to free reserves).

Clariant annual report 2014 221

Financial Report Notes to the fiNaNcial statemeNts of clariaNt ltd

report of the statutory auditor to the General meetinG of clariant ltd, muttenz

report of the statutory auditor on the financial statementsAs statutory auditor, we have audited the financial statements of Clariant Ltd, which comprise the balance sheet, income statement and notes (pages 212 to 219), for the year ended 31 December 2014.

Board of Directors’ ResponsibilityThe Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This respon-sibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial state-ments based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards re--quire that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, includ-ing the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial state-ments in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the account-ing policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the financial statements for the year ended 31 December 2014 comply with Swiss law and the company’s articles of incorporation.

report on other legal requirementsWe confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circum-stances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of financial state-ments according to the instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements sub-mitted to you be approved.

PricewaterhouseCoopers Ltd

Dr. Daniel Suter Ruth SigelAudit expert Audit expertAuditor in charge

Basel, 16 February 2015

PricewaterhouseCoopers Ltd, St. Jakobs-Strasse 25, Postfach, 4002 Basel, Switzerland

Telephone: +41 58 792 51 00, Facsimile: +41 58 792 51 10, www.pwc.ch

PricewaterhouseCoopers Ltd is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate and independent legal entity.

222

forward-lookinG statementsForward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings; pricing strategies of competitors; the company’s ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the company operates or in economic or technological trends or conditions, includ-ing currency fluctuations, inflation and consumer confidence, on a global, regional or national basis.

January February March April May June July August September October November December

Financial calendar

18 February 2015 Full-Year 2014 Result

31 March 2015 Annual General Meeting

29 april 2015 First Quarter 2015 Results

30 July 2015 First Half 2014 Results

29 October 2015 Nine Month 2015 Results

223Clariant AnnuAl RepoRt 2014

Publication details

PublisherClariant International Ltd, Muttenz

cOntactInvestor Relations Siegfried SchwirzerPhone +41 61 469 63 73Fax + 41 61 469 67 67

Group CommunicationsKai RolkerPhone +41 61 469 63 63Fax + 41 61 469 75 49

Editor-in-ChiefClaudia Kamensky

Financial EditorPhilipp Baberschke

Websitewww.clariant.com

Ordering addressOrders may be placed on the Clariant website: www.clariant.comor sent in writing to the following address:Clariant International LtdInvestor RelationsRothausstrasse 614132 MuttenzSwitzerland

® Product and service marks protected by Clariant in many countries TM Product and service marks licensed to Clariant in many countries

© 2014 Clariant International Ltd, Rothausstrasse 61, 4132 Muttenz, Switzerland

editOrGFD Finanzkommunikation, Frankfurt

design, graPhics and layOutKuhn, Kammann & Kuhn GmbH, Cologne

creditsJo Röttger: p. 3 – 5; 8 – 35; 42; 55; 67; 75; 83; 91Masterfiles: p. 60/61; 68/69; 76/77; 84/85

PrintingNeidhart + Schön, Zurich

nOte abOut FOrWard-lOOking stateMentsThis report contains forward-looking statements based on current assumptions and projections made by management. Such state-ments are subject to known and unknown risks, uncertainties and other factors which may cause the actual results and performance of Clariant International Ltd to differ from those expressed in, implied or projected by the forward-looking information and statements. The information published in this report is provided by Clariant Inter-national Ltd and corresponds to the status as of the date of publica-tion of this report.

disclaiMerClariant International Ltd published Annual Reports in English and German. The English version is legally binding.

224

  1 050People in R&D

3.5 % of Group Sales 2014

> 7 000Patents

> 130Scientific

Collaborations

8Global R&D

Centers

213 mR&D Expenditures

in CHF

6 116 mSales in CHF

334 mOperating Cash in CHF

14.2 % EBITDA Margin*

*  before except ional items

235 mNet Income from Continuing

Operations in CHF

0.40 Distribution per

Share in CHF

1 263 m Net Debt in CHF

Clariant At A glAnCe

innovAtion

perFormAnCe

reduce energy Consumption

reduce Water Consumption

reduce direct Co2 emissions

reduce volume of Waste Water reduce volume of Waste

environmental targets by 2025 in %

17 003employees Fte

– 30

– 35

– 30

– 40

reduce emissions from greenhouse gases

– 35

– 35

44 %Europe11 %

NORAM

15 %LATAM

5 %Middle East &

Africa

25 %Asia / Pacific

plAnet

people

Five-Year Group Overview 2010 – 2014

CHF m 2014 2013 2012 2011 2010

Group sales 6 1161 6 0761 6 0381 7 370 7 120

Change relative to preceding year

in Swiss francs (%) 1 1 8 4 8

in local currencies (%) 5 4 8 16 13

Operating income before exceptionals 5851 5741 5461.2 717 696

Operating income 5251 4701 4111.2 507 366

EBITDA before exceptionals 8671 8581 8171.2 975 901

EBITDA 9231 7971 6901.2 786 646

Net income 2351 3231 2031.2 251 191

Basic earnings per share 0.551 0.981 0.681.2 0.86 0.81

Distribution per share 0.40 0.36 0.33 0.30 – 

EBITDA margin before exceptionals (%) 14.2 14.1 13.52 13.2 12.7

Return on invested capital (ROIC) (%) 9.41 9.51 9.41 13.1 18.1

Operating cash flow 334 301 468 206 642

Investment in property, plant and equipment 310 292 311 370 224

Research & Development expenditures 2131 1991 1751 176 135

Depreciation and amortization 282 284 316 258 205

Net working capital 1 1691 1 0361 1 0791 1 442 1 132

in % of sales 19.11 17.11 17.91 19.6 15.9

Total assets 7 915 8 174 9 4672 9 081 5 921

Equity (including non-controlling interests) 2 733

2 780

2 6662

3 026

1 806

Equity ratio (%) 34.5 34.0 28.22 33.3 30.5

Net financial debt 1 263 1 500 1 789 1 740 126

Gearing ratio (%) 46 54 672 58 7

Employees 17 003 18 099 21 202 22 149 16 176

1  Continuning Operations (see note 1.04 in the Financial Report of the 2012 Annual Report) 2  Restated (see note 1.03 of the Financial Report of the 2013 Annual Report)

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