Ulrike Rockel - Head of Investor Relations Matthias Zachert - Chief Executive Officer and Chairman Michael Pontzen - Chief Financial Officer

Lutz Grüten - Commerzbank Christian Faitz - Kepler Cheuvreux James Knight - Exane BNP Paribas Peter Spengler - DZ Bank Patrick Lambert - Raymond James Markus Mayer - Baader Bank Patrick Rafaisz - UBS Andrew Benson - Citi Andreas Heine - MainFirst Bank Martin Evans - JPMorgan

Thanks Emma, a warm welcome from my side. Good afternoon, good morning.

Many thanks for joining us. I’m quite happy to have with me our CEO, Matthias Zachert; and our CFO, Michael Pontzen.

And I will as always immediately hand over to Matthias and just kindly ask you to take note of our Safe Harbor statement.

Ladies and gentlemen, warm welcome from my side. And I would like to start the second quarter presentation with our Slide 4, on which you basically see the highlights of second quarter business operational performance.

On 1st of April, ARLANXEO was created and therefore we have the first quarter fully independently of this strong joint venture worldwide rubber leader. It started off well and also the worldwide implementation with interaction on customers’ invoicing etcetera.

Everything was running according to plan. And therefore you see the results of the first ARLANXEO quarter also on our financials.

As far as our first acquisition is concerned, Chemours, we expect the closure of the transaction now after all anti-trust authorities have given green lights by end of August, latest end of September. Also here I think from everything that we see in direction is very positively and we are looking forward to integrate the people from Chemours and form an extremely strong performing the new materials protection businesses which contributed extremely powerful also in the second quarter.

And this leads me to the New LANXESS; all three segments have performed strongly, not only through volumes, also through the mix. And we could also as far as we faced two of our restructuring is concerned, operational improvements in the cost structure of our sites.

Also here we advanced very well and are coming stronger into the performance earlier than originally anticipated. Low lights of the quarter is definitely the continued pressure we see in the rubber markets and we’ve indicated that already in Q1 that further down in 2016 we would get more competitive pressure in this market and this unfolds as expected.

There are also some other operational issues that direct volumes down among others, the force majeure we have with one of our big suppliers in Singapore, which however has now come to a halt or has been declared to be finished. So this would gradually now start to improve the situation from mid-third quarter onwards.

And we also had a prolonged shutdown of our chloroprene rubber products which is a good product because the market turns tight. It’s one of the few rubbers that, was very, very oversupplied in the last three years.

But here supply demand has started to balance again and therefore it’s now getting tighter. And the situation we will see in butyl EPDM in the next few years to come again.

But of course here we face currently market pressure. Coming to the financials, overall net sales are down basically related to pass-through on the raw material side whilst overall EBITDA of the group especially in the New LANXESS divisions punched strongly with 9% growth.

I think we can compare ourselves well in the industry. Strong margin improvement and as indicated to you 2014 already we bring this company back to a cash flow generation company.

And as far as the balance sheet is concerned substantial deleveraging of course now becoming very visible post ARLANXEO closing. And as indicated second quarter we funded already €200 million of our CTA our pensions in Germany which will lead to positive EPS accretion going forward.

I think we have a platform for now focusing on focused and disciplined value creation through organic and inorganic investments. Page 6 highlights EBITDA increase, EBITDA margin increase and the substantial deleveraging as far as balance sheet is concerned.

And with this you can see on page 7, that we are doing everything to accelerate the transformation of our company. We would build a strong company in the next few years to come that we will be proud of and I think capital markets will see that the New LANXESS is a Company that’s with a strong platform where you have all reasons to be invested in.

This is what we call energizing chemistry. And with this I hand over to Michael.

Thank you, Matthias. Warm welcome as well from my side.

On Page 8, you’ll find our financial KPIs which prove as well that we are absolutely growing on the right direction and that Q2 was very good results for the group. EBITDA as discussed improving 9%, main drivers here were the higher volumes, the better mix which we had, the better cost structure through the manufacturing excellence initiative which we started last year.

We had a slightly better utilization rate and some positive effects from emerging market currency which as well supported our gross margin. EPS growing in the same direction, improving by 14%, please keep in mind that EPS pre as well including the share of Aramco and the net income which amounted to roughly €8 million in the second quarter.

Net financial debt is reported at €200 million, we funded our CTA with €200 million as well. So, if we would not have funded our CTA, we would basically be net financial debt-free at the end of June.

Return on capital employed is diluted because of the €1.2 billion which we received from ARLANXEO, clearly a number which we are not happy with. But keep in mind that the distinction between the return on capital employed for the New LANXESS for ARLANXEO and we gave indication earlier in Q1 how the share would look like if we would separate it.

Looking into the segment, on Page 9, the second quarter was a very strong quarter for the New LANXESS segment. Looking at advanced intermediate, you know the story very robust second quarter, the raw material decline were pass-through to the customers.

We continued our growth path which we started to last year, supported by the highly diversified end-custom industry posting a 20% margin in the second quarter. The same story is true for performance chemical, best quarter ever in history when it comes to EBITDA and margin.

The new set-up, the new strategy is truly paying off if you recall what we did last year. With beginning of last year we integrated different business units into Rhein Chemie additive business unit.

We let go of volumes in 2015 throughout the whole year and we told you we’d do that on a deliberately basis to really focus on the higher-margin products, which is now paying through or coming through. The mix is improving, the volumes are coming back, we have volume increases in Q1, we have volume increases in Q2, and the margin is at a very, very nice level of 21%.

The same story is true for high performance material. Here you recall our strategy as well to go downstream to invest and to the polyamide business to invest into the end-compound business to reduce the merchant market share of our caprolactam as well the increase in volume in especially these areas to improve the mix and now to turn out with a margin of 16% in the second quarter.

The last of our portfolio is ARLANXEO but only in terms of hierarchy or in terms of order. It is and was a very challenging environment.

And we told you so since some quarters now. But ARLANXEO did well in this challenging environment.

There is pressure in the margin and the pressure is increasing and we’re talking about it for some quarters now especially in butyl and EPDM. But as well look what happened with ARLANXEO, we put them in operation only at the beginning of the quarter.

There are new structures, new management teams in place and new organization. There were still additional challenges in the rubber segment, you know, Matthias was mentioning the supplier force majeure which we had in Singapore, a prolonged maintenance shutdown for a very nice margin product still they’re posting a 14% margin in the second quarter so, all-in-all very challenging environment but great job by the ARLANXEO team.

Matthias?

Thanks Michael. I turn the attention to Page 10, and here our outlook.

Overall we can say based on the solid performance especially from the New LANXESS divisions, we expect 2016 to come out with a stronger performance than originally guided. And therefore we lift up our former guidance to 9.30/9.70.

And this is predominantly standing from accelerated implementation of the Phase 2 restructuring initiatives and overall a good operational performance of the new LANXESS segments. ARLANXEO will remain tough as far as market environment is concerned, so here the indication out of second quarter is basically the one that we should also expect for the second half.

And this would be compensated through the better performance coming from the Advanced Intermediates’ performance chems and high-performance materials. I think in high-performance materials, just to make the point on the second quarter, I think the numbers now show very clearly that this is indeed high-performance engineering plastics business that drive the results.

This, results would never be possible if it would be caprolactam business. And I think now the numbers underline what we are communicating since a few quarters that this business will be a strong performing business in the years to come through organic growth and performance.

Ladies and gentlemen, with this I would like to close the presentation. And hand over to your questions.

Yes, thanks for taking my two questions. And the first one is on New LANXESS.

You’ve nicely improved the margins here for the three divisions, I would say roughly by 200 basis points. And you’ve mentioned higher volumes and mix-effect in also savings.

Could you give us an idea how this split was among these three, was it an equal split or so one of these three more dominant? That’s the first question.

The second one is on the ARLANXEO business, volumes had been down 2% but as you’ve mentioned you’ve suffered from the sales force majeure and owned shutdowns. If you would adjust these effects, the shutdown and the force majeure, how would have been the volume impact on a comparable basis?

Thank you.

Well, Mr. Grüten, thank you very much for your questions.

As far as the first question is concerned, we basically don’t break that out. So we clearly say we advance our savings, a clear update will however be given by end of the year.

This is the practice we’ve taken in the last few years as well. So, and as far as the volume and mix is concerned, all of them contribute basically giving us the guts and the clear solidity to upgrade our guidance but basically take these €20 million upgrades as a number which was basically coming from all three elements.

And as far as your second question is concerned, on the volume side, I would basically say that without the shutdowns we would be neutral to slightly positive. And that’s I think giving clarity on the impact that the shutdowns had on ARLANXEO.

That’s helpful. Thank you very much.

Yes, good afternoon. I try to remember its afternoon I recon.

Two questions from my side please. Can you please share with us why you are quite skeptical regarding the outlook for chemicals within your Saltigo business?

Is it inventory issues you see at the customer level or is it continued with demand predominantly in Lat-Am in the second half? Second question would be in terms of customer demand trends, can you share with us what you’ve seen automotive and as well in building and construction.

How had demand developed in these two segments, also sequentially in Q2 and then looking into Q3 what do you see at the moment? Thanks.

Well, on your first question Faitz, we are in our tonality for the New LANXESS generally positive and positive also for the second half. So, that is a very, very clear statement.

The business here, everything that we’re doing is positive results contribute nicely. Of course we have to clearly stress we have also raw materials and currencies being positive.

But this is definitely not only the case for LANXESS but for others as well. But I think the cost savings, the new structures, organization, market positioning, etcetera, on top of that they contribute very strongly.

And therefore these businesses are doing simply very well. The only area where we are softer is on the Agua chemical side, that’s the only area where we give soft tonality.

But this is no change to Q1. I think its norm that the Agua Chemical Industry by and large is in ‘16 and most likely first half ‘17 still under pressure.

As far as second question is concerned, and industry outlook, the guidance from our side has not really changed compared to Q1. So we are pretty much on the same track.

So, it’s basically our operational owned performance that makes us feel good about this second half. Specifically your questions on automotive and construction, of course in the second half they will be softer compared to first half but that’s the normal seasonality.

Overall we see that automotive especially to Asia rebounded in second quarter compared to first quarter, which was definitely softer. But we see here that second half is in a let’s say normal modest environments doing okay, it will not be great here.

But we don’t see that’s here, momentum is different to the momentum we had expected before. Same holds true for construction industry.

Of course in the first two quarters, this is normally good momentum for construction industry especially Europe, North America, second half will be softer, seasonally softer but also here construction is doing according to our original assumption.

Thanks a lot.

Most welcome. Next question please.

Good afternoon, I have three. Returning to Lutz’s questions about the volume impact from Shell and chloroprene, if I take your answer and make some assumptions in volumes, I get to a very low double-digit EBITDA impact from those two effects.

Is that reasonable or I’ve been, smelling too much menthol? Secondly, in terms of the capacity impact, specifically the Exxon [indiscernible] that’s on-stream and they’ve been pre-marketing it.

So, how should we think about the incremental impact from here, we obviously read the second half out in Lutz’s statement. But this is something that’s starting to deteriorate particularly in butyl or is it deteriorated and maybe seen most of the pain already?

And then thirdly, in terms of the Phase 2, cost cutting is coming through faster but are you seeing more opportunities to take out cost. And is the overall target the sort of thing you might talk about at the Capital Markets Day in a month’s time?

Thank you.

Well James, thanks for your questions. As far as what you have if you are well-off with menthol or not, it’s not up to me to comment.

Let’s focus on our business. The contribution from the slow margin, sorry, the contribution from this volume that we lost especially as far as Singapore is concerned, indeed is low margin because here volume, clear volume declined but predominantly on our olefins that we are selling in the market and of course some butyl being impacted by that.

So, you can assume this in the single-digit million, area. And therefore it impacted volume visibly but not substantially the EBITDA.

Some millions yes but being in the single-digits. As far as new capacity in the Middle East is concerned, the pain in the industry is clearly very high.

I think the operational performance that we have seen in ARLANXEO is in the current environment very strong. And we see from the competitor analysis that we are doing that further capacities are coming out.

We have given clarity on this over the last three months already. So capacities are being closed in by state-owned companies in China.

And we see that further joint ventures are being highlighted, you see most likely in the last one or two weeks another announcement by an Asian competitor or competitors who are planning to merge. This gives you all the indication that the pressure in the industry is high.

In butyl I think we have seen the biggest price pressures already. And this is reflection also in our financial performance.

In EPDM our assumption is that here the pressure will come even stronger. So there has been some pressure already.

Our assumption is for second half and next year that EPDM there will be further margin squeeze. And for that reason we have adjusted already our capacity as we have communicated last year in order to reduce tax cost to improve our competitiveness here.

But very clearly to your second point, the pressure in the rubber industry is very fierce. And we don’t mind that this pressure now leads to most likely more consolidation pressure on the side of other competitors which would definitely be very visible in 2016/2017.

Now as Phase 2 is concerned, I will only say that here the original plan is being executed faster. And we are not saying that there are more findings for this we have to go through further sites.

But the amount of sites we have seen has basically executed, done in a faster manner. And here the savings are implemented faster.

And this is visible also in the P&L. And we will take your feedback on the meet the management if we don’t make at Capital Markets Day, we’ll meet the management so that you can discuss with our operational managers, with Michael and myself; of course how we would like to take this company forward.

We will not do frontloaded presentations, we want to discuss and give you excess to our managerial people who are running this energized chemical company called LANXESS. Next question please.

Thanks. Sorry, just one minor follow-up.

Thank you for the EBITDA impact from Singapore. Is it a similar number for chloroprene or is that being too precise?

This was baked into my answer. And that will take single-digit million amount of EBITDA for both stencils in this quarter.

Thank you very much.

Most welcome. Next question please.

Good afternoon gentlemen, good afternoon Ulrike. First on your guidance, is the guidance including three months COMOS or is it without contribution of COMOS of the acquisition?

And then, I assume that you are now targeting at the middle of the guidance, so we see upper end also possible or likely. And then on recon, you mentioned earlier that the underlying expenses are €150 million which you repeated and they were €90 million hedging.

And I assume that the hedging amount is now a little bit lower? And lastly, also on hedging, so could you maybe tell us the amount belonging to ARLANXEO?

Spengler, I would take first question and Michael will address the other three. So, as far as COMOS is concerned, this is embedded in our forecast.

This is embedded in our guidance. And here you will see that in third quarter we will - we have taken that into consideration because we assume that in fourth quarter it would be fully contributing.

But of course in light of the overall EBITDA that COMOS is generating you should assume bottom line contribution only being in the single-million EBITDA because of, you need to take into consideration that in the first three months, we would of course be also confronted with a pushdown coming through the PPA. So don’t expect huge EBITDA contribution.

It should be mitigated through the PPA we are going to face in the first three months of consolidation. Michael?

Peter, with regards to recon, there is no change in guidance when it comes to hedging. The hedging number was given under certain assumption for the currency.

And that is true because it’s basically a function of the assumption for the different currency. And with regards to the amount belonging to ARLANXEO, here again, the guidance which we gave in the course of the first quarter basically roughly two thirds of the hedging impact belongs to ARLANXEO and one third basically for New LANXESS.

Okay. Thank you very much.

Yes, good afternoon everybody. Thanks for taking my questions.

They’re all around ARLANXEO, there are quite a few. So, just to come back on the minority interest, the way you calculated from the 41 EBIT to be €8 million minority income.

Is it fair to say that the tax rate if I calculated properly, is that actually slightly below the overall LANXESS tax rate? And if you can help us going forward how to value the ARLANXEO as part of below the EBIT line will be pretty helpful in terms of guidance, tax rate plus also the reconciliation split going forward?

First question. Second question, regarding the volumes again, minus 2, if I look at the tires market and I think you explained pretty well the impact of the shutdowns etcetera, it was basically flat on replacement market.

But all the players have mentioned a weaker outlook in terms of volumes in the second half. I’d like to have your view on that, on what your customers are seeing geographically but also as Brexit is already part of your lower guidance in terms of OEM volumes but also potentially replacement?

And finally, little financial question, on the cost of setting up ARLANXEO I haven’t seen anything yet. Is that, I think you guided to €20 million.

Is that still in the cards or basically was already mitigated by something else? Thanks.

Patrick, thank you very much for your questions, I will pass on the first question to Michael. But before doing that I would simply like to stress it’s worth the time to also focus on the New LANXESS because it will make a difference in the future.

So we take all three questions on ARLANXEO with pride and happiness. But my recommendation is invest time on the New LANXESS, this will make you understand the track records or the track records we want to build in this business in the future which will change the company configuration substantially.

Michael, please take up tax.

Great. Patrick, as well as we discussed in the first quarter, tax rate for ARLANXEO is in principle higher than the tax rate for New LANXESS.

So New LANXESS is on average roughly in the ballpark between €30 million and €35 million and ARLANXEO is above the tax rate which we’re currently posting.

So, of course when profitability rebounds in rubber, the tax rate will be substantially lower due to the tax-free holidays that we still have in Singapore. But of course here we will only benefit when there will be profitability and not idle costs.

This will come one day and then you will see that this business is not only nice and EBITDA cash flow contribution but also through the tax scheme behind it. So that should be noted.

Now as far as your second question is concerned, the outlook that we give for ARLANXEO is of course factoring in not only pressure on the price but also soft volume momentum so we are fully in-line with our customers here. We’ve seen moderate volume development in the first half but of course the second half also in rubber tends to be softer.

And we see especially in Latin America no relief coming, I mean, we basically are quite humble in our expectations here. We’ve seen a reasonable momentum in Asia but our assumption is here that in the second half the momentum will at best continue as it is.

We will no longer have the impact from the shutdowns so this will help. But we don’t see that in the second half there is a lot of incremental volume momentum coming from the tire sites.

And of course in current forecast, at least our view Brexit will show little implication. And we will see rather in 2017/2018 as this spills over into the industry.

But for the second half at least from everything that we’re seeing, we don’t see big implications through the Brexit on the volume side. I think this is rather something that can be visible in ‘17/’18 if at all.

And as far as the last question is concerned, you see a slight up-tick in G&A costs in the quarter. And that gives you an indication on of course incremental costs we have guided or which we are I think between €15 million and €20 million, they’re not fully there yet.

ARLANXEO builds up and therefore you’ve seen first implications of this in the second quarter.

And these are not exceptional items?

No, I mean, admin people are not exceptional because they are in the SG&A or in the administration cost line that we post. And therefore that is clearly embedded in our operational reporting and EBITDA numbers.

Great.

Yes, good afternoon. Four questions as well.

Firstly, on the margin of HPM, you had said in the last Capital Markets Day that sustainable margins should be above 10%. Can we now more quantify this, what is most being above 10% just then what is the range, 15% to 17% sustainable margin?

That would be the first question. Then the second question also on New LANXESS is on the new capacities and the Rhein Chemie Additives.

Could you, give us more flavor on this? And then sorry for this but another question on ARLANXEO.

And the minorities we see in our new P&L, this 4% net income margin, is this a good run rate going forward with this kind of margin if you assume that this margin in ARLANXEO is a sustainable margin? And then lastly on networking capital, this networking capital per sales ratio of 23% currently should yours expect to come this down to this 19% to 20% of sales level at year-end as you always had over the last year?

Thanks.

Thank you very much for all your questions. And let me address some of them and Michael will take the question on networking capital.

As far as HPM is concerned, I mean, second quarter is always margin-wise and EBITDA nominal-wise the strongest. So automatically second half we always see softer momentum profitability wise but also margin wise.

So please take this into consideration. Of course as indicated before, the second quarter margin of HPM is not one that you should consider as the margin that can be posted forever because our strategy here indicated or communicated last year is bit neat until 2020 to get the entire value chain balanced.

And then in 2020 from our current projections onwards, we basically then have fully the engineering plastics or notably, not fully but notably the engineering plastics being visible. And of course you see year-on-year depending on currencies and also raw material influence sometimes peak upwards or peak downwards.

But only in the next few years you will then see that sales will be less volatile, more stable because then we will have, once the value chains are balanced, of course the higher diversification, higher cash generation and of course then higher stability on margin and profitability. But we are not finished yet, we’re on a good way.

But of course you see already that the transformation of this business yields results. On ADD, the capacity is there is no one big capacity.

There are many small investments and of course they contribute. But we have not one that we can finger point.

We’re suddenly strong millions are coming simply from one investments, there are several that we have done over the last 6 to 12 months and they of course unfold and add to the probability. As far as ARLANXEO is concerned, our communication is clearly there is price and margin pressure.

So you should not assume that the 14% will be the normal margin of this business in the future. Anyhow certain fourth quarter tends to be always softer anyhow.

But we also guide here for price and margin pressure in our communication. And therefore the answer, this is not the sustainable margin for every quarter.

You should factor into seasonality and of course also the tough market environment. Michael, will you take the question on networking capital?

Sorry, can I interrupt you on this last question that the question was one to suspect where one kind of one-offs goes after taken into account if you calculate it under minorities for Saudi Aramco. Is this kind of minority we see now in the P&L basically clean minority number, is out any finesse or was there was kind of due to venture build-up phase any kind of in there which distorted this kind of margin?

No, it’s a relatively clean number, the minorities. And it’s simply that low due to the massive depreciation through the new sites that have come on-stream and the massive depreciation and simply the fact that we are not posting a lot of net income.

And that’s basically driving the contribution on net income through the ARLANXEO so low. And of course here long-term that will look different again through the repositioning that we do through raw-material integration cost cutting capacity and eventually once EBIT is coming back strong positively, of course the tax schemes are kicking in again.

But in the current trough environment, the contribution from ARLANXEO on net income is very, very modest.

Okay.

Michael.

Yes, Mark, with your question on networking capital. Indeed networking capital usually as you know in the second and in the third quarter is relatively high due to the fact that usually receivables are relatively high, payables are relatively low compared to the month of December.

And we will report the full-year numbers same as true for inventory. We usually have to pattern that we ramp up inventory in the course of the second and the third quarter and then have a relief in the fourth quarter.

That will be true for the inventory this year again. So my expectation is that we will have a slight tick-up in volume wise and the inventory in the third quarter.

And then have a sell-down of the inventory in the fourth quarter. It’s not hard to predict whether it will be 19%, 20%, 21%.

But clearly the direction will be that the inventory per sales number should be down by the end of the year.

Okay.

Good afternoon, thank you for taking the questions. Three from my side.

First on the outlook, with the way input costs are moving sequentially and you guiding for better performance at New LANXESS versus H2 last year. Would it be fair to assume that the majority of the outperformance versus last year will come in the third quarter rather than the fourth quarter?

I’m also not sure about how the mix plays a role of this? And second question on top-ups for the German pensions, should we - as you’ve already guided for this, should we pencil in further cash-outs in the coming years?

And also on the pensions, how much of your pensions will actually go to ARLANXEO the joint venture? And then lastly, on portfolio and performance chemicals you mentioned leather chemicals, was also benefited from volumes contributing to EBITDA.

Are we getting in a financial situation for leather chemicals where you think you could fetch a reasonable market price for it than would you be then willing to dispose of this business? Thank you.

Well, I think Michael will take the questions on seasonality Q3, Q4 and also on the pension side. I will immediately also answer your M&A question.

We have not said that we are in any kind of divestiture process. We have said a few months ago that for leather chemicals we are open for partnership that’s the only communication out there.

And there is, no updates as regards to this statement. And therefore I would like to hand over to Michael for the second half seasonality questions, Q3, Q4 and on CTA and ARLANXEO pensions.

Patrick, we gave now the indication about how New LANXESS will perform over the second half of last year. But we’re not giving a split now over the dynamics whether Q3 will be better than Q3 last year or Q4 versus last year.

So the underlying message is, New LANXESS will perform better than the second half of last year and ARLANXEO will not perform as last year. But it is clear the seasonality which we usually have in our accounts is that the Q3 is stronger than Q4.

That is obviously still true for the year 2016. When it comes to pensions, there is basically no change in the cash-out scheme for the pension.

You’d recognize that we had to increase our pension provision due to the fact that we had to adopt our underlying interest rate to German interest which is the main driver for the pension scheme, is now at 1.75. The increase in the pension provision is to some extent let me say diluted because we put €200 million in the CTA.

That means if we would not have invested into the CTA our pension provision would be €200 million higher compared to the number we’re reporting. But let me make because I know you guys put the numbers in the model, give you the indication that we are well, as well have some deferred tax assets which go along with the pension provision and our team is happy to discuss it in more detail.

And we posted at the end of the year that the amount in the deferred tax asset was in the ballpark of 220. We saw now an increase over year-end of another 120 and the majority here as well attributable to the pension change which we have.

So, all-in-all, no change in the cash affect. And please keep in mind there is a corresponding asset in the balance sheet which is let’s say financially to some extent offsetting the share or the pension provision which we have.

The share of ARLANXEO, we didn’t really discuss it and to disclose in detail. But we told you that to a very large extent, we put ARLANXEO in place rather financial debt-free.

There was a certain amount of pension on a global basis. But if you review the let’s say employee structure and there are not many employees going from Germany into ARLANXEO or which went from Germany into ARLANXEO.

And as the pension provision is to a very large extent related to Germany. The amount of the pension provision is to a very large extent related to the New LANXESS employees.

All right. Thank you.

Next question please.

Yes, thanks very much. Just a couple of, just on the financial chart with the stronger balance sheet, how should we look at the second half of 2017?

And then can you just provide a little bit more detail as to the if you like the quality of the margins advance intermediates to the performance chemicals because they’ve done pretty well. How should we think about your plans to try and maximize margins looking at over the second half of the medium term?

Thanks.

Andrew, I will take your second question. Michael will take the financial question.

So let me come to advance intermediates, performance chemicals. I think it’s the one thing that is visible those divisions are structurally showing strong performance.

They are in the double-digit profitability range, they are in the high-teens advance industrial intermediates or advance intermediates, has always been there between the 15% to 20% area. So, this is not a one-timer.

They’ve always performed very well high-margin over many years and generating strong cash. Maximizing these margins is not so much the storyline at advance intermediates.

It’s more the absolute EBITDA increase that we’re striving for with very, focused investments. And this is one that we will continue doing in the next years to come.

The same storyline on performance chemicals, however, here we clearly reflect in 2014 and sustaining, where margins were rather in the low-teens that we want to upgrade them. As here we felt that many of these businesses have been addressed like true orphans and through changing the investment approach, changing costs but changing also the market approach, we indicated that here you will not only see a margin upgrades which we are now posting.

But also a clear focus of absolute EBITDA increase. So, here, this is the storyline also in the future that both divisions should see of course with benign economic environments that we continue driving EBITDA in absolute terms upwards.

Michael, could you take financial charge.

Yes, I’m not sure whether I exactly know what you mean Andrew. Are you referring to the minority share?

Just that’s a bit below PPT really, just also it’s sort of bit below EBIT [indiscernible] but you’ve got pension costs and you’ve got debt in cash. Just how you think the financials line should evolve in the next year or so?

Well, I think the one element that you should take into consideration that in September we will redeem one of the high-cost of bonds, one, two, of course to funding the CTA, Michael has given guidance on the last conference call that this is also positive as EPS kicker. And these two elements are the more prominent ones.

You will start seeing from third quarter onwards. And that’s basically the key elements below EBIT that will contribute to EPS increase.

Okay, thanks.

Yes, good afternoon. [Indiscernible] I haven’t heard anything about the share buybacks.

Is there anything you could add when you proceed with this one? And then on the transferring cost from ARLANXEO to - from LANXESS to ARLANXEO these setup costs you mentioned of €15 million to €20 million but I found those into the ARLANXEO numbers or is that staying at the New LANXESS?

And one question on the leather chemicals where you said it is improving. You said only the chromium ore mine also the normal leather chemical business.

And last but not least, I think from the last conference call, you mentioned that especially as of the second half of this year, the orders from the agro industry will be less. If I look on the comments you have for New LANXESS in total will advance intermediates contribute to an earnings increase year-on-year in the second half or is it a bit more or flattish?

Thank you.

Well, I’ll take the last question and Michael will take the first three questions. As far as agro is concerned, I mean the overall statement for the New LANXESS remains unchanged as made before but now specifically on agro we specifically did then talk about Saltigo.

Here clearly the fourth quarter will be the weakest. It is always, it tends always to be the weakest but this year it will be very pronounced because from all indications we have received from the agro suppliers they currently manage the volumes to be high stocks they have with great care.

And that will notably impact us in the fourth quarter also volume wise. But this is all embedded in our guidance and therefore as far as agro is concerned, clearly fourth quarter in Saltigo you can expect a very weak-ish quarter for the business.

And so with this, Michael, you take the other three questions please.

Yes Matthias. So, Andreas, on the share buyback, you know we’re in the quiet period prior to the results presentation.

Now the teams will start working on the share buyback program. And once we’re ready we come with it and we’ll start it.

With regards to the setup cost of ARLANXEO, a part of them was already recorded in the last year in 2015 part of it was recorded especially in the first quarter. Now the running costs are in the operational P&L and therefore recorded in the overall results.

And as mentioned they’re not exceptional in the P&L. And with regards to the performance of leather, in leather, especially our organic leather business is really doing nicely.

I was mentioning earlier, we did have as well as some relief on the cost base because we have factories back in Argentina and back in South Africa which were benefiting to some extent from the dilution of the local currency. But the underlying leather business, the organic leather business was doing and improving nicely as well.

Thanks a lot.

Yes, thanks. Just following up on the balance sheet and the fact that you’ve made the point that substantial debt is close to zero.

And obviously you’ve mentioned that potential buyback. Just in areas of acquisition going forward, any sort of clarity on which particular areas of chemistry might interest you because obviously you’ve got a potentially a big amounts of cash you could spend on a deal or various deals that you want to sort of be prudent and protect the margin.

So, are there any sort of new or existing areas of chemistry that would appeal to you in terms of adding to the New LANXESS portfolio? Thanks.

Well Martin, thanks for both of your questions. We will address, I will address the M&A and Michael will address the second question.

I think first statement we want to first of all close the COMOS transaction, the disinfectant business. And this is pretty much what we like to strengthen the existing businesses that we have and we have various platforms in our portfolio.

So, whenever you can strengthen existing business and you get the potential to extract synergies, it can be financially rewarding and structurally you of course bring the company forward. So that is definitely something that we look at.

But we also look at targets that where we understand the chemistry, where the business model is the same. And therefore it can be integrated with great competence on our end.

And I indicated that this process on our site started 12 months ago, more than 12 months ago to get prepared for inorganic and organic investments. And when the next announcement on inorganic or organic will be made I cannot tell you because it depends eventually on making sure that from all perspectives we have a good fit strategically but also financially.

And that’s basically as far as the overall question is concerned. Michael since we have no further question from you aside, there was a second one that you would like to address, please let me know.

Sorry, simply do you feel any pressure because it was a year ago that you announced this intention and obviously as the weeks and months go by, and eventually you’re going to be sitting there with basically net cash. At what point will you sort of make statements for the fact that there are no more acquisitions in the pipeline or equally do you feel the sort of in order to boost the growth, do you feel the subtle pressure to move quite quickly?

Thanks.

Well, Martin, I think we are a company that is known for, I’m trying to understand, I mean, we are doing everything to try to understand through active discussions with our stakeholders, investors. We tried to generate value.

So for that reason you see that we have made EPS accretion through pension funding. We made I think clear statements that it is the intention of our company to buyback stocks and to make investments organically and through M&A.

But of course improving our accretion in the P&L. So, we will see in 12 months from now where we will stand.

And then we might readjust, this is definitely something that we will consider or reconsider on an ongoing basis. And let’s see where we stand 12 months from now what we have executed until then.

And then we will re-discuss our resource allocation.

Thanks very much.

Most welcome. Further questions.

Sorry, my question was just asked.

Well, then we think that all questions have been answered. Thank you for your time.

Michael and myself and the Investor Relations team, are now starting to hit the road, see investors on the Street looking forward to this. And for those of you who are on holidays or will have holidays we wish you a wonderful summer break.

And looking forward to seeing you all back in Cologne in September when we have our Meeting the Management’s Day, all the best until then. Bye-bye from LANXESS, energizing chemistry.