ANNUAL REPORT 2015 INDUSTRIES EFTA00598642

Key figures for the Evonik Group Key figures in million 2011 2012 2013 2014 2015 Sates 14,540 13,365 12,708 12,917 13,507 Adjusted EBITDA' 2,768 2,467 1,995 1,882 2,465 Adjusted EBITDA margin 19.0 18.5 15.7 14.6 18.2 Adjusted EBIT° 2,099 1,887 1,404 1,256 1,752 ROCE` in % 18.7 20.4 15.1 12.5 16.6 Net Income 1,011 1,165 2,054 568 991 Adjusted net Income 1,256 1,076 806 782 1,128 Earnings per share in 2.17 2.50 4.41 1.73 1.22 2.13 Adjusted earnings per share in 2.70 2.31 1.68 2.42 Total assets as of December 31 16,944 17,166 15,883 15,685 17,005 Equity ratio as of December 31 in% 35.8 31.9 43.0 41.6 44.6 Cash ow from operating activities 1,309 1,420 1,055 1,066 1,971 Capital expenditures° 830 960 1,140 1,123 877 Depreciation and amortization d 647 580 585 606 700 Net nand& debt/assets as of December 31 843 1,163 571 400 1,098 No. of employees as of December 31 33,556 33,298 33,650 33,412 33,576 Figures for 2012 and 2013 contain the former Real Estate segment as a diso:ntinued operation. 2014 figures restated. Earnings before financial result, taxes, depreciation and amortization, after adrustments. b Earnings before financial result and taxes, after arnustrnents. < Return on capital employed. 4 Intangible assets. property, plant, equipment and investment property. Due to rounding, sane figures in this report may not add up exactly to the totals stated. Sales by region' Other 3% Germany 10% Central and South America 7% Other European Countries 31% North America 20% • Elylocation of customer. Nutrition & Care Key figures in million 2015 2014 External sales 4,924 4,075 Adjusted EBITDA 1,435 847 Adjusted EBITDA margin In % 29.1 20.8 Adjusted EBIT 1,214 685 ROCE In % 41.5 27.1 No. of employees 7,165 6,943 Prior-year figures restated. Resource Efficiency Key figures in million 2015 2014 External sales 4,279 4,040 Adjusted EBITDA 896 836 Adjusted EBITDA margin in % 20.9 20.7 Adjusted EBIT 675 642 ROCE In % 24.8 25.9 No. of employees 8,662 7,835 prior-year figures restated. Performance Materials Key figures in million 2015 2014 External sales 3,435 3,827 Adjusted EBITDA 309 325 Adjusted EBITDA margin in % 9.0 8.5 Adjusted EBIT 174 204 ROCE In % 11.9 14.6 No. of employees 4,380 4,353 prior-year figures restated. EFTA00598643

EFTA00598644

6 HER MOM'S THINKING: Doesn't she look sweet? When she grows up, she'll be a movie star! HER BROTHER'S THINKING: Hey, that's my shovel! EFTA00598645

bse A Kieflerte "1 tur 'ma. ' • • • ft r $ t 01 OIS ta cp. • t AT I • SeEittorig • ts" • . t& .H. 4,...400~0010.01SOMbil.. "- „t a r , .5 Mr. • OUR CUSTOMER'S THINKING: That's really impressive! Even though that diaper is so thin, it can absorb and contain liquid that's many times its own weight. I bet it could absorb all the Water in the wading pool! 7 EFTA00598646

8 NUTRITION& CARE THE INNOVATIVE CORE Today baby diapers are a high-tech product that's attracting new customer groups all he world. Companies are therefore competing more fiercely to make the best diapers. Evonik supplies the key ingre- dient and special know-how to stay in the running. Away from cotton and cellulose, toward superabsorbing polymers: That would be a good way to describe the development of modern diapers—but it wouldn't even be close to the whole story. Since the 1980s, when diaper manufacturers started using superabsorbers, there have been transformations on babies' changing tables and in this fiercely competitive market. Today superabsorbers of the latest generation can absorb 500 times their own weight in liquid. Almost every diaper manufactured today contains a few grams of these granulates. And the granu- late in every fifth diaper comes from Evonik Industries. A great deal of know-how has led to modern diapers and their superabsorbers. Back in the early 1980s, the first-generation superabsorbers merely absorbed liquid especially well and then retained it under pressure. Second-generation superabsorbers could expand against pressure—that is, even when the baby was sitting on the diaper. In the third generation the transport of liquid was optimized, so that the entire diaper could be used even if it didn't contain much cellulose. Today the primary goal is to make diapers that absorb liquid even faster and require even less material to guarantee long-lasting dryness. That's why Evonik is continuing to do research aimed at finding new and improved superabsorbers, and why it's analyzing diaper designs from all over the world in its application laboratories. Why is it expending so much effort? Because of a demanding and steadily growing group of customers—not the children themselves, but their parents. From Shanghai to Sao Paulo, a growing middle class with increasing disposable income is buying more and more modern diapers that promise dry baby bottoms, quieter nights and happier children. As a result, diaper manufacturers in new markets are competing to win over a growing number of customers. Increasing prosperity and rising local birthrates are driving this business. Whereas the diaper market in Western Europe and North America is growing by less than two percent, and in Japan incontinence products and baby diapers are being sold in equal numbers, the rest of the Asian market is growing by about eight percent annually—and the Chinese market is increasing by an impressive ten percent a year. In these growth markets the manufacturers are trying to beat the competition by means of clever marketing and especially high-quality diapers. In many cases, the keys to success are materials that are very similar to textiles and powerful superabsorbers that make diapers even thinner and more absorbent. Children enjoy the wearing comfort, and parents enjoy having to change diapers less often. Manufacturers and dealers benefit too, because thinner diapers take up less of the fiercely contested space on supermarket shelves. And the environment also benefits, because more diapers fit into each delivery truck. In general, the environmental balance sheet is playing an increasingly important role for the customers and manufacturers of consumer goods. Evonik is therefore continuing to work on environmental issues and giving its customers extensive information about its products' CO2 footprint, which has shrunk by 15 percent in the past four years. Thanks in part to yet another hidden piece of high tech in every fifth diaper that is sold. Baby diapers are the biggest market for superabsorbers, followed by incontinence and hygiene products. But superab- sorbers can do much more: They protect undersea cables from invasive seawater. And they absorb and bind the moisture that forms inside the packaging of poultry, meat, fish, fruit and vegetables. These foods stay fresh longer. As water storage media in the soil, superabsorbers also make reliable harvests possible even in regions with a dry climate. EFTA00598647

9 IP Even though it's not always obvious, diapers are a high-tech product. We provide the core ingredient and the key know-how. STEFAN NOWICKI Strategic Marketing Director Bay Cate Burinen Line PP EFTA00598648

10 THE POLICEMAN'S THINKING: That's a novel way to slow down traffic. THE SHEEPDOG'S THINKING: Woof, woo/7 EFTA00598649

11 all OUR CUSTOMER'S THINKING: It shows that there are situations where even the most modern, fuel- efficient, and environmentally friendly lightweight engineering is useless. SI EFTA00598650

12 RESOURCE EFFICIENCY FAR-REACHING CHANGES New materials and manufacturing methods are making vehicles not only lighter but also better. Solutions from Evonik will make just about every car more efficient in the future. The automotive industry currently faces major challeng- es, as legislators and associations around the world are mandating that vehicles should be made more efficient as part of the effort to combat climate change. In other words, mobility must become cleaner and more econom- ical. At the same time, drivers continue to demand a level of comfort and safety that requires the inclusion of more and more equipment and systems. For decades, this led to an increase in vehicle weight with every new model generation, and this development basically negated the numerous advances that had been made with efficient drive systems, improved aerodynamics, and cleaner fuels. A broad range of innovations is needed to ensure that ever more sophisticated equipment can be efficiently put on the road. Such innovations involve everything from lightweight designs and materials to more efficient powertrains. As a specialist for exceptionally high-per- formance materials, Evonik offers solutions in just about every area here. For example, the company has devel- oped joining technology systems that use very powerful adhesives instead of weld seams, bolts, and rivets. This not only improves bonds between various materials such as metals and plastics; it also makes possible completely new component concepts and enables thinner materials to be used to achieve the same degree of component strength, which also reduces weight. Evonik supplies additives for the special adhesives needed here and also offers a hot melt adhesive system that withstands high stress loads and can thus meet the strictest safety requirements in crash tests. Plastics are playing an increasingly important role in efforts to make mobility more efficient. They can be used in place of heavier metal parts and also enable the creation of new functions. Even components such as air intake pipes, which are mounted close to the engine and exposed to high levels of stress, can now be manu- factured using temperature-resistant high-performance plastics from Evonik. In this case, the weight benefit is accompanied by an optimized air flow. EFTA00598651

13 Modern low rolling-resistance tires offer an important efficiency benefit today. These tires contain the silica-silane system from Evonik, which reduces rolling resistance even as it ensures optimal traction on wet roads. The result: longer range and lower fuel consumption and emissions. Evonik is also conducting practical tests with many other solutions—for example, in an ultra-lightweight sports car Evonik designed with Roding Automobile, a small-batch manufacturer from Bavaria. The vehicle is being used to test materials for composites, structural foams, plastic glazing, and oil additives under tough racing conditions. At the same time, new series production processes are needed if racing innovations are to be transferred to the mass market. Evonik has already accomplished a great deal in this regard with composites. For example, re- searchers in Evonik's Composites Project House have developed systems and processes that enable composites to be manufactured more quickly and simply, and less expensively. In the course of their work, they also com- bined properties that were long considered impossible for plastic materials. This feat was achieved with new combinations of polymers, crosslinkers, and catalysts, for example, and it ensures that the potential of composites can be exploited more effectively. However, lightweight design alone is not enough to make cars significantly more climate-friendly. In particular, the powertrain—where up to 20 percent of a vehicle's ener- gy is lost—needs to be optimized. Evonik is currently establishing a center of competence for such optimization. The facility will channel key areas of expertise at the Group to develop new powertrain technologies. For example, plastics and new coatings in transmissions, combined with specially optimized lubricant additives, could help reduce the loss of engine performance during vehide operation. Even with 130 years of development experience, there's still plenty of potential for improving automobiles. The road to climate-friendly mobility will be marked not so much by leaps in technology as by the combination of a large number of individual improvements. Evonik, with its innovations for everything from vehicle roofs to tires, fuels, lubricants, and paints, is present just about every- where in automobiles, which means the company is well equipped to participate in every step of the problem's solution. ii More varied materials are being used in cars —and not just because of lightweight design. We offer solutions that enhance efficiency in numerous ways. ECKART MAN I lead or the Automotive IndustriesTeam (AIT) at Evonik Industries IP EFTA00598652

14 THE ART LOVER'S THINKING. THE SCHOOLGIRL'S THINKING, Fantastic! Why can't Incredible! That painting is __... I paint like that? older than my parents! EFTA00598653

17 Hair care is a business that also involves emotions. We enable our customers to fulfill very individual needs in terms of hair care and beauty. DR. WOLFGANG GOMM Global Business Director Specialties & Business Director BMA Personal Care Business Line Brazil, Singapore, and China in order to develop new and more precise solutions, such as special formulations, that meet local customers specific needs. In addition to the familiar hair needs, new consumer de- mands must also be taken into account. For example, the latest products also protect the hair from ultraviolet ra- diation and other external influences, thanks to additives from Evonik. This feature is increasingly demanded by customers in China's megacities and elsewhere. There's also a global trend toward natural raw materials, as well as concerns about specific ingredients that are under scrutiny even if the reasons are not always scientifically justified. Brazilian people love natural extracts, while many people of the Asian population are buying more and more silicone-free products and people from France tend to choose products without parabens. Evonik follows a clear strategy in achieving sustainable targets and creating solutions for our customers. Natural raw materials in hair and body care products are very popular. Consumers are increasingly making sure the products they buy are sustain- ably produced. Accordingly, Evonik has some of the production plants for cosmetics ingredients certified— for example, according to the standard of the Roundtable on Sustainable Palm Oil (RSPO). EFTA00598654

16 THE GIRLFRIEND'S THINKING: Always eating fries and still so slim—how does she do it?! THE CAR LOVER'S THINKING: No eating in my car! EFTA00598655

19 !1 OUR CUSTOMER'S THINKING: ...we'll take the used grease for the French fries to make biodiesel— that's good for the environment and there's no need to grow extra canola. EFTA00598656

20 PERFORMANCE MATERIALS As a world market leader, we contribute to the conservation of resources with our alkoxides. HENRIK HELLMANNS I lead of the Alkox Ides Product line 9! FROM DEEP-FRYING FAT TO BIODIESEL Alkoxides act as catalysts that help to convert natural oils and fats into biodiesel. Evonik's specialty products make it possible to use highly sustainable raw materi- als more extensively. They're greasy and not very healthy, really—but hardly anyone can resist a portion of crispy French fries. What many people don't know is that the deep-frying fat they're made in can be reused in a productive way. How- ever, this fact might soon become common knowledge, because such grease is a perfect raw material for the large•scale production of environmentally and dimate- friendly biofuels for automobiles. biodiesel made from old cooking oils and other waste products produces 80 percent lower emissions of the greenhouse gas carbon dioxide than does diesel from fossil sources. Moreover, the supply of old cooking oils seems virtually inexhaust- ible. For example, Germany's restaurants alone produce around 200,000 tons of used grease per year and private households offer similar potential. Although most biofuels today are based on renewable raw materials such as rapeseed or soybean, the use of waste•based biodiesel has expanded rapidly over the last few years. For example, the share of biodiesel raw mate- rials accounted for by used cooking oils and other waste has nearly doubled since 2011. The European Union is also supporting the use of biofuels made from waste products because, unlike raw materials that are especially cultivated for fuel applications, such products do not take up fields that could otherwise be used to grow food crops. Moreover, the recyclability of such waste products means their use can significantly reduce greenhouse gas emissions. The importance of waste•based biofuels continues to grow even in Brazil and the USA, both of which produce large amounts of soybean. Companies around the world that produce biodiesel use alkoxides from Evonik Industries. Here, sodium methylate and potassium methylate serve as catalysts for the transesterification of vegetable oils and animal fats that is needed to produce biodiesel. Sodium methylate is the most extensively used catalyst worldwide and has been successfully supporting the production of biodiesel from renewable raw materials for many years now. Potassium methylate is the catalyst of EFTA00598657

21 choice for the production of biodiesel from used cooking oils. That's because such oils contain a high share of free fatty acids that form a soap residue, which makes the manufacturing process more difficult. However, the use of potassium methylate leads to the formation of potassium soaps, which are easier to manage. The production pro- cess with potassium methylate is therefore more robust, yields are higher, and the quality of the resulting biodiesel is better. I Evonik supplies its high-perfor- mance alkoxides to numerous growth markets. The products are utilized in the pharma- ceutical industry, for example, in order to synthesize active ingredients. They can also be found in health care products such as Omega-3 and Omega-6 fish oil capsules. Potassium methylate might actually be on the verge of a spectacular career, as a study has shown that many other types of waste materials could be used to produce biofuels. If all such waste in the European Union were to be converted into biofuels, the resulting volume would cover around 16 percent of the entire fuel requirement in the EU by 2030. This would also make it possible to lower fossil fuel consumption by up to 37 million tons per year— which would be a real treat for the environment as well. EFTA00598658

THE MANAGER'S THINKING: When I was a little boy, I dreamed of being a cowboy too. THE STUDENT'S THINKING: That's weird. Why is this making me think of a cigarette ad? EFTA00598659

OUR CUSTOMER'S THINKING: Worldwide meat consumption is still increasing. We urgently need to do something to make meat production more friendly to climate and the environment. EFTA00598660

24 NUTRITION& CARE IT'S ALL IN THE MIX Adding correctly dosed amino acids from Evonik to animal feed makes meat production more efficient and more environmentally friendly. But the Group's animal feed experts are delivering far more than these valuable nutrients in themselves. In agricultural meat production, everything revolves around livestock and animal feed. Animal feed accounts for between 60 and 70 percent of the total cost of meat production, and it also accounts for most of its environ- mental footprint. For example, the cultivation of pro- tein-rich fodder plants such as soybeans requires vast amounts of arable land, while other protein sources such as fish meal are accelerating overfishing in the oceans. If animals are not optimally metabolizing their feed, much of it is excreted without being used. The additional animal waste pollutes water sources, among other things, and it also wastes environmental as well as economic resources. Today farmers and feed producers are responding to this challenge by adjusting the nutrients in their animal feed to precisely meet the needs of particular animal species. Essential amino acids are an important aspect of this effort. Amino acids are among the basic building blocks of all living things. Human beings and animals need to take in amino acids through the food they consume. However, amino acids are optimally metabolized only if they are consumed in the right mixing ratio. In order to constantly guarantee the correct mixing ratio for every animal spe- cies and every fodder plant in spite of natural fluctuations, expert knowledge is required. Evonik Industries therefore supplies not only the four most important amino acids for animal feed but also com- plete systems for their targeted dosing. To accomplish this, the Group also employs its own animal feed spe- cialists and carries out cooperative research with around three dozen universities and research institutes all over the world. The objective of this research is to find out what pigs, chickens, dairy cows, fish, and shrimps each require in order to thrive. After all, every animal species, every farming method, and every new breed has different requirements. In order to apply this knowledge in practice, Evonik supports all wholesale producers of mixed animal feed, for example through special analyses, consultation, and dosing systems. For example, on behalf of its customers Evonik is using near-infrared spectroscopy (NIR) to regularly check the actual nutrient content of well over 100 different raw materials for animal feed that are sold all over the world. Hundreds of thousands of such analyses are integrated into Evonik's advisory service. Whether it's Pekin ducks, brood carp or shrimps, Evonik knows the optimal amino acid profile for almost every animal species and has a number of specialized products in its port- folio. Dairy cows, for example benefit from Nlepron2, a methi- onine product that was developed especially for the digestive tract of these ruminants. It moves through the cow's rumen without decomposing and thus can be utilized especially well. EFTA00598661

25 66 We supply a package solution consisting of product and service. That's the only way our customers, and ultimately their animals, can optimally utilize the feed. PP STEFAN MACK Head of the nlethionine &Derivatives Product Line Evonik employees provide on-site consultation in 120 countries—wherever raw materials for animal feed grow and meat is produced. Together with their custom- ers, they look at the actual nutrient content of animal feed, the animals' requirements, current feed prices on the world market, and recently also the environmental footprint, in order to determine how to mix the optimal animal feed in terms of nutritional biology, cost-effective- ness, and environmental friendliness. - The addition of between a few hundred grams and a few kilograms of methionine, lysine, threonine or tryptophan per ton of feed makes a crucial difference. That's why the dosage should be extremely precise so that valuable nutrients are not wasted once again. Here too, Evonik is a leader when it comes to customer service. For example, it provides dosing systems for its customers mixing operations to make sure the feed always contains exactly the nutrients the animals need. EFTA00598662

26 S THESTUDENT'S THINKING: How can a person be so awake at 7:30 .?! THE GRANDMOTHER'S THINKING: Now you can see what I used to go through! EFTA00598663

OUR CUSTOMER'S THINKING: Someone's had a good night's sleep! Latex mattresses are not only robust but also ideally suited for many different kinds of sleepers—even people with allergies. EFTA00598664

28 PERFORMANCE MATERIALS BETTER BEDDING More affordable, more ergonomic, and even more sustainable—latex mattresses based on Evonik products promise more comfortable sleep even for demanding sleepers. They also apply a chemical by- product useful and efficiently. We spend about a third of our lives in bed. That's already reason enough to select materials carefully when you're buying a mattress. After all, the wrong choice can cause countless problems. If you're allergic to house dust, you'll suffer from irritation of the eyes and the respiratory tract; if you're sensitive to cold, you'll shiver throughout the winter; and if you have back problems, you'll be kept awake by pain or wake up with stiff muscles. And if you're overweight, you'll tend to sink into your mattress instead of relaxing on top of it. A latex mattress can help you avoid all of these problems. However, natural latex is expensive, and some of the regions where latex-producing rubber trees are grown are under criticism because rain forests are being logged EFTA00598665

29 For decades, butadiene has been an important raw material in the tire, paper, and plastic industries. The demand for synthetic rubber will boost growth. DR. GERHARD HIMMEL Vire President Marketing & Sales, Rubber & Plasiles Marketing Area, Performance Intermediates Business Line Evonik products can be found not only in mattresses but also in upholstery cushions and insulation foams. A variety of foams for industry are made especially robust, fine- pored, and evenly textured through the use of additives from Evonik. to make room for rubber tree plantations. Evonik offers a more economical raw material for latex production: butadiene. This chemical is used to produce synthetic latex, which is cheaper and, by contrast to natural latex, does not become brittle when it is exposed to ultraviolet radiation. And because butadiene is a byproduct of the processing of crude oil, its use is practical and sustainable. Most mattress producers use a combination of natural and synthetic latex, in a ratio of up to 40 percent natural with the remainder synthetic latex. Butadiene makes about 40 percent of synthetic latex, but there are also production processes that use an even higher proportion of butadiene. For many people, latex mattresses are a good choice. They are especially appreciated by people who are aller- gic to house dust mites. Latex mattresses have an antibac- terial coating and are therefore more hygienic and easier to keep clean. There's practically no opportunity for dust mites to settle in. When it comes to comfortable sleep, latex mattresses generally also get excellent marks. They feel pleasantly warm and efficiently filter off moisture. People who are tall and heavy or suffer from backaches appreciate the high degree of point elasticity, which results in greater comfort. Who wouldn't be tempted to stay in bed just a little longer? EFTA00598666

so S THE YOUNG MAN'S THINKING: A cool party—I wish I could be there right now. THE MARRIED COUPLE'S THINKING: Remember when we were young? Those were the days... EFTA00598667

31 OUR CUSTOMER'S THINKING: Beer will also stay fresh longer once those new oxygen-absorbing bottle caps make it to the market. EFTA00598668

fa RESOURCE EFFICIENCY APPETITE FOR MORE Foods and beverages stay fresh with the help of protective "active packaging" on the inside of the normal packages. This helps reduce the amount of food that's thrown away. Scientists at Evonik develop the key raw materials for this "active packaging: Foods that look tasty and fresh and are attractively pack- aged as well—modern supermarkets have a huge amount of products on offer, and this sometimes causes shoppers to buy more than they can consume over a given period. The problem here is that the food products don't last forever: At some point, sausages will go bad even in the refrigerator, where yoghurt can also turn sour and cheese moldy. A lot of food therefore ends up in the garbage. Germany's Ministry of Food and Agriculture reports that every German throws away around 82 kilograms of food each year on average, although 64 percent of this amount really doesn't have to go to waste. Food products such as meats, sausages, milk and dairy products, and beverages react very sensitively to oxygen, traces of which remain even in shrink-wrapped packages. This oxygen triggers an oxidation process that accelerates the growth of microorganisms that cause fresh foods to start tasting and smelling bad—and also lose their vitamin content. In other words, the food spoils. A new trend has therefore developed that involves the use of 'active packaging° in which a chemical absorber is integrated into the packaging material, where it bonds with the remaining oxygen. Scientists from Evonik de- velop such additive•based concentrates, which not only absorb oxygen but also ensure that transparent packaging foils remain transparent. This is important, because most oxygen absorbers on the market change their color to an unpleasant-looking yellow as they protect food products. One third of all the food produced is thrown away, according to the United Nations. Our innovative solutions for the food industry can help ensure that resources are used more efficiently. DR. STEFAN NOROHOFF Vice President Active Packaging, Strategy Er NeveGrowth Business, Resource Efficiency Segment IP EFTA00598669

33 Many companies in the food and packaging industries have already expressed interest in the newly developed VISPARENT° product, despite the fact that it's still being examined by the authorities for approval. The market here harbors great potential—for example, demand for such packaging is very high in Europe, the USA, and Japan. Evonik is already working with leading manufac- turers on the development of formulations that can offer the right solution for each type of packaging. That's be- cause regardless of whether it's transparent foils, plastic containers, or bottle caps—the new oxygen absorber can basically be used with all types of packaging. This will give it a unique standing on the market and very likely ensure that it will make its way into a large number of supermarkets. Additive concentrates from Evonik keep cheese, meat, and other foods fresh for a longer period of time. Drinks in PET bottles and milk also last longer—and bottle caps with oxygen absorbers on the inside extend the shelf life of beer and other beverages as well. EFTA00598670

34 MOTHER'S THINKING. Don't hurt yourself, my boy! FATHER'S THINKING. Put it in the net, son! EFTA00598671

OUR CUSTOMER'S THINKINGI ...as ever, nobody notices the self-adhesive strip on the hockey stick, which defies the icy cold without losing its adhesive properties. EFTA00598672

36 PERFORMANCE MATERIALS STRONG BONDS Special additives from Evonik Industries ensure that adhesive tape and labels stick extremely reliably wherever it really matters. And they do that even when they are taken off and stuck back on. Adhesives have to stay cool even when the going gets tough. That also applies fully to adhesive tape, no matter whether it's used in sports or at home. However, the ugly brown spots that can be found on many bathroom tiles tell another story. Whereas adhesive strips that have just come off the roll seem to hold no matter what, the towel hooks they support eventually fall off the bathroom wall and only the adhesive itself remains permanently attached to the tiles. The adhesive was weakened by external influences such as temperature fluctuations, cleaning agents, and ultraviolet light. This is an area where Evonik can demonstrate its skill. As a result of post-application UV crosslinking, one of the company's additives, VISIO- MER° 6976, can greatly increase a tape's adhesive force. In endurance testing, it stuck 400 times better than a non-crosslinked adhesive. A typical property of the adhesive used in adhesive tape is its permanent stickiness. This distinguishes it from many types of adhesive, which don't become hard and adhesive until they dry or undergo a chemical reaction. This permanent stickiness makes it possible to attach tape to almost any surface. But it's precisely this versatility that makes the use of tape demanding because it limits the tape's adhesive strength. As a result, it's not just adhesive strips on hockey sticks and labels for frozen products that have to stay sticky at low temperatures and not become brittle. Stickers on hazardous materials also have to adhere reliably for a long time and when subjected to extensive wear and tear. Removable labels have to stick well but not leave any residue when they are taken off. This is where the special methacrylate VISIOMER° 6976 from the Performance Materials Segment comes into play. When an adhesive containing this substance is exposed to ultraviolet light, the adhesive becomes crosslinked. The UV-active monomer VISIOMER° 6976 helps the individual polymers in the adhesive to link up with one another and thus increase the adhesive strength. What's more, this process increases the ad- hesive's chemical stability, insensitivity to temperature fluctuations, and resistance to moisture. By changing the dose, it's possible to customize the type and duration of the UV influence and thus also the crosslinking to the respective application. Another benefit of adhesive tape containing VISIOMER° 6976 is that no solvents are needed to make them. This, in turn, reduces the environmental impact and increases the manufacturers' productivity. Typical areas of appli- cation for such adhesive tape include electronic systems and the industrial assembly of components. The special methacrylate is also well suited for everyday applications, particularly those that require strong bonds under unfa- vorable conditions—ice hockey being a good example. II The incorporation of our UV-active monomer VISIOMER° 6976 increases not only a glue's adhesiveness but also its resistance to many external influences such as moisture, temperature fluctuations, and chemicals. DR. SABINE K0MMEtT Technical Manager Applied Technology Acrylic Monomer% Engines% Line IP EFTA00598673

As a post-application crosslinking agent, VISIOMEle 6976 is also suited for other resin systems such as paints and coatings. Such paints are easy to apply before the crosslinking takes place. The natural ultraviolet light from the sun gradually causes the paints to harden and thus become more resistant to external influences. EFTA00598674

is I r 4 w THE LITTLE GIRL'S THINKING: When I grow up, I want tube a doctor too! Or a pop star! THE DOCTOR'S THINKING: ■plat/ no brown bears are showing up at my office! EFTA00598675

3 sr. OUR CUSTOMER'S THINKING: Getting a real injection is seldom this much jun. Fortunately, well soon be able to avoid them more and more often. EFTA00598676

40 NUTRITION Er CARE HELPING WHERE IT COUNTS Dosing active ingredients precisely and purposefully is an art in itself. It's an art that Evonik has mastered by means of polymers for the pharmaceutical industry— and one that could generate innovative treatments against numerous illnesses. Today people are growing older than ever before. Within four generations, life expectancy has more than doubled all over the world. In the period since 1990, child mortality has been cut in half. This is primarily thanks to the successful struggle against infectious diseases. Today medicine is focusing all the more on noninfectious and chronic diseases, which have long been responsible for the great majority of deaths—especially in developing countries and emerging economies. Diabetes, cancer, cardiovascular disease, and diseases of the respiratory tract are four of the most important fields of medical and pharmaceutical research. Active ingredients that can precisely intervene in the body's internal processes even in tiny doses are regard- ed as especially promising. But researchers are also increasingly looking for the optimal way to administer them. Especially in the case of active ingredients with complex molecules, it is very difficult to ensure that they will be available inside the body in a targeted way as continuously as possible. It is difficult to administer some active ingredients in tablet form, either because they disintegrate in the digestive tract or cannot be absorbed through the intestinal wall. Other active ingredients need to do their work locally, for example in a joint, a certain tissue or an organ, continuously for several weeks or months. That requires frequent injections. As a result, the concentration of the active ingredient in the tissue peaks at first, but then gradually decreases. In addition, every injection increases the patient's risk of infection, not to mention the unpleasant direct effects on the patient. One solution that involves oral as well as parenteral dos- age is offered by pharmaceutical polymers from Evonik Industries. They make it possible to release orally admin- istered active ingredients at the right time and place in the gastrointestinal tract and to transport them from there into the bloodstream continuously in precise doses. This has made it possible to administer some active ingredients in tablet form for the first time ever. Others can now be taken once a day rather than at regular intervals over 24 hours. Biologically absorbable polymers from Evonik now make it possible to formulate parenteral depot EFTA00598677

medications that can be injected directly beneath the skin or into the affected tissue. There, customized micropar- tides then continuously release the active ingredient in a targeted way before they themselves are disintegrated and absorbed by the body in a natural process. These depot medications in particular harbor tremendous potential. Evonik is cooperating with major customers from the pharmaceutical industry and also with creative startups to develop formulations for the treatment of diseases such as cancer and multiple sclerosis, as well as acute injuries, rare diseases such as solar urticaria, which is a severe form of solar allergy, and psychological disorders such as depression and schizophrenia. Evonik is providing important and comprehensive sup- port, especially in its cooperation with creative startups that are developing new types of treatment. From the initial idea to the development of a prototype, creation of the patterns for clinical studies, and manufacture of the final product, Evonik supports the development process and the steps leading toward commercial production. In this way it ensures that an active ingredient actually gets to the places where it's needed. Bioresorbable polymers from Evonik have proven their worth for years—in the form of surgical screws, for example. The screws do not need to be removed, which cuts costs and the risks posed by an additional operation. Moreover, they can be filled with active ingre- dients that support healing where it's needed. Forms of drug administration that intervene in physiological processes through precise dosing make new types of treatment possible. We are helping our customers to implement them. THOMAS RIERMEIER Head or Evonik Marina Polymers fa Services Product Line PP EFTA00598678

42 • 4 THE SMARTPHONE GENERATION'S THE BIOLOGY TEACHER'S THINKING: THINKING: Cool. Can you gel whale songs Oli, a 2Wegaptera novaeangliae. • as a ring tone? EFTA00598679

OUR CUSTOMER'S THINKING: There are special paints to prevent barnacles growing on the hulls of container ships. It's a pity that such paints don't exist for whales as well. EFTA00598680

44 RESOURCE EFFICIENCY CLEAR SAILING ON THE HIGH SEAS Because anti-fouling protection makes shipping more efficient and sustainable, fleet operators and ship builders are looking for effective protective paints. Evonik is making today's paint recipes especially effective and is also working on the coatings of tomorrow. Measuring 400 meters in length and boasting more than 80,000 hp, the largest container ships that currently ply the world's oceans often have up to 19,000 containers on board, representing almost 200,000 tons of freight. However, a tenacious enemy of these giants of the seas is microscopically small. In a process called fouling, these tiny microorganisms and algae create a slimy organic film on all ships' hulls that are in the water long enough, no matter whether the vessel is a luxury yacht or a deep-sea freighter. Once this 'soft growth' has made itself at home on the hull, it is followed somewhat later by mussels, barnacles, and other types of "hard growth.' These 'stowaways° not only increase the ship's weight but also promote the corrosion of the hull, thus necessitating frequent maintenance work in dry docks. Fouling particularly increases flow resistance, be- cause only clean and smooth hulls glide optimally through the water. This has a huge impact on the energy efficiency of ship- ping and thus on its costs and carbon footprint. That's be- cause a strongly fouled container ship can consume up to 40 percent more fuel than a clean one. With consumption figures measured in hundreds of tons of bunker oil per day, this is a considerable amount, and it is also the main reason why fleet operators and ship builders use effective anti-fouling products. These products consist of ship paint that keeps fouling at bay for as long as possible. The ancient Romans were already familiar with the most important anti-fouling agents against marine pests: metals such as lead and copper that prevent the organisms from attaching themselves to the hull. That's why the paints used on ships today contain copper compounds. The typically red color that adorns the hulls of merchant ships is caused by copper oxide in the paint. By contrast, the paints used for recreational craft mostly contain cop- per thiocyanate, which is white but much more expensive than copper oxide. Every large merchant ship is painted with hundreds of tons of coating to protect it against the elements and corrosive cargo. Almost all of the coatings—whether for the deck or the ballast water tanks—contain products from Evonik, which improve the coatings' resistance to the rough conditions aboard a ship. In addition, Evonik products in the formulations of the anti-fouling paints ensure that extremely tiny layers continuously peel off to uncover new copper underneath. This keeps hulls clean longer so that fewer stays are needed in dry dock. It also ensures that the same effect is achieved with less copper, which is beneficial from both an environmental and an economic point of view. Moreover, Evonik works together with paint manufac- turers and research institutes to create new formulations and new anti-fouling systems. The aim is to create paints that are especially effective and sustainable. For example, paints might not need any copper in the future, as they will create surfaces that mechanically prevent organisms from attaching themselves to the hull in a kind of lotus effect for the giants of the seas. The tiny stowaways would then no longer pose any threat to the leviathans of the high seas. EFTA00598681

Specialty products from Evonik are also helping against undesir- able adhesiveness of a different kind: graffiti. A special surface coating protects facades against spray attacks, repelling spray paint and markers so they can be easily removed. Although subject to the full force of the weather and repeated cleaning, the coat- ing lasts for several years. if We not only supply the components for high-performance coatings, we also know precisely what they have to do and under which conditions. JORGEN LOROSCH Head orthe Paints & Coatings Industry Team EFTA00598682

TO OUR SHAREHOLDERS EFTA00598683

• TO OUR SHAREHOLDERS - MANAGEMENT REPORT - CONSOU DATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION 47 r- 5 I Our strategy is based on profitable growth, efficiency and values. We are strengthening our leading market positions and concentrating on attractive growth businesses and emerging markets. Innovations and external growth give us access to new growth areas. We are also continuously improving our cost base and technology position. EFTA00598684

♦s ANNUAL REPORT 2015 EVONIK INDUSTRIES Report of the Supervisory Board Dr. Werner Muller, Chairman of the Supervisory Board A Ours AO\ rialciletAms In 2015, the Supervisory Board of Evonik Industries AG (Evonik) performed the obligations defined by law and the Articles of Incorporation correctly and with the utmost care, and regularly and conscientiously supervised the work of the Executive Board. We supported the Executive Board by providing advice on the management and strategic development of the company. Collaboration between the Executive Board and Supervisory Board The Executive Board always gave us full and timely information on all material issues affecting the Group, and involved us in all fundamental decisions relating to the company. Key areas were business performance and the situation of the company, along with aspects of business policy, corporate planning and Evonik's ongoing strategic development. In addition to reporting at meetings of the Supervisory Board, the Executive Board kept us informed orally and in writing of current business developments and activities of particular significance for Evonik. The Chairman of the Supervisory Board was kept informed of all major business events. EFTA00598685

• TO OUR SHAREHOLDERS MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 49 Rayon of the Supelvisory Booed The Supervisory Board was always consulted at an early stage on decisions of any significance. The Supervisory Board's oversight of the Executive Board centered in particular on ensuring the correct, orderly, expedient and cost-effective management of Group-wide business activities. The content and scope of reporting by the Executive Board complied with the law, the principles of good corporate governance and the requirements set by the Supervisory Board. Section 16 of the Articles of Incorporation of Evonik Industries AG and the Rules of Procedure of the Supervisory Board set out business activities and measures of fundamental importance on which the Executive Board is required to seek the approval of the Supervisory Board or, in some cases, individual committees. In the past fiscal year, the Supervisory Board took decisions on business activities and measures submitted by the Executive Board after examining them and discussing them with the Executive Board. Meetings and work of the Supervisory Board We examined all issues of importance to the company at five meetings, on March 2, May 19, June 25, September 24 and December 10, 2015. In addition, the Supervisory Board adopted one resolution via a written circulation procedure. In 2015 the work of the Supervisory Board was again prepared and supported by its committees. The committees and their members in the year under review were as follows: • Executive Committee: Dr. Werner Muller (Chairman), Michael Vassiliadis (Deputy Chairman), ainter Adam (until December 10, 2015), Ralf Hermann, Steven Koltes and Dr. Volker Trautz. • Audit Committee: Dr. Siegfried Luther (Chairman and independent financial expert within the meaning of Section 100 Paragraph 5 German Stock Corporation Act/AktG), Karin Erhard (Deputy Chairwoman), Prof. Barbara Grunewald, Jurgen Neding (until September 30, 2015), Norbert Pohlmann (from Octo- ber 1, 2015), Dr. Wilfried Robers and Dr. Christian Wildmoser. • Finance and Investment Committee: Michael Radiger (Chairman), Michael Vassiliadis (Deputy Chairman), Gunter Adam (until December 10, 2015), Martin Albers (from December 11, 2015), Stephan Gemkow, Ralf Hermann, Frank Lallgen, Dr. Werner Muller and Dr. Christian Wildmoser. • Nomination Committee: Dr. Werner Muller (Chairman), Steven Koltes and Dr. Volker Trautz. • Mediation Committee: Dr. Werner Muller (Chairman), Michael Vassiliadis (Deputy Chairman), Ralf Hermann and Dr. Volker Trautz. The tasks allocated to these committees are described in detail in the Corporate Governance Report on pages 63 and 64. The Executive Committee held eight meetings in 2015. The Audit Committee and the Finance and Investment Committee each held four meetings. In addition, the Finance and Investment Committee adopted one resolution via a written circulation procedure. The Nomination Committee met once in the reporting period. There was no need for the Mediation Committee to meet during the reporting period. The chairman or deputy chairperson of each committee reported regularly at the meetings of the Supervisory Board on the issues discussed and decisions taken at committee meetings. The Supervisory Board therefore always had extensive and well-founded information on all matters of significance in the Evonik Group. At its meeting in March, the Supervisory Board focused on examining the annual financial state- ments, which had first been considered in detail by the Audit Committee, and on preparing for the Annual Shareholders' Meeting. It also resolved on measures resulting from an efficiency review conducted with external support in 2014. The meeting in May was dedicated to supplementary information prior to the Annual Shareholders' Meeting. In June, the focus of the meeting was the resignation from the Executive Board of Patrick Wohlhauser, formerly Chief Operating Officer, and the appointment of Dr. Ralph Sven Kaufmann as his successor. At the meeting in September, the Supervisory Board discussed the strategy of the Evonik Group, the extension of the term of office of Thomas Wessel as Chief Human Resources Officer, targets for female members of the Supervisory Board and Executive Board, revision of the objectives for the composition of the Supervisory Board in accordance with Section 5.4.1 Paragraph 2 of the German Corporate Governance Code, and the new version of the Rules of Procedure of the Supervisory Board. t. fi 2 EFTA00598686

so ANNUAL REPORT 2015 EVONIK INDUSTRIES At its meeting in December, the Supervisory Board discussed the Declaration of Conformity in compliance with Section 161 of the German Stock Corporation Act (AktG), the budget for 2016, the mid-term planning for the period to 2018, and progress in implementing the measures adopted following the efficiency review. In the reporting period, the main issues discussed by the Executive Committee were: the bonuses for the Executive Board members for 2014 and their objectives for 2015, adjustment of the remuneration of the Executive Board effective January 1, 2016, systematic succession planning for the Executive Board, preparation of a proposal on implementation of the recommendations made by the efficiency review, the change of Chief Operating Officer on the Executive Board, acceptance and discussion of a report by the Chairman of the Executive Board on acquisition considerations, determination of the targets for the proportion of women on the Supervisory Board and Executive Board, and the business situation, current projects and Evonik's share price. At its meeting in March, the Audit Committee examined the annual financial statements of Evonik Industries AG, the consolidated financial statements, and the proposal for the election of the auditor for fiscal 2015. The focus at its meeting in May was the interim report on the first quarter, while in July the meeting focused on the interim report on the first six months. In October, the central issues discussed by the Audit Committee, apart from the interim report on the third quarter, were corporate governance and the compliance update. The attention of the Finance and Investment Committee in the reporting period was mainly concentrated on growth projects and investment controlling (see page 51 "Investment and investment controlling"). In January, the Nomination Committee discussed the implications of the legislation on equal participation of women and men in management positions in the private and public sectors for both groups of repre- sentatives on the Supervisory Board. In addition—apart from the reports required by law—the Supervisory Board and its committees examined and discussed the following issues in detail: Performance and situation of the Evonik Group The Evonik Group posted a very successful business performance despite the challenging macro-economic environment. Although global growth was lower than expected, the Group posted a pleasing volume trend, supported by the new production capacities. There was a particularly strong rise in selling prices in the Nutrition & Care segment, whereas prices in the Performance Materials segment declined, mainly because of the drop in the oil price. Overall, selling prices were on the previous year's level. Sales increased to €13.5 billion in 2015 and adjusted EBITDA improved considerably to €2.47 billion. Implementation of the new management and portfolio structure The Supervisory Board discussed in detail the reorganization of the management and portfolio structure of the Evonik Group, which started in 2014 and was completed in 2015. The principal objective of the reorganization—to take account of the different management needs of the businesses and bring a further improvement in the structural basis for their profitable growth was achieved in the reporting period through the following steps: • Establishment of new legal entities and transfer of management responsibility to the future managing directors of these companies with effect from the start of 2015 • Assumption of the operating business by these new companies through plant management agreements and the associated transfers of undertaking pursuant to Section 613a of the German Civil Code (BGB) effective July 1, 2015 EFTA00598687

• TO OUR SHAREHOLDERS MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION S1 Rip0I1 O r the Supetvisory Boerd • Concentration of Evonik Industries AG from this date as a management holding company on the strategic management and ongoing development of the legal entities. fi This introduced the principle of differentiated management. Consequently, the Nutrition & Care and Resource Efficiency segments now have an even stronger focus on growth, while the Performance Materials segment is run as a financing business. Investment and investment controlling Alongside this, the Supervisory Board and its committees kept a close eye on Evonik's growth course. At our meetings we discussed the development of Evonik's sales, earnings and capacity utilization, the financial and earnings position and the main growth projects, including investment controlling for current projects. The projects considered in detail by the Supervisory Board and the Finance and Investment Committee included: • Preliminary planning for the construction of a further methionine plant (Singapore) • Ongoing construction work on an integrated production complex for oleochemical specialty surfactants (Brazil) • Ongoing construction of a lysine plant (Brazil) • Extension of capacity for polyamide 12 powder (Germany) • Extension of production of high-molecular polyester (Germany) • Acquisition of Monarch Catalyst Pvt. Ltd. (India) • Joint venture for the construction of a production facility for potassium hydroxide solution and chlorine (Germany) • Construction of a production facility for acrolein cyanhydrin-o-acetate (USA). Divestments During the year the Supervisory Board and the Finance and Investment Committee also closely examined divestment projects, including the following: Divestment of the remaining 10.3 percent stake held by Evonik Industries AG in the real estate company Vivawest GmbH to RAG Aktiengesellschaft, Herne (Germany). Other issues addressed by the Supervisory Board and its committees In addition to the issues and developments outlined above, the main topics addressed by the Supervisory Board and its committees in 2015 were: Proposals for resolutions to be adopted at the Annual Shareholders' Meeting in May 2015, especially the proposal of the Supervisory Board to the Annual Shareholders' Meeting on the appointment of the auditor Revision of the Rules of Procedure of the Supervisory Board Appointment of Dr. Ralph Sven Kaufmann as a member of the Executive Board and renewal of the appointment of Thomas Wessel as a member of the Executive Board (see °Personnel issues relating to the Executive Board and Supervisory Board' on page 55) Resolutions on the Declarations of Conformity in compliance with Section 161 of the German Stock Corporation Act (AktG) in March and December 2015, and the Supervisory Board's report to the Annual Shareholders' Meeting. a 0 EFTA00598688

52 ANNUAL REPORT 2015 EVONIK INDUSTRIES Individual disclosure of the attendance at meetings of the Supervisory Board and its committees Supervisory Board member Supervisory Board Finance & Executive Investment Audit Nomination Committee Committee Committee Committee Mediation Committee Presence in % Presence in % Presence in % Presence in % Presence in % Presence in % Dr. Werner MOtler (Chairman) 5/5 100 8/8 100 4/4 100 1/1 100 0/0 Michael Vassilladis (Deputy Chakman) 5/5 100 8/8 100 4/4 100 0/0 GOnter Adam (until December 10, 2015) 4/5 80 7/8 87.5 4/4 100 Martin Albers (from October 1, 2015) 1/1 100 Prof. Barbara Albert 5/5 100 Karin Erhard 5/5 100 4/4 100 Carmen Fuchs (from December 10, 2015) 0/0 Stephan Gemkow 5/5 100 4/4 100 Prof. Barbara Grunwald 5/5 100 4/4 100 Ralf Hermann 5/5 100 8/8 100 3/4 75 0/0 Prof. Wolfgang A. Herrmann 5/5 100 Dieter Kitten 5/5 100 Steven Koltes 4/5 80 7/8 87.5 1/1 100 Frank Lbllgen 5/5 100 3/4 75 Dr. Siegfried Luther 5/5 100 4/4 100 itligen Wading (until September 30, 2015) 4/4 100 3/3 100 Norbert Pohlmann 5/5 100 1/1 100 Dr. Wilfried Robes 5/5 100 4/4 100 Michael ROdiger 5/5 100 4/4 100 Ulrich Terbradc 5/5 100 Dr. Volker Trautz 5/5 100 8/8 100 0/1 0 0/0 Dr. Christian Wlldmoser 5/5 100 I 4/4 100 4/4 100 Corporate governance The Supervisory Board is committed to the principles of good corporate governance. This is based principally on recognition of the provisions of the German Corporate Governance Code, both in the version dated June 24, 2014 and in the present version of May 5, 2015. This does not exclude the possibility of deviation from its recommendations and suggestions in legitimate individual cases. Since it is listed on the stock exchange, Evonik is subject to the obligation contained in Section 161 of the German Stock Corporation Act (AktG) to submit a declaration of the extent to which it has complied with or will comply with the German Corporate Governance Code and which recommendations have not been and will not be met, together with the reasons for this (declaration of conformity). The Executive Board and Supervisory Board issued declarations of conformity in March and December 2015. These are available on the company's website. In addition, the corporate governance report on page 56 f. contains the most recent declaration of conformity from December 2015. The Executive Board and Supervisory Board examined the requirements imposed by the German legislation on equal participation of women and men in management positions in the private and public sectors. In accordance with this, the list of objectives for the composition of the Supervisory Board was amended to state that in the future appointments to the Supervisory Board should ensure at least 30 percent women and at least 30 percent men; this requirement is applicable for new appointments from January 1,2016. Further, the Supervisory Board defined a target of at least 20 percent female members of the Executive Board for the period up to June 30, 2017. EFTA00598689

• TO OUR SHAREHOLDERS MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 33 Repot( of the Supetvisory Baud As an additional objective for its composition, Evonik's Supervisory Board has set a regular limit on membership of no more than three full terms of office to satisfy the new requirements set out in the latest version of the German Corporate Governance Code. With the exception of the quotas for men and women to be observed in future appointments, the present composition of the Supervisory Board meets all of the major objectives set for its composition. Further details of the diversity requirements and the list of objectives are set out in the corporate governance report on pages 64 and 65. For 2015, the members of the Supervisory Board will receive attendance fees and purely fixed remu- neration for their work on the Supervisory Board and any membership of committees (see page 133). Members of the Supervisory Board of Evonik Industries AG had no conflicts of interest in 2015. Moreover, there were no consultancy, service or similar contracts with any members of the company's Supervisory Board in 2015. Furthermore, there were no transactions between the company or a company in the Evonik Group on the one hand and Supervisory Board members and related parties on the other. In 2014 the Supervisory Board examined the efficiency of its work with the support of an external consultant. The measures adopted as a result of this review were either implemented in 2015 or adopted as an ongoing process. All of the measures implemented will increase the efficiency of the Supervisory Board and thus bring a further improvement in corporate governance at Evonik. Audit of the annual financial statements PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprufungsgesellschaft (PwC), Dusseldorf (Germany) has audited the financial statements of Evonik Industries AG as of December 31, 2015 prepared in accor- dance with the German Commercial Code (HGB), the consolidated financial statements for the Evonik Group prepared using the International Financial Reporting Standards (IFRS), as permitted by Section 315a Paragraph 1 of the German Commercial Code (HGB), and the combined management report for Evonik Industries AG and the Evonik Group, and has endorsed them with an unqualified opinion pursuant to Section 322 of the German Commercial Code (HGB). The Supervisory Board awarded the contract for the audit of the annual financial statements of Evonik Industries AG and the consolidated financial statements of the Evonik Group in line with the resolution taken by the Shareholders' Meeting on May 19, 2015. In accordance with Section 317 Paragraph 4 of the German Commercial Code (HGB), the annual audit includes an audit of the risk identification system. The audit established that the Executive Board has taken the steps required in compliance with Section 91 Paragraph 2 of the German Stock Corporation Act (AktG) to establish an appropriate risk identification system and that this system is suitable for timely identification of developments that could represent a threat to the continued existence of the company. The Executive Board submitted the above documents, together with the auditor's reports and the Executive Board's proposal for the distribution of the profit to all members of the Supervisory Board to prepare for the meeting of the Supervisory Board on March 2, 2016. At its meeting on February 26, 2016 the Audit Committee discussed the annual financial statements, auditor's reports and proposal for the distribution of the profit in the presence of the auditor to prepare for the subsequent examination and discussion of these documents by the full meeting of the Supervisory Board. Further, the Audit Committee requested the auditor to report on its collaboration with the internal audit department and other units involved in risk management, and on the effectiveness of the risk identification system. The auditor reported that the Executive Board had taken the steps required in compliance with Section 91 Paragraph 2 of the German Stock Corporation Act (AktG) to establish an appropriate risk identification system and that this system is suitable to ensure timely identification of developments that could represent a threat to the continued existence of the company. fi 2 5 o V EFTA00598690

54 ANNUAL REPORT 2015 EVONIK INDUSTRIES The Supervisory Board conducted a thorough examination of the annual financial statements of Evonik Industries AG, the consolidated financial statements for the Evonik Group, the combined management report for fiscal 2015 and the Executive Board's proposal for the distribution of the profit and—on the basis of explanations of these documents by the Executive Board—discussed them at its meeting on March 2, 2016. The auditor was also present at this meeting and reported on the main findings of the audit. He also answered questions from the Supervisory Board about the type and extent of the audit and the audit findings. The discussion included the audit of the risk identification system. The Supervisory Board shares the Audit Committee's assessment of the effectiveness of this system. In this way, the Supervisory Board convinced itself that the audit had been conducted properly by the auditor and that both the audit and the audit reports comply with the statutory requirements. Following its thorough examination of the annual financial statements of Evonik Industries AG, the consolidated annual financial statements and the combined management report (including the declaration on corporate governance), the Supervisory Board declares that, based on the outcome of its examination, it has no objections to raise to the annual financial statements of Evonik Industries AG, the consolidated annual financial statements and the combined management report. In line with the recommendation made by the Audit Committee, the Supervisory Board has therefore accepted the audit findings. At its meeting on March 2, 2016, the Supervisory Board therefore endorsed the annual financial statements of Evonik Industries AG and the consolidated annual financial statements. The annual financial statements for 2015 are thus ratified. The Supervisory Board concurs with the Executive Board's assessment of the situation of the company and the Group as expressed in the combined management report. The Super- visory Board considered the Executive Board's proposal for the distribution of the profit, in particular with a view to the dividend policy, the impact on liquidity and its regard for shareholders' interests. This also included an explanation by the Executive Board and a discussion with the auditor. The Supervisory Board then voted in favor of the proposal put forward by the Executive Board for the distribution of the profit. Examination of the report by the Executive Board on relations with affiliated companies The Executive Board has prepared a report on relations with affiliated companies in 2015. This was examined by the auditor, who issued the following unqualified opinion in accordance with Section 313 of the German Stock Corporation Act (AktG): "In accordance with our professional audit and judgment we confirm that 1. the factual disclosures made in this report are correct 2. the company's expenditures in connection with the legal transactions contained in the report were not unreasonably high? The Executive Board submitted the report on relations with affiliated companies and the associated auditor's report to all members of the Supervisory Board to enable them to prepare for the Supervisory Board meeting on March 2, 2016. The Audit Committee conducted a thorough examination of these documents at its meeting on February 26, 2016 to prepare for the examination and resolution by the full Supervisory Board. The mem- bers of the Executive Board provided detailed explanations of the report on relations to affiliated companies and answered questions on it. The auditor, who was present at this meeting, reported on the main findings of the audit of the report on relations with affiliated companies and answered questions raised by members of the Audit Committee. The members of the Audit Committee acknowledged the audit report and the audit opinion. The Audit Committee was able to convince itself of the orderly nature of the audit and audit report and, in particular, came to the conclusion that both the audit report and the audit conducted by the auditor comply with the statutory requirements. The Audit Committee recommended that the Supervisory Board should approve the results of the audit and, since it was of the opinion that there were no objections to the Executive Board's declaration on the report on relations with affiliated companies, should adopt a corresponding resolution. EFTA00598691

• TO OUR SHAREHOLDERS MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION SS Stp0I1Cri the Supelvisory Board The Supervisory Board discussed the report on relations with affiliated companies at its meeting on March 2, 2016. At this meeting too, the members of the Executive Board provided detailed explanations of the report on relations with affiliated companies and answered questions on it. Moreover, the auditor was present at this meeting of the Supervisory Board and reported on the main findings of the audit of the report on relations with affiliated companies and answered questions from members of the Super- visory Board. On this basis, the Supervisory Board ascertained that under the circumstances known at the time they were undertaken, the company's expenditures in connection with the transactions outlined in the report on relations with affiliated companies were not unreasonably high and compensation had been received for any disadvantages. In particular, it obtained an explanation of the principles used to determine the relevant activities and the remuneration therefor, especially in the case of transactions of material significance. The Audit Committee had discussed the report on relations with affiliated companies and gave the Supervisory Board a detailed overview of the outcome of its deliberations. The Supervisory Board was able to convince itself of the orderly nature of the audit and audit report and came to the conclusion, in particular, that both the audit report and the audit itself meet the statutory requirements. In particular, it examined the completeness and correctness of the report on relations with affiliated companies. No grounds for objection were identified. The Supervisory Board thus has no objection to raise to the final declaration made by the Executive Board in its report on relations with affiliated companies and concurs with the auditor's findings. Personnel issues relating to the Executive Board and Supervisory Board At its meeting on June 25, 2015, the Supervisory Board first agreed to the early termination of the contract with Patrik Wohlhauser as a member of the Executive Board and his resignation as of June 30, 2015. The Supervisory Board then appointed Dr. Ralph Sven Kaufmann as a member of the Executive Board for three years from July 1, 2015. At its meeting in September, the Supervisory Board reappointed Thomas Wessel to the Executive Board as Chief Human Resources Officer for a further five years from September 1, 2016 until August 31, 2021. There were some changes in the employee representatives on the Supervisory Board in 2015: Jurgen Noding resigned from the Supervisory Board with effect from September 30, 2015. Martin Albers was appointed to the Supervisory Board effective October 1, 2015 through a decision taken by the District Court of Essen on October 2, 2015 in accordance with Section 104 of the German Stock Corporation Act (AktG). Glinter Adam resigned from the Supervisory Board effective December 10, 2015. He was succeeded by Carmen Fuchs, who was elected to the Supervisory Board as a substitute member in accordance with the provisions of the German Codetermination Act (MitbestG) of 1976. The Supervisory Board would like to thank those members who have left for their dedicated commit- ment to the good of the company and its workforce over the years. Concluding remark The Supervisory Board would also like to thank the Executive Board, Works Councils and Executive Staff Councils, and all employees of Evonik Industries AG and its affiliated companies, for their successful work over the past year. The Supervisory Board adopted this report at its meeting on March 2, 2016, in accordance with Section 171 Paragraph 2 of the German Stock Corporation Act (AktG). Essen, March 2, 2016 V\)iett/t4fg On behalf of the Supervisory Board Dr. Werner Muller, Chairman fi I— S EFTA00598692

S6 ANNUAL REPORT 2015 EVONIK INDUSTRIES Joint report of the Executive Board and Supervisory Board of Evonik Industries AG on Corporate Governance (Corporate Governance Report) 1. Principles of corporate governance and corporate structure Corporate governance comprises all principles for the management and supervision of a company. As an expression of good and responsible corporate management, it is therefore a key element in Evonik's management philosophy. The principles of corporate governance relate mainly to collaboration within the Executive Board and Supervisory Board, between these two boards and between the boards and the shareholders, especially at Shareholders Meetings. They also relate to the company's relationship with other people and organizations with which it has business dealings. Evonik is committed to the German Corporate Governance Code Evonik Industries is a stock corporation established under German law. Its shares have been listed on the stock exchange since April 25, 2013. Alongside compliance with the provisions of the relevant legislation, the basis for ensuring responsible management and supervision of Evonik with a view to a sustained increase in corporate value is our commitment to the German Corporate Governance Code, both in the version dated June 24, 2014, and the revised version of May 5, 2015. This code, which was adopted by the Government Commission on the German Corporate Governance Code, contains both key statutory provisions on the management and supervision of publicly listed German companies and recommendations and suggestions based on nationally and internationally recognized standards of responsible corporate governance. The Executive Board and Supervisory Board of Evonik Industries AG are explicitly committed to responsible corporate governance and identify with the goals of the German Corporate Governance Code. According to the foreword, in the interest of good and proactive corporate governance, a company may deviate from the recommendations set out in the code if this is necessary to reflect enterprise-specific requirements. 2. Information on corporate management and corporate governance 2.1 Declaration of conformity with the German Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act (AktG) Under Section 161 of the German Stock Corporation Act (AktG), the Executive Board and Supervisory Board of Evonik Industries AG are required to annually submit a declaration that the company has been, and is, in compliance with the recommendations of the Government Commission on the German Corporate Governance Code and which recommendations have not been or are not being applied, together with the associated reasons. The declaration has to be made permanently available to the public on the company's website. The Executive Board and Supervisory Board of Evonik Industries AG hereby submit the following declaration pursuant to Section 161 of the German Stock Corporation Act: Since submitting its last declaration of conformity in March 2015, the company has fully complied with all recommendations of the German Corporate Governance Code in the versions dated June 24, 2014 and May 5, 2015, as published in the Federal Gazette on September 30, 2014 and June 12, 2015, respectively, and will continue to do so. EFTA00598693

• TO OUR SHAREHOLDERS - MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION Corporate Governance Rayon Further, nearly all suggestions contained in the aforementioned two versions of the German Corporate Governance Code were applied, with the following exceptions: The suggestion set forth in Section 2.3.3 of the German Corporate Governance Code (the company should make it possible to follow the general meeting using modern communication media) was not and will not be applied. Instead, for organizational reasons, only the speeches by the Chairman of the Supervisory Board and the Chairman of the Executive Board will be transmitted. This procedure also correlates with widespread practice. Moreover, it cannot be excluded that a more extensive transmission could infringe the personal rights of shareholders, which are to be protected. Further, Section 2.32 Sentence 2, second half-sentence of the German Corporate Governance Code (the representative appointed to exercise shareholders' voting rights in accordance with instructions should also be reachable during the general meeting) was not and will not be applied. Application of this suggestion would only be appropriate in the event of transmission of the general shareholders' meeting in full via modern communication media. Furthermore, the availability of the representatives nominated by the company via electronic media during the meeting as put forward by this suggestion involves technical uncertainties. These and the associated risks for the efficacy of resolutions are to be avoided. Essen, December 2015 The Executive Board The Supervisory Board 2.2 Relevant information on corporate management practices Corporate governance The company complies with the recommendations and—with two exceptions—the suggestions set forth in the German Corporate Governance Code (detailed in section 2.1 above). Compliance Evonik understands compliance as all activities to ensure that the conduct of the company, its governance bodies and its employees respect all applicable mandatory standards such as legal provisions, statutory requirements and prohibitions, in-house directives and voluntary undertakings. The basis for this under- standing and for compliance with these binding standards is set out in Evonik's Code of Conduct. Code of Conduct Evonik's binding Group-wide Code of Conduct contains the most important corporate values and principles and governs the conduct of Evonik, its legal representatives and its employees both internally, in the treatment of one another, and externally in the treatment of the company's shareholders and business partners, representatives of authorities and government bodies, and the general public. It requires all employees to comply with the applicable laws, regulations and other obligations. They are also required to observe ethical standards. All employees receive training in the Code of Conduct and systematic action is taken to deal with any breach of its rules. The Code of Conduct fosters a culture that ensures clear responsibility, mutual trust and respect, dependability and lawfulness. House of Compliance The compliance areas identified as being of specific relevance to our company are bundled in a House of Compliance. Following a refocusing, this still includes the traditional compliance issues: antitrust law, foreign trade law, fighting corruption, data protection and—as a publicly listed company—capital market compliance. Environment, safety, health and quality are bundled in a separate corporate division. fi EFTA00598694

sa ANNUAL REPORT 2015 EVONIK INDUSTRIES The role of the House of Compliance is to define minimum Group-wide standards for the compliance management systems for these areas and ensure that they are implemented. The process of forming a consensus, sharing experience and coordinating joint activities takes place in the Compliance Committee, which is composed of the heads of the respective units, who have independent responsibility for their areas, and the Head of Corporate Audit. The Compliance Committee is chaired by the Head of Compliance and Antitrust Law. House of Compliance Supervisory Board Executive Board Compliance Committee Compliance Management System The compliance management system to be implemented by each area of compliance on the basis of the defined values and specific targets has to implement the tools shown in the next chart. Measures must be put in place to avoid compliance risks and systematic misconduct, identify cases of misconduct, apply appropriate sanctions, and correct process weaknesses. Compliance Management System (CMS) Responsibility of Management Values and Objectives Prevention • Risk analysis • Policies & standards • Processes • Training • Awareness raising/communication • Advice & support Detection • Investigations • Whistleblower system • Monitoring & audits • Reporting Response • Corrective measures • Sanctions • Lessons learnt Compliance Organization Further information on Evonik's compliance management system and the corresponding areas of focus and action taken in the year under review can be found in the Sustainability Report.' Sustainability Report 2014 (the Sustainability Report 2015 will be published in May 2O16). EFTA00598695

• TO OUR SHAREHOLDERS - MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 59 Corporate Governance Rayon Corporate Responsibility Companies that strive for lasting success on the market need social acceptance as well as reliable and responsible corporate governance. Together with Evonik's Code of Conduct, the Global Social Policy (GSP) and our Environment, Safety and Health (ESH) Values contribute to responsible corporate management. In its Global Social Policy, Evonik outlines its principles of social responsibility for its employees and requires them to comply with recognized international standards of conduct such as the International Labor Standards of the International Labour Organisation (ILO) and the Guidelines for Multinational Enterprises issued by the Organisation for Economic Cooperation and Development (OECD). Evonik does not tolerate any conduct that violates the OECD Guidelines for Multinational Enterprises. The govern- ments of the OECD member states and other countries have signed these as a guide to multinational enterprises on how to meet their obligation to ensure responsible corporate conduct. The Global Social Policy states that the company's success and reputation are based fundamentally on the professionalism and commitment of all employees. By joining the United Nations' Global Compact (UN Global Compact), Evonik also gave an undertaking that, within its sphere of influence, it would respect and promote labor rights and human rights, avoid discrimination, protect people and the environment and fight against corruption. As a signatory to the chemical industry's Responsible Care Global Charter, we have also given an undertaking that we will continuously strive to improve our performance in health protection, safety, environmental protection and product stewardship. Evonik has signed the Code of Responsible Conduct for Business, which sets measurable standards that have to be firmly anchored in participating companies. These include fair competition, social partnership, the merit principle and sustainability. We also expect our suppliers to share these principles and accept their responsibility with regard to their own employees and business partners, society and the environment. This is set out in our Supplier Code of Conduct. Further, as a responsible company we have given a commitment to report regularly on our climate performance as part of the world's largest climate initiative, the Carbon Disclosure Project (CDP). This covers internal organizational processes and accountability, as well as transparent and challenging targets. Evonik's sustainability management complies with the provisions of the German Sustainability Code. The main documents containing the guidelines on conduct in the Evonik Group can be found on the following internet sites: • Code of Conduct • Supplier Code of Conduct • ESH Values • Global Social Policy • Code of Responsible Conduct for Business www.wcge.org/download/140918_leitbild-eng_Unterschriften_o.pdf • Responsible Care www.icca-chem.org/en/Home/Responsible-care/ • Sustainability Report Transparency Evonik regards timely and equal public disclosure of information as a key basis of good corporate governance. The Investor Relations section of the company's website provides extensive information in German and English. This includes our financial calendar, which provides a convenient overview of important dates.' fi EFTA00598696

60 ANNUAL REPORT 201S EVONIK INDUSTRIES Evonik's business performance is outlined principally in our quarterly reports, annual report and investor relations presentations. These are supplemented by information on Evonik's shares, the terms of bond issues and an overview of our credit ratings.' Mandatory publications such as ad-hoc announcements, voting rights announcements and information on directors' dealings are also published immediately on our Investor Relations site.' The offering also includes information on corporate strategy, and Evonik's corporate structure and organization. In addition, the Investor Relations site provides information on Evonik's approach to corporate respon- sibility, and how the management and supervision of the company (corporate governance) are aligned to responsible and sustained value creation.' 2.3 Work of the Executive Board and Supervisory Board The German Stock Corporation Act (AktG) forms the legal basis for the incorporation of Evonik Industries AG. Further details are set forth in the company's Articles of Incorporation and the provisions of the German Corporate Governance Code (see section 2.1 above). Executive Board The Executive Board of Evonik Industries AG is responsible for running the company in the company's interests with a view to sustained value creation, taking into account the interests of the shareholders, employees and other stakeholders. It works together trustfully with the other corporate governance bodies for the good of the company. The Executive Board defines and updates the company's business objectives, its basic strategic focus, business policy and corporate structure. It is responsible for complying with statutory provisions and internal directives, and exerts its influence to ensure that they are observed by Group companies (compliance). Its tasks also include ensuring appropriate risk management and risk controlling within the company. When making appointments to management functions in the company, the Executive Board applies the principles of diversity. In this it strives, in particular, to ensure adequate representation of women. The Executive Board currently has five members. One member is appointed to chair the Executive Board. With the approval of the Supervisory Board, the Executive Board has adopted Rules of Procedure and a plan allocating areas of responsibility. The Chairman coordinates the work of the Executive Board, provides information for the Supervisory Board and maintains regular contact with the Chairman of the Supervisory Board. The members of the Executive Board are jointly responsible for the overall management of the company. They work together constructively and keep each other informed of the main activities and developments in their areas of responsibility. The Executive Board endeavors to take decisions unanimously, but may also adopt resolutions by majority vote. If an equal number of votes is cast, the Chairman has the casting vote. Ensuring that the Supervisory Board receives sufficient information is the joint responsibility of the Executive Board and Supervisory Board. The Executive Board provides the Supervisory Board with the reports to be prepared in accordance with Section 90 of the German Stock Corporation Act (AktG) and the Rules of Procedure of the Supervisory Board. It gives the Supervisory Board timely, regular and full information on all matters that are relevant to the company and Group relating to strategy, planning, business development, risks, risk management and compliance. It outlines deviations between the planned and actual business performance and targets and the reasons therefor. News E, Reports, Share and Bonds & Ratings. For details of the shareholder structure see 'Evonik on the itt rnaeltels* on p. 67 of this annual report. 1 News & Reports/Ad-bac announcements, Share/Voting rights, and Co. orate Governance Directors' Dealings. 1 Sustainable Investments (SRI) and Corporate Governance. EFTA00598697

• TO OUR SHAREHOLDERS - MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 61 Corporate Governance Rayon Further, the Executive Board submits timely reports to the Supervisory Board on business matters and actions for which it is required by the Articles of Incorporation or the Supervisory Board's Rules of Procedure to obtain the approval of the Supervisory Board, including the annual budget for the Group. In addition, the Supervisory Board can make further business activities and measures dependent on its consent on a case-by-case basis. Members of the Executive Board are required to act in the interests of the company. They may not pursue personal interests in their decisions, nor may they utilize business opportunities available to the company for themselves. The members of the Executive Board are subject to a comprehensive non-compete obligation during their term of office. They may only assume additional posts, especially seats on the supervisory boards of companies that are not affiliated companies of Evonik Industries AG, with the consent of the Supervisory Board. Where such posts are assumed with the consent of the Supervisory Board, the Executive Board member shall accept the post as a personal office and shall ensure strict confidentiality and strict separation from his/her activities as a member of the company's Executive Board. Every member of the Executive Board is required to disclose any conflict of interests to the Chairman of the Supervisory Board without delay and to inform the other members of the Executive Board. In fiscal 2015 there were no conflicts of interest relating to members of the Executive Board of Evonik Industries AG. All transactions between the company or companies in the Evonik Group on the one hand and Executive Board members and related parties on the other must take place on terms that are customary in the sector. No such transactions took place in the reporting period. The composition of the Executive Board and membership of supervisory boards and similar governance bodies are outlined on page 216. Supervisory Board The Supervisory Board advises and supervises the Executive Board. It appoints the members of the Executive Board and names one member as the Chairperson of the Executive Board. It also decides on the remuneration of the members of the Executive Board. The Executive Board is required to obtain the approval of the Supervisory Board on decisions of fundamental importance, which are defined in a separate list. These include: • fundamental changes to the structure of the company and the Group • setting the annual budget for the Group • investments exceeding €25 million • the assumption of loans and the issuance of bonds exceeding €300 million with a maturity of more than one year. The Supervisory Board examines the company's annual financial statements, the Executive Board's proposal for the distribution of the profit, the consolidated financial statements for the Group and the combined management report. The Supervisory Board submits a written report on the outcome of the audit to the Shareholders' Meeting. The Supervisory Board is subject to the German Codetermination Act (MitbestG) 1976. In accordance with these statutory provisions, the Supervisory Board comprises twenty members, ten representatives of the shareholders and ten representatives of the workforce. The representatives of the shareholders are elected by the Shareholders' Meeting on the basis of nominations put forward by the Supervisory Board as prepared by the Nomination Committee. The representatives of the employees are elected by the workforce and comprise seven employee representatives and three representatives of the industrial union. The composition of the Supervisory Board should ensure that overall its members have the knowledge, ability and professional experience required to perform their duties. The members of the Supervisory Board may not undertake any duties as officers or advisors to the company's major competitors. fi 2 S EFTA00598698

62 ANNUAL REPORT 2015 EVONIK INDUSTRIES The Supervisory Board should not include more than two former members of the Executive Board. A former member of the Executive Board has been elected to the Supervisory Board. His term of office on the Executive Board ended more than two years before the date of his election to the Supervisory Board. All members of the Supervisory Board shall ensure that they have sufficient time to perform their tasks as a member of the Supervisory Board. Members of the Supervisory Board who are also members of the Executive Board of a publicly listed stock corporation should not hold more than three seats on the Supervisory Boards of listed companies outside their group of companies or Supervisory Boards of companies where comparable demands are made on them. Members of the Supervisory Board must act in the interests of the company and not pursue personal interests in their decisions, nor may they utilize business opportunities available to the company for themselves. Members must disclose conflicts of interest to the Supervisory Board. Any member of the Supervisory Board who discloses a conflict of interest is excluded from resolutions at the meetings of the Supervisory Board dealing with matters relating to the conflict of interest. In its report to the Shareholders' Meeting the Supervisory Board discloses any conflicts of interest that have arisen and how they have been dealt with. Material conflicts of interest relating to a member of the Supervisory Board that are not by nature temporary should lead to termination of his/her term of office. Consultancy, service and similar contracts between a member of the Supervisory Board and the company must be approved by the Supervisory Board. There were no contracts of this type in 2015, nor were there any conflicts of interest relating to members of the Supervisory Board of Evonik Industries AG. The Supervisory Board has adopted Rules of Procedure, which also govern the formation and tasks of the committees. At least two meetings of the Supervisory Board are held in each calendar half-year. In addition, meetings may be convened as required and the Supervisory Board may adopt resolutions outside meetings. If an equal number of votes is cast when taking a decision, and a second vote does not alter this situation, the Chairman of the Supervisory Board has the casting vote. The Supervisory Board has set objectives for its composition, which are taken into account in the proposals put to the Shareholders' Meeting with regard to the regular election of members of the Supervisory Board and the subsequent election of a member of the Supervisory Board: • At least two members should have sound knowledge and experience of regions which are of material importance for the Evonik Group's business, either through their background or through professional experience gained in an international context. • At least two members should have special knowledge and experience of business administration and of finance/accounting or auditing. • At least two members of the Supervisory Board should have specialist knowledge and experience of the area of specialty chemicals. • At least two members should have experience of managing or supervising a major company. • The Supervisory Board should comprise at least 30 percent women and at least 30 percent menl. • The members of the Supervisory Board should not hold consulting or governance positions with customers, suppliers, creditors or other business partners that could lead to a conflict of interests. Deviations from this rule are permitted in legitimate individual cases. • Members of the Supervisory Board should not normally be over 70 when they are elected. • Members of the Supervisory Board should not normally hold office for more than three full terms within the meaning of Section 102, Paragraph 1 of the German Stock Corporation Act (AktG), i.e. normally 15 years. It is possible to deviate from this rule, in particular in the case of a member of the Supervisory Board who directly or indirectly holds at least 25 percent of the company's shares or belongs to the governance body of a shareholder that directly or indirectly holds at least 25 percent of the company's shares. • At least five members of the Supervisory Board should be independent within the meaning of Section 5.4.2 of the German Corporate Governance Code. Applicable for new elections and the appointment of substitute members for one or more members of the Supervisory Board from January 1, 2O16. EFTA00598699

• TO OUR SHAREHOLDERS - MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 63 Coepormt Govtenence Ripen These targets were last revised in September 2015. The present composition of the Supervisory Board satisfies these objectives, apart from the fact that it currently comprises 20 percent women and conse- quently does not yet meet the statutory requirement of 30 percent women specified for future elections and appointments (see section 2.4 below). The Supervisory Board and its Nomination Committee will continue to monitor observance of these targets in the future. In the past fiscal year, the Supervisory Board had the following committees: The Executive Committee comprises the Chairman of the Supervisory Board, his deputy and four further members. It undertakes the regular business of the Supervisory Board and advises the Executive Board on fundamental issues relating to the ongoing strategic development of the company. Insofar as is permitted by law, it takes decisions in place of the full Supervisory Board on matters which cannot be deferred until the necessary resolution is passed by the full Supervisory Board without detrimental effects for the company. It also takes decisions on the use of authorized capital. It prepares meetings of the Super- visory Board and, in particular, personnel decisions and resolutions on the remuneration of the Executive Board, including the main contractual elements and the overall remuneration of individual members of the Executive Board. It is also responsible for concluding, amending and terminating employment contracts with the members of the Executive Board, where this does not involve altering or setting remuneration, and represents the company in other transactions of a legal nature with present and former members of the Executive Board and certain related parties. The Audit Committee has six members. The members of the Audit Committee should have specialist knowledge and experience in the application of accounting standards and internal control systems. The Supervisory Board has appointed the Chairman of the Audit Committee as an independent financial expert in accordance with Section 100 Paragraph 5 of the German Stock Corporation Act (AktG). He also meets the more extensive requirements of the German Corporate Governance Code. Acting on behalf of the Supervisory Board, the Audit Committee's principal tasks comprise supervising the accounting process, the efficacy of the internal control system, the risk management system and the internal audit system, the auditing of the financial statements, especially the independence of the auditor, any additional services provided by the auditor, compliance and the related decisions. It prepares the Supervisory Board's proposal to the Shareholders' Meeting on the choice of auditor, and takes decisions on the appointment of the auditor, the focal points of the audit and the agreement on audit fees. Further, it authorizes the Chairman of the Supervisory Board to issue the contract to the auditor. The Audit Committee prepares the decision of the Supervisory Board on approval of the annual financial statements of Evonik Industries AG and the consolidated financial statements for the Group. For this purpose, it is required to conduct a preliminary examination of the annual financial statements of Evonik Industries AG, the consolidated financial statements for the Group, the management report for the Group and the Executive Board's proposal for the distribution of the profit. The auditor of the financial statements must attend these meetings of the Audit Committee. The Audit Committee reviews the interim reports, especially the half-yearly report, discusses the audit review report with the auditor—if an auditor is engaged to conduct a review—and decides whether to raise any objections. Further, it examines issues relating to corporate governance and reports to the Super- visory Board at least once a year on the status, effectiveness and scope to implement any improvements to corporate governance, and on new requirements and new developments in this field. The Finance and Investment Committee has eight members. Its work covers aspects of corporate finance and investment planning. For example, it takes decisions on behalf of the Supervisory Board involving approval for the establishment, acquisition and divestment of businesses, capital measures at other Group companies and real estate transactions with a value of more than €25 million and up to €50 million. If the value of such measures or transactions exceeds the above limit, it prepares for a resolution by the Supervisory Board. The Finance and Investment Committee also takes decisions on the assumption of guarantees and sureties for credits exceeding €50 million and on investments in companies of more than €100 million. fi 0 EFTA00598700

The Nomination Committee comprises three Supervisory Board members elected as representatives of the shareholders. The task of the Nomination Committee is to prepare a proposal for the Supervisory Board on the candidates to be nominated to the Shareholders' Meeting for election to the Supervisory Board. Finally, there is a Mediation Committee established in accordance with Section 27 Paragraph 3 of the German Codetermination Act 1976. This mandatory committee is composed of the Chairman and Deputy Chairman of the Supervisory Board, one shareholder representative and one employee representative. This committee puts forward proposals to the Supervisory Board on the appointment of members of the Executive Board if the necessary two-thirds majority of the Supervisory Board members is not achieved in the first vote. It is only convened when necessary. All other committees meet regularly and may also hold additional meetings on specific issues in line with their responsibilities as set out in the Rules of Procedure for the Supervisory Board. Further details of the work of the Supervisory Board and its committees in the past fiscal year can be found in the report of the Supervisory Board on page 48. The report of the Supervisory Board also out- lines the composition of the various committees and the meetings attended by members the Supervisory Board. For details of the composition of the Supervisory Board and membership of other supervisory and governance bodies see pages 214 and 215. The Supervisory Board regularly examines the efficiency of its work. Further details can be found in the report of the Supervisory Board on page 53. Directors Dealings Under Section 15a Paragraph 1 of the German Securities Trading Act (WpHG), members of the Executive Board and Supervisory Board and related parties (including spouses, registered same-sex partners and dependent children) are required to notify Evonik Industries AG and the Federal Financial Supervisory Authority (BaFin) of any transactions in shares in Evonik Industries AG or related financial instruments, if the total value of such transactions by a member of the Executive Board or Supervisory Board or a related party is €5,000 or above in a calendar year. The transactions notified are disclosed on the website of Evonik Industries AG. Total holdings of shares in Evonik Industries AG and related financial instruments by members of the Executive Board and Supervisory Board on the reporting date amounted to less than 1 percent of the issued shares. 2.4 Information on statutory diversity requirements The German law on equal participation of women and men in management positions in the private and public sectors came into force on May 1, 2015. The regulations are additional to the diversity requirements set forth in the German Corporate Governance Code, which Evonik has satisfied up to now. The new requirements have been considered by the relevant bodies at Evonik at various levels and the necessary resolutions have been adopted. Since Evonik Industries AG is a publicly listed company and is therefore also subject to German co- determination legislation, its Supervisory Board is required to meet a fixed gender ratio, which is applicable for new appointments from January 1, 2016. The regulation specifies that the Supervisory Board should comprise at least 30 percent women and at least 30 percent men. As of December 31, 2015, four members of the Supervisory Board of Evonik Industries AG were women, two representing the shareholders and two representing the workforce. Thus, on the reporting date 20 percent of Supervisory Board members were women. Evonik will take the new statutory regulations into account for new appointments from January 1, 2016 in order to meet the requirements. In light of this, the Supervisory Board has revised the targets for its composition in accordance with Section 5.4.1 Paragraph 2 of the German Corporate Governance Code to take account of this aspect of diversity (see also the section headed 'Supervisory Board' above). Further, the leg_ EFTA00598701

• TO OUR SHAREHOLDERS - MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 69 Evonik on the cepHel meekets Animal Nutrition field trip A highlight of our capital market communication in 2015 was the Animal Nutrition field trip on October 1. Nearly 40 international analysts and investors visited our production site in Antwerp (Belgium). The focus was the Nutrition & Care segment's Animal Nutrition Business Line. The Executive Board started by outlining the company's present corporate strategy and progress with its growth strategy. As well as giving analysts and investors extensive information on all aspects of the animal nutrition business, the management then explained that market conditions remain attractive thanks to the nutrition, globalization and, above all, sustainability megatrends. On the same day, Evonik announced plans to build a further methionine plant in Singapore, which is scheduled to come on stream in 2019. Sound investment grade ratings and a successful bond issue Evonik still has sound investment grade ratings: BBB+ (outlook: stable) from Standard and Poor's and Baa2 (outlook: positive) from Moody's, so we have achieved one of the main goals of our financial strategy. In January 2015 Evonik Industries AG issued a new €750 million bond with a tenor of eight years. The annual coupon of 1.0 percent is the lowest ever on a bond issued by Evonik. The bond is being used to finance ongoing business and the investment program. Further increase in price targets The number of analysts that cover Evonik increased further in 2015— from 22 to 23. Thirteen of them rated the share as a buy, two as a sell, and eight issued neutral recommen- dations. Their price targets ranged from €29 to €42. The median was €38. In the previous year, the price targets were between €23 and €34 with a median of €30. Analysts' ratings sal 2 Buy 13 Hold a Inclusion in another sustainability index Evonik is included in well-known sustainability stock indices. In 2014 it gained a place in the FTSE4Good Global and STOXX" Global ESG Leaders indices. Since December 2015 we have also been included in the Euronext Vigeo Eurozone 120 index. Investor Relations For further information on our investor relations activities, visit our website at investor-relations. The financial calendar on our website provides a convenient overview of important dates. The website also contains key facts and figures, especially financial and segment data and details of the company's structure and organization. This is supplemented by information on Evonik shares, the terms of bond issues and an over- view of our credit ratings. Current presentations, analysts' estimates and reports on our business performance are also available. C•ntactt PHONE ..49 201177-P/6 I fi to EFTA00598702

70 ANNUAL REPORT 2015 EVONIK INDUSTRIES MANAGEMENT REPORT 1. 2. Bask information on the Evonik Group 1.1 Business model 1.2 Principles and objectives 1.3 Business management systems Business review 71 71 73 74 75 5. 6. 7. Sustainability 5.1 Employees 5.2 Environment, safety and health Events after the reporting date Opportunity and risk report 103 105 110 113 113 2.1 Overall assessment of the 7.1 Opportunity and risk management 113 economic situation 75 7.2 Overall assessment 2.2 Economic background 76 of opportunities and risks 114 2.3 Major events 77 7.3 Planning/market risks 2.4 Business conditions and performance 77 and opportunities 114 2.5 Comparison of forecast and 7.4 Legal/compliance risks actual performance 81 and opportunities 120 2.6 Segment performance 82 7.5 Process/organization risks 121 Nutrition & Care segment 82 Resource Efficiency segment 84 8. Takeover-relevant information 122 Performance Materials segment 86 9. Declaration on corporate governance 125 Services segment 88 2.7 Regional development 88 10. Remuneration report 125 2.8 Earnings position 89 10.1 Remuneration of the 2.9 Financial condition 91 Executive Board 125 2.10 Asset structure 94 10.2 Remuneration of the Supervisory Board 132 3. Performance of Evonik Industries AG 95 11. Report on expected developments 134 4. Research & development 97 11.1 Economic background 134 11.2 Outlook 136 Combined management report for 2015 This management report is a combined management report for the Evonik Group and Evonik Industries AG. Given the influence of the segments, statements relating to the development of the segments in the Evonik Group also apply for Evonik Industries AG. The consolidated financial statements for the Evonik Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) and the financial statements of Evonik Industries AG have been prepared in accordance with the provisions of the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). EFTA00598703

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOUDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 71 ask information on the Evonik Group Business model An excellent performance in 2015 Responding vigorously to challenges in 2016 1. Basic information on the Evonik Group • Strong market positions • A balanced portfolio • Innovations drive profitable growth 1.1 Business model Strong market positions, a clear innovation culture, sustainable business activities Evonik is one of the world's leading specialty chemicals companies. We concentrate on high-growth megatrends, especially health, nutrition, resource efficiency and globali- zation. Our strengths include the balanced spectrum of our business activities, end-markets and regions. Around 80 per- cent of sales come from market-leading positions', which we are systematically expanding. Our strong competitive position is based on integrated technology platforms, innovative strength and working closely with our customers. Our specialty chemicals products make an indispensable contribution to the benefits of our customers' products, which generate their success in global competition. Close cooperation with our customers enables us to build up a deep knowledge of their business, so we can offer products tai- lored to their specifications, and extensive technical service. Our technology centers and customer competence centers play an important role in this around the world. We also have a focus on our customers' customers. Corporate structure Market-oriented research & development is a key driver of profitable growth. This is based on our strong innovation culture, which is rooted in our innovation management and management development. We are convinced that sustainable and responsible busi- ness activities are vital for the future of our company. Evonik therefore accepts responsibility worldwide—for its business, its employees and society. Highly trained employees are a key success factor. They drive forward the company on a daily basis through their hard work and identification. We have therefore developed a wide range of activities to gain and develop talented and qualified employees and to position Evonik as a preferred employer in order to retain them. A decentralized corporate structure To further improve our scope for profitable growth, we reor- ganized our management and portfolio structure effective January 1, 2015. The Executive Board now concentrates on Evonik's strategic development within a management holding structure. The three chemical manufacturing segments' are run by newly established management companies and have Evonik Segments Nutrition & Care Resource Efficiency Performance Materials Services 1 We define these as ranking 1st, 2nd or 3rd in the relevant markets. 2 Two segments were renamed and some activities were assigned to different segments. The prior-year figures have been restated accordingly. See Note 9.1. c E 3 0 EFTA00598704

72 ANNUAL REPORT 2015 EVONIK INDUSTRIES far greater entrepreneurial independence, so they can operate closer to their markets and customers and improve efficiency still further. The Nutrition & Care segment produces specialty chemi- cals, principally for use in consumer goods for daily needs, and in animal nutrition and healthcare products. The Resource Efficiency segment supplies high- performance materials for environment-friendly and energy- efficient system solutions for the automotive, paints, coatings, adhesives and construction industries and many other sectors. The heart of the Performance Materials segment is the production of polymer materials and intermediates, mainly for the rubber, plastics and agriculture industries. The Services segment offers services for the chemical segments and external customers at our sites and supports the chemicals businesses and the management holding company by providing standardized Group-wide business services. The Nutrition & Care and Resource Efficiency segments operate principally in markets with high margins, growth rates and entry barriers. They both offer customers customized, innovation-driven solutions and the aim is for them to achieve above-average, profitable growth through innovations, investments and acquisitions. The Performance Materials segment is characterized by processes that make intensive use of energy and raw mate- rials. It therefore concentrates on integrated, cost-optimized technology platforms, efficient workflows, and economies of scale. Our strategic goal for this segment is to contribute earnings to finance the growth of the Evonik Group. In the Evonik's end-markets future, investments and, where appropriate, alliances will concentrate on securing and extending our good market positions. Integrated technology platforms are a competitive advantage Our products are manufactured using highly developed technologies that we are constantly refining. In many cases Evonik has backwardly integrated production complexes where it produces key precursors for its operations in neighboring production facilities. In this way we offer our customers maximum reliability of supply. At the same time, backwardly integrated world-scale production facilities com- bined with technologically demanding production processes act as high entry barriers. Further advantages are leveraged by the use of our integrated technology platforms for several businesses. That generates economies of scale and optimizes the use of product streams because by-products from one production facility can be used as starting materials for other products. This results in optimum utilization of capacity and resources and thus high added value. Moreover, the operating units can share the site energy supply and infrastructure cost- effectively. Broadly diversified end-markets Most of our customers are industrial companies that use our products for further processing. The range of markets in which they operate is diverse and balanced. None of the end-markets that we supply accounts for more than 20 per- cent of our sales. Agriculture Renewable energies Paper and printing Paints and coatings' Metal and oil products Electrical and electronics Pharmaceuticah Other industries Plastics and rubber' Consumer goods and pectoral care products Food and animal feed Automotive and mechanicalengineering 15-20% 10-15% 5-10% <5% • Where not directly assigned to ether end customer industries. EFTA00598705

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT Basic information on the Evonik Group Principles and oblecteires • CONSOUDATED FINANCIAL STATEMENTS Global production Evonik has a presence in more than 100 countries and 82 percent of sales are generated outside Germany. We have production facilities in 24 countries on five continents and are therefore close to our markets and our customers. Our largest production sites—Marl, Wesseling and Rheinfelden (Germany), Antwerp (Belgium), Mobile (Alabama, USA), Shanghai (China) and Singapore—have integrated techno- logy platforms used by various units. 1.2 Principles and objectives Profitable growth, enhanced efficiency, values A sustained increase in the value of the company is our overriding goal and the basis for Evonik's strategic alignment. To implement our strategy, we have set demanding financial, safety and environmental targets. Our strategy is based on profitable growth, efficiency and values. We aim to • further increase our leading market positions • concentrate on attractive growth businesses and emerging markets • gain access to new growth areas through innovation and external growth, and • continuously improve our cost and technology position. As growth drivers for our business we have identified the megatrends health, nutrition, resource efficiency and globalization, and the dynamic development of the emerging markets. We take a flexible and disciplined approach to extending our leading market positions around the world. All investment projects are regularly reviewed for changes in the market situation. Innovations are the driving force of future growth. Through them, we gain access to new products and appli- cations, enter attractive future markets and strengthen our market and technology leadership. SUPPLEMENTARY INFORMATION 73 To raise scope for growth and innovations, we are con- tinuously working to improve our cost position. The On Track 2.0 efficiency enhancement program is geared to optimizing production and related workflows, while the Administration Excellence program is designed to optimize our administrative functions' worldwide. The cornerstones of our corporate culture are our corpo- rate values "sparing no effort", 'courage to innovate' and 'responsible action', which represent the balance between economically successful, ecologically responsible and socially appropriate behavior. Our sustainability strategy is based on the megatrends identified in our corporate strategy, supplemented by eco- logical and societal challenges. We are keenly committed to expanding the contribution made by our innovative solutions to sustainable development. Ambitious targets In line with our growth strategy, we set ambitious financial targets in 2013: • We aim to report sales of around €18 billion and adjusted EBITDA of over €3 billion by 2018. • We want to maintain our sound investment-grade rating in the long term. As a responsible specialty chemicals company, we have also defined ambitious non-financial targets. We take our responsibility in the field of safety) particularly seriously. Our objective is to protect our employees and local residents as well as the environment from any potential negative impact of our activities. Accordingly, we set annual limits for occupational safety and plant safety indicators. For 2016 these are once again: The accident frequency' rate should not exceed 1.3. Incident frequency 4 should not exceed 48 5, taking 2008 as the reference base. See section headed Business review. 2 See section on Sustainability. I Number of accidents involving Evonik employees and contractors employees under Evonik's direct supervision per 1 million working hours. 4 This indicator comprises incidents resulting in the release of substances, fire or explosion, even if there is little or no damage. S Number of incidents per 1 million hours worked in the production facilities operated by the segments, taking 2008 as the reference base (expressed in percentage points: 2008 = 100). E EFTA00598706

74 ANNUAL REPORT 2015 EVONIK INDUSTRIES We also set ourselves ambitious environmental targets. The aim is to make a contribution to climate protection, minimize our ecological footprint, and steadily improve our environ- mental protection performance. In 2014, we set new targets for the period 2013 to 2020 (reference base: 2012): • Reduce specific greenhouse gas emissions' by 12 percent • Reduce specific water intake by 10 percent. In the area of sustainable waste management, we are con- tinuing our efforts to minimize the use of resources. 1.3 Business management systems Most important financial key performance indicators Financial management of Evonik is based on a consistent system of value-oriented indicators. These are used to assess the business performance of the operational units and the Group. Through systematic alignment to these indicators, Evonik endeavors to create value by raising profitability and ensuring profitable growth. Our key performance indicator is adjusted EBITDA. To track the attainment of targets, adjusted EBITDA is broken down to the level of the operating units. Adjusted EBITDA and the corresponding relative indicator, the adjusted EBITDA margin, show the operating performance of an entity irrespective of the structure of its assets and its invest- ment profile. They therefore provide a key basis for internal ▪ and external comparison of the cost structure of business operations. Since depreciation, amortization and impairment losses are not included, these are also cash-flow based parameters. The adjusted EBITDA margin can therefore be taken as an approximation of the return on sales-related cash flows. The return on capital employed (ROCE) is used as a further indicator of value-driven management of the company. The calculation starts from adjusted EBIT in relation to average capital employed. Comparison with the cost of capital, which shows the risk-adjusted return expectations of our investors, indicates relative value creation. This is calculated using a weighted average cost of capital, which reflects the return expectations of both shareholders, derived from the capital asset pricing model, and providers of debt capital. Most important non-financial key performance indicators Evonik also uses a wide variety of non-financial performance indicators. For example, our annual sustainability report' provides information on ecological and societal issues to supplement our economic reporting. Traditionally, we accord special significance to safety, which is regarded as a holistic management task that has to be lived at all management levels. Our guiding principles on safety are binding for staff at all levels and were reinforced in 2015 by a global safety culture initiative. In accordance with corporate policy, all units at Evonik have an occupational safety target. In addition, all production units have a plant safety target. The relevant indicators are accident frequency and incident frequency.' To protect the environment we specifically aim to reduce emissions of greenhouse gases, not just from our pro- duction but also along the entire value chain. We therefore strive continuously to improve our production processes still further. That ensures more efficient use of resources and minimizes environmental impact. We regard specific green- house gas emissions as a particularly important environ- mental indicator, which we plan to use as a key non-financial performance indicator from fiscal 2017. Energy- and process-related emissions as defined by the Greenhouse Gas Protocol. 2 This report is based on G4, the currently valid guidelines issued by the Global Reporting Initiative (GRI). 2 See sections Principles and objectives and Sustainabilisy. EFTA00598707

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOU DATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 75 Business review Overall assessment of the economic situation 2. Business review Successful development of the Nutrition & Care and Resource Efficiency growth segments • Very good adjusted EBITDA margin of 18.2 percent, attractive return on capital employed (ROCE) of 16.6 percent • Adjusted net income up 44 percent 2.1 Overall assessment of the economic situation Strategically, our new Group structure has further improved our basis for profitable growth in the future. The selective expansion of our market-leading positions was also success- ful: The new production capacities that have come on stream made a clear contribution to our very good business per- formance. We are still implementing our growth investments in a disciplined manner. Operationally, our business developed extremely well. In particular, our two growth segments, Nutrition & Care and Resource Efficiency, were able to raise volume sales further thanks to buoyant demand and increased production capacity. The positive price trend for some important products that started in the second half of 2014 continued uninterrupted until summer 2015 and prices then remained stable in the second half of the year. By contrast, selling prices fell con- siderably in the Performance Materials segment due to the sharp drop in the oil price. Overall, selling prices were on a level with the prior year. Sales increased by 5 percent to €13,507 million in 2015. Adjusted EBITDA rose even faster, growing 31 percent to €2,465 million. Higher earnings contributions mainly came Development of adjusted EBITDA in the Evonik Group from the growth segments, and earnings in the Performance Materials segment were only down slightly year-on-year. Thanks to our very successful business performance, earnings were high. The adjusted EBITDA margin improved substantially to 182 percent, which is also excellent by sector standards. The ROCE of 16.6 percent represents a very attractive return. Net income improved 74 percent to €991 million, while adjusted net income advanced 44 percent to €1,128 million. To enable our shareholders to participate in this very pleasing business trend, at the Annual Shareholders' Meeting the Executive Board and Supervisory Board will be proposing a dividend payment of €1.15 per share. Our financial profile remains good. At year-end 2015 we again had a net asset position. The cash flow from operating activities, continuing operations was a strong €1,968 million. After deduction of outflows for capital expenditures, the free cash flow was very high at €1,052 million. Evonik still has a sound investment grade rating (Moody's: Baal, Standard & Poor's: BBB+). Overall, we consider that we are well-positioned for the challenges that could result from the weak economic conditions and geopolitical tension in 2016. million 2011 2,768 2012 2,467 2013 1,995 2014 1.882 2013 2,465 SOD 1.000 1,500 2,000 2,500 3,000 The figure for 2011 includes adjusted EBITDA of €219 million foe the former Rml Estate segment. 2011 restated. 119 2 I EFTA00598708

76 ANNUAL REPORT 2015 EVONIK INDUSTRIES 2.2 Economic background Weaker global economic momentum Global economic conditions were slightly weaker than expected in 2015. We estimate that global economic growth was around 2.6 percent, which was lower than in the pre- vious year (2.7 percent). At the start of 2015, growth of 3.0 percent had still been anticipated. The main factors were the continued slowdown of eco- nomic activity in the emerging markets, which overshadowed the sound economic momentum in the industrialized eco- nomies. In Europe, the economy picked up in 2015 thanks to the European Central Bank's expansionary monetary policy, the depreciation of the euro, and the low oil price. In Germany, consumer spending, in particular, was boosted by the good employment situation and lower oil price. By contrast, industry only posted modest growth. During the year the US economy recovered from the temporary dip at the start of the year, with the main impetus coming from consumer spending. Although the appreciation of the dollar and lower investment in the oil and gas sector held back manufacturing industry, the US economy achieved full employment in 2015. The Federal Reserve raised its key interest rates in the fourth quarter for the first time since 2006, ushering in the reversal of its monetary policy. The lower growth in the emerging markets was driven by a number of factors: slowing growth in China, declining commodity prices and a deterioration in the financial situation as a result of capital outflows and the depreciation of currencies. This had an especially big impact on commod- ity exporting countries. The recession in Brazil and Russia worsened. Development of GDP 2014/2015 in % Global GDP Germany 24 2.7 1.7 1.6 Other European Countries 1.3 1.5 North America Central and South America 0.6 2.3 2.4 Asia-Pack 4.6 4.7 Middle East, Africa -1.0 2.6 2.7 0 1.0 2.0 3.0 4.0 5.0 In China, the slowdown in growth caused by the transition to a new economic model with a greater focus on the domestic market continued. Uncertainty about the economic devel- opment in China increased, especially in the second half of the year, resulting in higher volatility on the financial markets. Solid development of end-customer industries Worldwide, the development of Evonik's end-customer industries differed by region and by sector in the first half of 2015. Demand for food and animal feed continued its very pleasing trend. There was a year-on-year rise in output of consumer and care products, mainly in North America but also to some extent in Europe. Following a strong first half, growth momentum in the electrical and electronics sector in Asia, North America and some parts of Europe weakened in the remainder of the year. Automotive production cooled in Asia, but continued to grow at a moderate pace in North America and Europe. Overall though, the general industrial trend in Europe and North America remained weak and output only increased slightly. The average price of Evonik's raw materials was lower than in 2014. This was due to the substantial drop in the price of oil, which triggered a reduction in the price of most of Evonik's specific raw materials. The euro continued to depreciate against Evonik's most important foreign currency, the US dollar, in 2015 and the average exchange rate was considerably lower than in the previous year at US$1.11 (2014: USS1.33). 2015 (projected) 2014 EFTA00598709

TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOLIDATED FINANCIAL STATEMENTS rumen review Business conddion, and pedonnence SUPPLEMENTARY INFORMATION 77 Development of Evonik's end-customer industries 2014/2015 in% Overall Consumer and personal we products Food and animal feed Automotive end mechanical engineering Electrical end electronic Metal and oil products Paints end comings' Piper end printing Agricukure 1.0 2.0 2015 (prO)etted) 2014 t Where not directly essigned to other endcustomer industries. At the end of June 2015, Evonik Industries AG divested its remaining 10.3 percent stake in the residential real estate company Vivawest GmbH to RAG Aktiengesellschaft for €428 million. Through this transaction, Evonik Industries AG has now completely withdrawn from its real estate activities in order to focus on specialty chemicals. The divestment gain is recognized in other operating income. At its meeting on June 25, 2015, the Supervisory Board of Evonik Industries AG adopted a resolution on ending the term of office of Patrik Wohlhauser as a member of the Executive Board and Chief Operating Officer (COO) by mutual agreement effective June 30,2015. At the same time, Dr. Ralph Sven Kaufmann was appointed to the Executive Board of Evonik Industries AG as the company's new COO with effect from July 1, 2015. 2.3 Major events 2.4 Business conditions and performance A successful business trend Despite the challenging business conditions, we achieved a significant year-on-year improvement in adjusted EBITDA in all four quarters. Although global growth was below expec- tations, high demand enabled our two growth segments, Nutrition & Care and Resource Efficiency, to report good volume trends, aided by new production capacity. Selling prices rose considerably in the Nutrition & Care segment but decreased in the Performance Materials segment, principally due to the lower oil price. Overall, selling prices were on the previous year's level. EFTA00598710

78 ANNUAL REPORT 2015 EVONIK INDUSTRIES Organic sales growth Evonik posted organic sales growth of 1 percent as volumes were higher and prices were unchanged overall. Sales grew 5 percent to E13,507 million, driven by positive currency effects (S percentage points), principally as a consequence of the depreciation of the euro versus the US dollar and the Chinese renminbi yuan. The other effects (-1 percentage point) include changes in the scope of consolidation. Change in sales 2015 versus 2014 in % Volumes 1 Prices 0 Organic sales growth 1 Exchange rates 5 Other effects —1 Total 5 Very good adjusted EBITDA Adjusted EBITDA was E2,465 million, 31 percent above the prior-year figure. Alongside positive currency effects, contributory factors were sustained good demand, the posi- tive price trend and lower raw material costs. The adjusted EBITDA margin increased from 14.6 percent to a very good level of 18.2 percent. Adjusted EBITDA by segment ing million Change 2015 2014 in % Nuuition & Care 1,435 847 69 Resource Efficiency 896 836 7 Performance Materials 309 325 -5 Services 163 151 8 Corporate, other operations, consolidation -338 -277 -22 Evonik 2,465 1,882 31 Priories, figures resisted. The Nutrition & Care segment benefited from higher volumes and, above all, higher selling prices accompanied by lower raw material prices. Its earnings were therefore considerably higher than in the prior year. The Resource Efficiency segment improved earnings thanks to higher volumes, high capacity utilization and lower raw material costs. By contrast, the Performance Materials segment was hampered considerably by the reduction in selling prices, whereas lower raw material costs alleviated the situation. Overall, its earnings contribution was slightly lower than in the previous year. Earnings in the Services segment were higher than in the previous year. The adjusted EBITDA reported by Corporate, other operations, including consoli- dation, was —E338 million. This includes, among others, expenses for the Corporate Center and strategic research. Sales and reconciliation from adjusted EBITDA to net income in 4 mill4a Change 2015 2014 in % Sales 13,507 12,917 3 Adjusted EBITDA 2,465 1,882 31 Depreciation and amortization -713 -626 Adjusted EMT 1,752 1,256 39 Adjustments -88 -179 thereof attributable to Restructuring -65 -86 impelment losses/reversals of impairment losses -63 -37 Acquisition/divestment of sherehoidings 142 1 Other Income before finandal result and income taxes (EBIT) Financial result -102 -57 1,664 1,077 55 -223 -235 Income before income taxes, continuing operations 1,441 842 71 Income taxes Income after taxes, continuing operations Income after taxes, discontinued operations -422 -252 1,019 590 73 —17 —9 Income after taxes 1,002 581 72 thereof attributable to non-controlling Interests 11 13 Net Income 991 568 74 Earnings per share 2.13 1.22 Prioaynr figures restated. EFTA00598711

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Business 9esinesscondnions and pedo<meme • CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 79 Reconciliation to adjusted net income Jae million Change 2015 2014 in % Adjusted EBITDA 2,465 1,882 31 Depreciation and amortization -713 -626 Adjusted EMT 1,752 1,236 39 Adjusted financial result -179 -209 Amortization and Impairment losses on Intangible assets 39 59 Adjusted Income before incase taxes' 1,612 1,106 46 Adjusted Income taxes -473 -313 Adjusted Income after taxes' 1,139 793 44 thereof adjusted Income attributable to non-controlling interests 11 11 Adjusted net Income' 1,128 782 44 Adjusted earnings per share' .1 € 2.42 1.68 Continuing opeteiions. The adjustments are the net balance of non-operating income and non-operating expense items which are by nature one-off or rare and amounted to —E88 million in 2015. The adjustments include restructuring expenses of €65 mil- lion, mainly for optimization of the product portfolio in the Performance Materials segment and in connection with the new Group structure. The impairment losses/reversals of impairment losses totaling —E63 million relate to capitalized costs for a project in the Resource Efficiency and Performance Materials segments that was terminated following a routine review of investment projects, a production plant and intan- gible assets in the Performance Materials segment, and an equity investment in the Nutrition & Care segment. Income of €142 million from the divestment of shareholdings mainly comprised the divestment of the stake in Vivawest. Other adjustments chiefly comprise risk provisioning relating to a contract with a raw materials supplier, expenses for the reorganization and simplification of corporate structures in Europe, and expenses for an increase in provisions for the partial retirement program to comply with IAS 19. In the prior year, the adjustments totaling —E179 million mainly comprised restructuring expense, principally to optimize administrative structures and the product portfolio of the Nutrition & Care segment. The financial result of —E223 million contains one-off factors of —€44 million mainly for interest expense in con- nection with the establishment of provisions. In the previous year, this comprised one-off expense of E26 million. Exclud- ing these effects, the improvement in the financial result was higher, mainly because of the considerably lower cost of refinancing and the voluntary transfers to the contractual trust arrangement (CTA). Income before income taxes, continuing operations grew 71 percent to €1,441 million. The income tax rate was 29 percent, which was in line with the expected Group tax rate. Income after taxes, discontinued operations was —E17 mil- lion and mainly relates to the remaining lithium-ion activities, which were divested in April 2015. The prior-year figure of —€9 million contained operating income from the lithium- ion business and the stake in STEAG, which was divested in September 2014. The Evonik Group's net income rose 74 percent to €991 million. Adjusted net income, which reflects the operating per- formance of the continuing operations, increased 44 percent to €1,128 million in 2015. Adjusted earnings per share there- fore rose from €1.68 to €2.42. Target for On Track 2.0 achieved— Administration Excellence well on schedule At the start of 2012 we set up the On Track 2.0 efficiency enhancement program to achieve a continuous improvement in process efficiency, especially in the production function. The goal was to reduce production costs by €500 million following realization of this program in the period up to 2016. That has now been achieved. By the end of 2015, measures with the potential to cut costs by well over €550 million had been identified and adopted for implementation. Following the successful stock exchange listing and Evonik's strategic focus on the specialty chemicals business, in September 2013 we launched the Administration Excel- lence program to further strengthen our competitive position and optimize the quality of our administrative processes. This aims to implement measures with cost-improvement potential of around €230 million by the end of 2016. By year- end 2015 measures with cost-saving potential of around €100 million had already been implemented. In addition, more than 90 percent of the measures defined had been passed on to the responsible units for implementation. EFTA00598712

so ANNUAL REPORT 2015 EVONIK INDUSTRIES Specific human resources measures have now been defined to achieve the headcount reductions associated with the savings and will be implemented in consultation with repre- sentatives of the workforce to avoid undue hardship. Systematic optimization of the value chain and implemen- tation of the efficiency enhancement programs support Evonik's strategy of profitable growth. Efficient and effective procurement Reliable supply, gaining access to new procurement markets, and ongoing optimization of material costs are still the key tasks for Evonik's procurement function. Procurement in the company's growth markets will increase further in the future. There were a large number of unforeseeable production outages (force majeure) in 2015, especially in the European chemical industry. We essentially managed to secure supply to our sites through close cooperation with the suppliers affected and by drawing on alternative suppliers. To optimize material costs, Evonik uses a total-cost- of-ownership (TCO) approach to procurement, together with cross-unit purchasing to leverage savings potential in the pro- cess as a whole and along the entire supply chain. Stepping up collaboration with the business entities is a key success factor for efficient and effective procurement processes. The efficiency of the procurement organization has been optimized further through Administration Excellence. The main leverage was further integration of local and regional procurement into our global procurement structures, and systematic separation of strategic and operational activities within the procurement organization. Ongoing efficiency improvements will remain a core aspect of procurement in 2016. The main drivers will be automation and harmoni- zation of global procurement processes, especially in the operating units. As well as participating in procurement alliances with other companies and validating new suppliers, we are working intensively to extend strategic relationships with suppliers. Here we are looking for additional opportunities to reduce risk, optimize costs and enhance cooperation and innovation with the suppliers that are currently of the greatest strategic importance. We are aware of our responsibility within the supply chain. Issues such as safety, health, environmental protection, corporate responsibility and quality play an integral part in our procurement strategy. These sustainability aspects are also supported by standardized global assess- ments through the Together for Sustainability (TfS) sector initiative, which was co-founded by Evonik. Evonik's principal suppliers and the majority of our critical suppliers have already taken part in these assessments, which are evaluated by EcoVadis, an impartial sustainability rating company. In 2015 Evonik spent around E8.3 billion on raw materials and supplies, technical goods, services, energy and other operating supplies. Petrochemical feedstocks accounted for about 25 percent of the total. Overall, raw materials and supplies make up around 59 percent of procurement volume. Using renewable resources remains very important to Evonik. In 2015, around 8 percent of raw materials were from renewable resources. The main applications for these raw materials are amino acids and starting products for the cosmetics industry. Very good return on capital employed Within our value-oriented management approach, our success is measured principally by ROCE, which was 16.6 percent in 2015 and therefore well above our cost of capital, which was confirmed as 10.5 percent before taxes in our regular review for the fiscal year. Capital employed, ROCE and Economic Value Added (EVAI Joe milloan 2015 2014 Intangible assets 3,158 3,067 + Property, plant and equipment, Investment property 5,690 5,116 + Investments 175 386 + Inventories 1,782 1,681 + Trade accounts receivable 1,923 1,749 + Other Interest-free assets 435 497 - Interest-free proWslons -999 -911 - Trade accounts payable -1,050 -1,072 - Other Interest-free liabilities -584 -459 • Capital employed' 10,530 10,054 Adjusted EMT 1,752 1,256 ROCE (adjusted EBIT/ capital employed) in % 16.6 12.5 Cost of capital (capital employed • WACC) 1,106 1,056 EVA• (adjusted EMT- cost of capital) 646 200 Prior-year figures restated. 1 Annual averages. EFTA00598713

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOUDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION el Business rreiew Comparison of forecast and actual Performance The average capital employed increased by €0.5 billion to €103 billion in 2015. Capital employed was increased by the rise in property, plant and equipment and higher trade accounts receivable, which resulted from further implemen- tation of our growth investments. The divestment of the stake in Vivawest and impairment losses on property, plant and equipment had a counter-effect. The considerable improve- ment in ROCE was attributable to higher operating earnings, while the increase in capital employed had a counter-effect. In the three chemical segments, ROCE is well above the cost of capital. The return on capital employed in the Nutrition & Care and Resource Efficiency segments is well above average. The ROCE for the Group is considerably lower because capital employed also includes identified hidden reserves from former business combinations. ROCE by segment $n % 2015 2014 Nutrition & Care 41.5 27.1 Resource Efficiency 24.8 25.9 Performance Materials 11.9 14.6 Services 9.4 9.7 Evonik (including Corporate, other operations) 16.6 12.5 Ptior.yeat figures restated. Clear value creation Economic Value Added (EVA.) is the difference between adjusted EBIT and the cost of capital, which is calculated by multiplying average capital employed by the average cost of capital (WACC). If EVA* is positive, the Group creates value (value spread approach). In 2015, we generated EVA* of €646 million. The hike of €446 million compared with the previous year was mainly attributable to the improvement in operating earnings. 2.5 Comparison of forecast and actual performance Financial forecast clearly met In our annual report for 2014 we forecast a slight rise in sales and slightly higher adjusted EBITDA than in the previous year. Thanks to the very good development of our growth seg- ments, Nutrition & Care and Resource Efficiency, especially in the first half of the year, we raised our guidance at the end of the first and second quarters. After the first six months, we anticipated that at year end we would report sales of around €13.5 billion and adjusted EBITDA of around €2.4 billion. We clearly achieved this revised forecast, with sales up 5 per- cent at €13,507 million and a 31 percent rise in adjusted EBITDA to €2,465 million. Adjusted EBITDA greatly exceeded our original forecast. This was principally attributable to the more favorable price trend in the Nutrition & Care segment and the reduction in raw material costs resulting from the drop in the oil price. Since the earnings improvement was better than expected, ROCE was well above the prior-year figure at 16.6 percent. It was also well above the cost of capital, as had been expected. As a consequence of the disciplined implementation of our growth investments, our capital expenditures totaled €0.9 billion in 2015 so we did not fully utilize the budget of up to €1.1 billion. In view of the capital required to fund our growth invest- ments, payment of the dividend and the planned cash transfer to the CTA, we had expected to report net financial debt. However, we are able to report a net financial asset position of €l.l billion thanks to the better-than-expected business performance, the sale of the shares in Vivawest and the fact that capital expenditures were lower than had been budgeted. Non-financial safety indicators at a good level Our significant non-financial performance indicators for occupational and plant safety continued their positive long- term trend. A further improvement in our safety indicators is especially important to us. We have therefore set ambitious long-term targets. However, these indicators can naturally fluctuate from year to year. We had expected to achieve a slight improvement in the accident frequency indicator in 2015 and aimed to remain below our upper limit of 1.3. We clearly achieved this goal, with an accident frequency rate of 1.0. We also aimed for a slight improvement in our incident frequency indicator, with a ceiling of 48. The indicator again came in at a good level of 55 and therefore exceeded our ambitious target despite a slight deterioration compared with the previous year (53). Based on our systematic analysis of all accidents and incidents, action has already been initiated to bring about an improvement. We are stepping up measures to improve our performance, for example, through our safety culture initiative. 0 io EFTA00598714

IQ ANNUAL REPORT 201S EVONIK INDUSTRIES 2.6 Segment performance Nutrition & Care segment The Nutrition & Care segment produces specialty chemicals, principally for use in consumer goods for daily needs, and in animal nutrition and healthcare products. The long-term development of this segment's business is driven by socio-economic megatrends. As a result of growth in the world population, demand for food based on animal protein is rising. At the same time, the rise of an affluent middle class in the emerging markets is increasing consumption of animal protein such as meat, eggs, milk and fish, leading to higher demand for better quality day-to-day consumer goods such as personal care products and cosmetics. Moreover, as a result of demographic change the proportion of older people in the developed markets will rise in the long term, leading to higher demand for cosmetics, wellness and healthcare products. Key data for the Nutrition & Care segment Change in E millan 2015 2014 in % External sales 4,924 4,075 21 Adjusted EBITDA 1,435 847 69 Adjusted EBITDA margin in % 29.1 20.8 Adjusted E8IT 1,214 685 77 Capital expenditures 250 458 —45 Depreciation and amortization 212 157 35 Capital employed (annual average) 2,923 2,527 16 ROCE in % 41.5 27.1 No. of employees as of December 31 7,165 6,943 3 Piior.year figure* resiaied Considerable sales growth The Nutrition & Care segment posted an extremely success- ful business performance in 2015 and grew sales 21 percent to €4,924 million. Alongside slightly higher volumes, the main drivers were considerably higher selling prices and positive currency effects. In particular, there was a substantial increase in sales of essential amino acids for animal nutrition. The strong trend to modern and sustainable animal nutrition continues to have a positive impact on this business. Thanks to the new pro- duction facility that came on stream in Singapore at the end of 2014, we were able to satisfy the significant rise in demand for our methionine products and raise volumes further. Having risen since fall 2014, prices have stabilized at a very attractive level since summer 2015. Considerably higher sales were also registered for healthcare products, with exclusive synthesis and pharmaceutical polymers for smart drug delivery systems proving particularly successful. Sales of per- sonal care products were higher, especially in North America and the Asia-Pacific region, aided by the new capacity in China. In the baby care business, volumes declined, princi- pally because competitors brought new production capacities on stream. Sales were therefore down year-on-year. Substantial increase in adjusted EBITDA The Nutrition & Care segment's adjusted EBITDA grew 69 percent to €1,435 million, driven mainly by higher selling prices and positive currency effects. The adjusted EBITDA margin improved significantly from 20.8 percent in 2014 to 29.1 percent. Capital expenditures scaled back as planned— Attractive return on capital employed Capital expenditures in the Nutrition & Care segment amounted to €250 million. That was well below the prior- year figure of €458 million, which was boosted by high growth-driven investments. Nevertheless, capital expendi- tures were well above depreciation, which was €212 million. EFTA00598715

TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOLIDATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION R3 8usioess review Segment ptrformance Development of sales in the Nutrition & Care segment In f million 2011 4,081 2012 4,204 2013 4,171 2014 4.075 2015 4,924 0 1.000 2,000 3,003 4,000 5,000 Rgures for 2011 through 2013 reflect the old structure, pnor- year figures restated. Development of adjusted EBITDA in the Nutrition & Care segment inif million 2011 1,099 2012 1.055 2013 922 2014 847 2015 1,435 0 300 600 900 1,200 1,500 Rgures for 2011 through 2013 reflect the old structure; 'Yee, figures restated. The average capital employed increased by E396 million to E2,923 million, principally because of the high capital expen- ditures in previous years. Thanks to the positive earnings trend, ROCE improved to 41.5 percent, up from 27.1 percent in 2014. Investment projects to drive growth Since demand for amino acids for modern animal nutrition is growing fast, selective capacity increases in this field are a major focus of investment in the Nutrition & Care segment. A new facility for biotechnological production of around 100,000 metric tons of Biolys° (L-lysine), an amino acid for animal feed, was completed in Castro (Brazil). This site has excellent access to corn, which is used as a raw material, very good logistics connections, and is close to our customers in the growing Latin American market. In addition, the segment invested in new production facilities for methionine formulations tailored specifically to the nutritional requirements of species other than poultry. A facility to produce Mepron° for dairy cattle has been erected in Mobile (Alabama, USA). Investment in this plant was in the low double-digit million euro range. Evonik has also developed AQUAVI° Met-Met, a dipeptide with two methionine molecules, for aquaculture of shrimp and other crustaceans. The first production facility is currently under construction in Antwerp (Belgium), and is scheduled to come on stream in April 2016. This investment is also in the low double-digit million euro range. In view of the strong growth in the market for methionine, Evonik is planning to build a further world-scale production complex alongside the facility on Jurong Island (Singapore) that came into service in November 2014. In this new, fully backwardly integrated production complex as well, all key strategic precursors will be produced by Evonik. As part of the global expansion of the production network for oleochemical specialty surfactants, all pro- duction technologies for the high-growth cosmetics and consumer goods industry were successfully started up at the new facility in Americana (Brazil). Evonik has a global investment initiative to strengthen its integrated technology platform for specialty silicones in Germany and China. Total planned investment is in the triple-digit million euro range. The first capacity expansion in Essen (Germany) came into operation in 2015. The plants there will be extended further over the next few years and a new silicone platform will be constructed in Shanghai (China). The silicone platforms are the backbone of signifi- cant business activities in the Nutrition & Care and Resource Efficiency segments. 3r 3 tr. EFTA00598716

$4 ANNUAL REPORT 2015 EVONIK INDUSTRIES Resource Efficiency segment The Resource Efficiency segment supplies high-performance materials for environment-friendly and energy- efficient system solutions for the automotive, paints, coatings, adhesives and construction industries and many other sectors. The resource efficiency megatrend is the basis for energy-efficient and environmentally compatible products and is therefore a key factor in the development of this segment's business. Key data for the Resource Efficiency segment Change in E million 2015 2014 In% External sales 4,279 4,040 6 Adjusted EBITDA 896 836 7 Adjusted EBITDA margin in 25 20.9 20.7 Adjusted E8lT 675 642 5 Capital expenditures 241 273 -12 Depreciation and amortization 222 194 14 Capital employed (annual average) 2,726 2,474 10 ROCE in% 24.8 25.9 No. of employees as of December 31 8,662 7,835 11 Ptior.year figure* resialed Higher sales Sales in the Resource Efficiency segment grew 6 percent to €4,279 million. Alongside positive currency effects, this was attributable to organic sales growth resulting from higher volumes and stable selling prices. There was strong growth in sales of crosslinkers, which benefited above all from attractive end-markets such as construction and wind energy. Oil additives, which enhance the performance of engines and gears in the automotive, construction and transportation industries, were again very successful. Sales of silica also increased appreciably, mainly due to buoyant demand for products for the silicones and tire sectors. The catalysts business benefited from the first-time consolidation of the catalyst producer Monarch Catalyst Pvt. Ltd., Dombivli (India), which was acquired in June 2015. High demand for hydrogen peroxide products for traditional appli- cations, especially in the paper and textile industries, resulted in higher sales. Sales of high performance polymers were around the prior-year level, although this still included the solimides business that was divested in September 2014. Improvement in earnings Adjusted EBITDA in the Resource Efficiency segment advanced 7 percent to €896 million, mainly as a result of higher volumes, better capacity utilization, positive currency effects, and lower raw material costs. The adjusted EBITDA margin increased slightly to 20.9 percent. High investment—Return on capital employed still very good Capital expenditures in the Resource Efficiency segment remained high at €241 million, but were 12 percent lower than in the previous year. Nevertheless, they were slightly above depreciation, which amounted to €222 million. As a result of the expansion of production capacity, the average capital employed increased by €252 million to €2,726 million. ROCE was very good at 24.8 percent, but below the prior- year level of 25.9 percent due to higher capital expenditures, which increase capital employed but only impact adjusted EBIT successively as the new capacity comes into service. EFTA00598717

TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOLIDATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION OS Business review Segment performance Development of sales in the Resource Efficiency segment Inc ,thmon 2011 2012 2013 2014 2015 1,000 2.000 3,131 3,084 1000 1,015 1,010 4,000 4,279 5,000 Rem% for 2011 through 2013 reflect the old structure; pieties( figures rested. Development of adjusted EBITDA in the Resource Efficiency segment Int million 2011 765 2012 663 2013 655 2014 836 2015 896 0 200 400 600 800 1,000 Figures for 2011 through 2013 reflect the old structure; prior-year figures restated. Investment projects to expand market positions The Resource Efficiency segment has almost doubled pro- duction capacity for oil additives on Jurong Island (Singapore). This facility, which was inaugurated in May 2015, is now Evonik's biggest production plant for oil additives. The addi- tional capacity enables this segment to meet rising demand from customers for more efficient lubricants. By raising global capacity for precipitated silicas, the Resource Efficiency segment is supporting the growth of its global customers in the tire, construction, animal feed and nutrition industries. A new production facility is currently under construction near Sao Paulo (Brazil) and is scheduled to start operating in 2016. This will be the first production facility for highly dispersible silica (HD silica) for the South American tire industry. Pre-engineering work has started for a new production plant for precipitated silicas in North America, which is scheduled to be completed in early 2018. The entire project is still contingent upon approval by the relevant bodies. Progress is also being made with the expansion of capacity for specialty silicas, primarily for customers in the food, cosmetic and pharmaceutical sectors. In fall 2015, DSL. Japan Co., Ltd. (DSL), Tokyo (Japan), in which Evonik has a 51 percent stake, started up new capacity at the extended production facility for specialty silicas in Ako (Japan). As binders for paints, specialty copolyesters are used in coil coatings and, increasingly, in food can coatings. To meet rising demand, the segment is investing in a new plant at the Witten site in Germany. This will have annual capacity of several thousand metric tons and is scheduled for completion in 2018. Strengthened by selective acquisitions The Indian catalyst producer Monarch was acquired in June 2015. This strategic acquisition will strengthen the Resource Efficiency segment's market position in activated base and precious metal catalysts and extend its business into oil and fat hydrogenation catalysts. In October 2015, the Resource Efficiency segment acquired the hydrogen peroxide producer PeroxyChem Netherlands B.V., Amsterdam (Netherlands). Its site in Delfzijl complements the present network of European production sites. I tr• a. EFTA00598718

as ANNUAL REPORT 2015 EVONIK INDUSTRIES Performance Materials segment The heart of the Performance Materials segment is the production of polymer materials and intermediates, mainly for the rubber, plastics and agriculture industries. Progressive globalization offers market opportunities for this segment, driven by the mobility and urbanization megatrends, which are raising global demand for efficient transportation systems and sustainable construction methods. Key data for the Performance Materials segment Change in E million 2015 2014 In % External sales 3,435 3,827 —10 Adjusted EBITDA 309 325 —S Adjusted EBITDA margin in V. 9.0 8.5 Adjusted E8IT 174 204 —15 Capital expenditures 183 218 —16 Depreciation and amortization 132 109 21 Capital employed (annual avenge) 1,467 1,397 S ROCE in % 11.9 14.6 No. of employees as of December 31 4,380 4,353 1 Prior year figure* resiaied Lower sales Sales declined 10 percent to €3,435 million in the Perfor- mance Materials segment. Since volume sales were almost stable, the decline was principally due to the oil-driven reduction in selling prices. By contrast, exchange rates had a positive effect. Performance intermediates, in particular, reported signifi- cantly lower sales than in the previous year. This was caused by a sharp decline in selling prices for products from the inte- grated C. platform in the wake of the reduction in the oil price. The downward trend gained momentum in the second half of the year. Methacrylate products benefited from good demand in the first half of the year. Polymethylmethacrylate (PMMA) for the automotive industry also developed well, but market conditions for PMMA sheet remained difficult. Alcoholates for the production of biodiesel posted another good performance. Adjusted EBITDA down year-on-year Adjusted EBITDA slipped 5 percent year-on-year to €309 million. This was caused by lower selling prices, while the decline was checked by the reduction in the cost of oil- based raw materials. The adjusted EBITDA margin improved from 8.5 percent to 9.0 percent. Targeted investment—Lower return on capital employed To secure its leading market positions, raise efficiency and broaden its technology base, the Performance Materials seg- ment invested €183 million in property, plant and equipment in 2015. Capital expenditures therefore exceeded deprecia- tion, which amounted to €132 million. The average capital employed increased by €70 million to €1,467 million as a result of the segment's selective capital expenditures. ROCE dropped from 14.6 percent to 11.9 percent, mainly as a con- sequence of the reduction in earnings. EFTA00598719

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Business review $eomeet on, I ornane • CONSOLIDATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION 87 Development of sales in the Performance Materials segment In f million 2011 4.880 2012 4.843 2013 4,490 2014 3,827 2015 3.435 0 1,000 2.000 3.000 4,000 5,000 Figures for 2011 through 2013 reflect the old structure, prior-year figures restated. Development of adjusted EBITDA In the Performance Materials segment Int million 2011 907 2012 853 2013 552 2014 325 2015 309 0 200 400 800 1,000 Ague.. for 2011 through 2013 reflea the Old structure; paerleor figures restated. Global projects to expand capacity As part of the Europe-wide expansion of capacity for C.-based products, new plants came on stream in Marl (Ger- many) and Antwerp (Belgium). These have successfully raised capacity for the plasticizer alcohol isononanol, for butadiene and for MTBE, an anti-knock additive for fuel. Thanks to a unique new process, some product streams from refineries can be utilized for C. chemistry for the first time. Total investment was in the triple-digit million euro range. To ensure sustainable and reliable long-term supply of potassium derivatives to customers, Evonik has established a production joint venture with Akzo Nobel to build and oper- ate a membrane electrolysis plant for chlorine and potassium hydride solution in Ibbenburen (Germany). Production is scheduled to start in the fourth quarter of 2017. In Mobile (Alabama, USA) the Performance Materials seg- ment has embarked on a substantial capacity increase for ACA (acrolein cyanohydrin-o-acetate). This drives forward the very successful exclusive partnership with a global leader in broadband herbicides. The new production plant, which involves total investment in the triple-digit million euro range, should start operating in early 2017. From the second half of 2016 Performance Materials will have access to new capacity for sodium cyanide from a joint venture with the Mexican group IDESA. This will greatly strengthen its position in the growing Mexican market. a. EFTA00598720

ANNUAL REPORT 2015 EVONIK INDUSTRIES Services segment The Services segment provides site management, utilities, and waste management, technical, process technology, engineering, and logistics services for the chemicals segments and external customers at our sites. It also provides standardized Group-wide administrative services to support the chemicals businesses and the management holding company. Key data for the Services segment Change in E million 2015 2014 In % External sales 828 906 -9 Adjusted EBITDA 163 151 8 Adjusted EBITDA margin in V. 19.7 16.7 Adjusted E8lT 53 49 8 Capital expenditures 177 153 16 Depreciation and amortization 107 101 6 Capital employed (annual avenge) 565 507 11 ROCE in % 9.4 9.7 No. of employees as of December 31 12,668 13,173 -4 Prior-year figure, resiaied The Services segment generates sales both internally, with the specialty chemicals segments and Corporate Center (2015: €1,886 million), and with external customers. Exter- nal sales contracted by 9 percent to €828 million in 2015. This was mainly due to the reduction in the price of energy, which the segment charges to external customers at our sites. 2.7 Regional development A global presence As part of our growth strategy, we are expanding our pres- ence in emerging markets. We define these as selected coun- tries in Asia, South America, Eastern Europe and the Middle East. In 2015, 82 percent of our sales were generated outside Germany. In Germany, sales were 13 percent lower at €2,436 million in 2015. Sales declined considerably in the Performance Materials segment, mainly as a consequence of the oil price, but the Nutrition & Care and Resource Efficiency segments also reported lower sales. Adjusted EBITDA increased 8 percent to €163 million, mainly because of changes to the internal cross-charging system. Capital expenditures in this segment increased 16 percent to €177 million. That was above depreciation, which amounted to €107 million. Numerous infrastructure projects were completed at German sites in 2015. Our German sites serve customers throughout Europe and in some overseas markets as well as domestic customers. To strengthen these sites, we increased capital expenditures to €427 million (2014: €419 million). A new production plant for C: based products came on stream in Marl in 2015, and in Essen we extended a production plant for specialty silicones. In addition, many infrastructure projects were completed, for example, a freight transport project in Marl and a new control center in Darmstadt. EFTA00598721

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Business review ••••• pool on • CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 89 Sales by region Other 3% Atie•Pacitd 21% Central end South America 7% North America 20% • Ely Location of customer. Germany 18% Other European Couniries 31% Sales in the other European countries slipped 2 percent to €4,148 million. This was caused by an oil price-induced drop in sales in the Performance Materials segment. By contrast, high demand enabled the Nutrition & Care and Resource Efficiency segments to raise sales. This region's share of Group sales fell to 31 percent. Capital expenditures in this region were €88 million, a decline of 34 percent year- on-year. A new production plant for C.-based products was successfully brought into service in Antwerp (Belgium). In addition, the first production plant for a new source of methionine for shrimp and crustaceans is scheduled for completion at this site in April 2016. Higher investment in the Americas In North America, sales grew 15 percent to €2,647 million, mainly for currency reasons. The principal contributions to this came from the Nutrition & Care and Resource Efficiency segments. This region's share of Group sales increased to 20 percent. Capital expenditures rose 48 percent to €208 mil- lion. A new plant to produce Mepron° for dairy cattle was completed in Mobile (Alabama, USA). At the same time, work started on expansion of capacity for ACA (acrolein cyanohydrin-o-acetate) at this site. This is scheduled to come on stream in early 2017. Sales totaled E954 million in Central and South America, an increase of 23 percent year-on-year. This was driven mainly by the Nutrition & Care and Resource Efficiency seg- ments. This region's share of Group sates therefore increased slightly to 7 percent. Capital expenditures were 37 percent lower at €67 million. A new production plant for Biolys°, an amino acid for feed additives, was officially opened in Castro (Brazil). In addition, a new plant for precipitated silicas is currently under construction in Sao Paulo (Brazil). It is scheduled to come into service in 2016. Substantial rise in sales in Asia-Pacific Sales grew 17 percent to €2,860 million in the Asia-Pacific region. The Nutrition & Care and Resource Efficiency seg- ments made equal contributions to this, while Performance Materials posted lower sales. This region's share of Group sales increased to 21 percent. Capital expenditures amounted to E86 million, below the previous year's high level of E323 million, which was dominated by construction of the new production complex for the amino acid DL-methionine in Singapore. A new production plant which opened at this site in 2015 has virtually doubled capacity for oil additives. The expansion of production capacity for specialty silicas at the facility in Ako (Japan) came on stream. 2.8 Earnings position Considerable improvement in income before income taxes, continuing operations Sales rose 5 percent to €13,507 million thanks to higher demand and positive currency effects. Despite higher sales volumes and cost-driving currency effects, the cost of sales declined by 2 percent to E9,096 million. The main positive factors were lower raw material costs, along with substantial cost-savings from the successful implementation of the On Track 2.0 efficiency enhancement program. The gross profit on sales therefore increased by 22 percent to €4,411 million. Currency effects and the expansion of business following the start-up of new plants increased selling expenses by 12 percent to E1,447 million. Administrative expenses were E693 million, 15 percent higher than in 2014. The main rea- sons for this increase were a change in the system used to cross-charge services within the Group, higher additions to provisions for long-term incentive programs for executives (LTI Plan)' and other variable remuneration components, and currency effects. The rise was mitigated by savings made through the Administration Excellence program. To strengthen our innovative capability still further, we raised spending on research & development by 5 percent to E434 million. r - ON- I See Note 10.1. EFTA00598722

90 ANNUAL REPORT 2015 EVONIK INDUSTRIES Since the start of 2015, the effects of currency translation of operating monetary assets and liabilities and the associated hedging instruments have been presented as net amounts in other operating income and expenses. This avoids increases in income and expenses as a result of the high currency- driven volatility of hedging transactions and hedged items during the year, which essentially offset each other. The 78 percent increase in other operating income to E445 mil- lion in 2015 was mainly due to higher income from the disposal of assets, especially the sate of the stake in Vivawest. The 22 percent increase in other operating expenses to Income statement for the Evonlk Group inemalsan Change 2015 2014 in % Sales 13,507 12,917 5 Cost of sale -9,096 -9,308 -2 Gross profit on sales 4,411 3,609 22 Selling expenses -1,447 -1,289 12 Research and development expenses -434 -413 5 General adminisuative expenses -693 -601 15 Other operating Income 445 250 78 Other operating expenses -603 -493 22 Result from investments recognized at equity -15 14 - Income before finandal result and income taxes, continuing operations 1,664 1,077 SS Financial result -223 -235 -5 Income before income taxes, continuing operations 1,441 442 71 Income taxes -422 -252 67 Income after taxes, continuing operations 1,019 590 73 Income after taxes, discontinued operations -17 -9 89 Income after taxes 1,002 SIM 72 thereof attributable to Non controlling interests 11 13 -15 Shareholders of Evonik industries AG (net Income) 991 S68 74 E603 million resulted mainly from provisions for risks arising from an agreement with a raw material supplier, and expenses for the reorganization and simplification of corporate structures in Europe. The result from investments recognized at equity was —E15 million and chiefly related to an impair- ment loss on an equity investment in the Nutrition & Care segment, whereas in the previous year, this item comprised income of E1O million from the former investment in Vivawest. Income before financial result and income taxes, continuing operations improved 55 percent to E1,664 million. Prior-year figures restated. Considerable increase in net income The financial result improved 5 percent to —E223 million. This includes one-off factors of —E44 million, mainly for interest expense in connection with the establishment of pro- visions. In the prior year, these effects were —E26 million. Excluding these effects, there was a significant improvement in the financial result, principally as a consequence of far more favorable refinancing and the voluntary cash contribu- tion to the contractual trust arrangement (CIA) for pensions. Income before income taxes, continuing operations rose 71 percent to E1,441 million. The 67 percent increase in income taxes to E422 million was mainly due to higher earnings. Income after taxes, discontinued operations' was —E17 mil- lion and mainly relates to the remaining lithium-ion activities, which were divested in April 2015. The prior-year figure of —E9 million contains operating income from the lithium-ion business and the stake in STEAG, which was divested in Sep- tember 2014. Income after taxes improved 72 percent to E1,002 million. Non-controlling interests in after-tax income See Note 53. EFTA00598723

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Business review Fmancitil (Ord tip, • CONSOLIDATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION 91 amounted to EV million (2014: E13 million) and comprised the pro rata profits and losses of fully consolidated sub- sidiaries that are attributable to shareholders outside the Evonik Group. The Evonik Group's net income rose 74 percent to E991 million. 2.9 Financial condition Central financial management The principal objectives of financial management are safe- guarding the financial independence of the Evonik Group and limiting financial risks. We therefore apply a central financing strategy. Borrowing and bond issuance are normally under- taken by Evonik Industries AG or its financing company Evonik Finance B.V., Amsterdam (Netherlands), whose liabil- ities are fully guaranteed by Evonik Industries AG. To reduce external borrowing, surplus liquidity at Group companies is placed in a cash pool at Group level to cover financing requirements in other Group companies. Evonik has a flexible range of corporate financing instruments to meet liquidity requirements for day-to-day business, investments, and the repayment of financial debt. Solid investment grade rating confirmed In 2015 both Moody's and Standard & Poor's (M con- firmed their credit ratings for Evonik Industries AG. Moil still rates Evonik as Baal with a positive outlook, while rating remains BBB+ with a stable outlook. Maintaining a sound investment grade rating is a central element in our financing strategy to ensure we remain a reliable partner for bond investors and banks in the long term. Active management of pension obligations Pension provisions make up the major portion of our total debt. They are non-current and depend on the discount rate. The E604 million decline in pension provisions was principally due to the fact that the discount rate at year end was higher than in the previous year. Unfunded pension obligations were reduced as scheduled in 2015 by a further voluntary cash con- tribution of €219 million' to the contractual trust arrangement (CTA), completing the program of transfers totaling E1.6 bil- lion that commenced in 2010. At present, there are no plans to allocate further funds to the CTA. Further increase in net financial assets Financial debt increased by €626 million compared with year-end 2014 to E1,555 million, essentially as a result of the E750 million bond issued in January 2M5. In the same period, financial assets increased by E1,324 million to E2,653 million, mainly because of the high free cash flow ' , proceeds from the new bond issue, and income from the divestment of the stake in Vivawest (E428 million) at the end of June. The divi- dend of E466 million for fiscal 2014 was paid in May 2015. Overall, net financial assets were E1,098 million, E698 mil- lion higher than at year-end 2014. Net finandal assets In E million Non-current financial liabilities' Current financial Financial debt Cash and cash equivalents Current securities Other financial Invesunenu Financial assets Net financial assets as stated on the balance sheet • Excluding derivatives. Dec. 31, Dec. 31, 2015 2014 -1,361 -639 -194 -290 -1,555 -929 2,368 921 262 387 23 21 2,653 1,329 1,098 400 Corporate bonds as a central financing instrument At year-end 2015, the financial debt of E1,555 million com- prised two bonds with a total carrying amount of E1,241 mil- lion, decentralized bank loans totaling €282 million, and other financial liabilities of E32 million. Following the issuance of a bond with a nominal value of E500 million in 2013, another bond with a nominal value of E750 million was issued in 2015. This matures in 2023 and has a coupon of 1.000 per- cent. On the reporting date, E1.25 billion of the debt issuance program of up to E3 billion had been used to issue bonds. Over 85 percent of the Group's financial liabilities are denominated in euros (2014: over 65 percent). Only Group companies outside the euro zone have financial liabilities in other currencies. The relevant currencies include the Chinese renminbi yuan (CNY) and the Brazilian real (BRL). Including a refund of €19 million for advance tax payments by the CTA. 1 Cash flow from operating activities, continuing operations, less outflovn for capital expenditures for intangible assets, properly, plant and equipment. I S. 0 EFTA00598724

92 ANNUAL REPORT 2015 EVONIK INDUSTRIES Maturity profile of financial liabilities in E million 2016 2017 . 2018 . 2019 I 2020 2021 2022 2023 202411. 700 0 100 20D 300 400 500 600 BOO As of December 31, 2015. Further increase in the strong liquidity position Alongside cash and cash equivalents of E2,368 million and investments of E262 million in current securities, Evonik's central source of liquidity is still a €1.75 billion revolving credit facility from a syndicate of 27 national and international banks. This credit facility is divided into two tranches of E875 million each. The second and last option to extend their term by one year was exercised in 2015 and they now run until September 2018 and 2020 respectively. This credit facility was not drawn at any time in 2015. It does not contain any covenants requiring Evonik to meet specific financial ratios. Further, as of December 31, 2015, various unused credit lines totaling E368 million were available to meet local requirements, especially in the Asia-Pacific region. Major projects completed or virtually completed in 2015 Significant growth projects completed successfully in the specialty chemicals sector Evonik is expanding in busi- ness areas and markets where it already has—or intends to build—a strong competitive position. Investment projects are aimed at utilizing potential for sustained profitable growth and value creation. Every project undergoes detailed strategic and economic analyses. In addition, there is a minimum return requirement for every project based on Evonik's cost of capital. We take a flexible and disciplined approach to extending our leading market positions. All projects are regularly reviewed for changes in the market situation. Examples of projects completed successfully in 2015 are a new lysine facility in Castro (Brazil), expansion of the production facilities for specialty silicas in Ako (Japan), and expansion of production capacity for butadiene in Antwerp (Belgium), isononanol in Marl (Germany) and the anti-knock agent MTBE in Marl and Antwerp. Segment Nutrition & Care Resource Efficiency Performance Materials Location Castro (Brazil) Essen (Germany) Mobile (Alabama, USA) Ako (Japan) Singapore Marl (Germany) and Antwerp (Belgium) Project Construction of a new lysine plant Expansion of the silicone platform Construction of a new production facility for Mepron Expansion of capacity for specialty silicas Expansion of a facility for oil additives Expansion of capacity for butadiene in Antwerp, the plasticizer alcohol isononanol in Marl, and the anti-knock agent MTBE in Marl I and Antwerp For further information on current capital expenditure projects, please see the section en Segment performance. EFTA00598725

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Rosiness review Fnencisl tand•tion • CONSOLIDATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION Capital expenditures amounted to €877 million in 2015, below the previous year's high figure of E1,123 million. In principle, the related cash outflows are delayed slightly by payment terms. In 2015, cash outflows for property, plant and equipment totaled E916 million (2014: €1,095 million). The highest proportion of capital expenditures went to the Nutrition & Care and Resource Efficiency segments (29 percent and 27 percent respectively). A further 21 per- cent was allocated to the Performance Materials segment, and 20 percent was invested in the Services segment. The regional focus of capital expenditures was Germany, which accounted for 49 percent of the total, followed by North America (24 percent) and the Asia-Pacific region and other European countries, which each received 10 percent. Financial investments totaled €90 million (2014: €114 mil lion). They mainly comprised the acquisition of Monarch Catalyst Pvt. Ltd., Dombivli (India), and PeroxyChem Nether- lands Amsterdam (Netherlands).' A strong cash flow The cash flow from operating activities, continuing opera- tions increased by€933 million to €1,968 million, principally due to the good operating performance. The cash flow from operating activities, discontinued operations related to the lithium-ion business, which has now been divested and, in the prior year, also to the stake in STEAG, which was sold in September 2014. In 2015, the cash flow from operating activities, discontinued operations was €3 million, compared with €31 million in 2014. Overall, the cash flow from oper- ating activities increased by €905 million to €1,971 million. Cash flow statement (excerpt) ME million 2015 2014 Cash flow from operating activities, continuing operations 1,968 1,035 Cash flow from operating activities, discontinued operations 3 31 Cash flow from operating activities 1,97E 1,066 Cash flow from investing activities, continuing operations —660 —575 Cash flow from investing activities, discontinued operations — —1 Cash flow from investing activities —660 —576 Cash flow from financing activities, continuing operations 133 —1,155 Cash flow from financing activities, discontinued operations — — Cash flow from financing activities 133 —1,155 Change in cash and cash equivalents 1,444 —665 The cash flow from investing activities comprised an outflow of €660 million. This was mainly for capital expenditures on property, plant and equipment and investments, and the cash contribution to the CTA. It was countered by cash inflows, mainly from the disposal of investments, especially the shares in Vivawest. In 2014 the cash outflow for investing activities was €576 million. Cash and cash equivalents December 31, 2015 versus December 31, 2014 MC 3,000 2,500 2,000 1,500 1,000 500 •1968 +6 2,368 +133 —660 921 Cash operating actWities' Dec 31, 2010 Cash and cash equivalents' flew, Cash flow, irreestisg activities" ash flow, financing Dec 31, 2015 Cash and cash equiwkets• • Continuing operations. See section on Segment performance and Note 5.2. 3 a 0 EFTA00598726

94 ANNUAL REPORT 2015 EVONIK INDUSTRIES The cash flow from financing activities was €133 million. The cash inflow from the new bond was reduced principally by the repayment of financial debt and the payment of the dividend for 2014. In 2014, there was a cash outflow of E1,155 million, mainly for the redemption of a bond and the dividend for fiscal 2013. The free cash flow was very high at €1,052 million in 2015 (2014: —E60 million). The significant improvement was mainly due to the very good operating performance and dis- ciplined implementation of our growth-driven investments. 2.10 Asset structure Increase in total assets As of December 31, 2015, total assets were €1.3 billion higher at €17.0 billion. Non-current assets increased slightly year-on-year to €10.3 billion. While the value of investments recognized at equity decreased by €0.3 billion, mainly because of the sale of the stake in Vivawest in June 2015, property, plant and equipment increased by €0.3 billion to ES.8 billion as a result of growth-driven investments. Intan- gible assets increased slightly, by €0.1 billion, to €3.2 billion. In all, non-current assets decreased to 61 percent of total assets, down from 65 percent in the prior year. They are financed by liabilities with the same maturity structure. Balance sheet structure of the Evonik Group Current assets increased by €1.3 billion to E6.7 billion. This was primarily attributable to a strong rise of €1.4 billion in cash and cash equivalents to €2.4 billion, principally as a result of the issue of the new bond in January 2015 and the good operating performance. Owing to the increase in business, trade accounts receivable were €0.1 billion higher at €1.8 billion. Inventories and financial assets basically remained constant at €1.8 billion and €0.4 billion respec- tively. Current assets therefore rose to 39 percent of total assets (2014:35 percent). Equity increased by €1.1 billion to €7.6 billion as a conse- quence of the good business performance. The equity ratio rose from 41.6 percent to 44.6 percent. Non-current liabilities increased by€0.1 billion to €6.4 bil- lion, principally due to the increase in financial liabilities to €1.4 billion in the wake of the bond issue in January 2015. By contrast, provisions for pensions and other post-employment benefits decreased by €0.6 billion to €3.3 billion. Non- current liabilities decreased from 40 percent to 37 percent of total equity and liabilities. Current liabilities increased by €02 billion to €3.1 billion. While trade accounts payable were virtually unchanged at €1.1 billion, other liabilities increased by€0.1 billion. Current liabilities accounted for an unchanged 18 percent of total equity and liabilities. In E million 2015' 2014' 2015' 2014' 7,576 6,522 Equity Nomomient assets 10,320 10.251 (45%) (42%) (61%) (65%) 6,353 6,201 Non-:Decent liabilMes (37%) (40%) Commit assets 6485 5,434 (39%) (35%) 3,076 2,922 Current OWllilkt 08%) (1S%) Total assets 17,005 15485 17,005 15,685 Thal equity and liabilities As of December 31. EFTA00598727

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOU DATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION 9S Pert *mince of Evonik Industries AG 3. Performance of Evonik Industries AG • Management holding company concentrates on strategic development of the Group • High net income of €1,205 million • Proposed increase in the dividend from €1.00 to €1.15 Evonik Industries AG, Essen (Germany) is the parent com- pany of the Evonik Group. It holds direct and indirect stakes in all subsidiaries in the Group. The annual financial statements for Evonik Industries AG have been prepared in accordance with the accounting standards set out in the German Commercial Code (HGB) and the German Stock Corporation Act (AktG). Since January 1, 2015, the Executive Board of Evonik Industries AG has concentrated on the strategic development of the Evonik Group through a management holding structure. In this connection the plant management agreements between the company and five subsidiaries were terminated effective June 30, 2015. These plant management agreements had been performed on behalf of Evonik Industries AG and for the account of the subsidiaries. The substance of agree- ments of this type is that the companies remain the economic Income statement for Evonik Industries AG E million 2015 2074 Sales 592 216 Increase in work In progress 1 Other operating Income 1,431 425 Cost of materials -235 -2 Personnel expense -337 -206 Depreciation and amortization of intangible assets, property, plant and equipment -15 -6 Other operating expenses -1,294 -647 Operating result 143 -220 Income from Investments 1,509 921 Write-downs of financial assets and current securities -41 -121 Write-ups of financial assets and current securities 10 96 Net Interest expense -157 -86 Income before Income taxes 1,464 590 Income taxes -259 -123 Net Income 1,205 467_ Allocation to revenue reserves -600 -1_ Net profit 605 466 owners of the assets and liabilities of the plants, while the operator recognizes liabilities entered into in its own name and at the same time capitalizes a claim for reimbursement against the owners of the plants. As a result of the termination of these agreements, the balance sheet of Evonik Industries AG at year-end 2015 no longer contained any items of this type. In the income statement, the arrangement merely gave rise to sales revenues from plant management fees. All other income and expenses were allocated to the companies that owned the plants and were recognized in their annual financial statements. In connection with the strategic realignment of the Evonik Group, in the first half of the year Evonik Industries AG acquired the activities of subsidiaries within the scope of the management holding company or that serve to support it, through asset deals. Activities outside its scope were trans- ferred to the subsidiaries. Fmancul statements 5 EFTA00598728

96 ANNUAL REPORT 2015 EVONIK INDUSTRIES Balance sheet for Evonik Industries AG InEmiRion Dec. 31, Dec. 31, 2015 2014 Asset Intangible assets, property, plant and equipment 40 20 Financial assets 8,870 8,834 Non-current assets 8,910 8,854 Inventories 8 — Receivables and other assets 2,720 4,354 Securities 249 377 Cash and cash equivalents 2,056 606 Current assets 5,033 5,337 Prepaid expenses and deferred charges 8 7 Total assets 13,951 14,198 Equity and liabilities Issued capital 466 466 Capital reserve 721 720 Revenue reserves 4,235 3,635 Net profit 605 466 Equky 6,027 5,287 Provisions 850 2,278 Payables 7,074 6,633 Total equity and liabilities 13,951 14,198 The earnings performance of Evonik Industries AG is essen- tially dependent on income from its subsidiaries, income and expenses relating to corporate financing and portfolio management activities. Financial management is therefore based on an earnings indicator that contains all these effects: net income. Sales increased substantially from €216 million to E592 million as a result of activities assumed by Evonik Industries AG, especially strategic procurement for the sub- sidiaries. Sales revenues include plant management fees of €31 million (2014: €48 million). The cost of materials rose from E2 million in 2014 to €235 million, due to the assump- tion of procurement activities. Personnel expense increased by 64 percent to €337 million, driven mainly by staff trans- fers in connection with the transfers of undertaking in the first half of 2015. The other operating income of €1,431 mil- lion contains income from the disposal of assets totaling €413 million, mainly from the divestment of the stake in Vivawest. Further, this item includes currency translation gains of €939 million (2014: €354 million). In the gross pre- sentation, currency translation losses of €921 million (2014: €337 million) are shown in other operating expenses, sepa- rately from the currency translation gains. The net effect was a gain of E18 million (2014: €17 million). Income from investments increased by 64 percent to €1,509 million, principally because of considerably higher income from profit-and-loss transfer agreements. The increase was mainly due to higher profit transfers from subsidiaries as a result of the good operating performance and to one-off payouts by investments. The write-downs of financial assets and current securities totaling €41 million and write-ups of financial assets and financial securities totaling E10 million mainly related to affiliated companies. Net interest expense deteriorated considerably from €86 million to €157 million. This was mainly due to higher interest on pension provisions due to a change in the interest rate and an increase in headcount. This item also contains interest income and expense from the Group-wide cash pool, which is concentrated at Evonik Industries AG. Income before income taxes rose 148 percent to €1,464 mil- lion. Income taxes increased to €259 million due to the increase in income. EFTA00598729

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT Research Ea development • CONSOU DATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 97 Net income was 158 percent higher at €1,205 million. €599,873,641.46 was allocated to revenue reserves, leaving a net profit of €605,000,000.00. A proposal will be put to the Annual Shareholders' Meeting that €69,100,000.00 of the net profit should be allocated to revenue reserves and €535,900,000.00 should be paid out, giving a dividend of €1.15 per share. The total assets of Evonik Industries AG declined slightly from €14.2 billion in the previous year to €14.0 billion. Financial assets mainly comprise shares in subsidiaries. The receivables mainly comprise financial receivables of €2.5 billion (2014: €1.9 billion), principally in connection with loans and cash pooling activities. In 2014, receivables also included claims for reimbursement in connection with plant management (€2.1 billion). Cash and cash equivalents increased by €606 million to €2,056 million, mainly because of the sale of the shares in Vivawest and the bond issue. Equity increased by €0.7 billion to €6.0 billion, mainly as a consequence of the high earnings. The equity ratio therefore improved from 37.2 percent in the prior year to 43.2 percent. The provisions of €2.3 billion in 2014 included €1.5 billion relating to the plants managed by Evonik Industries AG. The receivables and liabilities reflect the financing activities of Evonik Industries AG in its role as the holding company for the Group. Payables include financial liabilities of €6.8 billion (2014: €5.7 billion). €5.5 billion (2014: €52 billion) of this comprises liabilities to affiliated companies, mainly in connec- tion with cash pooling activities. A further €1.3 billion (2014: €0.5 billion) relates to corporate bonds. Opportunities and risks The most significant operating subsidiaries in Germany have profit-and-loss transfer agreements with Evonik Industries AG. In line with the central financing strategy of the Evonik Group, most internal and external financing transactions are handled by Evonik Industries AG. Consequently, Evonik Industries AG is essentially exposed to the same risks and opportunities as the Evonik Group. Further information can be found in the Opportunity and risk report. Outlook' for 2016 We anticipate that in 2016 the net income of Evonik Industries AG will be below the high level of 2015, which was also boosted by the sale of the real estate investment and an increase in income from investments as a result of one-off payouts from investments. Report on relations with affiliated companies A report on Evonik Industries AG's relations with affiliated companies has been prepared in accordance with Section 312 of the German Stock Corporation Act (AktG). It concludes with the following declaration: "Our company received adequate remuneration or compensation for each of the transactions set out in this report on relations with affiliated companies under the circumstances known to us at the time when the transactions were undertaken. No actions were performed or omitted at the instigation of such companies." 4. Research & development • Our vision: Evonik—one of the world's most innovative companies • More than 500 projects in the pipeline • Innovations drive our profitable growth course Innovation strategy firmly anchored in corporate strategy Evonik—one of the world's most innovative companies. That is the vision that guides our research & development (la). As a major driver liofitable growth and value creation, our market-oriented is firmly anchored in our corporate strategy. Innovations strengthen our leading market and technology positions and open up new high-growth business opportunities. The careful selection of our areas of inno- vation is guided by the megatrends of relevance for Evonik: health, nutrition, resource efficiency and globalization. 1 For details of the assumptions, please refer to the Report on expected developments. I 0 EFTA00598730

93 ANNUAL REPORT 2015 EVONIK INDUSTRIES Our claim: First-class in Innovation Evonik is one of the most innovative companies in the world O Increase the value of the innovation pipeline New products, applications, and processes must make a substantial contribution to sales and profit First-class in innovation Explore new horizons Push radical innovation Cross-unit collaboration Enhance risk-taking Trust, openness and transparency Improve knowledge sharing Our is aligned to three core strategic objectives: we aim to produce custom-tailored products and solutions in close collaboration with our customers and partners, to drive their success in international competition continuously improve our processes, and make a substantial contribution to profitable growth and to the future of Evonik. Our open, learning innovation culture based on a business mindset is the key to achieving these goals. It ensures timely identification of good ideas which we can drive forward and turn into additional sales and earnings. To reinforce Evonik's innovative strength, we organize regular internal conferences under the motto Leading Innovation, which are attended by members of our top management. Every year, we present an Innovation Award in various categories to honor outstanding research achievements. At the same time, we consistently terminate projects if there are no prospects of success and take a constructive attitude to such cases. We have a well-stocked innovation pipeline with a bal- anced mixture of more than 500 short-, mid- and long-term projects. These are managed with the aid of Idea-to-Profit, a multi-step innovation process developed by Evonik. Ingredients for the cosmetics industry, membranes, specialty materials for medical technology, feed and food additives, and composites have been identified as promising areas of innovation for Evonik. In addition, we aim to steadily extend our clear expertise in catalysis and biotechnolo To raise the pace of innovation, we want to align our project portfolio even more closely to these fields, step up external knowledge sharing, and drive forward the inter- nationalization of our.. Evonik has an extensive patent strategy to protect new prod- ucts and processes. The value and quality of our patent port- folio have increased steadily in recent years. Innovative strength and patent protection at Evonik No. of new patent applications filed Patents held and applications filed Registered/pending trademarks No. of projects in the pipeline 2015 approx. 260 more than 25,000 more than 7,000 more than 500 In view of the strategic importance of M s we have raised expenses by an average of 6 percent a year since 2010. Given our growth strategy and our vision of being one of the world's most innovative companies, we want to maintain this ambitious level and intend to spend more than €4 billion on in the next ten years. The reorganization of our management and portfolio structure allows more differentiated management and devel- opment of our various businesses close to the market. This is also reflected in our innovation strategy: The Nutrition & Care and Resource Efficiency growth se should receive an above-average share of our funds in order to enter new markets through innovations and alliances. The Performance Materials segment focuses on process optimi- zation and incremental product improvements. Decentralized organization of MI Evonik's global network comprises 35 locations with approximately 2,700 employees. Around 90 percent of our. is performed by our segments. That includes, first and foremost, research geared specifically to their core tech- nologies and markets and the development of new business. EFTA00598731

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT Research Fs development • CONSOU DATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 99 exp in million 2011 365 2012 393 2013 394 2014 413 2015 434 100 200 300 400 500 In addition, in close collaboration with our segments, our strategic innovation unit Creavis is involved in research in new high-tech areas outside the Group's present portfolio. Creavis focuses on mid- to long-term innovation projects that support Evonik's growth and sustainability strategy. For example, the Composites Project House has developed a new composite that combines the benefits of thermoplastics and thermosets. For this innovation Evonik received the 2015 Innovation Award presented by CFK Valley, a leading com- petency network for fiber composites. Creavis is currently developing a new high-performance surfactant produced using a biotechnological process. As the driving force behind strategic innovations, the role of Corporate Innovation is to provide direction and leadership for the Evonik Group. This division is headed by the Chief Innovation Officer, who reports directly to the Chairman of the Executive Board. Furthermore, we bring together our in-house expertise in specialty chemicals, process technology and engineering at an early stage in projects to facilitate rapid transfer of new processes to efficient industrial production. In recent years, we have also integrated marketing and sales more closely into innovation processes. One important success factor for our is close interaction with our customers, which gives us a deep knowl- edge of their specific markets and requirements. Often this collaboration results in new products and applications which provide a sound basis for profitable growth. We are strengthening our position as a strategic partner for our customers by raising our presence close to their local markets. At the same time, this enables us to position Evonik as an attractive employer and gain outstanding experts for the Group. The progressive internationalization of our can be illustrated by two examples. In 2015, Evonik opened new innovation centers in Midrand (South Africa) and Singapore to develop product solutions specifically for customers in the personal care sector in Subsaharan Africa, Southeast Asia, Australia and New Zealand. Similarly, the Health Care Busi- ness Line started to build up a worldwide network of service laboratories for medical products in 2015. The aim is to provide technical support for customers who use our bio- degradable polymers. The first of these laboratories was opened in Shanghai (China) in summer 2015. Hi commitment to in 2015 expenses amounted to €434 million in 2015, an increase of 5 percent compared with the previous year (€413 million). The ratio of MI expenses to sales was 3.2 percent (2014: 3.2 percent). Breakdown of • expenses Crean: Performance Matellth Resource Efficiency Notation b Core Moreover, in the past four years Evonik has spent €170 mil- lion on building laboratory ca acity and pilot plants. The focus of this investment in facilities was on new and extended innovation centers in Essen (Germany), Shanghai (China), Richmond (Virginia, USA) and Birmingham (Ala- bama, USA). Examples of Evonik's most recent research successes include an innovative microencapsulation process for extended release of medication, and composites for light- weight structures. In addition, work has commenced on a new generation of lubricant additives. o V EFTA00598732

100 ANNUAL REPORT 2015 EVONIK INDUSTRIES Main products introduced in 2015 Product VISCOBASE 11-524/526 VISCOPLEX 0-192 SILIKOPHEN• AC 950 SEPURAN• Noble BREAK-THRU• SP 131 and BREAK-THRIP SP 133 WREN AirVold• 360 Methacrylic acid anhydride (MAAH) Description High-viscosity synthetic base fluid with dispersing properties Easy-to-handle viscosity index improver based on comb polymers Heat-resistant, low-toxic (aromatic-free) silicone resin that cures at ambient temperature Membrane technology for gas separation; several thousand hollow fibers made from a high-performance polymer (polylmide) are used as membranes Based on renewable raw materials, biodegradable, very good ecotoxko- logical profile; adjuvant to increase the efficacy of crop protection products Defoamer for cement- and gypsum- based construction applications Market entry with improved product quality from a new plant Application Favorable alternative formulation for modern gear lubricants for cars, trucks and Industrial gears Used in gear lubricant formulations to minimize energy losses In the drivetrain; reduces fuel consumption High-temperature coating of Industrial plant; corrosion protection of high-volume components Recovery and treatment of helium and hydrogen Crop protection Dry mortar Synthesis Innovation drivers at Evonik Interdisciplinary collaboration across organizational units and regions is regarded as very important at Evonik because it is a key source of innovative ideas. In the project houses at Creavis, experts work with specialists from the operating business on scientific tasks. At present the project houses, which are set up for a defined time period, are working on research in the innovation areas of medical technology and composites for lightweight engineering. The Business and Innovation Center in Richmond (Virginia, USA), which was inaugurated in summer 2015, is specifically deli ned for interdisciplinary research. It brings together experts with specialists from the Marketing and Sales, Procurement, Controlling, HR, IT and Environment, Safety, Health and Quality functions. In addition, we are steadily becoming more open to external partners. We cooperate with research institutes, universities and other industrial companies so that the latest findings in chemistry, biology and physics can rapidly be transported into our company. Through strategic partnerships we are linked to leading universities in the USA, China, and Saudi Arabia, and to Singapore's state-run research agency Sector Automotrve, industrial gears Automotive Machinery and plant engineering, consumer durables and capital goods, automotive Hydrogen: refineries, production of ammonia and methanol. Helium: medical institutes, MRT technology, welding and metal- working, electronics Industry, oil and gas production Agriculture Construction Specialty chemicals (A*STAR). Our support for our established partnership with the University of Duisburg-Essen in Germany comprises a junior professorship, ten scholarships for doctoral candidates and a large number of joint projects and colloquia. We recently entered into a preferred partnership with the Technical University of Munich (TUM) through a master research agreement. In addition, we regularly organize the Evonik Meets Science forum in Germany, China, Japan and the USA to strengthen networking with leading international research scientists. This is a platform for discussion between our experts and leading scientists from a wide range of disciplines and institutions. Our corporate venture capital activities are a special way of networking and a strategic complement to our understanding of open innovation. We invest selectively in specialized technology funds and promising start-ups of strategic relevance to Evonik. This gives us an insight into innovative technologies and business activities aligned to our growth strategy at a very early stage of development. New projects and technologies are developed in joint projects. In this way we speed up our innovative process. We selectively extended our corporate venture capital portfolio in 2015. EFTA00598733

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Reseoch Fs development • CONSOLIDATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 101 Evonik Venture Capital: New investments in 2015 Name JeNaCell GmbH Jena (Germany) Headquarters Technology/business model Specialist in nanocellulose generated by biotechnological methods, which is used, for example, as a wound dressing to improve the treatment of burns. It can also be loaded with medical active ingredients for controlled release to the skin over time. Wiiw Wearables Inc. Vancouver Winn, is one of the first companies in the world to (Canada) use 30 printing for individualized mass production of biomechanically optimized insoles. Airborne Oil & Gas Bmulden (Netherlands) Synoste Oy Espoo (Finland) Strategic focus on the following Evonik competencies An excellent strategic fit with Evonik's expertise in biotechnology and delivery systems for active medical ingredients. Evonik is a leading supplier of polyamlde 12 for 3D printing, a highly innovative growth market with diverse applications. Airborne Oil & Gas has a unique production technology for thermoplastic composite pipes for a whole range of applications in offshore oil and gas production. The oil and gas Industry is an attractive growth market for Evonik and an Important area of innovation. In addition, it is the market leader in polyamlde 12, which is marketed as VESTAMID• and used in pipelines for the production and transportation of oil and gas. As a technology leader in high-performance polymers, Evonik supplies polyetherether ketone (PEEK) for medical applications. Our VESTAKEEP• PEEK grades for implants, dental and medical applications set new standards in medical applica- tions thanks to their outstanding biocompatibility and biostability. Synoste is a young medical technology company that has developed a novel implant to 'lengthen' the legs of patients suffering from limb length discrepancy. Unlike conventional methods, after implantation the Implant is activated by an external magnetic field and can correct differences of up to 7cm. GRC SlnoGreen Fund III Beijing GRC is a Chinese venture capital fund which focuses (China) on investing in non-listed green-tech companies in Greater China (China, Taiwan and Hong Kong) that have unique technological competencies and high growth potential. The target sectors include energy and resource efficiency. environment-friendly mobility, sustainability and climate protection. By investing in the GRC SlnoGreen Fund Ill, Evonik has extended its venture capital activities to Asia. The company now has a presence in the most important venture capital markets: North America, Europe and Asia. Investments in venture capital funds are a fundamental element of the innovation strategy of Evonik Venture Capital because they offer excellent opportunities to speed up the devel- opment of new business and gain access to new growth areas. Focus on sustainability Our innovative products, systems and solutions make a con- tribution to sustainable development and we are continuousl extending our work in this field. Our market-oriented plays an important role in this. We are aligning our innova- tion pipeline increasingly to sustainable projects and solutions in response to rising interest from our customers. In this way, we enable them to improve their ecological footprint and successfully differentiate themselves from competitors. Examples of sustainable products recently launched by Evonik include a new ingredient based on renewable resources for shampoos and conditioners, an innovative silica-based insulating material, and a biological fungicide for agricultural applications. Together with the Wuppertal Institute for Climate, Environ- ment and Energy and the in-house Life-Cycle Management and Innovation Excellence Consulting groups, Creavis has developed the l2P3 (idea to people, planet, profit) innovation management process, which allows an extensive sustainability assessment of new products and processes at an early stage in their development. Fostering education and science Fostering education and science is a core focus of the Evonik Foundation. In 2015 the Foundation supported 18 particularly gifted and committed science students at 17 universities in Germany and in collaboration with foreign universities. Regular meetings with these scholarship students, scientific colloquia and a mentoring program give them an early insight into the day-to-day work of a leading specialty chemicals company. Evonik is also one of the most committed sponsors of the German government's "Deutschlandstipendium" program, with 200 scholarships provided by the Evonik Foundation. tr. EFTA00598734

102 ANNUAL REPORT 2015 EVONIK INDUSTRIES Market-oriented research & development In 2015 our segments once again developed major innovative products and processes up to market maturity or market launch. In addition, they drove forward key future-oriented projects such as new materials and production processes for lightweight construction. Special attention was paid to sustainability and efficient use of resources. Since summer 2015 our Nutrition Es Care segment has been working with OSM Nutritional Products Ltd. on the development of algae-based omega-3 fatty acid products for animal nutrition. Both humans and animals need to absorb a certain amount of these essential long-chain polyunsatu- rated fatty acids through their diet to ensure healthy growth. At present, most of the omega-3 fatty acids required for aquaculture come from fish oil. The development partners aim to meet the rising global demand for omega-3 fatty acids more resource-efficiently using biotechnological production processes based on marine algae. The anticipated high-quality products are intended principally for applications in aqua- culture and the nutrition of pets. This segment has introduced two new environment- friendly adjuvants under the brand name BREAK-THRU° to improve the performance of crop protection products. These biodegradable adjuvants are based on renewable raw materials, and have an exceptionally good ecotoxicological profile. They improve the retention of agrochemicals on plants and their diffusion into the leaves. The result is a considerable reduction in the amount of crop protection products required. Both new developments therefore make a multiple contribution to more effective and environmentally friendly agriculture. The Resource Efficiency segment has now entered the market for nitrogen (N2) with its SEPURAN° membrane technology, building on its success in the treatment of biogas. The new SEPURAN° N2 hollow fiber membranes allow particularly energy- and cost-saving recovery of nitrogen from air. Investment costs and energy consumption are lower than for both the conventional method—separation of air at low temperatures—and previous membrane processes. As an inert gas, nitrogen prevents fires and explosions, extends the shelf-life of food, and can also be used as a protective gas for processing chemicals and plastics. The nitrogen market is worth more than US$10 billion, making it the world's second biggest gas market after oxygen. Although SEPURAN° has only been on the market for four years, it is already making a positive contribution to earnings. This segment is currently introducing iXsenic°, a new technology for ultra-high resolution displays developed by the Creavis strategic innovation unit. iXsenics is an inorganic metal oxide semiconductor, which is applied as a solution in normal ambient conditions like a coating. The thin-layer transistors produced in this way allow higher resolution than the established semiconductor amorphous silicon. In addi- tion, iXsenie can be processed without a vacuum, leading to a simpler process with high yields and clear cost benefits. The Resource Efficiency segment has entered into a strategic partnership with a market-leading plant engineering com- pany to ensure that the material, equipment and process are aligned for the production of displays. A manufacturer of displays is planning to use iXsenic° in a new production facil- ity for flat screens in China. Olefins, which are used to produce the plasticizer alcohol isononanol and the anti-knock agent MTBE, are an important precursor for our integrated C, production in Marl (Ger- many). Olefins mainly come from C, product streams from steam crackers as by-products of ethylene production. Thanks to a unique new process, our Performance Materials segment can now use product streams from fluid catalytic cracking (FCC) processes as a source of olefins. These product streams occur in refineries and are not dependent on the production of ethylene. Since FCC product streams contain unwanted by-products, in the past they were of limited use to the chemical industry. The Performance Materials segment has been using a new process to remove unwanted sub- stances at its new C, plant in Marl (Germany) since summer 2015. This innovative process has strengthened the segment's position as a technology leader. CAPLUS°, a new amine for scrubbing industrial gas streams, has been brought onto the market by Performance Materials. Unwanted acid gases such as carbon dioxide and/ or hydrogen sulfide have to be removed from natural gas, synthetic gas, biogas and flue gas for various reasons. CAPLUS° scrubs these gases far more effectively than conventional amines and also increases the performance and working life of plants. Following success in the treatment of biogas and flue gas, the segment has now entered the important natural gas scrubbing market. The first commercial natural gas scrubber was converted in Southeast Asia. Perfor- mance Materials is currently introducing CAPLUS° to other well-known natural gas producers in the attractive growth regions of Southeast Asia, the Middle East/North Africa and South America. The International Energy Agency estimates that gas consumption will increase by 50 percent by 2035'. I Reference base: 2010. EFTA00598735

- TOOUR SHAREHOLDERS • MANAGEMENT REPORT • CONSOU DATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 103 Susisimbility 5. Sustainability Committed employees are a key success factor for Evonik • Ambitious environmental targets • Evonik is well-positioned in sustainability indices and ratings Responsible corporate management Sustainability is a core element in our corporate claim Tower to create". Our products and solutions are used in many areas that play a significant role in improving people's lives and making efficient use of scarce resources. In fall 2015 the United Nations published 17 goals for global sustainable development, to be achieved by 2030. Our sustainability activities support these in many areas. Evonik is committed to the ten principles of the UN Global Compact and is guided by the International Labour Standards issued by the International Labour Organization, and the OECD Guidelines for Multinational Enterprises. In addition, we are involved in many networks such as the Chemie3 sustainability initiative of the German chemical industry, and the World Business Council for Sustainable Development (WBCS0), to which more than 200 companies worldwide belong. Together with our Code of Conduct, our Global Social Policy (GSP) and our Environment, Safety and Health (ESH) Values provide a framework for responsible corporate management. Furthermore, we are committed to the WBCSD's Vision 2050: "9 billion people living well, within the limits of the planet." Sustainability management at Evonik Close links between sustainability and corporate strategy We are convinced that sustainable business activities and responsible conduct by our management and staff at all levels are vital for the future of our company. Our sustainability strategy therefore takes up the megatrends identified in our corporate strategy—health, nutrition, resource efficiency and globalization—supplemented by ecological and societal challenges. In view of this, we systematically drove forward the sustainability analysis of our business in 2015 in collaboration with the operational units. This analysis covers the entire value chain of our products and is based on a list of criteria including elements of the life cycle analysis of the supply chain, production and subsequent use of the product. This sustainability-oriented evaluation of our business supports Evonik's positioning on the capital markets because sustain- ability is becoming an increasingly significant element in many investors' investment policies. Demand from our customers for products and solutions that balance economic, ecological and social factors is rising steadily. Sustainability is often an additional benefit for customers that can clinch purchasing decisions and is there- fore a clear growth driver in certain businesses such as amino acids for animal nutrition and the personal care sector. Executive Board Overall responsibility for sustalnability Responsible Executive Board member: Chief Human Resources Officer Segments Corporate D Ions Regions Sustainability strategy and networks Specialist regional project-based steering committees and management teams 0 V EFTA00598736

104 ANNUAL REPORT 2015 EVONIK INDUSTRIES Accordingly, our market-oriented research & development pays special attention to sustainability and efficient use of resources. Evonik therefore has a good basis for innovative solutions that will strengthen its market-leading positions in the future, give it access to new growth markets, and make a tangible contribution to improving sustainable development. Reorganization of sustainability management The Executive Board bears overall responsibility for sustain- ability and direct responsibility is assigned to the Chief Human Resources Officer. In view of the importance of sustainability for Evonik, the associated topics are assigned to an inde- pendent corporate division at Group level. This division sets the strategic framework for Evonik's sustainability activities. It cooperates closely with the segments to implement this strategy. Evonik in dialogue with significant stakeholder groups At Evonik, sustainability management is characterized by close dialogue with stakeholders. This continuous exchange facili- tates timely identification of trends and future requirements and gives us a better understanding of different perspectives. Overall, it helps Evonik to position itself as a company aligned to sustainable business practices. To update our materiality analysis, in fall 2015 we again asked internal and external stakeholder groups for their views on the relevance of specific sustainability issues for Evonik. The results also form the basis for our Sustainability Report 2015, which will be prepared for the first time in accordance with the Global Reporting Initiative's G4 guidelines. Evonik's stakeholder groups Important feedback about our sustainability performance also comes from talking with members of the investment commu- nity. Alongside financial criteria, more and more investors include ecological, social and governance factors in their investment decisions. Key stakeholder groups for Evonik are shown in the chart below. Evonik is well-positioned in leading sustainability indices and ratings Evonik is included in the sustainability-oriented index families FTSE4Good Global, STOXXe Global ESG Leaders and Euronext Vigeo Eurozone 120. Important sustainability rating agencies such as Oekom Research, Sustainalytics and imug/EIRIS also rank the company among the leaders in the chemical sector. In 2015 we took part in the assessment for the Dow Jones Sustainability Index (DJSI), which is performed by RobecoSAM. As a result, Evonik was included in the RobecoSAM Sustainability Yearbook 2016 as a Sustainability Leader with the distinction "Silver Class'. This was the first time we took part and we gained a place straight away among the top ten of the approximately 70 chemical com- panies rated worldwide. This provides further motivation for us to drive forward our sustainability activities. In the mid term, we aim to sharpen our sustainability strategy further, anchor it even more firmly in the company, and improve the transparency of our sustainability performance. Alongside this, our goal is to enhance our good position in relevant ratings and rankings and step up dialogue with significant stakeholder groups. Interest groups, e.g. local inhabitants, non-governmental organizations (NGOs) Media Politicians/political decision-makers Scientific community Evonik Equity and debt holders Business associates/customers Employees Suppliers EFTA00598737

TOOUR SHAREHOLDERS • MANAGEMENT REPORT Susuansbillty Employes • CONSOLIDATED FINANCIAL STATEMENTS - SUPPLEMENTARY INFORMATION 105 5.1 Employees Slight increase in headcount At year-end 2015, the Evonik Group had 33,576 employees. The headcount in our continuing operations was 335 higher than at year-end 2014, principally as a result of acquisitions and investment in growth projects in the Resource Efficiency and Nutrition & Care segments. Implementation of the Administration Excellence program to enhance efficiency, some small optimization programs in the chemical segments, and divestment of the remaining carbon black activities had a counter-effect. At year-end 2014, the discontinued operations still contained Evonik Litarion GmbH, Kamenz (Germany), which was divested in April 2015. Employees by segment Dee. 31, Dee. 31, 2015 2014 Nutrition & Care 7,165 6,943 Resource Efficiency 8,662 7,835 Performance Materials 4,380 4,353 Services 12,668 13,173 Other operations 701 937 CoMlnuing operations 33,576 33,241 Discontinued operatiom — 171 Evonik 33,576 33,412 Piloting' figures resisted. Age structure In the Evonik Group, continuing operations Nearly two-thirds of our workforce is employed in Germany. In line with our global positioning, other focal areas of employment are the Asia-Pacific region (2015: 14 percent) and North America (2015:11 percent). Employees by region, continuing operations Around 24 percent of employees are female (2014: around 24 percent). The age structure is still biased towards the 46+ age group, which accounts for 44 percent of employees (2014: 44 percent). The average age of our employees was 41.7 years in 2015 (2014: 41.6 years). In% Under 21 years 21-2S years 26-30 years 31-35 years 36-40 years 41-45 years 46—S0 years 51—SS years 56-60 years Over 60 years 4 10 11 11 12 15 15 12 2 2 10 12 14 16 18 I a L 2 EFTA00598738

106 ANNUAL REPORT 2015 EVONIK INDUSTRIES Active support for the reorganization of the Group The strategic reorganization of the management and port- folio structure of the Evonik Group was supported from an early stage in the project by an agreement on key points that subsequently formed the basis for the reconciliation of inter- ests with representatives of the workforce and provided security for the structural changes and safeguarding employ- ment. In all, around 19,000 employees were transferred to the new companies. To secure the operational viability of the new organizational structures, employee representation structures were adjusted, Supervisory Boards were estab- lished in accordance with the 1976 Codetermination Act, the new members of our companies were granted the necessary powers, and agreements were concluded in respect of the multi-user sites where there will in future be several or additional Group companies. Further optimization of the HR organization The organization of the human resources departments was also adjusted and optimized to reflect the reorganization of the Group. The aim is to continue to provide uniform, effec- tive and efficient human resources services and sustained support for the segments in the attainment of their business targets. Personnel planning is geared to this goal. In 2015 we successfully established an all-round approach as a basic pre- requisite for high-quality and foresighted human resources work that combines strategic and operational personnel planning and sets a uniform standard for the Group. As a consequence of Evonik's historic roots in a large number of separate companies, the HR systems landscape has so far been very diverse. The HR IT strategy now aims to systematically harmonize the systems landscape. Alongside efficient and effective processes, this should ensure greater transparency and measurability of the success of human resources work. HR strategy Exemplary leadership is the heart of our HR strategy Our employees are a key factor in the successful and sustain- able implementation of our corporate strategy. As a world- leading specialty chemicals company, innovative strength and entrepreneurship play a central role as drivers that enable us to meet our goals of growth and an increase in efficiency. Based on this, our Group-wide human resources strategy is geared to a healthy performance culture, together with dialogue based on partnership and excellence in human resources processes. The strategic focus of our human resources work is on the principles of "Attract", "Develop", "Perform", "Retain", "Lead" and "HR Excellence". Special attention is paid to exemplary leadership because this is the key to the success in the other areas of action. In our annual strategy review we defined action for these key areas in consultation with the operational business enti- ties and regional organizations, taking into account relevant political and societal developments. The action defined was implemented through projects. Attract The focus here is on positioning Evonik globally as a strong employer brand. Alongside conventional and modern recruit- ing methods, activities include measures to ensure that new employees and executives get off to a good start in the company. corporate strategy HR sttategy HR Excellence EFTA00598739

- TO OUR SHAREHOLDERS • MANAGEMENT REPORT Susuinebilily EmPlovets • CONSOU DATED FINANCIAL STATEMENTS SUPPLEMENTARY INFORMATION 107 Employer branding—Positioning Evonik as an attractive employer A strong and uniform global employer brand is an important success factor in the competition to attract the most talented employees and executives. Our promise "Exploring opportu- nities. Growing together." is an expression of our values as an employer: wide-ranging global development opportunities and team spirit. As part of our employer branding, we use creative and unusual methods to fire passion for Evonik in tomorrow's specialists at an early stage. For example, in 2015 we challenged students at ten universities in Germany to Battle of Brains, a digital quiz that attracted around 1,000 participants. High-quality prizes were awarded to the best three from each university and the winning entrant from each university was invited to attend the Evonik Student Network Day. In addition, around 100,000 impressions of Battle of Brains were registered in various media (including films on YouTube). A variety of awards and surveys confirm that Evonik is already one of Germany's most attractive employers. For example, in 2015 we ranked third in the chemical and pharmaceutical sector in the employer ranking conducted by the German news magazine FOCUS. In China, Evonik was once again included in the list of the most popular employers published by the Top Employer Institute in 2015. Modern recruiting tools extended To build contact to relevant groups of potential employees at an early stage, we engage in selective cooperation with universities and higher education institutes around the world. These are selected in consultation with the relevant specialist departments. In Germany, for example, we support particularly com- mitted students at 15 universities as part of the German government's Teutschlandstipendium° program. This includes offering them opportunities for internships and supporting them in the preparation of their dissertations and theses through specific projects at Evonik. Through the Evonik Perspectives program we remain in contact with students whose performance in internships is above average. Many participants in this program join Evonik when they finish their studies. In view of the high and growing significance of social media, we have stepped up our activities in this area and further strengthened our presence in such media. Our global talent recruitment initiative RISE is designed to attract talented external candidates for key positions and management posts. The core element of RISE, apart from suitability for a specific position, is the potential to take on more demanding assignments. Develop In this area, we concentrate on targeted development of talented employees. Group-wide we are therefore stepping up structured development opportunities for all employees aligned to requirements. This also lays the foundations for our sustained policy of filling key positions from within the company. Vocational and further training for present and future specialists Evonik still recruits specialists from within its own ranks and is committed to supporting their vocational training and ongoing development. This is also an element in meeting our corporate responsibility to society and our workforce. The number of apprentices and, above all, the number of apprentices hired by us at the end of their training will be aligned even more clearly to the personnel requirements of our organizational units in the future. At year-end 2015, we had around 2,050 apprentices at 17 sites in Germany on more than 40 vocational training courses and combined vocational training and study programs. Around 340 of them were being trained on behalf of other companies. We have around 30 places on the "Start in den Beruf" pre-apprenticeship project, plus about 20 additional places for refugees. About 590 new apprentices started their training at Evonik in 2015. Apprentices accounted for around 9 percent of our workforce in Germany, which is still well above the national average. Overall, we invested some €65 million in vocational training in 2015. Continuous professional development of our skilled per- sonnel geared specifically to the needs of the company is another core element of our HR activities. A large number of training opportunities are offered through in-house courses and in cooperation with external training partners, either cen- trally or on a decentralized basis by the segments or individual sites. Focal areas in 2015 were competency management and leadership skills. S E o V EFTA00598740

103 ANNUAL REPORT 2015 EVONIK INDUSTRIES Talent management for executives Evonik is committed to the established practice of filling executive and other key positions principally from within the company. Our talent management identifies, develops and fosters employees with potential across hierarchical levels and functions. Regular planning conferences with the close involvement of the Executive Board focus on development and succession planning for corporate talents and executives. To ensure continued business-oriented identification and career development for talented employees, in 2015 we aligned our processes and personnel conferences to the management holding structure. Operational and functional units and the Corporate Center discuss key potentials within the Group with the Executive Board, along with the next steps in their development and target functions. Alongside employee development reviews and various panels, we use clearly defined indicators, which are reviewed regularly and were revised in 2015. In 2015 we introduced a new program for top-level development: members of Evonik's top man- agement support personally selected executives in their professional development and act as sparring partners for their future career paths. Perform Here the focus is on a healthy performance culture as the basis for the company's success and the personal motivation of every individual employee. Globally, our activities in this area are based on appropriate human resources tools comple- mented by a wide variety of performance incentives. Fair, performance-related remuneration plays a central role in this, together with the annual performance and development review. In 2015, personnel expenses, including social security contributions and pension expense, rose 14 percent to €3,121 million' as a result of the increase in our headcount and pay rises. Personnel expenses were therefore 23.1 per- cent of sales (2014:21.3 percent). Remuneration—Uniform global evaluation criteria When shaping remuneration systems, Evonik believes it is very important to offer specialists and executives market- oriented and performance-related salaries based on uniform global evaluation criteria. The remuneration of many mem- bers of our workforce includes bonus payments that are dependent on the company's business performance or the personal performance of the employee. • See Note 112. In addition, two years ago we introduced the "Share" employee share program for personnel in Germany, Belgium and the USA. The high participation rate of around 36 percent highlights our employees confidence in Evonik's business development. In 2015 around 10,000 employees, including apprentices, took part in the "Share" program. They pur- chased nearly 280,000 shares and were allocated around 95,000 bonus shares through the company's subsidy program. Pensions form part of overall compensation Evonik helps employees provide for security after retirement. Different arrangements are offered depending on regional specifics and the conditions prevailing in individual countries. In Germany, Evonik has established a system of company pension plans that provide retirement, disability and surviving dependents pensions through a reinsured support fund. Mandatory contributions to this fund, supplemented by optional contributions through deferred compensation arrangements, ensure that employees' pension provision extends beyond the level funded by their employer. Employer contributions to pension plans are also an important element of total annual remuneration outside Germany, for example in the USA and some European countries. Retain In spite of the necessary change processes a high level of employee retention is achieved through our corporate values and common corporate culture, which foster identification with the company. Employee fluctuation 2015a fluctuation rale in % No. of employees who left the company By gender Female 5.2 416 Male 4.5 1,133 By age Under 30 4.4 295 3010 50 3.1 537 Over 50 7.7 717 Evonik 4.7 1,549 • Reference base: no. of employees in each category as of December 31, 2014. Previous reporting base altered in sustainability reports from 2015: instead of unplanned fluctuation. the figure now shows total fluctuation. EFTA00598741