LyondellBasell Industries N : 2020 Statutory Dutch Annual Report

LyondellBasell Industries N.V.

LyondellBasell Industries N.V.

Financial Report

For the Year Ended 31 December 2020

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LyondellBasell Industries N.V.

CONTENTS

1	About LyondellBasell	4
2	Report of the Board of Directors	4
2.1	Operational and Financial Overview	4
2.1.1	Segment Analysis	7
2.1.2	Financial Condition	12
2.1.3	Outlook	17
2.2	Risk Factors	18
2.3	Our Strategy	27
2.4	Sustainability	28
2.5	Human Capital	28
2.6	Research and Development	30
2.7	Governance Report of the Board of Directors	30
2.7.1	Evaluation of the Board of Directors and its Individual Members	38
2.7.2	Compensation of the Board of Directors	38
2.8	Corporate Governance and Risk Management	41
2.8.1	Corporate Governance Statement	41
2.8.2	Code of Conduct	42
2.8.3	Conflicts of Interest	42
2.8.4	Related Party Transactions	42
2.8.5	Dutch Corporate Governance Code	43
2.8.6	Shareholders and General Meeting of Shareholders	46
2.8.7	Takeover Directive; Anti-Takeover Provisions and Control	47
2.8.8	Risk Management	47
2.8.9	Audit of Financial Reporting	50
2.8.10	Statements of the Board of Directors	51
Consolidated Financial Statements	54
	Consolidated Statement of Income	55
	Consolidated Statement of Comprehensive Income	56
	Consolidated Statement of Financial Position	57
	Consolidated Statement of Changes in Equity	59
	Consolidated Statement of Cash Flows	61
1	General	63
2	Summary of Significant Accounting Policies	63
3	Critical Accounting Estimates and Judgments	72
4	Financial Risk Management	74
5	Revenue	82
6	Expenses by Nature	83
7	Employee Benefit Expenses	83
8	Share-Based Compensation Granted to Directors and Employees	83
9	Directors' Remuneration	87
10	Other (Income) Expense, Net	90
11	Finance Costs	90
12	Income Tax Expense	91
13	Earnings per Share	92
14	Intangible Assets	94
15	Property, Plant and Equipment	96
16	Leases	97
17	Investments in Associates and Joint Ventures and Acquisition of Joint Operations	98

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LyondellBasell Industries N.V.
18	Financial Assets and Liabilities by Category	102
19	Credit Quality of Financial Assets	102
20	Derivative and Non-Derivative Financial Instruments	103
21	Inventories	103
22	Trade and Other Receivables	104
23	Cash and Cash Equivalents	105
24	Equity Attributable to the Owners of the Company	105
25	Non-Controlling Interests	107
26	Borrowings	108
27	Deferred Income Tax	114
28	Retirement Benefit Obligations	117
29	Trade and Other Payables	124
30	Provisions	125
31	Contingencies and Commitments	126
32	Related Parties	127
33	Segment and Related Information	128
34	Subsequent Events	131
A	Appendix A	132

Corporate Financial Statements	137
1	General	140
2	Goodwill and Investments	140
3	Cash and Cash Equivalents	141
4	Equity Attributable to Equity Holders	141
5	Long-term Debt	143
6	Group Company Loans	143
7	Deferred Income	144
8	Commitments and Contingencies not included in the Balance Sheet	144
9	Independent Auditor's Fees	145
10	Directors' Remuneration	146

Other Information

147

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LyondellBasell Industries N.V.

1. About LyondellBasell

LyondellBasell Industries N.V. is a global, independent chemical company and was incorporated, as a Naamloze Vennootschap, under Dutch law on 15 October 2009. Unless otherwise indicated, the "Company," "we," "our," "us" and "LyondellBasell" are used in this report to refer to the businesses of LyondellBasell Industries N.V. and its consolidated subsidiaries. We are one of the world's top independent chemical companies based on revenues.

We participate globally across the petrochemical value chain and are an industry leader in many of our product lines. Our chemicals businesses consist primarily of large processing plants that convert large volumes of liquid and gaseous hydrocarbon feedstocks into plastic resins and other chemicals. Our chemical products tend to be basic building blocks for other chemicals and plastics, while our plastic products are used in large volumes as well as smaller specialty applications. Our customers use our plastics and chemicals to manufacture a wide range of products that people use in their everyday lives including food packaging, home furnishings, automotive components, paints and coatings. Our refining business consists of our Houston refinery, which processes crude oil into refined products such as gasoline, diesel and jet fuel. We also develop and license chemical and polyolefin process technologies and manufacture and sell polyolefin catalysts.

Our financial performance is influenced by the supply and demand for our products, the cost and availability of feedstocks and commodity products, global and regional production capacity, our operational efficiency and our ability to control costs. We have a strong operational focus and, as a producer of large volume commodities, continuously strive to differentiate ourselves through safe, reliable and low-cost operations in all our businesses. We purchase large quantities of natural gas, electricity and steam which we use as energy to fuel our facilities. We also purchase large quantities of natural gas liquids and crude oil derivatives which we use as feedstocks. The relatively low cost of natural gas-derived raw materials in the U.S. versus the global cost of crude oil-derived raw materials has had a significant positive influence on the profitability of our North American operations.

We manage our operations through six operating segments. Our reportable segments are:

• Olefins and Polyolefins-Americas ("O&P-Americas"). Our O&P-Americas segment produces and markets olefins and co-products, polyethylene and polypropylene.
• Olefins and Polyolefins-Europe,Asia, International ("O&P-EAI"). Our O&P-EAI segment produces and markets olefins and co-products, polyethylene and polypropylene.
• Intermediates and Derivatives ("I&D"). Our I&D segment produces and markets propylene oxide and its derivatives, oxyfuels and related products, and intermediate chemicals; such as, styrene monomer, acetyls, ethylene oxide and ethylene glycol.
• Advanced Polymer Solutions ("APS"). Our APS segment produces and markets compounding and solutions, such as polypropylene compounds, engineered plastics, masterbatches, colors and powders, engineered composites and advanced polymers, which includes Catalloy and polybutene-1.
• Refining. Our Refining segment refines heavy, high-sulfur crude oil and other crude oils of varied types and sources available on the U.S. Gulf Coast into fuel products including gasoline and distillates.
• Technology. Our Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

2. Report of the Board of Directors

2.1 Operational and Financial Overview

This discussion should be read in conjunction with the information contained in our Consolidated Financial Statements and the accompanying notes elsewhere in this report.

During 2020, we demonstrated financial and operational resilience against the challenging backdrop of a global pandemic, the associated recession, volatile oil prices and significant capacity additions in our industry.

Early in 2020, as the virus became more widespread, our leadership team established three principles to guide our actions in the short term. These were to (i) protect our employees, both from the virus in the workplace and also from widespread layoffs; (ii) prioritize cash flow and keep our commitments to our shareholders; and (iii) take action to strengthen the company for the future.

Our manufacturing operations have been designated as an essential industry to support society's needs during the pandemic in the majority of the regions in which we operate. Our performance was supported by consumer-driven demand for many of our products and the recovery in demand for durable goods during the second half of the year. Our Refining and Oxyfuels

• Related Products businesses suffered from the unprecedented decline in demand for transportation fuels that began during March 2020 due to the pandemic. During the year, we advanced our growth agenda through the formation of joint ventures in China and on the U.S. Gulf Coast.

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LyondellBasell Industries N.V.

Our strengths in operational excellence, cost management and capital discipline served us well as we quickly adapted to dynamic conditions by minimizing working capital and bolstering liquidity by rapidly accessing capital markets and efficiently generating cash. We honored commitments to maintain an investment grade credit rating and continued to fund dividends and capital investments with cash from operations.

Significant items that affected results in 2020 relative to 2019 include:

• Olefins and Polyolefins-Americas("O&P-Americas") and Olefins and Polyolefins-Europe, Asia, International ("O&P-EAI") results declined primarily due to a decline in olefin and polyolefins margins;
• Intermediates and Derivatives ("I&D") segment results declined due to margin decreases primarily driven by our intermediate chemicals and oxyfuels and related products businesses; and
• Refining segment results declined due to lower refining margins and a $582 million non-cash impairment charge which was recognized during the third quarter of 2020.

Other noteworthy items include the following:

• Launched production at our U.S. Gulf Coast high-density polyethylene plant using LyondellBasell's next- generation Hyperzone technology during the first quarter of 2020;
• In April 2020, issued $2,000 million of guaranteed senior notes to bolster liquidity. Net proceeds from the sale of the notes totaled $1,974 million;
• In April 2020, repaid $500 million outstanding under our Senior Revolving Credit Facility and $500 million outstanding under our U.S. Receivables Facility, which were borrowed in March 2020;
• In August 2020, invested $472 million in our new 50 percent owned joint venture polyolefin complex in China with Liaoning Bora Enterprise Group using our polyolefin technologies;
• In October 2020, issued $3,900 million of Guaranteed Notes to be used to repay certain outstanding borrowings and fund a portion of the Louisiana Integrated PolyEthylene JV LLC ("Louisiana Joint Venture") purchase. Net proceeds from the sale of the notes totaled $3,848 million;
• In the fourth quarter of 2020, repaid $500 million outstanding under our Term Loan due 2022 and all amounts outstanding on our Senior Notes due 2021 and Guaranteed Notes due 2022;
• In December 2020, invested approximately $2 billion to purchase a 50 percent interest in the newly formed Louisiana Joint Venture with Sasol Chemicals (USA) LLC;
• In January 2021, signed an agreement to form a 50 percent owned joint venture with the China Petroleum & Chemical Corporation ("Sinopec") which will construct a new PO and SM unit in China; and
• In January 2021, repaid an additional $500 million outstanding under our Term Loan due 2022 .

The following selected financial data of the Company should be read in conjunction with the Consolidated Financial Statements and related notes thereto and the discussion and analysis of our results of operations below. The selected financial data of the Company is derived from its audited Consolidated Financial Statements.

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