2023
Integrated Annual
Report DSM B.V.
Table of Contents
REPORT BY THE MANAGING BOARD .............................. 3
Our company ......................................................................... 3
About DSM ................................................................................................ 3
Science & Research ............................................................................ 4
Business .................................................................................. 5
Taste, Texture & Health - DSM ..................................................... 5
Health, Nutrition & Care - DSM ................................................... 7
Animal Nutrition & Health ...............................................................9
Corporate activities .......................................................................... 10
Financial performance ...................................................................... 11
Non-financial information .............................................. 13
EU Taxonomy ......................................................................................... 13
Governance and Risk Management ............................ 18
Governance and governance framework ............................ 18
Risk Management ............................................................................. 20
Group structure and shares ....................................................... 25
Supervisory Board and Managing Board DSM B.V. ....... 26
Supervisory Board report ............................................................ 30
Auditors..................................................................................................... 31
FINANCIAL STATEMENTS ................................................ 32
Consolidated financial statements ........................... 32
Notes to the consolidated financial statements .......... 39
Parent company financial statements ................... 103
Notes to the parent company financial statements 105
OTHER INFORMATION ...................................................... 115
Independent auditor’s report .................................................... 115
Special statutory rights ............................................................... 126
Forward-looking statements
This Integrated Annual Report may contain forward-looking statements with respect to DSM’s future (financial)
performance and position. Such statements are based on current expectations, estimates and projections of DSM and
information currently available to the company. DSM cautions readers that such statements involve certain risks and
uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual
performance and position to differ materially from these statements. The information provided in this Integrated Annual
Report is provided as of the date of its issue. DSM does not assume any obligation to update any information or forward-
looking statement provided in this Integrated Annual Report unless required by law. The English language version of this
Integrated Annual Report prevails over other language versions.
DSM Integrated Annual Report 2023
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REPORT BY THE MANAGING BOARD
Our company
About DSM
DSM is a company organized under Dutch law with its statutory seat in Heerlen, the Netherlands. With the closing of the
merger with Firmenich on 8 May 2023, DSM has become part of the dsm-firmenich Group. As part of dsm-firmenich, we
are innovators in nutrition and health. We reinvent, manufacture, and combine vital nutrients and flavors to help the
world’s growing population thrive sustainably.
Our Business Units
Our three Business Units are Taste, Texture & Health – DSM; Health, Nutrition & Care – DSM; and Animal Nutrition &
Health. They each strive to address the latest consumer needs and wants in a sustainable way. We are uniquely
positioned to help our customers realize their ambitions and address evolving consumer trends. We do this by creatively
applying proven science and drawing on our data-driven innovation capabilities as well as our exceptional standards of
operational excellence. Our Business Units are supported by Group Business Partners such as Science & Research,
Finance, Human Resources, Sustainability, Procurement, Legal, Regulatory, Safety, Health and Environment, and Digital &
Tech.
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Our company - Science & Research
Science & Research
Our approach to Science & Research
DSM drives the development of disruptive products and technologies with an end-to-end innovation approach.
Sustainability is embedded from the outset and throughout every stage of the process – from discovery, pre-clinical and
clinical studies through application development to scale-up and industrialization. By harnessing the expertise of our
scientists and investing in our multidisciplinary approach, Science & Research brings progress to life, driving innovation
that addresses global challenges and unmet needs in nutrition and health. We provide industry-leading science and
research capabilities to drive the innovation required to deliver on our purpose and to provide differentiated solutions
that combine the essential, the desirable, and the sustainable.
IP and licensing
Our group of qualified intellectual property (IP) professionals maximizes the value of DSM innovations and brands through
strategic protection and defense of patents and trademark rights in our key markets. The IP team acts as a further
differentiator through valuation and protection of IP assets in strategic partnerships, including joint developments,
technology licensing (in/out), and IP asset acquisitions or sales.
Pushing the envelope
By combining all our science capabilities, our Science & Research team strives to pioneer solutions that help shape the
future of nutrition and health. Analytical science assists the discovery of novel ingredients and allows us to gain greater
understanding of complex biochemical mechanisms and interactions. We respond to real-world problems and seek to
contribute meaningfully to well-being and a more sustainable future. In 2023, for example, we facilitated the rapid
discovery of two glycan leads for 2024 clinical trials aimed at validating mood and stress benefits in humans.
DSM Integrated Annual Report 2023
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Business – Taste, Texture & Health - DSM
Business
Taste, Texture & Health - DSM
About Taste, Texture & Health - DSM
Building on our science-based heritage, biotech know-how, creation & application capabilities, and intimacy with
customers, Taste, Texture & Health - DSM (TTH-DSM) addresses one of society’s biggest challenges: how to deliver
nutritious, delicious and sustainable food and beverage solutions. TTH-DSM, which primarily encapsulates our Ingredients
Solution capabilities, helps accelerate the diet transformation by offering appealing taste and texture and helps feed a
growing world population sustainably, while minimizing food loss and waste.
Operating environment
Several macro-economic factors contributed to a challenging business environment for TTH-DSM in 2023. These
included continued inflation of input costs, volatile foreign exchange rates, exceptionally low vitamin prices, and customer
destocking as companies continued trying to manage their inventories and costs.
The year in review
Financial performance 2023
x € million
Sales
EBITDA
2023
1,435
213
2022
1,545
245
Continued investment in our facilities
In Europe, we began the construction of our new headquarters and application labs at the Biotech Campus in Delft
(Netherlands). This building will replace the current offices and facilities in Delft and will feature leading-edge facilities for
food application development, especially for co-creation with our customers – including a demonstration kitchen and a
sensory room, as well as collaborative office spaces.
Within the framework of our plant-based platform, we opened an extrusion test center in Tau (Norway) to work on dry
texturized proteins, high-moisture extruded proteins, and concentrated process flavors. The creation of this new facility
will help in our ambition to become a leading provider of integrated solutions for delicious and nutritious meat and fish
alternatives.
Innovation
In the food and beverage industry, capitalizing on new scientific and business opportunities increasingly depends on the
effective deployment of advanced digital technologies – such as artificial intelligence for fermentation and lab
automation – to develop new solutions for food and beverages faster and more accurately.
In 2023, we further increased our investments in the digital transformation of our science and innovation capabilities,
with a clear focus on being able to generate and combine consumer, customer, and technical data insights faster. This is
with the dual aim of accelerating internal innovation processes and supporting our customers with faster availability of
data useful to them.
DSM Integrated Annual Report 2023
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Business – Taste, Texture & Health - DSM
Partnerships
We signed an agreement with leading global Chinese dairy producer Yili to partner on research, innovation, sustainability,
and more. The agreement paves the way for cross-Business Unit collaboration – we can offer Yili our flavors and
ingredients from TTH-DSM, nutrition solutions from HNC-DSM, and animal feed from ANH. In China’s highly competitive
market, our unparalleled combined capabilities in taste, texture, and nutrition are what particularly appeal to Yili.
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Business – Health, Nutrition & Care - DSM
Health, Nutrition & Care - DSM
About Health, Nutrition & Care - DSM
Health, Nutrition & Care - DSM (HNC-DSM) is dedicated to supporting the health of the world’s growing population
through nutrition and care solutions. We deliver nutritional solutions that support well-being and proactive health at
every stage of life and for every lifestyle. As an end-to-end solutions provider, we partner closely with our customers
from product conception to launch, providing unique consumer insights, a broad portfolio of nutritional ingredients,
innovative solutions, and expert taste capabilities.
HNC-DSM offers solutions for the early life nutrition, dietary supplement, pharmaceutical, medical nutrition, and
biomedical materials markets. We address specific consumer nutritional and wellness needs with our direct-to-
consumer i-Health business. We also serve the nutrition improvement sector, providing affordable and accessible
nutrition fortification solutions for some of the world’s most vulnerable populations.
Operating environment
Our industry experienced challenging market conditions in 2023. External geopolitical factors and inflation drove up
energy, raw material procurement and production costs. Simultaneously, the dietary supplements market was impacted
by pressure on consumer discretionary spend, especially in North America, and lower demand for immunity-supporting
solutions post COVID. The early life nutrition market faced a highly comparable period (due to product shortages in North
America), further exacerbated by a continuing decline in birth rates (especially in China – the largest ELN market) and
ongoing destocking.
The year in review
Financial performance
x € million
Sales
EBITDA
2023
2,806
489
2022
2,990
669
Acquisition of Adare Biome
In 2023, we further strengthened our ‘Health from the gut’ offering to meet growing consumer demand for better gut
health with nutritional solutions that have scientifically backed health benefits combined with easy application and novel
product formats. These clinically proven, multi-ingredient products include our next-generation Humiome® pre-, pro-
and postbiotics, GlyCare™ HMOs, Tolerase® digestive enzymes, and Quali® vitamins.
In July, we completed the acquisition of Adare Biome, a pioneer and global leader in the development and manufacture of
postbiotics. Our strong infrastructure, commercialization and science capabilities will enable us to substantially scale
Adare Biome’s industry-leading scientific research. Together with Adare Biome’s team of experts, we are poised to
accelerate the creation of next-generation biotics faster and more efficiently than was previously possible, to a wider
range of people around the world. Further development of postbiotic business-to-business ingredients and solutions
presents opportunities in dietary supplements, early life nutrition, and medical nutrition.
DSM Integrated Annual Report 2023
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Business – Health, Nutrition & Care - DSM
Innovation
We have defined a number of strategic innovation priorities based on consumer and customer needs across all our
business segments. These include providing novel ingredient solutions as well as novel premix and market-ready
solutions that deliver nutritional support in segments such as healthy aging and women’s health.
In 2023, we accelerated the shift from fish oil to algal sources with the launch of life’s®OMEGA O3020, and led the market
in infant nutrition innovation in HMOs.
Other notable innovation achievements this year included:
•
•
•
•
Increasing the bioavailability of vitamins with our ampli® vitamins range
The publication by the European Food Safety Authority (EFSA) of the conversion factor for calcidiol (25-
hydroxyvitamin D3) in its scientific opinion on the tolerable upper intake level for vitamin D – a major regulatory
process milestone for obtaining approval for ampli-D® in the European Union
Providing new solutions for one of the world’s biggest nutrient-related disorders with Tolerase® G, the first and
only enzyme demonstrated to effectively break down residual gluten molecules
Pioneering in biotics-based gut health with the Humiome® brand, an innovative range of ‘Health from the gut’
solutions. Shaped by microbiome science and consumer needs, Humiome® comprises prebiotics, probiotics and
postbiotics, along with multi-ingredient custom solutions delivered via microbiome-targeted technology.
DSM Integrated Annual Report 2023
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Business – Animal Nutrition & Health
Animal Nutrition & Health
About Animal Nutrition & Health
As the world’s population continues to grow, more and more land and resources will be required to feed it. Our innovative
offering in Animal Nutrition & Health (ANH) helps meet the rising demand for animal protein and support the sustainable
transformation of food systems.
We combine our professional passion and smart science to deliver new approaches to animal health and nutrition that
enable the sustainable production of high-quality animal protein while simultaneously reducing emissions and our
reliance on natural resources.
Operating environment
Overall global animal protein consumption remained resilient throughout the year, driven by good demand for poultry.
Market conditions in China remained subdued, with pork demand stabilizing in the second part of the year but not
showing the anticipated recovery.
Our ANH business operated in an exceptionally challenging environment, being impacted by an imbalance in the global
feed additive marketplace due to ongoing destocking as farmers’ profitability was squeezed as a result of substantially
higher input costs. This was most pronounced in China, where pork production was loss-making throughout the year.
These difficult market conditions led to unprecedentedly low levels of vitamin prices, as well as underutilization of the
vitamins asset base, resulting in a very weak performance of the essential ingredients activities of ANH.
The year in review
Financial performance
x € million
Sales
EBITDA
2023
3,223
(30)
2022
3,784
523
Successful launch of vitamin transformation program
In response to the exceptionally challenging macroeconomic environment in the vitamins industry, in mid-2023 the
company embarked on a major restructuring program in its vitamin activities to reduce costs and restore profitability.
Innovation
We offer concrete and measurable solutions that are closely linked to our products, reducing environmental impact while
at the same time improving profitability for producers. In 2023, we successfully continued the roll-out of our smart
science and innovative solutions, including:
•
•
•
Sustell™, the world’s first intelligent sustainability service, designed to improve the environmental footprint and
profitability of animal protein production
ProAct 360™, our innovative second-generation feed protease, which drives consistent improvements in poultry
growth performance and reduces production costs while making animal protein production more sustainable
Bovaer®, our cattle feed additive that reduces enteric methane emissions by 30%, helping to cut global warming
• Veramaris®, our algae-based omega 3 oil, which helps reduce reliance on marine resources and supports the
sustainable growth of aquaculture.
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Business – Corporate activities
Corporate activities
Any consolidated activities within continuing operations that are outside the three Business Units are reported as
Corporate activities. These comprise operating and service activities, as well as a number of costs that cannot be
allocated directly to the Business Units. While this segment reports net sales to third parties from its service units, it
normally has a negative operating result.
Corporate activities include various holding companies, regional holdings, and corporate overheads. The most significant
cost elements are corporate departments and the share-based compensation, see Note 27 Share-based
compensation to the consolidated financial statements.
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Business – Financial performance
Financial performance
Financial results
TTH-DSM’s performance was solid. HNC-DSM, and even more so ANH, were weak in the face of exceptionally low vitamin
prices and persistent destocking.
In 2023, net sales were € 7,590 million, which was 10% lower than in 2022. The results for the full year were impacted by a
combination of unprecedented market dynamics that led to very low vitamin prices, together with a deep destocking
cycle.
EBITDA, significantly impacted by the vitamin effect and foreign exchange effects, was 59% lower than in the prior year,
resulting in a margin decline of 853 basis points. This includes a negative vitamin effect which is estimated at about
€500 million, and one-off restructuring, acquisition and integration costs of about €325 million.
Income statement and key data
x € million
Continuing operations
Sales
EBITDA
Operating profit (loss)
Net profit (loss)
EBITDA margin (in %)
DSM
Net profit (loss) for the period
2023
2022
Change
7,590
532
(412)
(463)
7.0
8,390
1,304
682
475
15.5
-10%
-59%
-160%
-197%
2,326
1,715
36%
Net profit (loss)
Net loss from continuing operations of €463 million represented a fall of €938 million from the net profit from continuing
operations of €475 million posted in 2022. The decrease in the net result for the year is mainly attributable to a decrease
in net sales of €800 million (9.5%) to €7,590 million in 2023 and an increase in total operating costs of €300 million. The
primary driver behind the increase in total operating costs was impairment charges of €308 million, which chiefly related
to the vitamins business.
Financial income and expense of continuing operations decreased by €30 million year on year to a net expense of €58
million, which was caused by an increase in interest income of €96 million, partly offset by less favorable fair value
changes of derivatives of €59 million.
The total effective tax rate on the taxable result for continuing operations in 2023 was 3.4% (2022: 20.9%). This was
mainly caused by the geographical spread, changes in tax rates, and non-deductible expenses.
The total net profit from continuing and discontinued operations increased by €611 million to €2,326 million. This
increase was mainly a result of the net book profit of €2,790 million on the sale of DSM Engineering Materials (DEM) (in
comparison with a net book profit of €1,018 million in 2022 on the sale of DSM Protective Materials).
Balance sheet
The balance sheet total (total assets) decreased to €15.7 billion at year-end (2022: €17.4 billion). Equity decreased by
€1.9 billion, which was attributable to dividend payments of -€3.9 billion, the net profit of €2.3 billion, treasury share
transactions of -€0.2 billion, and the effect of exchange rate differences of -€0.1 billion. Equity as a percentage of total
assets decreased from 62% to 57%.
DSM Integrated Annual Report 2023
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Business – Financial performance
Capital expenditure on intangible assets and property, plant and equipment amounted to €546 million for continuing
operations in 2023 (€542 million on a cash basis). Including new leases, the additions to intangible assets and property,
plant and equipment amounted to €651 million, whereas amortization, depreciation and impairments amounted to €944
million. Acquisitions during the year, mainly related to Adare Biome, resulted in an increase of intangible assets and
property, plant and equipment of €326 million.
Cash and cash equivalents amounted to €2,181 million at the end of the year, a decrease of €574 million. This decrease
resulted from cash inflows from operating activities of €576 million and from investing activities of €2,711 million, offset
by a cash outflow from financing activities of € 3,852 million.
The decrease in other current assets of €1,013 million mainly results from the decrease in assets held for sale of €1,239
million related to DEM and an increase in receivables on related parties of €279 million.
Other liabilities increased by about €245 million, resulting from an increase of payables to related parties of €691 million,
were partly offset by a decrease in the liabilities held for sale that mainly related to DEM of €422 million.
Balance sheet profile
Goodwill and intangible assets
Property, plant and equipment
Other non-current assets
Cash and cash equivalents
Other current assets
Total assets
Equity
Provisions
Other non-current liabilities
Other current liabilities
Total equity and liabilities
2023
x € million
5,210
3,492
499
2,181
4,360
15,742
8,923
111
3,363
3,345
15,742
in %
33
22
3
14
28
100
57
1
21
21
100
2022
x € million
5,147
3,576
552
2,755
5,373
17,403
10,845
95
3,950
2,513
17,403
in %
30
21
3
16
30
100
62
1
23
14
100
Future developments
On 13 February 2024, DSM-Firmenich AG completed the voluntary tender offer for 4.2 million DSM B.V. ordinary shares for
a total consideration amounting to €400 million. DSM-Firmenich AG will seek to acquire the remaining 1.5% of shares
through the statutory buy-out procedure.
On 15 February 2024, dsm-firmenich announced the initiation of a process to carve out the ANH business and separate it
from the Group. dsm-firmenich expects to be in a position to separate the business in the course of 2025.
On 8 March 2024, DSM divested its 100% equity interest in the vitamin C plant DSM Jiangshan.
See also Note 30 Events after the balance sheet date to the consolidated financial statements.
Management expects that DSM will be able to continue as a going concern.
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Non-financial information
EU Taxonomy
Taxonomy regulation
The EU Taxonomy entered into force on 12 July 2020, establishing criteria for environmentally sustainable economic
activities related to six environmental objectives:
• Climate change mitigation (CCM);
• Climate change adaptation (CCA);
•
Sustainable use and protection of water and marine resources (WTR);
•
•
•
Transition to a circular economy (CE);
Pollution prevention and control (PPC); and
Protection and restoration of biodiversity and ecosystems (BIO).
The Taxonomy regulation also amended the EU Accounting Directive (2013/34/EU) on non-financial information by
expanding the scope of content that needs to be disclosed by large companies in the Management Report. It requires
companies to disclose the proportion of their activities that qualify as environmentally sustainable.
The first delegated act concerning the technical screening criteria for economic activities with substantial contribution
to climate change mitigation and adaptation (the Climate Delegated Act, C2021/4987) was formally adopted on 4 June
2021. A delegated act amending the Climate Delegated Act (covering the environmental objectives of climate change
mitigation and adaptation) and an Environmental Delegated Act addressing the remaining four environmental objectives
were published in 2023.
We welcome the implementation of the EU Taxonomy and assessed its impact on DSM in line with its overall objectives,
albeit accepting that parts of the Taxonomy regulation are subject to interpretation, which may lead to variance in its
application. Considering the level of complexity as well as the evolving character of the framework, we expect that
Taxonomy reporting will develop over time. As such, we shall apply a conservative approach to, and interpretation of, the
Taxonomy legislation until we believe it has sufficiently matured. We will periodically revalidate our methodology and our
reported KPIs based on the evolution of the regulations and forthcoming guidance from, among others, the European
Commission and the European Securities and Markets Authority (ESMA).
Disclosures
Under the Taxonomy regulation, DSM is required to report on how much Turnover, Capital Expenditure (‘CapEx’) and
Operating Expenses (‘OpEx’) are in scope of the Taxonomy Regulation (i.e., ‘Taxonomy-eligible activities’), and how much
are aligned with the Taxonomy regulation (i.e., ‘Taxonomy-aligned activities’). In 2023, the required disclosures apply in
full to climate change mitigation and climate change adaptation, but simplified reporting requirements are applicable to
the remaining four environmental objectives. More specifically, whereas DSM has to disclose both the Taxonomy-eligible
and the Taxonomy-aligned proportions for Turnover, CapEx, and OpEx with regard to climate change mitigation and
climate change adaptation, DSM only has to report on the Taxonomy-eligible proportions of these KPIs for the new
economic activities under CCM and CCA and the remaining four objectives applied for the first time in 2023.
DSM Integrated Annual Report 2023
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Non-financial information – EU Taxonomy
Turnover
Total turnover, as defined by the Taxonomy regulation, corresponds to the sales from continuing operations as reported
on the basis of the income statements in the Consolidated financial statements.
In line with 2022, DSM did not identify any Taxonomy-eligible activities with respect to climate change mitigation and
climate change adaptation. The publication of the Environmental Delegated Act addressing the remaining four
environmental objectives in 2023 resulted in the identification of DSM’s Pharma business (part of HNC-DSM) as an
eligible activity under the environmental objective pollution prevention and control. Given the simplified reporting
objectives in 2023, DSM only discloses the taxonomy-eligible portion of the revenue related to its Pharma business.
Taxonomy-eligible turnover amounted to €253m, or 3.3% of total turnover.
CapEx
Total CapEx is determined based on the 2023 additions to property, plant and equipment, intangible assets, and
additions to right-of-use assets, see also Note 8 Goodwill and intangible assets and Note 9 Property, plant and
equipment to the consolidated financial statements. In addition to the CapEx related to the Pharma business, which was
identified as an eligible activity, Taxonomy-eligible CapEx includes expenditures related to the purchase of output from
Taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or
to lead to greenhouse gas reductions. Taxonomy-eligible CapEx amounted to €116m, or 14.0% of total CapEx.
DSM does not have to disclose the Taxonomy-aligned proportion of the CapEx related to the Pharma business under the
simplified reporting requirements in 2023 and did not establish alignment for the remaining CapEx. Therefore, DSM
discloses 0% alignment with respect to the CapEx KPI.
OpEx
Total OpEx consists of maintenance (including building renovations) and R&D costs, excluding costs and income related
to bad debts, government grants, depreciation and amortization, and own work capitalized.
Taking into consideration the assessment of the contribution of the Pharma business to both the turnover KPI and the
CapEx KPI, the operational expenditure related to this business within DSM’s business model is considered immaterial
from an EU Taxonomy perspective. As such, the numerator reflecting the eligible OpEx attributable to this business is
considered negligible and DSM discloses 0% eligible and aligned OpEx.
DSM Integrated Annual Report 2023
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Non-financial information – EU Taxonomy
Turnover
DSM Integrated Annual Report 2023
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Non-financial information – EU Taxonomy
CapEx
DSM Integrated Annual Report 2023
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Non-financial information – EU Taxonomy
OpEx
DSM Integrated Annual Report 2023
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Governance and Risk Management
Governance and governance framework
Governance
DSM B.V. is a direct affiliate of DSM-Firmenich AG. It is managed by a Managing Board and supervised by a Supervisory
Board. Members of the Managing Board and the Supervisory Board are appointed by the General Meeting of
Shareholders.
The Company is governed by Dutch law and by its Articles of Association, which can be consulted on the Company
website.
DSM is part of the dsm-firmenich Group and is organized in three distinct high-performing Business Units. These
Business Units are supported by Group Business Partners. More details about the organization can be found in the About
DSM section.
Diversity
As part of dsm-firmenich, we strongly value diversity, and we endeavor to reflect this in our Board memberships. The
Supervisory Board has formulated diversity policies for the Supervisory Board and the Managing Board. These policies
seek a balanced composition of these bodies, taking into account gender, age, knowledge, experience, and nationality /
cultural background. In addition, for the composition of the Supervisory Board, the tenure structure is taken into
consideration.
In terms of gender diversity, we aim for at least 30% of the positions in our Supervisory Board and Managing Board to be
held by women and at least 30% by men. To ensure a balanced composition in terms of nationality / cultural background,
our aim is to have not more than 50% of the members of our Supervisory Board drawn from a single nationality. While a
diverse composition in terms of nationality / cultural background is also taken into account in the composition of the
Managing Board, no quantitative target is set here, given the small number of Managing Board members.
Our diversity policies are implemented by applying them to nominations for (re)appointments of Supervisory Board and
Managing Board members.
In 2023, the Supervisory Board consisted of 30% women, which is in line with Dutch legislation on gender diversity and
with the Company’s own diversity policy. Furthermore, the composition of our Supervisory Board is in line with our target
of having not more than 50% of the members drawn from a single nationality.
Until 1 September 2023, the Managing Board was well balanced in terms of gender, comprising 50% women. In May 2023,
DSM-Firmenich AG’s Board of Directors decided to evolve the then existing CO-CEO structure and to appoint Dimitri de
Vreeze as sole CEO of dsm-firmenich, effective 1 September 2023. As of the same date, Géraldine Matchett, until then
Co-CEO (and holding Chief Financial Officer responsibility), stepped down from the Executive Committee of DSM-
Firmenich AG and as a member of the Managing Board of DSM B.V. Ralf Schmeitz, previously Group Controller, was
appointed CFO and Member of the Executive Committee of DSM-Firmenich AG, effective 1 September 2023. In light of
the Board of Directors’ decision, Ralf Schmeitz was also appointed as Managing Board member of DSM B.V., effective 1
September 2023.
DSM Integrated Annual Report 2023
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Governance and Risk Management – Governance and governance framework
Governance framework
The figure below depicts the Company’s governance framework and the most important governance elements and
regulations at each level.
The Company’s internal corporate governance framework is based on its Articles of
Association (the ‘Articles of Association’). The Regulations of the Supervisory Board
and the Managing Board further clarify the duties, powers and regulations of the
governing bodies of the Company.
DSM Integrated Annual Report 2023
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Governance and Risk Management – Risk Management
Risk Management
Our risk management framework is based on the COSO Enterprise Risk Management model. It supports DSM’s Group,
Business Unit and Business Partner functions in managing risks that might prevent us from achieving our strategic,
financial, and operational objectives and in protecting company assets, including reputation. It also supports compliance
with laws and regulations, as well as reliable financial and non-financial reporting.
Our approach to Risk Management
Until 9 May 2023, DSM was responsible for its risk management, with its Managing Board bearing the accountability for
the management of all risks associated with DSM’s strategy and business objectives. With the creation of dsm-firmenich,
enterprise risk management for DSM has become part of dsm-firmenich’s risk management activities. The Managing
Board continues to be accountable for risk management within DSM as part of their responsibilities within dsm-
firmenich. The risk management framework of dsm-firmenich - described in the below sections - also applies to DSM as
part of the dsm-firmenich Group.
Risk management framework
The building-blocks of our risk management framework are shown in the diagram. Governance and culture form the
foundation, on which the pillars of the risk management process – strategy & objective-setting, risk identification &
assessment, risk mitigation & control activities, monitoring & improvement – stand to protect our value & integrity.
Communication & reporting ensures the connection between the pillars and the sharing of adequate information with
internal and external stakeholders. The building-blocks are summarized in the paragraphs below.
Risk management framework
Governance & culture
As part of the dsm-firmenich Group, the DSM Group applies the Operating Model Framework that was determined by the
Executive Committee of DSM-Firmenich AG, with the approval of the Board of Directors of DSM-Firmenich AG. The
Operating Model Framework functions as guidance for the operations of, and cooperation within, the Group, the Business
Units and Business Partners, who are therefore jointly responsible for achieving our objectives and managing the
associated risks.
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Governance and Risk Management – Risk Management
Strategy & objective-setting
Our Group strategy and objectives are determined by the Board of Directors of DSM-Firmenich AG, supported by the
Executive Committee of DSM-Firmenich AG. The DSM Group strategy and objectives are translated into specific plans
and priorities for Business Unit and Business Partner leadership and are elaborated in further detail for lower levels in the
organization.
Risk identification & assessment
The realization of an ambitious strategy will always entail risks. To enable informed decision-making, these risks are
identified and assessed at all levels in the organization. Risk assessments may focus on various topics (e.g., Safety, Health
and Environment (SHE), security, climate) and are regularly updated.
Risk mitigation & control activities
Mitigating actions and controls are defined and implemented for the most relevant risks. Controls include policies,
standards, Segregation of Duties (SoD) management, business continuity management , and business performance
reviews. Control activities, which can be preventive or detective, are integrated into our business processes and are
executed by the first line.
Monitoring & improvement
The Internal Control department within Legal, Regulatory, Risk & Compliance owns the Internal Control Framework. It
defines the standard set of key controls that must be performed by the first line, and it aims to ensure reliable financial
reporting, mitigate fraud risks, and safeguard our assets. The effectiveness of the key controls is independently tested by
the Internal Control department.
Communication & reporting
Reviewing of risks and incidents takes place via structured processes, and if needed on an ad-hoc basis.
DSM Integrated Annual Report 2023
21
Governance and Risk Management – Risk Management
Material risks and uncertainties
Within the framework of the dsm-firmenich risk management process, risk assessments are performed at all levels in the
DSM organization and can focus on varying topics. Material risks for our Business Units and Business Partner functions are
reported to our CEO twice a year via the Risk & Incident Report.
Our risk profile
The below list details the five most important short-term risks that might have material impact within three years and
have the potential to prevent us from successfully implementing our strategy and achieving our targets, despite the
mitigations in place.
Top risks and related mitigating actions
Digital transformation
Risk description
Mitigations
Having an integrated digital backbone is essential to
In the new operating model of dsm-firmenich including
implement efficient and robust business processes
DSM, the Business Partners have allocated dedicated
that meet the expectations of our customers.
resources to drive digitally-enabled process excellence.
Therefore, successful execution of our digital
Furthermore, the capacity and capability in Digital & Tech
transformation roadmap is important to deliver on our
are being strengthened.
strategic and financial targets.
All key projects are subject to quality reviews by a multi-
The implementation of this roadmap is complex. This,
disciplinary, independent team of experts at specific
in combination with some resource constraints, means
moments throughout project implementation.
there is a risk that the digital transformation roadmap
is not implemented according to plan or does not
bring the full benefits as aimed for.
Geopolitical instability
Risk description
Mitigations
DSM operates globally and could therefore be affected
Our business continuity management governance and
by geopolitical instability and related economic
processes are strengthened as part of the
•
•
•
decline, such as:
Trade restrictions, raw material and energy
shortages, and supply disruptions, hampering our
ability to supply our customers
Lower economic growth and declining disposable
implementation of the new operating model within dsm-
firmenich including DSM. To reduce the impact of
possible disruptions, preventive actions are taken, such
as reducing single-source positions, qualifying back-up
manufacturing sites, and optimizing safety stocks.
income, impacting demand for our products
Continuous monitoring of possible disruptions in our
Inflation, putting pressure on our margins
supply chains enables us to act with speed as and when
needed.
We hedge part of our exposure to purchasing price
fluctuations and currency fluctuations.
DSM Integrated Annual Report 2023
22
Governance and Risk Management – Risk Management
In economic downturns, we have the flexibility to offer
solutions to serve the changing needs of our customers
and end-consumers.
Commodity markets
Risk description
Mitigations
DSM operates in highly competitive markets. There is a
We prioritize high-growth and higher-margin market
risk that some competitors may benefit from a lower
segments. To address the needs of customers and end-
cost position and where we cannot differentiate
consumers in these segments, we develop innovative
ourselves sufficiently, this could impact our sales
products and services and offer differentiating value
volumes and margins.
propositions. We use our wide-ranging expertise, our
scientific, technical and data-driven innovation
capabilities, and our broad portfolio of natural and
renewable ingredients.
In all our Business Units, we focus on maximizing
operational performance and apply strict cost control.
We launched the vitamin transformation program to
improve profitability, structurally reduce our exposure to
price fluctuations, and deliver significant cost savings.
Talent availability
Risk description
Mitigations
The success of DSM depends on its employees,
We successfully implemented the new operating model
including – but not limited to – scientists, researchers,
and organization within dsm-firmenich including DSM
flavorists, and experts in digital and data science.
and have launched our new purpose and values.
In view of the tight labor market, the ongoing
challenges of the macro-economic environment, and
the demands associated with any major merger and
integration process, there is a risk that we cannot
Throughout the entire process, we frequently connect
with our employees to update them on the status of the
integration and the challenges we face as a company. We
answer their questions and address their concerns.
attract, retain, develop, and engage the people with the
Building on this foundation, we are executing our plans
required expertise, experience, and mindset needed
for integrated rewards, people development, well-being,
for the implementation of our strategy.
engagement, and Diversity, Equity & Inclusion.
We continue to monitor retention rates as well as
employee engagement and take action as and when
needed.
DSM Integrated Annual Report 2023
23
Governance and Risk Management – Risk Management
Cyber attack
Risk description
Mitigations
As external cyber threats remain high, DSM is exposed
We are implementing a single, integrated cyber security
to the risk of cyber attacks. This could lead to
discontinuity of operations and loss of integrity or
framework covering the domains of information
technology, operations technology, and R&D laboratory
confidentiality of information.
systems.
Since the ‘human firewall’ remains critically important, we
have intensified our phishing tests to keep employee
awareness high – something that is especially important
during times of change.
To mitigate the impact of a potential cyber attack, we are
strengthening our business continuity plans and disaster
recovery plans.
Other important risks
There are also more generic business risks, such as business continuity, sourcing, intellectual property, tax, changing
legislation and regulations, and increasing non-financial reporting requirements. Our risk management framework is set
up to adequately monitor and respond to these risks.
All relevant risks are taken into account in the preparation of our financial statements.
DSM Integrated Annual Report 2023
24
Governance and Risk Management – Group structure and shares
Group structure and shares
Group structure
DSM B.V. and Group companies
DSM B.V. is the parent company of the DSM Group and a direct affiliate of DSM-Firmenich AG. DSM B.V. is a company
organized under Dutch law with its statutory seat in Heerlen and its registered office at Wilhelminasingel 39, 6227BE
Maastricht, the Netherlands. On 31 May 2023, after the delisting of the DSM Ordinary Shares (see Delisting Ordinary
Shares Koninklijke DSM N.V.), DSM B.V. became a private limited liability company with the conversion of the former
Koninklijke DSM N.V. from a Dutch public limited liability company (naamloze vennootschap) into a Dutch private limited
liability company (besloten vennootschap met beperkte aansprakelijkheid).
Shares
Delisting Ordinary Shares Koninklijke DSM N.V.
The last trading date of the DSM Ordinary Shares was 30 May 2023. The delisting of the DSM Ordinary Shares was
effective on 31 May 2023.
Buy-out procedure
DSM-Firmenich AG commenced the statutory buy-out procedure in accordance with Articles 2:359c DCC and 2:201a
DCC to acquire the DSM Ordinary Shares that were not tendered in the Exchange Offer (the Buy-Out) (or otherwise
acquired by DSM-Firmenich AG) as DSM-Firmenich AG holds more than 95% of DSM's aggregate issued and outstanding
ordinary share capital as of the Post-Closing Acceptance Settlement Date as defined on page 4 of the Offering Circular.
On 14 May 2024, the Enterprise Court of the Amsterdam Court of Appeal awarded DSM-Firmenich AG’s claims in the
Buy-Out.
Former bearer shares
Former DSM bearer shares are subject to the Buy-Out scenario. Further information can be found in the dsm-firmenich
Offering Circular dated 22 November 2022; see paragraph 14.27.
DSM Integrated Annual Report 2023
25
Governance and Risk Management – Supervisory Board and Managing Board DSM B.V.
Supervisory Board and Managing Board DSM B.V.
Supervisory Board
The Supervisory Board is composed of the following three members.
Thomas Leysen, Chairman of the Supervisory Board,
Chairman of the Board of Directors of DSM-Firmenich AG
and Member of its Compensation Committee since 2023
Thomas Leysen has spent a large part of his career at Umicore, which was
transformed under his leadership from a metals producer to a materials technology
group with leading positions in battery materials, automotive catalysts, and precious
metals recycling. He was CEO of the company until 2008, after which he became
Chairman of the Supervisory Board. He has long been committed to the promotion
of sustainability development, and was the founding chair of The Shift, a coalition of
businesses and non-governmental organizations in Belgium. He was Chairman of the
Federation of Enterprises in Belgium between 2008 and 2011. Between 2011 and
2020, he was Chairman of the Board of KBC Group, a banking and insurance group
with activities mainly in Belgium, Central Europe and Ireland. He was Member of the
Supervisory Board of Koninklijke DSM N.V. as of 2020 and served as its Chairman
Nationality
Year of Birth
Education
Listed Company Boards
Non-Listed Company Boards
Other Memberships
from 2021 to 2023, until DSM and Firmenich merged.
Belgian
1960
Master’s degree, Law, Katholieke Universiteit Leuven (Belgium)
• Umicore: Non-Executive Chair of the Supervisory Board
• Mediahuis: Non-Executive Chair of the Board
•
•
• Mayer van den Bergh Museum: Chair of the Board of Trustees
King Baudouin Foundation US: Chair of the Foundation
Flemish Heritage Council: Council Chair
DSM Integrated Annual Report 2023
26
Governance and Risk Management – Supervisory Board and Managing Board DSM B.V.
John Ramsay, Member of the Supervisory Board, Member of
the Board of Directors of DSM-Firmenich AG and Chairman
of its Audit & Risk Committee since 2023
John Ramsay started his career at KPMG before entering the corporate world in
1984, when he joined ICI. He held several, increasingly senior, accounting and finance
positions within ICI, which would later become AstraZeneca. John played a leading
role in planning and executing the merger of AstraZeneca’s agribusiness with
Novartis, including the integration and disposal of various businesses post-merger.
He also played a leading role in the formation and stock exchange listing of the
Syngenta business and became its Group Controller in 2001. In that role, he had to
build up the group’s finance function from scratch, establishing the organization and
reporting systems after the IPO. His last executive position was Chief Financial
Officer (CFO) and Interim CEO of Syngenta AG, which he held until 2016. He has
served as Non-Executive Board Member of G4S and was a was a Member of the
Supervisory Board of Koninklijke DSM N.V. during a six-year tenure, until DSM and
Firmenich merged in 2023.
Nationality
Year of Birth
Education
Listed Company Boards
British
1957
Chartered Accountant
•
RHI Magnesita N.V.: Non-Executive Director
• Croda International PLC: Non-Executive Director
•
Babcock International PLC: Non-Executive Director
Non-Listed Company Boards
Other Memberships
N/A
N/A
Corien Wortmann, Member of the Supervisory Board,
Member of the Board of Directors of DSM-Firmenich AG,
Member of its Sustainability Committee and Member of its
Audit & Risk Commmittee since 2023
Corien Wortmann served as Chair of the Board of ABP Pension Fund, a world leader
in responsible investing, from 2015 to 2022. She was a Member of the European
Parliament for the European People’s Party from (EPP) 2004 to 2014, and the EPP’s
Vice President Economy, Finance and Environment. She is currently a Non-Executive
Member and Vice Chair of the Board of Directors of Aegon Ltd, Member of the
Capital Market Advisory Board of the AFM, Board Member of the Impact Economy
Foundation, and Chair of the Supervisory Board of Netspar, a network for studies on
pensions, aging and retirement. She has served as Chair of the Supervisory Board of
Save the Children (Netherlands), as a Jury Member of the Business Woman of the
Year Prize at Veuve Clicquot, and as Co-Chair of the European High Level Expert
Group Next CMU. She was a Member of the Supervisory Board of Koninklijke DSM
N.V. during a two-year tenure, until DSM and Firmenich merged in 2023.
Nationality
Year of Birth
Dutch
1959
DSM Integrated Annual Report 2023
27
Governance and Risk Management – Supervisory Board and Managing Board DSM B.V.
Education
Master’s Degree in Political Science and Economics, Vrije Universiteit Amsterdam
(Netherlands)
Listed Company Boards
Non-Listed Company Boards
Other Memberships
Aegon N.V: Non-Executive Vice-Chair of the Board
N/A
•
Impact Economy Foundation: Advisory Board Member
• Netspar: Chair of the Supervisory Board
• Capital Markets Advisory Board of the Dutch Financial Markets Authority:
Member
•
Koninklijke Hollandsche Maatschappij der Wetenschappen: Member
DSM Integrated Annual Report 2023
28
Governance and Risk Management – Supervisory Board and Managing Board DSM B.V.
Managing Board
The Managing Board is composed of the following two members.
Dimitri de Vreeze, Chief Executive Officer since 2023
Dimitri de Vreeze was appointed as member to DSM B.V.’s Managing Board in 2013 and
served as DSM’s Co-CEO from 2020, having joined the company in 1990. Starting in
Finance, he took on leadership roles in various Business Units around the world before
being named Young Captain of the Year in the Netherlands in 2006. He has been
instrumental in setting DSM’s strategy and executing its transformation journey to a fully
focused health, nutrition, and bioscience company, including the development of DSM’s
Food System Commitments, a series of quantifiable 2030 targets aimed at addressing
urgent societal and environmental challenges linked to how the world produces and
consumes food. He chairs the Young Captain Foundation, awarding and elevating young
leadership potential, and is also the Chair of the ALV United World College Maastricht,
bringing together young people from all directions of life to work together toward a
peaceful and sustainable future.
Nationality
Year of Birth
Education
Dutch
1967
• Master’s in Business Economics, University of Groningen (Netherlands)
• Master’s in Finance and Control from Maastricht University (Netherlands)
Ralf Schmeitz, Chief Financial Officer since 2023
Ralf Schmeitz was appointed as Managing Board member (CFO) of DSM B.V. in September
2023, marking a significant milestone in his journey with the company. He initially joined
the company in 2006 , and his path has been marked by outstanding achievements and a
track record of strong performance. Ralf has played a pivotal role in propelling
the transformation of the Finance function and in navigating substantial portfolio changes.
Prior to his CFO role, Ralf held the position of Head of Group Finance, overseeing Finance
& Control, Treasury and Taxation. In his last role, he held the position of Group Controller,
spearheading both the Business Controlling and Accounting teams. Ralf began his career
at PwC, laying strong foundations and building financial and strategic acumen, and
then moved to Hewlett Packard, where he assumed diverse leadership responsibilities
in Finance.
Nationality
Year of Birth
Education
Dutch
1972
• Master’s degree, Economics, Maastricht University (Netherlands)
• Master’s degree Accountancy, Maastricht University (Netherlands)
• Master’s degree in Business Valuation, Erasmus University, Rotterdam (Netherlands)
DSM Integrated Annual Report 2023
29
Governance and Risk Management – Supervisory Board report
Supervisory Board report
This report provides information on the way the Supervisory Board performed its duties in 2023.
Change in the composition of the Supervisory Board
In 2023, the size of the Supervisory Board decreased from eight to three Board members due to the changes in the
Group structure caused by the merger with Firmenich. The composition of DSM’s Supervisory Board is diverse in terms of
gender, nationality, background, knowledge, and experience. The Supervisory Board comprises two men and one woman.
One member is Belgian, one British, and one Dutch. The current Supervisory Board members are Thomas Leysen (Chair),
John Ramsay, and Corien Wortmann. For detailed information on their backgrounds, see Supervisory Board and
Managing Board DSM B.V. For information on the composition of the Supervisory Board prior to the merger between
DSM and Firmenich, please refer to page 236 of the Offering Circular.
Supervision and advice
The Supervisory Board performs its duties of supervising and advising the Managing Board with respect both to recurring
standard agenda items for Supervisory Board meetings and to specific topics that become relevant at any given point in
time.
In view of and prior to the merger between DSM and Firmenich, the Supervisory Board was actively involved in the
preparations and approval process for the merger. In view of the launch of an industry-wide investigation into the
fragrances sector, including Firmenich, by the European, US, UK, and Swiss competition authorities in March 2023, the
investigations were discussed in the full Supervisory Board meeting. This resulted in the Second Supplement to the
Offering Circular. Furthermore, the Supervisory Board was also involved in the discussions leading to the acquisition of
Adare Biome.
Another prominent agenda item is an update on business performance, financials, treasury, and investor relations topics.
As part of this agenda item, the Supervisory Board tracked the company’s financial performance, as well as approved the
annual Budget and the annual Finance and Capital Expenditure Plan. It was additionally updated on capital market
expectations, and deliberated on any additional treasury topics as needed. A bridge financing facility as part of the
annual Finance Plan was approved to cover the financial aspects related to the closing of the merger.
In the area of financials and auditing, discussions were held with KPMG about the audit plan and strategy, DSM B.V.’s
reporting requirements, audit report, and financial statements for 2023.
Financial statements 2023
The Report of the Managing Board and the financial statements for 2023 were submitted by the Managing Board to the
Supervisory Board, in accordance with the provisions of Articles 17.2 and 22 of the Articles of Association, and were
subsequently approved by the Supervisory Board on 14 May 2024. The financial statements were audited by the external
auditor KPMG, who issued an unqualified opinion (see the Independent auditor’s report). The Supervisory Board
established that the external auditor was independent of DSM.
The Supervisory Board will submit the 2023 financial statements to the 2024 Annual General Meeting of Shareholders,
and will propose that the shareholders adopt them and release the Managing Board from all liability in respect of its
managerial activities and release the Supervisory Board from all liability in respect of its supervision of the Managing
Board. The profit appropriation as proposed by the Managing Board and approved by the Supervisory Board is presented
in Note 6 Shareholders’ equity to the parent company financial statements.
DSM Integrated Annual Report 2023
30
Governance and Risk Management – Auditors
Auditors
Mandate and term of office
KPMG was appointed as Group and statutory auditors of DSM B.V. for the financial year 2023. The Supervisory Board
reconsiders on an annual basis whether the external auditors should be proposed to the Annual General Meeting for re-
election.
Assurance fees
The assurance fees paid to KPMG in its capacity as statutory and Group auditor for the 2023 consolidated financial
statements, the fees for any other audit instructions, non-audit tax services, as well as for other non-audit services can
be found in Note 29 Service fees paid to external auditors to the consolidated financial statements. The scope of the
audit of the 2023 consolidated financial statements was approved by the Supervisory Board and defined in an
engagement and fee letter signed by the CEO and the CFO.
Auditor Rotation
The Audit Rules of the European Union require DSM B.V. to rotate its external auditor for the financial year 2025. In view of
this requirement, the Supervisory Board of DSM B.V. initiated an auditor selection process in the third quarter of 2023
and mandated a Selection Committee to conduct a tender process for the selection of the external auditor.
The Selection Committee consisted of Supervisory Board member John Ramsay and the Managing Board. The Selection
Committee oversaw the execution of the tender process, which was performed by a Tender Team consisting of the
employees from the Finance and Procurement teams. The amended Audit Directive (2014/56/EU) and the Audit
Regulation (537/2014/EU) of the European Union, which prescribe specific requirements on the appointment of statutory
auditors or audit firms, were considered in the audit tender process. In addition, the Selection Committee considered the
report of the Dutch Authority for the Financial Markets (AFM) published in February 2021, which provides
recommendations on the external auditor selection. The auditor selection criteria, which were validated by the
Supervisory Board, emphasize the requirements for independence, the ability to provide financial & non-financial
assurance, global footprint, quality ratings, and an excellent professional knowledge network of IT, systems, processes &
controls.
Considering the results of the audit tender process and the recommendation of the Selection Committee, the
Supervisory Board approved the recommendation (subject to the powers of the General Meeting of Shareholders). The
Supervisory Board of DSM B.V. will propose to the 2024 Annual General Meeting of Shareholders to approve the
appointment of PricewaterhouseCoopers as external auditor for DSM B.V. starting from the financial year 2025.
DSM Integrated Annual Report 2023
31
FINANCIAL STATEMENTS
Consolidated financial statements
The financial statements of DSM include the consolidated financial statements and the parent company financial
statements. DSM (the ‘Company’ or the ‘Group’) is the former Koninklijke (or Royal) DSM Group, a sub-group of the dsm-
firmenich Group, a new group following the merger between DSM and Firmenich that took place on 8 May 2023.
The parent company of the sub-group DSM is DSM B.V., domiciled in Heerlen (Netherlands). Its main shareholder is DSM-
Firmenich AG, listed on the Euronext Amsterdam stock exchange.
These consolidated financial statements comprise DSM B.V. and its subsidiaries (the ‘Group’). A list of main participations
of the Group can be found in Note 3 Financial assets to the parent company financial statements.
The financial year 2023 covers the period from 1 January 2023 to 31 December 2023.
DSM Integrated Annual Report 2023
32
Consolidated financial statements
Consolidated income statement
x € million
Continuing operations
Net sales
Cost of sales
Gross profit
Marketing & Sales
Research & Development
General & Administrative
Other operating income
Other operating expense
Operating profit (loss)
Finance income
Finance expense
Profit (loss) before tax
Income tax expense
Share of net profit of associates and joint ventures
Other results related to associates and joint ventures
Net profit (loss) from continuing operations
Net profit from discontinued operations
Net profit for the period
Attributable to:
- Holders of shares parent company
- Non-controlling interests
- Dividend on cumulative preference shares
Notes
2023
2022
5
5
5
5
5
5
5
6
6
7
10
10
3
17
16
16
7,590
(6,021)
1,569
(1,051)
(352)
(619)
155
(114)
(412)
129
(187)
(470)
16
(8)
(1)
(463)
2,789
2,326
2,312
8
6
8,390
(5,700)
2,690
(1,235)
(295)
(534)
107
(51)
682
71
(159)
594
(124)
12
(7)
475
1,240
1,715
1,694
15
6
The accompanying notes are an integral part of these consolidated financial statements.
DSM Integrated Annual Report 2023
33
Consolidated financial statements
Consolidated statement of comprehensive income
x € million
Net profit for the period
Other comprehensive income
Remeasurements of defined benefit liability
Fair value changes in other participating interests and other financial
instruments
Related tax
Items that will not be reclassified to profit or loss
Exchange differences on translation of foreign operations
- Change for the period
- Reclassified to the income statement on loss of significant influence
Hedging reserve
- Change for the period
- Reclassified to the income statement
Equity accounted investees – share of other comprehensive income
Related tax
Items that may subsequently be reclassified to profit or loss
Notes
2023
2,326
2022
1,715
24
11
16
16
(35)
(37)
9
(63)
(101)
-
27
-
(1)
(2)
(77)
10
(61)
(10)
(61)
264
(16)
(6)
53
-
(7)
288
Total other comprehensive income
(140)
227
Total comprehensive income for the period, net of tax
2,186
1,942
Attributable to:
- Holders of shares parent company
- Non-controlling interests
17
16
2,184
2
1,930
12
DSM Integrated Annual Report 2023
34
Consolidated financial statements
Consolidated balance sheet at 31 December
x € million
Assets
Goodwill and intangible assets
Property, plant and equipment
Deferred tax assets
Prepaid pension costs
Share in associates and joint ventures
Derivatives
Other non-current assets
Non-current assets
Inventories
Trade receivables
Income tax receivables
Other current receivables
Derivatives
Financial investments
Cash and cash equivalents
Assets held for sale
Current assets
Total assets
Equity and liabilities
Shareholders' equity
Non-controlling interests
Equity
Deferred tax liabilities
Employee benefit liabilities
Provisions
Borrowings
Derivatives
Other non-current liabilities
Non-current liabilities
Employee benefit liabilities
Provisions
Borrowings
Derivatives
Trade payables
Income tax payables
Other current liabilities
Liabilities held for sale
Current liabilities
Total equity and liabilities
Notes
2023
2022
8
9
7
24
10
23
11
12
13
13
13
23
14
15
3
17
16
7
24
18
19
23
20
24
18
19
23
21
21
21
3
5,210
3,492
169
15
55
46
214
9,201
2,318
1,535
79
286
35
101
2,181
6
6,541
5,147
3,576
95
19
61
82
295
9,275
2,339
1,508
36
78
42
125
2,755
1,245
8,128
15,742
17,403
8,814
109
10,743
102
8,923
10,845
454
289
77
2,487
3
130
476
287
50
2,978
4
205
3,440
4,000
2
34
631
28
1,364
133
1,179
8
5
45
86
23
1,415
64
490
430
3,379
2,558
15,742
17,403
DSM Integrated Annual Report 2023
35
Consolidated financial statements
Consolidated statement of changes in equity (Note 16)
Share capital
Share
premium
Treasury
shares
Other
reserves
Retained
earnings
Shareholders
' equity
Non-
controlling
interests
x € million
Balance at 1 January
2022
Total comprehensive
income
Dividend
Options / performance
shares granted
Options / performance
shares vested /
canceled
Repurchase of shares
Reissued shares
Acquisition (divestment)
of subsidiary with NCI
Transfer
Other changes
Balance at 31 December
2022
.
Total comprehensive
income
Dividend
Options / performance
shares granted
Options / performance
shares vested /
canceled
Reissued shares
Repurchase of shares
Cancellation of shares
Acquisition of subsidiary
with NCI
Divestment of subsidiary
with NCI
Transfer
Other changes
Balance at 31 December
2023
328
471
(177)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(210)
191
-
-
-
328
471
(196)
-
-
-
-
-
-
(67)
-
-
-
-
-
-
-
-
-
-
(2)
-
-
-
-
261
469
-
-
-
-
63
(256)
345
-
-
44
-
-
8,540
1,700
(459)
9,318
1,930
(459)
-
34
29
-
(50)
-
17
-
-
(210)
141
-
(11)
-
79
12
-
-
-
-
-
(4)
11
4
Total
Equity
9,397
1,942
(459)
34
-
(210)
141
(4)
-
4
9,777
10,743
102
10,845
2,292
(3,935)
2,184
(3,935)
-
23
23
(39)
-
(276)
-
-
(4)
(4)
-
24
(256)
-
-
-
35
(4)
2
-
-
-
-
-
-
-
(4)
9
-
2,186
(3,935)
23
-
24
(256)
-
-
(4)
44
(4)
156
230
-
34
(29)
-
-
-
(28)
-
363
(108)
-
23
(23)
-
-
-
-
-
(5)
-
250
7,834
8,814
109
8,923
DSM Integrated Annual Report 2023
36
Consolidated financial statements
Consolidated cash flow statement (Note 26)
x € million
2023
2022
Operating activities
Net profit for the period
Share of profit of associates and joint ventures (including discontinued operations)¹
Income tax expenses (including discontinued operations)¹
Profit before tax (including discontinued operations)¹
Finance income and expense (including discontinued operations)¹
Operating profit (including discontinued operations)¹
Depreciation, amortization and impairments (including discontinued operations)¹
EBITDA (including discontinued operations)¹
- (Gain) or loss from disposals
- Acquisition- / divestment-related
- Changes in provisions
- Changes in employee benefits
- Share-based compensation
- Income taxes paid / received
- Other non-cash items
Operating cash flow before changes in working capital
Changes in:
Inventories
Trade receivables
Trade payables
Changes in operating working capital
Changes in non-operating working capital
Changes in working capital
2,326
9
21
2,356
59
2,415
944
3,359
(2,770)
-
10
(34)
23
(107)
97
578
58
46
(66)
38
(40)
(2)
1,715
(5)
190
1,900
94
1,994
652
2,646
(1,024)
4
(33)
(15)
34
(131)
(19)
1,462
(442)
(133)
116
(459)
(38)
(497)
Cash provided by operating activities
1 The Consolidated cash flow statement includes an analysis of all cash flows in total, therefore including both continuing and discontinued operations.
For the amounts related to discontinued operations split by activities and a reconciliation of profit from continuing operations to total, including
discontinued operations, see Note 3 Change in the scope of the consolidation to the consolidated financial statements.
576
965
DSM Integrated Annual Report 2023
37
Consolidated financial statements
Consolidated cash flow statement (Note 26) continued
x € million
Cash provided by operating activities
Investing activities
Capital expenditure for intangible assets
Capital expenditure for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Payments regarding drawing rights
Acquisition of subsidiaries
Disposal of subsidiaries
Payments for short-term financial investments
Proceeds from short-term financial investments
Other financial assets (incl. associates):
- Dividends received
- Capital payments and acquisitions
- Proceeds from disposals
- Additions to loans granted
- Repayment of loans granted
Interest received
Cash from / (used in) investing activities
Financing activities
Contributions from non-controlling interests
Proceeds from borrowings
Repayment of borrowings
Payments of lease liabilities
Change in debt to credit institutions
Proceeds from re-issued treasury shares
Repurchase of shares
Dividend paid
Interest paid
Funding cash pool
Other
Cash (used in) / from financing activities
Cash and cash equivalents at the beginning of the period
Net increase / (decrease) in cash and cash equivalents
Effect of movements in exchange rates on cash held
Cash and cash equivalents at the end of the period
2023
576
(103)
(439)
20
(8)
(389)
3,533
(150)
187
4
(15)
26
(35)
31
49
2,711
-
2
(21)
(52)
(1)
8
(256)
(3,935)
(14)
425
(8)
(3,852)
2,755
(565)
(9)
2,181
2022
965
(138)
(506)
17
(7)
(74)
1,366
(638)
1,001
4
(33)
30
(152)
-
6
876
5
51
(29)
(57)
(21)
25
(210)
(345)
(52)
-
(12)
(645)
1,561
1,196
(2)
2,755
See Note 26 Notes to the cash flow statements to the consolidated financial statements for selected comments on
statement of cash flow.
DSM Integrated Annual Report 2023
38
Consolidated financial statements – Notes to the consolidated financial statements
Notes to the consolidated financial statements
1 General information
Basis of preparation
DSM’s consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and the provisions of section 362-8 of Book 2 of the Dutch Civil
Code.
In the following notes, all amounts are shown in millions of euros (€), unless otherwise stated.
Changes in accounting policies
DSM adopted International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon their release on 23 May
2023. DSM applies the temporary mandatory exception from deferred tax accounting for the top-up tax, which is
effective immediately.
Pillar Two legislation has been enacted or substantively enacted in a number of jurisdictions in which DSM operates.
Since the newly enacted tax legislation was not yet in effect in these jurisdictions in 2023, there is no current tax impact
for the group for the year ended 31 December 2023.
DSM actively monitors developments and the global legislative status of Pillar Two implementation in the jurisdictions
where it operates. Furthermore, an assessment is made regarding the potential Pillar Two impact. Based on this
assessment and considering the jurisdictions where the Pillar Two legislation is currently enacted or substantively
enacted, DSM does not expect Pillar Two to have a material impact for the financial year 2024.
Other new or amended standards that are effective from 1 January 2023 do not have a material effect on DSM’s
consolidated financial statements. In addition, new or amended standards effective after 1 January 2023 were neither
adopted early, nor are they expected to have significant impact.
Group material accounting policies
The below information outlines the general Group material accounting policies. Other specific material accounting
policies that management considers to be the most important for the presentation of the financial position and results of
DSM’s operations are included in the relevant notes and applied throughout the consolidated financial statements.
Principles of consolidation
As a parent company, DSM is exposed, or has a right, to the variable returns from its involvement with its subsidiaries and
has the ability to affect the returns through its power over the subsidiaries. The financial data of subsidiaries are fully
consolidated. Non-controlling interests in the Group's equity and profit and loss are stated separately. Subsidiaries are
consolidated from the acquisition date until the date on which DSM ceases to have control. From the acquisition date
onwards, all intra-group balances and transactions and unrealized profits or losses from intra-group transactions are
eliminated.
DSM Integrated Annual Report 2023
39
Consolidated financial statements – Notes to the consolidated financial statements
A joint arrangement is an entity in which DSM holds an interest and which is jointly controlled by DSM and one or more
other venturers under a contractual arrangement. A joint arrangement can either be a joint venture whereby DSM and the
other partner(s) have rights to the net assets of the arrangement, or a joint operation where DSM and the partner(s) have
rights to the assets and obligations for the liabilities of the arrangement. For joint ventures, the investment in the net
assets is recognized and accounted for in accordance with the equity method, see also Note 10 Associates and joint
arrangements to the consolidated financial statements. For a joint operation, assets, liabilities, revenues, and expenses
are recognized in the financial statements of DSM in accordance with the contractual entitlement or obligations of DSM.
Foreign currencies
The DSM's presentation currency is the euro (€), which is also the parent company's functional currency.
Each entity of the Group records transactions and balance sheet items in its functional currency. Transactions
denominated in a currency other than the functional currency are recorded at the spot exchange rates prevailing at the
date of the transactions.
Monetary assets and liabilities denominated in a currency other than the functional currency of the entity are translated
at the closing rates. Exchange differences resulting from the settlement of these transactions and from the translation of
monetary items are recognized in the income statement.
Non-monetary items that are measured on the basis of historical costs denominated in a currency other than the
functional currency continue to be translated against the rate at initial recognition and will not result in exchange
differences.
On consolidation, the balance sheets of subsidiaries that do not have the euro as their functional currency are translated
into euros at the closing rate. The income statements of these entities are translated into euros at the average rates for
the relevant period. The functional currency in which goodwill paid on acquisition is recorded is based on the business
case underlying the corresponding business combination. Exchange differences arising from the translation of the net
investment in entities with a functional currency other than the euro are recorded in Other comprehensive income. The
same applies to exchange differences arising from borrowings and other financial instruments insofar as those
instruments hedge the currency risk related to the net investment. On disposal of an entity with a functional currency
other than the euro, the cumulative exchange differences relating to the translation of the net investment are recognized
in profit or loss.
The currency exchange rates that were used in preparing the consolidated financial statements are listed below for the
most important currencies.
1 euro =
US dollar
Swiss franc
Brazilian real
Chinese renminbi
Exchange rate at
31 December
2023
1.11
0.93
5.36
7.85
2022
1.07
0.98
5.64
7.36
Average exchange rate
2023
1.08
0.97
5.40
7.66
2022
1.05
1.00
5.44
7.08
DSM Integrated Annual Report 2023
40
Consolidated financial statements – Notes to the consolidated financial statements
Emission rights
DSM is subject to legislation encouraging reductions in greenhouse gas emissions and has been awarded emission rights
(principally CO2 emission rights) in a number of jurisdictions. Emission rights are reserved for meeting delivery obligations
and are recognized at cost. Income is recognized when surplus emission rights are sold to third parties. When actual
emissions exceed the emission rights available to DSM, a liability is recognized for the expected additional costs.
Significant accounting estimates and judgments
The preparation of the consolidated financial statements requires management to make estimates that affect the
application of accounting policies and the reported amounts of assets and liabilities, income and expenses, and
disclosure of contingent assets and liabilities at the date of the financial statements. Actual outcomes could differ from
those estimates. The estimates are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
Furthermore, the application of the Group’s accounting policies may require management to make judgments, apart from
those involving estimates, that can have a significant effect on the amounts recognized in the financial statements.
Areas of management estimates and judgments that have the most significant effect on the amounts recognized in the
financial statements are disclosed, along with the material accounting policies, in the relevant notes.
Presentation of Consolidated income statement
DSM presents expenses in the Consolidated income statement in accordance with their function. This allows the
presentation of gross profit on the face of the income statement, which is a widely used performance measure in the
industry. The composition of the costs allocated to the individual functions is explained below.
Cost of sales encompasses all manufacturing costs (including raw materials, employee benefits, and depreciation and
amortization) related to goods and services captured in net sales. These are measured at their actual cost based on
weighted average cost, or FIFO.
Marketing & Sales relates to the selling and marketing of goods and services, and also includes all costs that are directly
related to the sale of goods but are not originated by the manufacturing of the goods (e.g., outbound freight).
Research & Development consists of:
•
Research, which is defined as original and planned investigation undertaken with the prospect of gaining new
scientific or technical knowledge and understanding
• Development, which is defined as the application of research findings or other knowledge to a plan or design for
the production of new or substantially improved materials, devices, products, processes, systems or services
before the start of commercial production or use that do not meet the accounting requirements for
capitalization
General & Administrative relates to the strategic and governance role of the general management of the company as
well as the representation of DSM as a whole in the financial, political, or business community. It also relates to business
support activities of staff departments that are not directly related to the other functional areas.
DSM Integrated Annual Report 2023
41
Consolidated financial statements – Notes to the consolidated financial statements
2 Alternative performance measures
Accounting policy
In monitoring the financial performance of DSM, management uses EBITDA as an Alternative performance measure (APM)
not defined by IFRS. An APM should not be viewed in isolation as an alternative to the equivalent IFRS measure and
should be used as supplementary information in conjunction with the most directly comparable IFRS measure. An APM
does not have standardized meaning under IFRS and therefore may not be comparable to similar measures presented by
other companies.
In line with common industry practice, EBITDA is used as a metric to review DSM’s financial performance.
Earnings before interest, tax, depreciation and amortization (EBITDA) is defined as the IFRS metric operating profit
plus depreciation, amortization, and impairments.
Reconciliation of Alternative performance measures (continuing operations)
Operating profit (loss)
Depreciation, amortization and impairments
EBITDA
2023
(412)
944
532
2022
682
622
1,304
3 Change in the scope of consolidation
Accounting policy
Business combinations
Business combinations are accounted for using the acquisition method from the moment control is transferred to the
Group. The cost of an acquisition is measured as the aggregate of the consideration transferred, including assets
transferred, shares issued, and liabilities incurred, measured at acquisition date fair value. Acquisition-related costs
incurred are expensed, except if related to the issue of debt or equity securities. As of the acquisition date, identifiable
assets acquired, liabilities assumed, and any non-controlling interest in the acquiree are recognized separately from
goodwill. Identifiable assets acquired and the liabilities assumed are measured at acquisition date fair value. For each
business combination, DSM elects whether it measures the non-controlling interest in the acquiree at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Any contingent consideration payable is measured at fair
value at the acquisition date; subsequent changes in the fair value of the contingent consideration resulting from events
after the acquisition date are recognized in profit or loss.
For business combinations with the acquisition date in the prior reporting period, comparative information is revised in
case adjustments are made during the measurement period to the provisional amounts, determined as part of the
purchase price allocation (PPA), based on information available at the acquisition date.
Non-current assets and disposal groups held for sale
Non-current assets and disposal groups (assets and liabilities relating to an activity that is to be sold) are classified as
‘held for sale’ if their carrying amount is to be recovered principally through a sales transaction rather than through
continuing use. The reclassification takes place when the assets are available for immediate sale and the sale is highly
probable. These conditions are usually met as from the date on which a letter of intent or agreement to sell is ready for
signing. Non-current assets and disposal groups held for sale are measured at the lower of carrying amount and fair value
less costs to sell. Non-current assets held for sale are not depreciated or amortized.
DSM Integrated Annual Report 2023
42
Consolidated financial statements – Notes to the consolidated financial statements
Discontinued operations
Discontinued operations comprise those activities that were disposed of during the period, or which were classified as
held for sale at the end of the period and represent a separate major line of business or geographical area that can be
clearly distinguished for operational and financial reporting purposes. Classification as a discontinued operation occurs
when the operation meets the criteria to be classified as held for sale.
Estimates and judgments
Key estimates DSM makes in the accounting for changes in the scope of consolidation relate to the determination of fair
values for assets acquired and liabilities assumed in business combinations. These estimates are based on historical
quoted market prices plus past experience, and are validated by external valuation specialists where deemed necessary
by management.
Acquisitions
In 2023, DSM acquired businesses for a total consideration of €292 million (in 2022: €77 million).
Adare Biome
On 1 July 2023, DSM acquired a 100% interest in Adare Biome, headquartered in Houdan (France) for a total cash
consideration of €290 million. Adare Biome is a pioneer in the development and manufacturing of postbiotics, a rapidly
emerging segment of the gut health market. All identified synergies of this acquisition are revenue synergies.
In accordance with IFRS 3, the purchase price was provisionally allocated to identifiable assets and liabilities acquired,
pending final confirmation of the local valuator. This allocation resulted in a non-tax-deductible goodwill amount of €146
million and intangible assets for technology of €105 million, customer relations of €45 million, and trade names of €11
million.
The goodwill relates to the value of future intangible assets, the Culturelle® synergy, and the assembled workforce. As the
Adare Biome workforce does not qualify for separate recognition as an intangible asset under IFRS, it was valued to
estimate a contributory asset charge for the valuation of technology and rationalize part of the residual goodwill.
The acquisition of Adare Biome contributed €12 million to net sales, -€5 million to operating result, and €2 million to
EBITDA during the second half year. If the acquisition had occurred on 1 January 2023, additional net sales would have
been approximately €29 million, operating result -€5 million, and EBITDA €6 million.
Finalization of Prodap PPA
In the reporting year, the Purchase Price Allocation (PPA) related to the acquisition of Prodap in Brazil in 2022 was
finalized without any changes in relation to the purchase price allocation as disclosed in the DSM Integrated Annual
Report of 2022.
Valuation techniques intangible assets
Part of a PPA is the recognition of intangible assets which are recognized apart from goodwill. The valuation techniques
DSM used for measuring the fair value of these intangible assets in 2023 were as follows:
Technology was identified as the key business driver and leading intangible assets of Adare Biome, and therefore the
multi-period excess earnings method (MEEM) was applied to value it.
The trade names were valued by applying the relief from royalty (RfR) method, a form of the income approach whereby
the value of an asset is estimated by capitalizing the royalties saved as a result of owning the asset.
The fair values of customer relationships were determined by applying the MEEM approach, considering the present
value of the projected cash flow revenues and adjusted for retention.
DSM Integrated Annual Report 2023
43
Consolidated financial statements – Notes to the consolidated financial statements
Summary acquisitions in 2023
The accounting of the acquisitions upon closing impacted DSM’s consolidated balance sheet 2023 as shown in the below
table (measured at the date of acquisition).
Impact acquisitions on balance sheet in 2023
Fair value
Assets
Intangible assets
Property, plant and equipment
Inventories
Receivables and other current assets
Cash and cash equivalents
Total assets
Non-controlling interests and liabilities
Non-current liabilities
Current liabilities
Total non-controlling interests and liabilities
Net assets
Acquisition price (in cash)
Other
Consideration
Goodwill
Acquisition costs (excluding inventory step-up)
Adare Biome
Other
acquisitions
Total
161
17
8
13
1
200
46
10
56
144
290
-
290
146
4
1
-
-
-
-
1
-
-
-
1
2
-
2
1
-
162
17
8
13
1
201
46
10
56
145
292
-
292
147
4
The fair value of the acquired receivables is based on the gross contractual amounts, adjusted for estimated contractual
cash flows not expected to be collected.
Divestments
Divestment of Engineering Materials
On 1 April 2023, the company completed the divestment of its Engineering Materials business (DEM) to Advent
International and LANXESS. Prior to this divestment, the results of this business (the ‘disposal group’) were reclassified to
discontinued operations.
Summary of divestments in 2023
See below table for the book result of the divestments that took place in the reporting year.
DSM Integrated Annual Report 2023
44
Consolidated financial statements – Notes to the consolidated financial statements
Engineering Materials (DEM)
Other
Total
Assets
Goodwill and intangible assets
Property, plant and equipment
Other non-current assets
Inventories
Receivables and other current assets
Cash and cash equivalents
Total assets
Non-controlling interests and liabilities
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Non-controlling interest
Net assets dsm-firmenich shareholders
Consideration
(net of selling costs, translation differences and
net debt)
Book result 2023
Income tax
Net book result
(217)
(374)
(32)
(329)
(264)
(161)
(1,377)
(74)
(439)
(513)
(864)
(3)
(861)
3,689
2,828
(38)
2,790
-
-
-
-
(1)
(8)
(9)
-
(5)
(5)
(4)
-
(4)
1
(3)
-
(3)
(217)
(374)
(32)
(329)
(265)
(169)
(1,386)
(74)
(444)
(518)
(868)
(3)
(865)
3,690
2,825
(38)
2,787
Impact on comprehensive income
The impact of the business that has been presented as discontinued operations in the income statement and statement
of comprehensive income is presented in the below tables.
Net sales
EBITDA
Total expenses
Operating profit
Financial income and expense
Profit (loss) before income tax
expense
Income tax expense
Results related to associates and joint
ventures
Continuing
operations
7,590
2023
Discontinued
operations
388
532
8,272
(412)
(58)
(470)
16
2,827
(2,439)
2,827
(1)
2,826
(37)
Total
7,978
3,359
5,833
2,415
(59)
2,356
(21)
(9)
-
(9)
Net profit (loss) for the year
(463)
2,789
2,326
Of which:
Continuing
operations
8,390
2022
Discontinued
operations
2,090
1,304
7,708
682
(88)
594
(124)
5
475
1,342
778
1,312
(6)
1,306
(66)
-
1,240
Total
10,480
2,646
8,486
1,994
(94)
1,900
(190)
5
1,715
- Attributable to non-controlling interests
- Dividend on Cumulative Preference Shares
- Available to holders of ordinary shares
8
6
(477)
-
-
2,789
8
6
2,312
13
6
456
2
-
1,238
15
6
1,694
DSM Integrated Annual Report 2023
45
Consolidated financial statements – Notes to the consolidated financial statements
The operating profit in discontinued operations amounting to €2,827 million comprises the regular activities of the DEM
business in the first three months of the reporting year (-€1 million) and the book profit on the sale of the DEM business
on 1 April 2023 (€2,828 million). The business results reclassified to discontinued operations include also intercompany
recharges that ceased to be earned/incurred on disposal. Corporate costs have been excluded from the reclassification
to discontinued operations. The comparative numbers in the Income statement and the Statement of comprehensive
income are re-presented as if the activities of the DEM business had been discontinued from the start of the
comparative year 2022. In addition, these comparative numbers also include eight months of results related to former
DSM’s Protective Materials business, which was divested in September 2022.
See also the section Assets and liabilities held for sale here below.
Net profit from discontinued operations
Other comprehensive income
Remeasurements of defined benefit pension plans
Fair value changes in Other participating interests and other financial instruments
Items that will not be reclassified to profit or loss
Exchange differences on translation of foreign operations
- Change for the year
Items that may subsequently be reclassified to profit or loss
2023
2,789
-
-
-
(4)
(4)
2022
1,240
1
(1)
-
(44)
(44)
Total comprehensive income discontinued operations
2,785
1,196
Of which:
- Attributable to non-controlling interests
- Available to equity holders of DSM
-
2,785
1
1,195
Impact on cash flow statement
The impact of the business that has been included as discontinued operations in the cash flow statement is shown in the
following table.
Net cash provided by / (used in):
- Operating activities
- Investing activities
Net change in cash and cash equivalents
2023
2022
70
3,517
3,587
190
1,291
1,481
See also Note 26 Notes to the cash flow statements to the consolidated financial statements.
Assets and liabilities held for sale
Jiangshan
The production of vitamin C in Jiangshan, China, which had already been significantly reduced since the end of 2022, was
completely shut down in mid-May. At the end of 2023, the assets and liabilities of Jiangshan met the criteria for
classification as held for sale.
Impact on balance sheet
The impact of the reclassification of the above-mentioned activities on the DSM consolidated balance sheet is
presented in the following table.
DSM Integrated Annual Report 2023
46
Consolidated financial statements – Notes to the consolidated financial statements
Assets
Non-current assets
Other non-current assets
Current assets
Inventories
Receivables
Total assets
Liabilities
Non-current liabilities
Current liabilities
Total liabilities
Net assets
2023
1
4
1
6
2
6
8
(2)
4 Segment information
Accounting policy
DSM has segmented its operations by business activity from which revenues are earned and expenses incurred. These
operating results are regularly reviewed by the Managing Board, DSM’s Chief Operating Decision Maker (CODM), to make
decisions about resources to be allocated to the operating segments and assess their performance. DSM uses EBITDA as
the main indicator to evaluate the consolidated performance as well as the performance per operating segment. Discrete
financial information is available for each identified operating segment. DSM has determined that Taste, Texture & Health
- DSM (TTH-DSM), Health, Nutrition & Care - DSM (HNC-DSM), and Animal Nutrition & Health (ANH) represent reportable
operating segments in addition to the reportable segment Corporate Activities.
The same accounting policies that are applied for the consolidated financial statements of DSM are also applied for the
operating segments. Prices for transactions between segments are determined on an arm’s length basis at market-based
prices. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can
reasonably and consistently be allocated. Interest income, interest expense, and income tax expense or income are not
allocated to segments as these amounts are not included in the measure of segment profit or loss reviewed by the
Managing Board.
Selected information on a country and regional basis is provided in addition to the information about operating
segments.
Operating segments
DSM is organized into three Business Units:
•
Taste, Texture & Health - DSM (TTH-DSM) helps customers create food and beverage products that are
delicious, nutritious, affordable, and sustainable. This Business Unit provides enjoyment and nourishment for
consumers, business success for customers, and better health for people and planet This Business Unit mainly
consists of the Ingredients Solutions business
• Health, Nutrition & Care - DSM (HNC-DSM) provides people solutions to help them look after their health by
adding critical nutrients to diet. This Business Unit drives medical innovation forward, helping to accelerate
recovery times and enhancing quality of life. This Business Unit mainly consists of DSM’s former Health, Nutrition
& Care business, including the Personal Care & Aroma Ingredients business
• Animal Nutrition & Health (ANH) delivers healthy animal proteins efficiently and sustainably, harnessing the
power of data to make animal farming practices more sustainable, productive, and transparent
DSM Integrated Annual Report 2023
47
Consolidated financial statements – Notes to the consolidated financial statements
For 2023, these Business Units have been identified as the reportable operating segments of DSM.
Any consolidated activities outside the three reportable operating segments above are reported as the reportable
segment ‘Corporate Activities’. These consist of corporate operating and service activities that are not further allocated
to the operating segments.
DSM does not have a single external customer that represents 10% or more of total sales.
Geographical information
2022
Net sales (by destination)
Nether-
lands
Switzer-
land
Rest of
EMEA
North
America
Latin
America
China
Rest of
Asia
Total
In € millions
In %
.
Workforce at year-end (headcount)¹
Intangible assets and property, plant and equipment at
year-end (carrying amount)
402
5
156
2
2,305
26
1,869
22
1,507
18
803
10
1,348
17
8,390
100
2,642
2,232
4,366
2,618
2,302
4,591
1,931 20,682
1,304
1,852
2,105
2,143
404
774
141
8,723
.
2023
Net sales (by destination)
In € millions
In %
.
Workforce at period-end (headcount)
Intangible assets and property, plant and equipment at
period-end (carrying amount)
1 Refers to total Group, including discontinued operations.
Reportable segments
388
5
165
2
2,072
27
1,711
23
1,331
18
780
10
1,143
15
7,590
100
1,783
2,274
4,274
2,447
2,555
3,785
1,737
18,855
1,665
1,950
2,220
1,937
422
423
85
8,702
2022
Net sales
EBITDA1
Operating profit
.
2023
Net sales
Taste,
Texture &
Health - DSM
Health,
Nutrition &
Care - DSM
Animal
Nutrition &
Health
Corporate
Activities
Total
continuing
operations
Discontinued
operations
TOTAL
1,545
2,990
3,784
71
8,390
2,090
10,480
245
115
669
420
523
328
(133)
(181)
1,304
682
1,342
1,312
2,646
1,994
1,435
2,806
3,223
126
7,590
388
7,978
EBITDA1
Operating profit
.
1 See Note 2 Alternative performance measures to the consolidated financial statements for the reconciliation to IFRS performance measures.
(30)
(504)
(140)
(204)
532
(412)
489
211
213
85
2,827
2,827
3,359
2,415
DSM Integrated Annual Report 2023
48
Consolidated financial statements – Notes to the consolidated financial statements
5 Net sales and costs
Accounting policy
Revenue from contracts with customers is recognized by identifying the contract and its performance obligations as well
as determination and allocation of the transaction price to these performance obligations. Net sales represent the
invoice value less estimated rebates, cash discounts, and indirect taxes. No element of financing is deemed present as
sales are made with a short-term credit term.
The payment terms are determined per business segment on a customer basis. DSM has neither specific obligations for
returns or refunds, nor specific warranties or other related obligations.
Sale of goods
At DSM, revenue related to the sale of goods is recognized in the income statement when the performance obligation is
satisfied. This is at the point in time when transfer of control of the goods passes to the buyer. Fulfilment of the
performance obligations related to goods sold is measured using the commercial shipment terms as an indicator for the
transfer of control. Revenue recognized is measured at the fair value of the contractual transaction price allocated to the
performance obligation that is satisfied.
Rendering of services
Income coming from the rendering of services is recognized when the service, i.e., the performance obligation, has been
performed. Fulfillment of the performance obligations for services rendered is identified according to the individual
contract. The revenue recognized is measured at the fair value of the contractual transaction price allocated to the
performance obligation that is satisfied.
Licensing (royalties)
Income related to the sale or licensing of technologies or technological expertise is recognized in the income statement
either at a point in time or over time, depending on when the contractually identified performance obligations are
satisfied. Performance obligations related to license income include the transfer of rights and obligations associated with
those technologies. License income is reported in Net sales when the income is part of the ordinary and recurring
activities of the business and, if this is not the case, it is reported in Other operating income.
Net sales
Goods sold
Services rendered
Royalties
Total
Disaggregation of net sales
Taste, Texture & Health - DSM (TTH-DSM)
Health, Nutrition & Care - DSM (HNC-DSM)
Animal Nutrition & Health (ANH)
Corporate Activities
Total
2023
7,325
253
12
7,590
2023
1,435
2,806
3,223
126
7,590
2022
8,191
193
6
8,390
2022
1,545
2,990
3,784
71
8,390
Total costs
In 2023, total operating costs (the total costs included in operating profit) amounted to €8.0 billion, €0.3 billion higher
than in 2022, when these costs stood at €7.7 billion. Total operating costs in 2023 included Cost of sales amounting to
€6.0 billion (2022: €5.7 billion); gross profit as a percentage of net sales stood at 21% (2022: 32%).
DSM Integrated Annual Report 2023
49
Consolidated financial statements – Notes to the consolidated financial statements
Employee benefit costs
Wages and salaries
Social security costs
Pension costs (see also Note 24)
Share-based compensation (see also Note 27)
Total
Depreciation, amortization and impairments
Amortization of intangible assets
Depreciation of property, plant and equipment owned
Depreciation of right-of-use assets
Impairment losses
Total
2023
1,426
181
96
23
1,726
2022
1,353
169
102
35
1,659
2023
2022
245
340
51
308
944
234
325
49
14
622
Impairments of PPE, goodwill, and intangible assets of €308 million mainly relate to the vitamins business. Due to the
weakening of the vitamins market, the company has taken several measures, including the restructuring of its vitamin
asset footprint, to significantly reduce the costs. This includes the closure of the Xinghuo vitamin B6 plant in China and
the refocusing of the company’s vitamin C activities on its specialty Quali®-C from Dalry (UK) only. The production of
vitamin C in Jiangshan (China), which had already been significantly reduced since the end of 2022, was completely shut
down in mid-May. At the end of 2023, the assets and liabilities of Jiangshan met the criteria for classification as held for
sale.
Other operating income
Release of provisions
Gain on sale of assets and activities
Insurance benefits
Amendments / settlements to pension plans
Earn-out payments and other settlements
Lease income
Royalties
Sale of emission rights
Sundry
Total
Other operating expense
Additions to provisions
Exchange differences
Acquisitions / disposals
Damages w.r.t insurance
Sundry
Total
DSM Integrated Annual Report 2023
2023
2022
-
23
22
1
57
4
2
8
38
10
31
12
2
9
7
4
-
32
155
107
2023
2022
22
13
56
-
23
114
4
18
3
4
22
51
50
Consolidated financial statements – Notes to the consolidated financial statements
6 Finance income and expense
2023
2022
Finance income
Interest income from third parties
Interest income from related parties
Fair value change in derivatives
Sundry
Total finance income
Finance expense
Interest expense from third parties
Interest expense from related parties
Interest relating to lease liabilities
Interest relating to defined benefit plans
Fair value change in derivatives
Capitalized interest during construction
Exchange differences
Unwinding of discounted payables
Sundry
Total finance expense
Total finance income and expense
93
25
6
5
129
(91)
(20)
(5)
(7)
(33)
4
(8)
(22)
(5)
(187)
(58)
22
-
46
3
71
(101)
-
(6)
(3)
(14)
3
(2)
(23)
(13)
(159)
(88)
In 2023, the interest rate applied in the capitalization of interest during construction was 2.5% (same as in 2022).
DSM Integrated Annual Report 2023
51
Consolidated financial statements – Notes to the consolidated financial statements
7 Income tax
Accounting policy
Income tax expense is recognized in the income statement except to the extent that it relates to an item recognized
directly in Other comprehensive income or Shareholders’ equity.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted at the
balance sheet date, and any adjustment to tax payable with respect to previous years. The current tax position also
reflects any uncertainty related to income taxes. Current tax assets and liabilities are offset only if certain criteria are
met.
Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between
the carrying amount of assets and liabilities and their tax base. Deferred tax assets and liabilities are measured at the tax
rates that have been enacted or substantially enacted at the balance sheet date, and reflect any uncertainty related to
income taxes and are expected to apply when the related deferred tax assets are realized or the deferred tax liabilities
are settled. Deferred tax assets, including assets arising from losses carried forward and tax credits, are reassessed over
time and recognized to the extent that it is probable that future taxable profits will be available against which the
deductible temporary differences and unused tax losses can be utilized. Deferred tax assets and liabilities are stated at
nominal value.
Deferred taxes are not recognized for the following temporary differences: the initial recognition of goodwill, the initial
recognition of assets or liabilities that affect neither accounting nor taxable profit, and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. Deferred tax assets
and deferred tax liabilities are offset and presented net when there is a legally enforceable right to offset, and the assets
and liabilities relate to income taxes levied by the same taxation authority.
Estimates and judgments
Key estimates for income tax generally relate to uncertain tax positions that could result from different interpretation of
tax legislation by local tax authorities in the countries where DSM operates. For the measurement of the uncertainty, DSM
uses the most likely amount or the expected value method to estimate the underlying risk. This requires judgements and
final outcome may deviate from the estimates.
DSM Integrated Annual Report 2023
52
Consolidated financial statements – Notes to the consolidated financial statements
Income tax
The income tax benefit on continuing operations was €16 million, which represents an effective income tax rate of 3.4%
(2022: tax expense of €124 million, representing an effective income tax rate of 20.9%). The amount excludes tax expense
from discontinued operations of €37 million (2022: €66 million) and can be broken down as follows.
Current tax (expense) / benefit:
- Current year
- Prior-year adjustments
- Tax credits compensated
- Non-recoverable withholding tax
Total current tax (expense) / benefit
Deferred tax (expense) / benefit:
- Originating from temporary differences and their reversal
- Prior-year adjustments
- Change in tax rate
- Changes arising from write-down of deferred tax assets
- Changes in previously and newly recognized tax losses and tax credits
Total deferred tax (expense) / benefit
Total tax (expense) / benefit
2023
2022
(121)
8
10
(4)
(107)
139
4
4
(33)
9
123
16
(121)
16
3
(5)
(107)
(16)
(17)
15
7
(6)
(17)
(124)
The relationship between the income tax rate in the Netherlands and the effective tax rate on the taxable result can be
explained as follows.
Effective tax rate (continuing operations)
In %
Domestic income tax rate
Tax effects of:
- Deviating rates
- Change in tax rates
- Tax-exempt income and non-deductible expense
- Other effects
Effective tax rate
2023
25.8
(22.0)
0.8
5.2
(6.4)
3.4
2022
25.8
(5.4)
(2.4)
1.9
1.0
20.9
The total effective tax rate on the taxable result in 2023 was 3.4% (2022: 20.9%).
The variation in effective tax rate arises due to changes in the total Group result in combination with the geographical
spread of our results within the Group, changes in tax rates under local tax law, tax-exempt income and non-deductible
expenses. Due to the loss position in 2023, items such as the geographical spread of our results and non-deductible
expenses led to a reduction of our effective tax rate.
DSM Integrated Annual Report 2023
53
Consolidated financial statements – Notes to the consolidated financial statements
The balance of the deferred tax assets and deferred tax liabilities fell by €96 million owing to the changes presented in
the following table.
Deferred tax assets and liabilities
Balance at 1 January
Deferred tax assets
Deferred tax liabilities
Total
Changes:
- Income tax income / (expense) in income statement
- Income tax: change in tax percentage
Total income statement
- Income tax expense in OCI
- Acquisitions and disposals
- Exchange differences
- Reclassification to held for sale
- Transfer
Balance at 31 December
Of which:
- Deferred tax assets
- Deferred tax liabilities
2023
2022
95
(476)
(381)
106
4
110
7
(44)
3
-
20
203
(490)
(287)
(52)
15
(37)
(17)
(6)
(13)
(21)
-
(285)
(381)
169
(454)
95
(476)
In various countries, DSM has taken standpoints regarding its tax position which may at any time be challenged, or have
already been challenged, by the tax authorities, because the authorities in question interpret the law differently. For
particular tax treatments whose acceptance by the relevant tax authorities is uncertain, DSM either recognizes a liability
or reflects the uncertainty in the recognition and measurement of its current and deferred tax assets and liabilities.
The deferred tax assets and liabilities relate to the following balance sheet items.
Deferred tax assets and liabilities by balance sheet item
Intangible assets
Property, plant and equipment
Right-of-use assets
Financial assets
Inventories
Receivables
Lease liabilities non-current
Other non-current liabilities
Non-current provisions
Other current liabilities
Lease liabilities current
Tax losses carried forward and credits
Set-off
Total
2023
2022
Deferred tax
assets
11
Deferred tax
liabilities
(378)
Deferred tax
assets
28
Deferred tax
liabilities
(368)
29
-
35
59
7
18
1
49
45
9
263
59
(153)
169
(167)
(24)
(14)
(7)
(13)
-
(2)
-
(2)
-
(607)
-
153
(454)
15
-
28
36
5
25
1
41
66
11
256
47
(208)
95
(181)
(34)
(25)
(46)
(22)
-
(2)
-
(6)
-
(684)
-
208
(476)
DSM Integrated Annual Report 2023
54
Consolidated financial statements – Notes to the consolidated financial statements
No deferred tax assets were recognized for loss carryforwards amounting to €188 million (2022: €153 million).
Unrecognized loss carryforwards amounting to €78 million will expire in the years up to and including 2028 (2022: €54
million up to and including 2027), €1 million between 2029 and 2033 (2022: €30 million between 2028 and 2032) and
the remaining €110 million in 2034 and beyond (2022: €69 million between 2033 and beyond). In addition, an amount of
€9 million (2022: €17 million) of withholding taxes was unrecognized.
No deferred tax liability is recognized on temporary differences relating to unremitted retained earnings of subsidiaries
as the group is able to control the timings of the reversal of these temporary differences and it is probable that they will
not reverse in the foreseeable future. The amount of unremitted retained earnings on which no deferred tax liability has
been provided for represents €592 million (2022: €875 million).
The valuation of deferred tax assets depends on the probability of the reversal of temporary differences and the
utilization of tax loss carryforwards, tax credits and withholding tax. Deferred tax assets are recognized for future tax
benefits arising from temporary differences and for tax loss carryforwards to the extent that the tax benefits are
probable. DSM has to assess the likelihood that deferred tax assets will be recovered from future taxable profits. Deferred
tax assets are reduced if, and to the extent that, it is not probable that all or some portion of the deferred tax assets will
be realized. In the event that actual future results differ from estimates and depending on tax strategies that DSM may be
able to implement, changes to the measurement of deferred taxes could be required, which could have an impact on the
company's financial position and profit for the year.
8 GoodwilI and intangible assets
Accounting policy
Goodwill
Goodwill represents the excess of the cost of an acquisition over DSM’s share in the net fair value of the identifiable
assets and liabilities in a business combination. Goodwill paid on acquisition of subsidiaries is included in intangible
assets. Goodwill paid on acquisition of joint ventures or associates is included in the carrying amount of these entities.
Goodwill recognized as an intangible asset is tested for impairment annually, and when there are indications that the
carrying amount may exceed the recoverable amount. A gain or loss on the disposal of an entity includes the carrying
amount of goodwill relating to the entity sold.
Intangible assets acquired as part of a business combination
Intangible assets acquired in a business combination are recognized at fair value on the date of acquisition and
subsequently amortized on a straight-line basis over their expected useful lives. The expected useful lives vary from 4 to
20 years.
Separately acquired intangible assets
Separately acquired licenses, patents, application software and other purchased rights are carried at historical cost less
straight-line amortization and less any impairment losses. The expected useful lives vary from 4 to 20 years.
Capital expenditure that is directly related to the development of application software is recognized as an intangible
asset and amortized over its estimated useful life (5 to 8 years). Costs of software maintenance are expensed when
incurred.
Internally generated intangible assets
Research costs are expensed when incurred. An internally generated intangible asset arising from development
expenditure is recognized if it is demonstrated that it is technically feasible to complete the asset; that the entity intends
to complete the asset; that the entity is able to sell the asset; that the asset is capable of generating future economic
benefits; that adequate resources are available to complete the asset; and that the expenditure attributable to the asset
DSM Integrated Annual Report 2023
55
Consolidated financial statements – Notes to the consolidated financial statements
can be reliably measured. Development expenditure that meets the recognition criteria is amortized over the asset’s
useful life on a straight-line basis.
As long as internally generated intangible assets are under construction, these intangible assets are not amortized as
they are not yet available for use. Instead, they are subject to a review for impairment annually, or more frequently if
events or circumstances indicate this is necessary. Any impairment is charged to the income statement as it arises.
Impairment of non-financial assets
When there are indications that the carrying amount of a non-financial asset (goodwill, an intangible asset or an item of
property, plant and equipment) may exceed the estimated recoverable amount (the higher of its value in use and fair
value less costs of disposal), the possible existence of an impairment loss is investigated. If an asset does not generate
largely independent cash flows, the recoverable amount is determined for the cash generating unit (CGU) to which the
asset belongs. In assessing the value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market interest rates and the risks specific to the asset or CGU.
When the recoverable amount of a non-financial asset or a CGU is less than its carrying amount, the carrying amount is
impaired to its recoverable amount and an impairment charge is recognized in profit or loss. An impairment loss is
reversed when there has been a change in estimate that is relevant for the determination of the asset’s recoverable
amount since the last impairment loss was recognized. Impairment losses for goodwill are never reversed.
Estimates and judgments
Key estimates and judgments DSM makes in the accounting for goodwill and intangible assets relate to:
•
•
•
The amortization period of intangible assets, which depends on their useful lives
The determination of CGUs, which depends on the capacity of the asset or group of assets to generate
independent cash flows
The estimation and allocation of future cash flows, growth rates, discount rates and fair values minus costs of
disposal for the impairment testing of goodwill and intangible assets. These estimates are based on historical and
current market rates, quoted prices, experience, current business outlooks, and validated by external valuation
specialists, where deemed necessary by management.
DSM Integrated Annual Report 2023
56
Consolidated financial statements – Notes to the consolidated financial statements
Goodwill and intangible assets
Goodwill
Customer
base
Brands and
trademarks
Technology
and formulas
Internally
generated
Software,
licenses
and
patents
Other
Total
Balance at 1 January 2022
Cost
2,943
1,140
Amortization and impairment losses
14
Carrying amount
2,928
Changes in carrying amount:
- Capital expenditure
- Put into operation
- Acquisitions
- Disposal subs
- Amortization
- Impairment losses
- Exchange differences
- Reclassification to held for sale
- Transfers
- Other
Balance at 31 December 2022
-
-
52
(46)
-
(4)
80
(26)
-
-
56
468
672
-
-
11
(66)
-
14
-
22
(19)
117
52
65
-
-
4
(10)
-
3
-
-
(3)
898
592
570
659
6,919
161
737
-
-
17
-
(58)
-
16
-
22
1
(2)
395
174
345
1,609
197
396
314
5,309
8
90
-
(7)
(49)
(3)
6
-
(1)
8
52
130
(100)
2
(7)
(34)
5
10
(11)
-
(1)
(6)
-
10
-
(4)
(23)
-
-
(182)
(43)
2
(240)
138
-
86
(64)
(240)
(2)
129
(219)
-
10
(162)
Cost
2,989
1,249
124
1,005
612
576
270
6,825
Amortization and impairment losses
Carrying amount
- Of which acquisition related
.
Changes in carrying amount:
- Capital expenditure
- Put into operation
- Acquisitions
- Disposal subs
- Amortization
- Impairment losses
- Exchange differences
- Reclassification to held for sale
- Transfers
- Other
Balance at 31 December 2023
5
2,984
2,984
-
-
147
-
-
(28)
(63)
-
-
-
56
596
653
653
1
2
45
-
(61)
(3)
5
-
3
-
(8)
62
62
62
-
2
11
-
(8)
-
-
-
20
-
25
270
735
735
-
1
105
-
(63)
(13)
4
-
12
-
46
363
249
186
390
196
74
1,678
5,147
2
-
36
4,472
2
57
-
-
(66)
(1)
7
-
(5)
-
(6)
98
(62)
-
-
(38)
(13)
11
2
(12)
-
(14)
2
-
1
-
(9)
(7)
(4)
-
(11)
(8)
(36)
103
-
309
-
(245)
(65)
(40)
2
7
(8)
63
Cost
3,061
1,305
158
1,127
673
612
258
7,194
Amortization and impairment losses
Carrying amount
- Of which acquisition-related
21
3,040
3,040
660
645
645
71
87
87
346
781
781
430
243
236
376
220
38
1,984
5,210
-
-
13
4,566
The amortization and impairment losses of goodwill and intangible assets are included in Cost of sales, Marketing & Sales,
Research & Development and General & Administrative expenses.
Where DSM acquired entities in business combinations, they were accounted for by the acquisition method, resulting in
recognition of mainly goodwill, customer- and marketing-related, and technology-based intangible assets. The amounts
assigned to the acquired assets and liabilities are based on assumptions and estimates about their fair values. In making
these estimates, management consults independent, qualified appraisers where appropriate.
DSM Integrated Annual Report 2023
57
Consolidated financial statements – Notes to the consolidated financial statements
Other significant intangibles were mainly obtained during the acquisitions of Erber Group and Glycom in 2020, and F&F
Amyris and First Choice Ingredients in 2021. Intangible assets are amortized on a straight-line basis and subject to
impairment trigger testing. There are no intangible assets with an indefinite useful life (same as in 2022).
The carrying amount of the internally generated intangible assets includes €133 million (2022: €143 million) that relates
mainly to strategic projects which are not being amortized yet. The recoverable amount of these projects was estimated
based on the present value of the future cash flows expected to be derived from the projects (value-in-use).
Goodwill
The CGUs DSM identified in 2023 were Taste, Texture & Health – DSM (TTH-DSM), (F&B), Health, Nutrition & Care (HNC),
and Animal Nutrition & Health (ANH).
Goodwill per Cash generating unit
Taste, Texture & Health - DSM (TTH-DSM)
Health, Nutrition & Care - DSM (HNC-DSM)
Animal Nutrition & Health (ANH)
Total
2023
577
1,480
983
3,040
2022
544
1,429
1,011
2,984
The annual impairment tests of goodwill are performed in the fourth quarter. The recoverable amount of the CGUs is
based on a value-in-use calculation.
The cash flow projections are derived from dsm-firmenich’s overall business plan as DSM does not operate in isolation
from the dsm-firmenich Group. DSM’s derived business plan is adopted by the Managing Board. The DSM specific cash
flow projections are based on the derived budget for 2024, as approved by DSM’s management, which is extrapolated
throughout the remainder of the forecast period using management’s internal forecasts. The key assumptions in the cash
flow projections relate to the market growth for the CGUs and the related revenue projections, EBITDA developments, and
the rates used for discounting cash flows. For the CGUs HNC-DSM and ANH, which are considered mature businesses, a
forecast period of five years is applied before they come to a terminal value. For TTH-DSM, an initial forecast period of
ten years was applied, reflecting the extended period of time during which the identified synergies arising from the
merger are expected to contribute to the growth of this CGU. The terminal value growth rate is determined with the
assumption of inflationary growth.
Key assumptions for goodwill impairment tests
Forecast period (years)
- Mature business
- Emerging business
Terminal value growth
Pre-tax discount rate
Taste, Texture & Health - DSM (TTH-DSM)
Health, Nutrition & Care - DSM (HNC-DSM)
Animal Nutrition & Health (ANH)
Organic sales growth (year 1–5)
Taste, Texture & Health - DSM (TTH-DSM)
Health, Nutrition & Care - DSM (HNC-DSM)
Animal Nutrition & Health (ANH)
2023
2022
5
10
2.0%
8.3%
7.9%
9.2%
5
10
1.5%
8.7%
9.1%
10.7%
3%–8%
6%–7%
4%–8%
5%–8%
5%–8%
4%–7%
DSM Integrated Annual Report 2023
58
Consolidated financial statements – Notes to the consolidated financial statements
For ANH and HNC-DSM, the growth assumptions are based on the growth of the global food and feed markets, and the
vitamin transformation program; for TTH-DSM, on the growth assumptions of the global food and beverage markets. A
sensitivity test was performed on the impairment tests of the CGUs and showed that the conclusions of these tests
would not have been different if a reasonable possible adverse change in key parameters had been assumed.
9 Property, plant and equipment
Accounting policy
Property, plant and equipment owned
Items of Property, plant and equipment owned are measured at cost less depreciation calculated on a straight-line basis
over their estimated useful lives and less any impairment losses. Borrowing costs during construction are capitalized
when the underlying asset under construction meets the recognition criteria of a qualifying asset.
Subsequent expenditure is capitalized only when it is probable that future economic benefits associated with the item
will flow to the Group. Expenditures relating to major scheduled turnarounds are capitalized and depreciated over the
period up to the next turnaround.
The estimated remaining lives of assets are reviewed every year, taking account of commercial and technological
obsolescence as well as normal wear and tear. The initially assumed expected useful lives are in principle as follows:
•
Buildings 10–50 years
•
•
Plant and equipment 4–15 years
Land is not depreciated
An item of property, plant and equipment owned is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use or the sale of the asset. Any gain or loss arising on derecognition of the asset is
recorded in profit or loss.
Right-of-use assets (leases)
DSM mainly leases offices, warehouses, vehicles, machinery, and other equipment.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are
measured at cost less any depreciation on a straight-line basis over the expected lease term, less any impairment losses,
and adjusted for remeasurements of the lease liability. In line with the initially assumed expected useful life of the
corresponding asset class within Property, plant and equipment, the minimum expected lease term for building leases is
in principle 10 years. However, the contractual terms or specific circumstances could require applying the shorter non-
cancellable period in determining the expected lease term. For vehicle leases, the expected lease term is set equal to the
contractual term (4–5 years).
Impairment of Property, plant and equipment
If there is an indication of impairment, the carrying amount of an item of Property, plant and equipment or the cash
generating unit (CGU) to which it belongs is reviewed and the recoverable amount of the asset or the CGU is estimated.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. An
impairment loss is reversed when there has been a change in estimate that is relevant for the determination of the
asset’s recoverable amount since the last impairment loss was recognized.
Estimates and judgments
Key estimates and judgments DSM makes in the accounting for items of property, plant and equipment relate to:
•
The depreciation period of items of property, plant and equipment, which depend on their useful lives
DSM Integrated Annual Report 2023
59
Consolidated financial statements – Notes to the consolidated financial statements
•
•
The determination of the lease term for lease contracts based on assessment of available renewal options.
Estimates are based on the underlying asset class, past practices and current business outlooks
The estimation and allocation of future cash flows, growth rates, discount rates and fair values minus costs of
disposal for the impairment testing of items of property, plant and equipment. These estimates are based on
historical and current market rates, experience, and current business outlooks
DSM Integrated Annual Report 2023
60
Consolidated financial statements – Notes to the consolidated financial statements
Composition of Property, plant and equipment
Property, plant and equipment owned
Right-of-use assets
Total
Property, plant and equipment owned
2023
3,266
226
3,492
Land and
buildings
Plant and
equipment
Under
construction
Not used for
operating
activities
Balance at 1 January 2022
Cost
Depreciation and impairments
Carrying amount at 1 January 2022
Changes in carrying amount:
- Capital expenditure
- Put into operation
- Acquisitions
- Disposals and deconsolidations
- Depreciation
- Impairment losses
- Exchange differences
- Reclassification to held for sale
- Transfer to RoU assets
- Other changes
Balance at 31 December 2022
Cost
Depreciation and impairments
Carrying amount at 31 December 2022
.
Changes in carrying amount:
- Capital expenditure
- Put into operation
- Acquisitions
- Disposals and deconsolidations
- Depreciation
- Impairment losses
- Exchange differences
- Reclassification to held for sale
- Other reclassifications
Balance at 31 December 2023
Cost
Depreciation and impairments
Carrying amount at 31 December 2023
DSM Integrated Annual Report 2023
2,108
946
1,162
7
70
2
(55)
(71)
(2)
28
(55)
2
2
(72)
5,707
3,673
2,034
48
303
1
(161)
(271)
(16)
42
(243)
(2)
(1)
(300)
1,929
4,625
839
1,090
2,891
1,734
7
38
6
(3)
(71)
(64)
4
-
13
(70)
1,937
917
1,020
42
259
7
(2)
(269)
(187)
(11)
-
72
(89)
4,965
3,320
1,645
564
1
563
443
(373)
-
(22)
-
-
9
(42)
(6)
-
9
572
-
572
394
(297)
3
-
-
8
3
-
(88)
23
595
-
595
8
-
8
-
-
-
-
-
-
-
-
(2)
-
(2)
6
-
6
-
-
-
-
-
-
-
-
-
-
6
-
6
2022
3,402
174
3,576
Total
8,387
4,620
3,767
498
-
3
(238)
(342)
(18)
79
(340)
(8)
1
(365)
7,132
3,730
3,402
443
-
16
(5)
(340)
(243)
(4)
-
(3)
(136)
7,503
4,237
3,266
61
Consolidated financial statements – Notes to the consolidated financial statements
In 2023, impairment losses of €243 million (2022: €18 million) were recognized on Property, plant and equipment, which
mainly relate to the impairment of the Jiangshan site (€119 million) and the impairment of the vitamin B6 production line
on the Xinghuo site (€106 million). For acquisitions, see Note 3 Change in the scope of consolidation to the
consolidated financial statements.
Right-of-use assets
Land and
buildings
Plant and
equipment
Total
Balance at 1 January 2022
136
61
197
Changes in carrying amount:
New leases / terminations
Remeasurements
Depreciation
Derecognition
Exchange rate differences
Reclassification to held for sale
Balance at 31 December 2022
Cost
Depreciation and impairments
Carrying amount at 31 December 2022
.
Changes in carrying amount:
Acquisition
New leases / terminations
Depreciation
Exchange rate differences
Impairments
Balance at 31 December 2023
Cost
Depreciation and impairments
Carrying amount
8
12
(33)
(2)
4
(6)
(17)
219
100
119
1
92
(34)
(4)
-
55
289
115
174
14
-
(17)
-
1
(4)
(6)
92
37
55
-
13
(17)
1
-
(3)
95
43
52
22
12
(50)
(2)
5
(10)
(23)
311
137
174
1
105
(51)
(3)
-
52
384
158
226
For the disclosures on the lease liabilities that correspond with the right-of-use assets, see Note 19 Borrowings to the
consolidated financial statements.
10 Associates and joint arrangements
Accounting policy
An associate is an entity over which DSM has significant influence but no control or joint control, usually evidenced by a
shareholding that entitles DSM to between 20% and 50% of the voting rights. A joint venture is an entity over which DSM
has joint control and is entitled to its share of the net assets and liabilities.
Investments in associates and joint ventures are initially recognized at cost, including transaction costs. Subsequent to
initial recognition, these investments are accounted for by the equity method, which involves recognition in the income
DSM Integrated Annual Report 2023
62
Consolidated financial statements – Notes to the consolidated financial statements
statement of DSM’s share of the associate’s or joint venture’s profit or loss for the year determined in accordance with
the accounting policies of DSM. Any other results at DSM in relation to associated companies are recognized under Other
results related to associates and joint ventures. DSM’s interest in an associate or joint venture is carried in the balance
sheet at its share in the net assets of the associate or joint venture together with goodwill paid on acquisition, less any
impairment loss.
When DSM’s share in the loss of an associate or joint venture exceeds the carrying amount of that entity, the carrying
amount is reduced to zero. No further losses are recognized unless DSM has responsibility for obligations relating to the
entity.
Associates and joint ventures
The following table analyses, in aggregate, the carrying amount and share of profit of associates and joint ventures.
Balance at 1 January
- Share of the profit of associates and joint ventures
- Other comprehensive income
- Capital payments
- Dividends received
- Acquisitions
- Disposals
- Other
Balance at 31 December
Associates
53
(9)
(2)
5
(1)
-
-
-
46
2023
Joint
ventures
8
1
-
-
-
-
-
-
9
2022
Total Total
61
(8)
(2)
5
(1)
-
-
-
55
64
10
-
4
(2)
-
(9)
(6)
61
Joint operations
The operations Veramaris®1 (2017) and Avansya (2019) are accounted for in accordance with IFRS 11 for joint operations.
DSM therefore recognizes their amounts for the assets, liabilities, revenues, and expenses in accordance with the
contractual entitlement and obligations of DSM, see also Note 1 General Information to the consolidated financial
statements.
11 Other non-current assets
Accounting policy
Other non-current assets comprise loans to associates and joint ventures, other participating interests and other long-
term investments and receivables.
Other participating interests comprise equity interests in entities in which DSM has no significant influence. DSM
generally applies the irrevocable election upon initial recognition to present subsequent changes in the fair values of
these interests in Other comprehensive income (OCI). Fair value changes in OCI will not be recycled through profit and
loss upon disposal of the interest. All dividends received will be presented in profit or loss.
DSM’s business model objective for loans granted is ‘held-to-collect contractual cash flows only’. Held to collect loans,
other receivables and other deferred items, for which the contractual cash flows consist solely of principal and interest,
are measured at amortized cost, using the effective interest method, which generally corresponds to the nominal value,
1 This trademark is owned by Veramaris V.O.F.
DSM Integrated Annual Report 2023
63
Consolidated financial statements – Notes to the consolidated financial statements
less an adjustment for expected credit loss. Upon disposal of these assets, the gain or loss is recognized in profit or loss.
Other long-term investments and receivables, for which the contractual cash flows are not solely principal and interest,
are recognized at fair value, with changes in fair value recognized in profit or loss.
Loans
associates
and joint
ventures
Other
participating
interests
Other
receivables
Other
Total
Balance at 1 January 2022
Changes:
- Charged to the income statement
- Disposals
- Capital payments
- Loans granted / prepayments
- Repayments / (receipts)
- Exchange differences
- Transfers
- Changes in fair value
- Expected credit loss (ECL) adjustment
and impairments
- Reclassification from/to held for sale
- Other changes
Balance at 31 December 2022
.
Changes:
- Charged to the income statement
- Acquisitions
- Disposals
- Capital payments
- Loans granted / prepayments
- Repayments / (receipts)
- Exchange differences
- Transfer shares held in DSM-Firmenich
AG from treasury shares
- Other transfers
- Changes in fair value through OCI
- Other changes
Balance at 31 December 2023
1
-
-
-
1
-
-
-
-
-
-
-
2
-
-
-
-
3
-
-
-
-
-
(1)
4
191
-
(24)
28
-
-
-
-
(66)
-
(4)
-
125
-
-
(10)
10
-
-
-
44
-
(37)
7
139
31
1
-
-
127
1
(7)
16
-
(11)
-
-
158
(1)
-
-
-
13
-
(1)
-
(24)
-
(82)
63
4
(1)
-
-
-
3
-
-
-
-
-
4
10
-
-
-
-
-
(4)
(1)
-
4
-
(1)
8
227
-
(24)
28
128
4
(7)
16
(66)
(11)
(4)
4
295
(1)
-
(10)
10
16
(4)
(2)
44
(20)
(37)
(77)
214
Other participating interests’ increased mainly due to the transfer of shares held in DSM-Firmenich AG (€44 million) from
treasury shares. The transfer is the result of the exchange of shares of former DSM N.V. to DSM-Firmenich AG shares, prior
to the merger with Firmenich.
‘Changes in fair value through OCI’ consists mainly of the value decrease of our minority share in Amyris, Inc. (-€24
million) and of the value adjustment of shares held in DSM-Firmenich AG from cost price to market value (-€8 million).
These changes are posted to the Fair value reserve in Other comprehensive income.
DSM Integrated Annual Report 2023
64
Consolidated financial statements – Notes to the consolidated financial statements
12 Inventories
Accounting policy
Inventories are stated at the lower of cost and net realizable value. The cost of intermediates, work-in-progress and
finished goods includes directly attributable costs and related production overhead expenses.
Net realizable value is determined as the estimated selling price in the ordinary course of business, less the estimated
costs of completion and the estimated costs necessary to make the sale. Products whose manufacturing cost cannot be
calculated because of joint cost components are stated at net realizable value after deduction of a margin for selling and
distribution efforts. Allowances for slow-moving and obsolete inventories have been made.
Cost is generally determined using the weighted average cost formula, unless the nature of the inventories warrants the
use of the first in, first out (FIFO) method of valuation.
Raw materials and consumables
Intermediates and finished goods
Adjustments to lower net realizable value
Total
Changes in the adjustment to net realizable value
Balance at 1 January
Additions charged to income statement
Utilization / reversals
Exchange differences
Disposal
Transfer
Reclassification to held for sale
Balance at 31 December
2023
676
1,716
2,392
(74)
2,318
2023
(66)
(29)
21
1
28
(2)
(27)
(74)
2022
596
1,809
2,405
(66)
2,339
2022
(82)
(31)
20
(2)
15
(10)
24
(66)
DSM Integrated Annual Report 2023
65
Consolidated financial statements – Notes to the consolidated financial statements
13 Current receivables
Accounting policy
Current receivables, for which the contractual cash flows are solely principal and interest, are initially recognized at fair
value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortized
cost, which generally corresponds to their nominal, non-discounted value, less an adjustment for expected credit loss.
Loss allowances for trade receivables are always measured at lifetime expected credit loss – see also Note 23 Financial
Instruments and risks to the consolidated financial statements.
2023
2022
Trade receivables
Trade accounts receivable
Other trade receivables
Other receivables from related parties
Deferred items
Receivables from associates
Expected credit loss
Total Trade receivables
Income tax receivable
Other current receivables
Other taxes and social security contributions
Related party cash pool
Employee-related receivables
Acquisition-/disposal-related receivables
Interest
Loans
Other receivables
Deferred items
Total Other current receivables
Total current receivables
1,183
231
101
38
-
1,553
(18)
1,535
79
17
178
7
5
-
69
9
1
286
1,900
1,306
182
-
31
1
1,520
(12)
1,508
36
23
-
3
7
1
24
8
12
78
1,622
Information about the expected credit loss that relates to trade accounts receivable resulting in a loss allowance is
included under Credit risk in Note 23 Financial instruments and risks to the consolidated financial statements.
Deferred items comprised €39 million (2022: €43 million) in prepaid expenses that include advance payments for any
expenditure that would have otherwise been made during the next 12 months.
Related party cash pool relates to the receivables from DSM Finance B.V., the dsm-firmenich finance entity, with entities
of the dsm-firmenich Group. See Note 26 Notes to the cash flow statements to the consolidated financial statements
for further info.
DSM Integrated Annual Report 2023
66
Consolidated financial statements – Notes to the consolidated financial statements
14 Current investments
Accounting policy
Current investments are initially recognized at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at amortized cost using the effective interest method.
Deposits with banks with a maturity between three and 12 months are classified as current investments.
Fixed term deposits
Total
2023
101
101
2022
125
125
All fixed-term deposits have been placed with institutions with a high credit rating in line with our counterparty policy.
The purpose of the deposits is either to meet short-term cash commitments, or to manage liquidity to such extent that
yields are optimized while allowing DSM sufficient freedom in fulfilling its (strategic) goals.
For more information regarding the counterparty policy, see Note 23 Financial instruments and risks to the
consolidated financial statements.
15 Cash and cash equivalents
Accounting policy
Cash and cash equivalents comprise cash at banks and in hand and deposits held at call with banks with a maturity of
less than three months at inception.
Deposits will be classified as ‘cash equivalent’ if held at banks with a maturity of less than three months at inception.
Deposits will be classified as ‘current investments’ if the maturity is more than three months but less than or equal to
one year. Bank overdrafts are included in current liabilities. Included in cash and cash equivalents are investments in
money-market funds that do not meet the SPPI (Solely Payments of Principal & Interest) criterion but are held to meet
short-term cash demand. Money-market fund investments have been placed with institutions with a high credit rating in
line with our counterparty policy.
Cash and cash equivalents are measured at amortized cost, or at fair value through profit and loss.
Composition of cash and cash equivalents
Deposits
Money-market funds
Cash at bank and in hand
Payments in transit
Total
2023
284
931
964
2
2,181
2022
23
1,493
1,221
18
2,755
The purpose of the deposits and money-market funds is either to meet short-term cash commitments, or to manage
liquidity to such an extent that yields are optimized, while allowing DSM sufficient freedom in fulfilling its (strategic) goals.
Cash at year-end 2023 was not being used as collateral and therefore was not restricted (same as in 2022).
In a few countries, DSM faces cross-border foreign exchange controls and/or other legal restrictions that limit its ability to
make these balances available at short notice for general use by the Group. The amount of cash held in these countries
DSM Integrated Annual Report 2023
67
Consolidated financial statements – Notes to the consolidated financial statements
was €64 million at year-end 2023 (2022: €105 million). The cash will generally be invested or held in the relevant country
and, given the other liquidity resources available to the Group, does not significantly affect the ability of the Group to
meet its obligations.
For more information regarding the counterparty policy, see Note 23 Financial instruments and risks to the
consolidated financial statements.
16 Equity
Accounting policy
DSM classifies ordinary shares and other financial instruments, for which settlement of the contractual obligations is at
the sole discretion of DSM, as equity.
The price paid for repurchased DSM shares (treasury shares) is deducted from DSM shareholders’ equity until the shares
are reissued. Treasury shares are presented in the treasury share reserve. When treasury shares are sold or reissued, the
amount received is recognized as an increase in equity.
Dividend to be distributed to holders of ordinary shares is recognized as a liability when the Annual General Meeting of
Shareholders approves the profit appropriation.
Movements in equity
Balance at 1 January
Net profit for the year
Other comprehensive income
Options / share units granted
Dividend
Proceeds from reissue of ordinary shares
Acquisition of NCI without a change in control
Acquisition (divestment) of subsidiary with NCI
Repurchase of shares
Transfer
Other changes
2023
10,845
2,326
(140)
23
(3,935)
24
-
(4)
(256)
44
(4)
2022
9,397
1,715
227
34
(459)
141
-
(4)
(210)
-
4
Balance at 31 December
8,923
10,845
Share capital
On 31 December 2023, the capital amounted to €261 million, consisting of 174 million ordinary shares, distributed over
167.3 million shares held by its parent DSM-Firmenich AG, and 6.7 million by the non-tendered shareholders. All shares
have a nominal value of €1.50 each. The outstanding shares provide an entitlement of one vote per share at the General
Meeting of Shareholders. All rights attached to the company’s shares held by the Group (treasury shares) are suspended
until those shares are reissued.
The changes in the number of issued and outstanding shares in 2022 and 2023 are shown in the following table.
DSM Integrated Annual Report 2023
68
Consolidated financial statements – Notes to the consolidated financial statements
Development issued and outstanding shares of DSM B.V. (Koninklijke DSM N.V. until 31 May 2023)
Balance at 1 January 2022
Reissue of shares in connection with share-based payments
Repurchase of shares
Dividend in the form of ordinary shares
Balance at 31 December 2022
Number of treasury shares at 31 December 2022
Number of shares outstanding at 31 December 2022
.
Issued
shares
Ordinary
174,786,029
Issued
shares
Cumprefs A
44,040,000
174,786,029
44,040,000
(1,710,632)
173,075,397
44,040,000
Balance at 1 January 2023
174,786,029
44,040,000
Reissue of shares in connection with share-based payments
Treasury shares DSM N.V. swapped to DSM-Firmenich AG shares
Cancellation of shares
Balance at 31 December 2023
-
(767,995)
174,018,034
(44,040,000)
-
Treasury
shares
Ordinary
1,817,299
(617,967)
1,330,000
(818,700)
1,710,632
1,710,632
(280,021)
(662,616)
(767,995)
-
On 28 April 2023, 44.0 million outstanding Cumulative preference shares A Koninklijke DSM N.V. were repurchased for the
amount of €256 million. On 31 May 2023, all Cumulative preference shares A and B were canceled.
Share premium
The share premium decreased by €2 million due to the cancellation of 0.8 million ordinary shares.
Treasury shares
In 2023, the Group did not repurchase own shares to fulfil its obligations under the share-based compensation plans.
During the merger process, the DSM N.V. treasury shares were swapped into shares of DSM-Firmenich AG, the parent of
the Group. Hence, these shares are no longer considered treasury shares for DSM. The DSM-Firmenich AG shares held by
DSM are recognized in Other participating interests (OPI).
DSM Integrated Annual Report 2023
69
Consolidated financial statements – Notes to the consolidated financial statements
Other reserves in Shareholders equity
Translation
reserve
Hedging
reserve
Balance at 1 January 2022
177
(77)
Reserve for
share-based
compensation
39
Fair value
reserve
Total
17
156
Changes:
Fair-value changes of derivatives
Release to income statement
Fair-value changes of other financial assets
Exchange differences
Options and performance shares granted
Options and performance shares exercised/canceled
Transfer to retained earnings
Income tax
Total changes
Balance at 31 December 2022
.
Changes:
Fair-value changes of derivatives
Release to income statement
Fair-value changes of other financial assets
Exchange differences
Options and performance shares granted
Options and performance shares exercised/canceled
Transfer to retained earnings
Income tax
Total changes
Balance at 31 December 2023
-
(16)
-
267
-
-
-
(4)
247
424
-
-
-
(96)
-
-
-
(1)
(97)
327
(6)
53
-
-
-
-
-
(3)
44
(33)
27
-
-
-
-
-
-
(1)
26
(7)
-
-
-
-
34
(29)
-
-
5
44
-
-
-
-
23
(23)
-
-
-
44
-
-
(61)
-
-
-
(28)
-
(89)
(72)
-
-
(37)
-
-
-
(5)
-
(42)
(114)
(6)
37
(61)
267
34
(29)
(28)
(7)
207
363
27
-
(37)
(96)
23
(23)
(5)
(2)
(113)
250
For information on the reserves, see Note 6 Shareholders’ equity to the parent company financial statements.
Dividend
Prior to the merger, dividend was paid to the holders of cumulative preference shares A and of non-tendered ordinary
shares of Koninklijke DSM N.V.
Dividend distribution in the reporting year
Shareholders DSM B.V. (formerly Koninklijke DSM N.V.)
Per cumulative preference share A: €0.14 (2022: €0.13)
Per ordinary share:
Interim dividend ordinary shares: €0 (2022: 0.93)
Final dividend listed ordinary shares: €1.66 (2022: €1.70)
Final dividend ordinary shares held by DSM-Firmenich AG: €1.66
Special dividend listed ordinary shares: €20.92
Special dividend ordinary shares held by DSM-Firmenich AG: €20.92
Total
2023
2022
6
-
11
278
140
3,500
3,935
6
161
292
-
-
-
459
DSM Integrated Annual Report 2023
70
Consolidated financial statements – Notes to the consolidated financial statements
17 Non-controlling interests
Accounting policy
Non-controlling interests in subsidiaries are measured at the proportionate share of the subsidiaries’ identifiable net
assets.
% of non-controlling interest
Balance at 1 January
Changes:
- Share of profit/charged to income statement
- Acquisitions
- Divestments
- Transfers
- Capital payments
- Exchange differences
Total changes
Balance at 31 December
Andre
Pectin
25%
46
5
-
-
-
-
(3)
2
48
2023
Yimante
Other
Total
2022
25%
47
8
-
-
9
-
(3)
14
61
9
102
79
(5)
-
(4)
-
-
-
(9)
-
8
-
(4)
9
-
(6)
7
109
15
-
(4)
11
4
(3)
23
102
The shareholding by DSM in Yimante Health Ingredients (Jingzhou) Company Ltd. is 75%. The profit will be distributed in a
50:50 proportion. The impact of this arrangement has led to a transfer of €9 million (2022: €11 million) within equity from
shareholders’ equity to non-controlling interest.
DSM Integrated Annual Report 2023
71
Consolidated financial statements – Notes to the consolidated financial statements
Not fully-owned subsidiaries on a 100% basis
Andre Pectin
Yimante
Other
Total
2023
2022
Assets
Intangible assets
Property, plant and
equipment
Other non-current assets
Inventories
Receivables
Current investments
Cash and cash equivalents
Total assets
.
Liabilities
Provisions (non-current)
Borrowings (non-current)
Other non-current
liabilities
Borrowings and derivatives
(current)
Other current liabilities
Total liabilities
Net assets (100% basis)
Net sales
Net profit for the year
Cash provided by / (used
in) operating activities
42
38
2
42
35
51
1
211
10
-
-
-
8
18
193
95
21
15
20
127
37
18
47
-
7
256
1
-
1
66
21
89
167
219
35
55
12
50
37
1
14
-
4
118
-
74
1
-
40
115
3
25
(23)
(7)
74
215
76
61
96
51
12
585
11
74
2
66
69
222
363
339
33
63
92
310
91
68
109
44
41
755
14
167
2
50
112
345
410
159
56
91
DSM Integrated Annual Report 2023
72
Consolidated financial statements – Notes to the consolidated financial statements
18 Provisions
Accounting policy
Provisions are recognized when there is a present legal or constructive obligation as a result of past events, when it is
probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount
can be made. The underlying assumptions in the recognition of provisions are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
In cases where the effect of the time value of money is material, provisions are measured at the present value of the
expenditures expected to be required to settle the obligation. Where discounting is used, the increase in the provision
due to the passage of time is recognized as financial expense.
Differences between the final obligations and the initial estimates are recognized in the consolidated income statement
in the period in which such determination is made.
Estimates and judgments
Key estimates made in the accounting for provisions relate to the estimates made in determining the likelihood and
timing of potential cash flows included in their measurement.
Balance at 1 January 2022
Of which current
Changes:
- Additions
- Releases
- Uses
- Other change
Total changes
Balance at 31 December 2022
Of which current
.
Changes:
- Additions
- Releases
- Uses
- Other change
Total changes
Balance at 31 December 2023
Of which current
Restructuring
costs and
termination
benefits
53
49
44
(15)
(41)
-
(12)
41
39
48
(9)
(41)
-
(2)
39
25
Environmental
costs
Other
provisions
Total
37
4
-
(5)
(3)
-
(8)
29
2
4
-
(3)
3
4
33
3
34
10
8
(8)
(7)
(2)
(9)
25
4
24
-
(7)
(3)
14
39
6
124
63
52
(28)
(51)
(2)
(29)
95
45
76
(9)
(51)
-
16
111
34
In cases where the effect of the time value of money is material, provisions are measured at the present value of the
expenditures expected to be required to settle the obligation. The rate used for discounting decreased from 4.2% to
3.5%. Depending on the risk profile, the discount rates used at the end of 2023 vary from 3.5% to 5.7% (2022: 4.2% to
5.8%). The balance of provisions measured at present value increased by less than €2 million in 2023 in view of the
passage of time (similar to 2022).
DSM Integrated Annual Report 2023
73
Consolidated financial statements – Notes to the consolidated financial statements
The provisions for restructuring costs and termination benefits mainly relate to the costs of redundancy schemes
connected to the dismissal of employees and costs of termination of contracts. These provisions generally have a term
of one to three years.
The restructuring program following up on the change in strategy, aiming to concentrate on Health, Nutrition and
Bioscience, which was launched at the end of 2021, was finalized in 2023, with €8 million being used during the year.
Furthermore, a restructuring program following up on (the preparation of) the merger of DSM with Firmenich, which was
launched in 2022, was also continued. An additional €8 million was recognized for this program, and €9 million was used
during the year. A restructuring provision of €26 million was created, following the announced restructuring of the vitamin
asset footprint, of which €12 million had been used by the end of 2023. The other additions to the provisions for
restructuring costs and termination benefits in 2023 relate mainly to the various smaller restructuring projects (same as
in 2022).
The provisions for environmental costs relate to soil clean-up obligations, among other things. These provisions have an
average life of around 30 years.
Several items have been combined under Other provisions, for example, demolition costs, onerous contracts and legal
claims. These provisions have an average life of one to 10 years.
19 Borrowings
Accounting policy
Borrowings
Borrowings, including bonds, are not held for trading and are initially recognized at fair value of the proceeds received, net
of transaction costs. Subsequently, borrowings are stated at amortized cost using the effective interest method with any
discount or premium on the borrowing amortized over the applicable term. The corresponding interest expenses are
recorded as financial expense in profit or loss.
Lease liabilities
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Group’s incremental borrowing rate. Generally, DSM uses its incremental borrowing rate as the discount rate. In
determining the incremental borrowing rate, DSM applies the practical expedient to use a single discount rate to
portfolios of leases with reasonably similar characteristics, as reflected in the contractual currency and expected lease
term of these contracts.
In general, DSM splits the contractual consideration into a lease and a non-lease component based on their relative
stand-alone prices. For vehicle leases, however, DSM applies the practical expedient not to make this split but rather
accounts for the fixed consideration as a single lease component.
Over time, the lease liability is increased by the interest expense related to the unwinding of the lease liability and
decreased by the lease payments made. The lease liability is remeasured when DSM reassesses or modifies the
contractual terms and conditions, including indexation.
Payments related to short-term leases (leases with a term shorter than 12 months) are recognized on a straight-line basis
in profit or loss.
DSM Integrated Annual Report 2023
74
Consolidated financial statements – Notes to the consolidated financial statements
Borrowings
Bonds
Private loans
Lease liabilities
Credit institutions
Total
2023
Total
2,743
108
240
27
3,118
Of which
current
500
56
48
27
631
2022
Total
2,741
116
179
28
3,064
Of which
current
-
14
44
28
86
In agreements governing loans with a residual amount at year-end 2023 of €2,743 million (31 December 2022: €2,741
million), negative pledge clauses have been included that restrict the provision of security.
At 31 December 2023, there was €617 million in borrowings outstanding with a remaining term of more than 5 years (at 31
December 2022, €1,044 million).
The schedule of repayment of borrowings is as follows.
Borrowings by maturity
2023
2024
2025
2026
2027 and 2028
After 2028
Total
A breakdown by currency is given in the following table.
Borrowings by currency
EUR
CNY
USD
CHF
BRL
Other
Total
2023
-
631
538
788
544
617
3,118
2023
2,843
50
78
99
16
32
3,118
2022
86
558
579
775
528
538
3,064
2022
2,833
80
84
20
19
28
3,064
DSM Integrated Annual Report 2023
75
Consolidated financial statements – Notes to the consolidated financial statements
On balance, total borrowings increased by €54 million due to the following changes.
Movements of borrowings
Balance at 1 January
Loans taken up
Repayments
Unwinding (interest)
Acquisitions / consolidation changes
Transfers
Disposals
Reclassification to held for sale
Changes in debt to credit institutions
New lease arrangements (incl. remeasurements)
Payment of lease liabilities
Exchange differences
Balance at 31 December
A breakdown of bonds is given below.
2023
3,064
-
(33)
6
-
28
-
-
-
102
(49)
-
3,118
Bonds
EUR loan
EUR loan
EUR loan
EUR loan
EUR loan
Total
2.38%
1.00%
0.75%
0.25%
0.63%
2014—2024
2015—2025
2016—2026
2020—2028
2020—2032
Nominal amount
500
500
750
500
500
2,750
2023
500
500
749
498
496
2,743
2022
3,098
51
(29)
9
9
-
(28)
(8)
(21)
34
(57)
6
3,064
2022
500
499
749
496
498
2,741
The bonds issued by DSM B.V. have a fixed interest rate and are listed on the AEX.
•
•
•
•
•
The 2.375% EUR bond 2014–2024 of €500 million was pre-hedged by means of forward starting swaps, resulting
in an effective interest rate for this bond of 3.97%, including the settlement of the pre-hedge
The 1% EUR bond 2015–2025 of €500 million was pre-hedged by means of forward starting swaps, resulting in
an effective interest rate for this bond at 3.65%, including the settlement of the pre-hedge
The 0.75% EUR bond 2016–2026 of €750 million was pre-hedged by means of a collar resulting in an effective
interest rate for this bond of 1.08%, including the settlement of the pre-hedge
The 0.25% EUR bond 2020–2028 of €500 million has an effective interest rate of 0.29%
The 0.625% EUR bond 2020–2032 of €500 million has an effective interest rate of 0.70%
A breakdown of private loans is given below.
Private loans
CNY loan
Other loans
Total
DSM Integrated Annual Report 2023
2023
2022
39
69
108
63
53
116
76
Consolidated financial statements – Notes to the consolidated financial statements
A breakdown of the lease liabilities is given below.
Lease liabilities by maturity
2023
2024
2025
2026
2027
2028
After 2028
Total undiscounted lease liabilities at 31 December
Lease liabilities included in the Balance Sheet at 31 December
Current
Non-current
2023
2022
-
49
37
29
22
17
140
294
240
48
192
49
40
28
20
15
10
50
212
179
44
135
In addition to the contractual lease commitments, DSM has identified explicit renewal options available to DSM, which are
currently not reasonably certain to be exercised and are therefore not included in the measurement of the lease. The
associated future lease payments which are uncommitted and optional for DSM, are estimated around €181 million
(undiscounted; 2022: €86 million). The interest expense on the lease liabilities was €5 million (2022: €6 million) and the
total repayments of the lease liabilities amounted to €52 million in 2023 (2022: €57 million). These cash flows are
reported as financing cash flows. DSM’s policy regarding financial risk management is described in Note 23 Financial
instruments and risks to the consolidated financial statements.
20 Other non-current liabilities
Accounting policy
Other liabilities are measured at amortized cost, which generally corresponds to the nominal value, or at fair value
through profit and loss. The latter is mainly applied to acquisition-related liabilities.
Government grants are recognized at their fair value if there is reasonable assurance that the grant will be received and
all related conditions will be complied with. Cost grants, which are grants that compensate DSM for expenses incurred,
are recognized as income over the periods necessary to match the grant on a systematic basis to the cost that it is
intended to compensate. If the grant is an investment grant, its fair value is initially recognized as deferred income in
Other non-current liabilities and then released to profit or loss over the expected useful life of the relevant asset.
Investment grants / customer funding
Deferred items
Acquisition-/divestment-related liabilities
Other
Total
2023
54
30
45
1
130
2022
55
25
123
2
205
The change in the Other non-current liabilities includes the settlement of an earn-out liability relating to a previous
acquisition. See also Note 3 Change in the scope of the consolidation to the consolidated financial statements.
DSM Integrated Annual Report 2023
77
Consolidated financial statements – Notes to the consolidated financial statements
21 Current liabilities
Accounting policy
Other liabilities are measured at amortized cost, which generally corresponds to the nominal value, or at fair value
through profit and loss. The latter is mainly applied to acquisition-related liabilities.
Trade payables
Received in advance
Trade accounts payable
Notes and cheques due
Total Trade payables
Income tax payable
Other current liabilities
Other taxes and social security contributions
Interest
Pensions
Investment creditors
Employee-related liabilities
Payables associates and joint ventures relating to cash facility
Related party cash pool
Acquisition-/divestment-related liabilities
Other
Total Other current liabilities
Total current liabilities
2023
2022
8
1,356
-
1,364
133
56
20
1
117
218
3
691
73
-
1,179
2,676
4
1,410
1
1,415
64
46
23
2
118
246
2
-
53
-
490
1,969
Included in trade accounts payable are amounts due to suppliers which could be part of a supply chain finance
arrangement between the supplier and a third-party bank. DSM suppliers have the option to enter into such supply chain
finance arrangements with third party banks, which provides them with the option of earlier payment based on terms
linked to DSM’s investment grade credit rating. If a supplier chooses to participate in such an arrangement, this does not
impact the classification of the trade payable for DSM, as these supply chain finance arrangements are concluded
between the banks and the suppliers and do not alter the payment conditions between the supplier and DSM. Therefore,
these amounts remain classified as trade payables.
Related party cash pool relates to the payable of DSM Finance B.V., the DSM finance entity within the dsm-firmenich
group. See Note 26 Notes to the cash flow statements to the consolidated financial statements for further info.
22 Contingent liabilities and other financial obligations
The contingent liabilities and other financial obligations in the following table are not recognized in the balance sheet.
Guarantee obligations on behalf of associates and third parties
Outstanding orders for projects under construction
Other
Total
DSM Integrated Annual Report 2023
2023
2022
170
-
76
246
178
6
104
288
78
Consolidated financial statements – Notes to the consolidated financial statements
Guarantee obligations are principally related to VAT and duties on the one hand and to financing obligations of
associated companies or related third parties on the other. Guarantee obligations will only lead to a cash outflow when
called upon. At year-end, no obligations had been called upon. Most of the outstanding orders for projects under
construction will be completed in 2024. Other relates mainly to contingent liabilities in contracts for catalysts.
Litigation
DSM has a process in place to monitor legal claims periodically and systematically. DSM is involved in several legal
proceedings, most of which are related to the ordinary course of business. DSM does not expect these proceedings to
result in liabilities that have a material effect on the company's financial position. In cases where it is probable that the
outcome of the proceedings will be unfavorable, and the financial outcome can be measured reliably, a provision has
been recognized in the financial statements and disclosed in Note 18 Provisions to the consolidated financial
statements.
In 2015, an award was issued against DSM Sinochem Pharmaceuticals India Private Ltd. (DSP India) in a protracted
arbitration case in India going back to 2004 involving a joint venture that DSP India had formed with Hindustan
Antibiotics Ltd., which suspended its operations in 2003. DSP India (renamed to Centrient Pharmaceuticals after
divestment by former DSM in 2018) is covered by an indemnity from DSM B.V. for this case. In 2015, DSP India made an
application with the Civil Court in Pune (India) to set aside the arbitral award. The award amounts to INR 127.5 crore (€14
million as at year-end 2023) excluding interest of 12% per year as of 2004. In 2019, former DSM provided the Bombay
High Court a bank guarantee of INR 150 crore (€16 million as at year-end 2023). At the end of 2023, the application
proceedings were still pending. DSM views this case as unfounded and is of the opinion that the likelihood of the award
being ultimately set aside is high. Therefore, no liability is recognized in respect of this case.
In 2019, Brazilian tax authorities disagreed with certain tax treatment as applied by the company in 2014–2016, which
would have an effect on such prior year income tax returns of around BRL 100 million (€19 million as at year-end 2023),
including penalties and interest. DSM views this case as unfounded and considers that the possibility of winning this case
is high, as confirmed by external legal counsel. Therefore, no liability relating to this case is recognized. During 2023 no
relevant developments took place that alter this view.
23 Financial instruments and risks
Policies on financial risks
As an international company, DSM is exposed to financial risks in the normal course of business. A major objective of
Group Treasury is to minimize the impact of market, liquidity and credit risk on the value of the company and its
profitability. In order to achieve this, a systematic financial and risk management system has been established.
Furthermore an internal control framework is in place, and the controls are monitored and tested periodically.
The derivatives contracts used by DSM are entered into exclusively in connection with the corresponding underlying
transaction (hedged item) relating to normal operating business. The instruments used are customary products, such as
currency swaps, cross-currency interest rate swaps, collars, forward exchange contracts and interest rate swaps.
An important element of DSM’s capital management is the allocation of cash flow. DSM primarily allocates cash flow to
investments aimed at strengthening its business positions and securing the payment of dividends to its shareholders.
The remaining cash flow is further used for acquisitions and partnerships that strengthen DSM’s competences and
market positions. The net debt to equity ratio (gearing) is 8.1 (2022: 0.8), see also Note 25 Net debt to the consolidated
financial statements.
DSM Integrated Annual Report 2023
79
Consolidated financial statements – Notes to the consolidated financial statements
Liquidity risk
Liquidity risk is the financial risk that an entity does not have and/or cannot access enough liquid cash and/or assets to
meet its obligations. This can happen if the entity’s credit rating falls, or when it experiences sudden unexpected cash
outflows or an unexpected drop in cash inflows, or some other event that causes counterparties to avoid trading with or
lending to the entity. Additionally, an entity can be indirectly exposed to market liquidity risk if the financial markets on
which it depends are subject to loss of liquidity.
The primary objective of liquidity management is to optimize the corporate cash position, among other things, by
securing availability of sufficient liquidity for execution of payments by DSM entities, at the right time and in the right
place.
At 31 December 2023, DSM had cash and cash equivalents of €2,181 million (2022: €2,755 million).
At the end of 2023, DSM B.V has a committed credit facility amounting to €1.0 billion, maturing on 28 May 2025. The
agreement for the committed credit facility has neither financial covenants nor material adverse changes clauses. The
committed credit facility links the interest rate to DSM’s greenhouse gas (GHG) emission reduction. At year-end 2023, no
loans had been taken up under the committed credit facilities.
The bridge financing facility contracted in 2022 by DSM was cancelled in 2023 and there were no drawings under the
facility.
In 2023, a bridge financing facility amounting to €1.0 billion was contracted by DSM B.V., maturing on 13 December 2025
and there is no drawing under the facility at year-end.
Furthermore, DSM B.V. has a commercial paper program amounting to €2.0 billion (2022: €2.0 billion). The company will
use the commercial paper program to a total of not more than €1.0 billion (2022: €1.0 billion). At 31 December 2023, no
commercial paper had been issued (same as 2022).
DSM has no derivative contracts to manage currency risk or interest rate risk outstanding under which margin calls by the
counterparty would be permitted.
Floating-rate and fixed-rate borrowings and monetary liabilities analyzed by maturity are summarized in the following
table. Borrowings excluding credit institutions are shown after taking into account related interest rate derivatives in
designated hedging relationships. DSM manages financial liabilities and related derivative contracts on the basis of the
remaining contractual maturities of these instruments. The remaining maturities presented in the following table provide
an overview of the timing of the cash flows related to these instruments. Financial assets are not linked to financial
liabilities in order to meet cash outflows on these liabilities.
DSM Integrated Annual Report 2023
80
Consolidated financial statements – Notes to the consolidated financial statements
Carrying
amount
Within 1
year
1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
Financial liabilities
2022
Borrowings
Monetary liabilities
Guarantees
Derivatives
Interest payments
Cash at redemption¹
Total
.
2023
Borrowings
Monetary liabilities
Guarantees
Derivatives
Interest payments
Cash at redemption¹
3,064
2,110
178
27
100
9
5,488
3,118
2,739
170
30
78
7
86
1,969
14
23
27
2
2,121
631
2,682
18
27
29
2
558
579
775
45
28
3
27
2
59
-
1
15
1
15
-
-
10
1
663
655
801
538
788
35
1
-
18
1
6
4
3
10
1
17
3
-
-
4
1
25
After 5
years
1,044
12
136
-
17
2
1,211
617
10
147
-
13
1
22
10
-
-
4
1
37
527
3
-
-
4
1
Total
3,389
1 Difference between nominal redemption and amortized costs.
6,142
593
812
535
788
The following table reflects the exposure of the derivatives to liquidity risk. It contains the cash flows from derivatives
with positive fair values and from derivatives with negative fair values so as to provide a complete overview of the
derivative-related cash flows. The amounts are gross and undiscounted.
Derivatives cash flow
2022
Inflow
Outflow
2023
Inflow
Outflow
2023
2024
2025
2026
2027
Total
2,287
(2,270)
52
(52)
2,407
(2,396)
33
(34)
23
(23)
29
(33)
13
(16)
4
(4)
5
(4)
2,405
(2,393)
2,448
(2,439)
Market risk
Market risk can be subdivided into interest rate risk, currency risk and price risk.
Interest rate risk
Interest rate risk is the risk that adverse movements of interest rates lead to high costs on interest-bearing debt or
assets, which negatively impact the company’s capability to honor its commitments. The aim is to minimize the interest
rate risks associated with the financing of the company and thus at the same time optimizing the net interest costs. This
translates into a certain desired profile of fixed-interest and floating-interest positions, including cash and cash
equivalents, with the floating-interest position not exceeding 60% of net debt.
There were no outstanding fixed-floating interest rate swaps (end of 2022 none).
The following analysis of the sensitivity of borrowings, assets and related derivatives to interest rate movements assumes
an instantaneous 1% change in interest rates for all maturities from their level on 31 December 2023, with all other
variables held constant. A 1% reduction in interest rates would result in a €21 million pre-tax loss in the income statement
DSM Integrated Annual Report 2023
81
Consolidated financial statements – Notes to the consolidated financial statements
and equity on the basis of the composition of financial instruments on 31 December 2023, as floating-rate borrowings are
more than compensated for by floating-rate assets (mainly cash). The opposite applies in the case of a 1% increase in
interest rates. The sensitivity of financial instruments with a floating interest rate on 31 December 2023 to changes in
interest rates is set out in the following table.
For more information regarding fixed or floating interest, see Note 19 Borrowings to the consolidated financial
statements.
Sensitivity to change in interest rate
Loans to associates and joint
ventures
Current investments
Cash and cash equivalents
Short-term borrowings
Long-term borrowings
2023
Sensitivity
Carrying
amount
2022
Sensitivity
Carrying
amount
4
101
2,181
(631)
(2,487)
+1%
-
1
22
(1)
(1)
(1%)
-
(1)
(22)
1
1
2
125
2,755
(86)
(2,978)
+1%
-
1
28
-
(1)
(1%)
-
(1)
(28)
-
1
Currency risk
Currency risk is the risk that adverse movements of foreign currencies negatively impact the results of operations and
the financial condition of the company, for example due to losses on assets or liabilities in foreign currencies. The aim is
to hedge 100% of the currency risks resulting from sales and purchases at the moment of recognition of the receivables
and payables. This is realized by transferring at spot rates the respective exposures to the Group, which are,
consequently (on a netted basis), hedged externally.
In addition, operating companies may — under strict conditions — opt for hedging currency risks from firm commitments
and forecast transactions. The currencies giving rise to these risks are primarily USD, CHF and JPY. The risks arising from
currency exposures are regularly reviewed and hedged when appropriate. DSM uses currency forward contracts, spot
contracts, and average-rate currency forwards and options to hedge the exposure to fluctuations in foreign exchange
rates. At year-end, these instruments had remaining maturities of less than one year. For the hedging of currency risks
from firm commitments and forecast transaction cash flows, hedge accounting is applied. Hedge accounting is not
applied for hedges of recognized trade receivables and trade payables hedged with short-term derivatives.
To hedge intercompany loans, receivables and payables denominated in currencies other than the functional currency of
the subsidiaries, DSM uses currency swaps or forward contracts.
The following analysis of the sensitivity of net borrowings and derivative financial instruments to currency movements
against the euro assumes a 10% change in all foreign currency rates against the euro from their level on 31 December
2023, with all other variables held constant. A +10% change indicates a strengthening of the foreign currencies against the
euro. A -10% change represents a weakening of the foreign currencies against the euro.
DSM Integrated Annual Report 2023
82
Consolidated financial statements – Notes to the consolidated financial statements
Sensitivity to change in exchange rate
2023
Sensitivity
Carrying
amount
2022
Sensitivity
Carrying
amount
+10%
(10%)
+10%
(10%)
Loans to associates and joint
ventures
Current investments
Cash and cash equivalents
Short-term borrowings
(excluding lease liabilities)
Long-term borrowings
(excluding lease liabilities)
Lease liabilities
Currency forward contracts
Average-rate forwards used for
economic hedging¹
Other derivatives
1 Fair-value change reported in Hedging reserve.
4
101
2,181
(583)
(2,295)
(240)
(19)
25
44
-
7
21
(9)
(1)
(19)
(36)
(5)
(6)
-
(7)
(21)
9
1
19
36
5
6
2
125
2,755
(42)
(2,843)
(179)
1
18
78
-
5
29
(4)
(6)
(14)
14
(19)
1
-
(5)
(29)
4
6
14
(14)
19
(1)
Sensitivity changes on these positions will generally be recognized in profit or loss or in the translation reserve in equity,
with the exception of the instruments for which cash flow hedge accounting or net-investment hedge accounting is
applied.
In case of a strengthening or weakening of the euro against USD, CHF and CNY (being the key currencies), this would
affect the translation of financial instruments denominated in these currencies taking into account the effect of hedge
accounting and assuming all other variables being constant.
EUR
USD (10% movement)
CHF (10% movement)
CNY (10% movement)
Profit or loss
Equity
Strengthening
Weakening
Strengthening
Weakening
(19)
26
(128)
19
(26)
128
(299)
(167)
(66)
299
167
66
Price risk
Financial instruments that are subject to changes in stock exchange prices or indexes are subject to a price risk. At year-
end 2023, mainly other participating interests are subject to price risks.
Credit risk
Credit risk is the risk that a (commercial or financial) counterparty may not be able to honor a financial commitment
according to the contractual agreement with DSM. The company manages the credit risk to which it is exposed by
applying credit limits per institution and by dealing exclusively with institutions that have a high credit rating.
At the balance sheet date, there were no significant concentrations of credit risks.
For all financial assets measured at amortized cost, the estimation of the loss allowance for doubtful accounts receivable
is based on an expected credit loss (ECL) model.
For trade receivables, DSM uses an allowance matrix to measure the lifetime ECL for trade receivables. The loss rates
depend among other things on the specified aging categories and are based on historical write-off percentages, taking
market developments into account.
DSM Integrated Annual Report 2023
83
Consolidated financial statements – Notes to the consolidated financial statements
For other financial assets, DSM applies an ECL model that reflects the size and significance of DSM’s exposure to credit
loss. The ECL is based on the allocation of a credit risk grade which is based on data that is determined to be predictive
of the risk of loss (including but not limited to external ratings, audited financial statements, management accounts and
cash flow projections and available press information about customers) and applying experienced credit judgement.
Credit risk grades are defined using qualitative and quantitative factors that are indicative of the risk of default and are
aligned to external credit rating definitions from Moody’s.
Risk of default is herewith considered as the risk of bankruptcy, or any legal impediment to the timely payment of either
interest and/or principal, as well as missed or delayed disbursement of either interest and/or principal.
The loss allowance on non-current financial assets that has been taken into consideration at the end of 2023 was €0
million (2022: €2 million).
With regard to treasury activities (for example cash, cash equivalents and derivatives held with banks or financial
institutions) it is ensured that financial transactions are only concluded with counterparties that have at least a Moody’s
credit rating of A3 for long-term instruments. At Business Unit level, outstanding receivables are continuously monitored
by management. Appropriate allowances are made for any credit risks that have been identified in line with the expected
credit loss policy.
The development of the outstanding trade accounts receivable per aging category is as follows.
Neither past due nor impaired
1–29 days overdue
30–89 days overdue
90 days or more overdue
Total
2023
1,090
56
16
21
1,183
2022
1,117
69
100
20
1,306
The table below provides information about the credit risk exposure per aging category and the ECL for trade accounts
receivable of €18 million at 31 December 2023 (31 December 2022: €12 million), see Note 13 Current receivables to the
consolidated financial statements.
Neither past due nor impaired
1–29 days overdue
30–89 days overdue
90 days or more overdue
Total
Weighted
average
loss rate
0.2%
0.0%
0.0%
76.2%
2023
Gross
carrying
amount
1,090
56
16
21
1,183
Expected
credit loss
(2)
-
-
(16)
(18)
Weighted
average
loss rate
0.1%
0.0%
1.0%
53.0%
2022
Gross
carrying
amount
1,117
69
100
20
1,306
Expected
credit loss
(1)
-
(1)
(10)
(12)
DSM Integrated Annual Report 2023
84
Consolidated financial statements – Notes to the consolidated financial statements
The changes in the expected credit loss for trade accounts receivable are as follows.
Balance at 1 January
Net remeasurement of expected credit loss
Deductions
Disposals
Exchange differences
Balance at 31 December
2023
(12)
(7)
1
-
-
(18)
2022
(23)
7
3
1
-
(12)
The maximum exposure to credit risk is represented by the carrying amounts of financial assets that are recognized in
the balance sheet, including derivative financial instruments. DSM has International Swaps and Derivatives Association
(ISDA) agreements in place with its financial counterparties that allow for the netting of exposures in case of a default of
either party, but do not meet the criteria for offsetting in the balance sheet. The following table presents the carrying
amounts of the derivative financial instruments subject to these agreements. No significant agreements or financial
instruments were available at the reporting date that would reduce the maximum exposure to credit risk.
Exposure to credit risk related to derivatives
Receivables from derivatives presented in the balance sheet
Related amounts not offset in the balance sheet
Net amount
Liabilities from derivatives presented in the balance sheet
Related amounts not offset in the balance sheet
Net amount
Notional value of derivative financial instruments
2023
2022
81
(12)
69
(31)
12
(19)
124
(23)
101
(27)
23
(4)
Cross-currency interest rate swaps
Forward exchange contracts, currency
options, currency swaps
Other derivatives
Total
Non-
current
(25)
2023
2022
Current
Total
Non-current
Current
Total
(31)
(56)
(29)
(87)
(116)
(2)
-
(27)
(761)
-
(763)
-
(792)
(819)
(7)
-
(973)
(1)
(980)
(1)
(36)
(1,061)
(1,097)
Information about financial assets is presented in Note 10 Associates and joint arrangements, Note 11 Other financial
assets, Note 13 Current receivables, Note 14 Current investments and Note 15 Cash and cash equivalents to the
consolidated financial statements.
DSM may grant corporate guarantees for credit support of subsidiaries and associates, to get access to credit facilities
which are necessary for their operating working capital needs and which cannot be funded by the corporate cash pools
and/or for bank guarantees needed for local governmental requirements. Information on guarantees is presented in Note
22 Contingent liabilities and other financial obligations to the consolidated financial statements.
DSM Integrated Annual Report 2023
85
Consolidated financial statements – Notes to the consolidated financial statements
Hedge accounting
DSM uses derivative financial instruments to manage financial risks relating to business operations and does not enter
into speculative derivative positions. The purpose of cash flow hedges is to minimize the risk of volatility of future cash
flows. These may result from a recognized asset or liability or a forecast transaction that is considered highly probable
(firm commitment). DSM determines the existence of an economic relationship between the hedging instrument and
hedging item based on currency, amount and timing of their respective cash-flows. The hedge ratio is dependent on the
risk analysis related to the specific cash flow, and can vary from 50% to 100%. Changes in fair value as a result of changes
in interest (for cash flows hedges) or as a result of changes in exchange rate (for firm commitment hedges) are
recognized in Other comprehensive income (Hedging reserve), and ineffectiveness (mainly as a result of changes in
timing of the hedged transactions) will be recognized in the income statement. As soon as the forecast transaction is
realized (the underlying hedged item materializes), the amount recognized in the Other comprehensive income will be
reclassified to the income statement. In case the hedged future transaction is a non-financial asset or liability, the gain or
loss recognized in Other comprehensive income will be included in the cost of acquisition of the asset or liability.
The purpose of a hedge of a net investment is to reduce the foreign currency translation risk of an investment in a
company whose functional currency is not the euro. Changes in fair value are recognized in Other comprehensive income
(Translation reserve), and ineffectiveness will be recognized in the income statement. The amount recognized in Other
comprehensive income will be reclassified to the income statement, upon divestment of the respective foreign
subsidiary.
The purpose of a fair value hedge is to hedge the fair value of assets or liabilities reflected on the balance sheet. Changes
of fair value in hedging instruments, as well as hedged items, will be recognized in the income statement.
Cash flow hedges
In 2023, DSM hedged USD 498 million (2022: USD 611 million) of its 2024 projected net cash flow in USD against the EUR
by means of average-rate currency forward contracts at an average exchange rate of USD 1.10 per EUR for the four
quarters of 2024. Each quarter, the relevant hedges for that quarter will be settled and recognized in the income
statement.
In 2023, DSM also hedged JPY 7,535 million (2022: JPY 5,687 million) of its 2024 projected net cash flow in JPY against
the EUR by means of average-rate currency forward contracts at an average exchange rate of JPY 147.11 per EUR for the
four quarters of 2024. DSM also hedged the projected CHF obligations against the EUR, namely CHF 393 million (2022:
CHF 417 million) at an average exchange rate of CHF 0.95 per EUR. These hedges have fixed the exchange rate for part of
the USD and JPY receipts and CHF payments in 2024. Cash flow hedge accounting is applied for these hedges. As a
result of similar hedges concluded in 2022 for the year 2023, €24 million positive was recognized in the 2023 operating
profit of the segments involved in accordance with the realization of the expected cash flows. There was no
ineffectiveness in relation to these hedges.
DSM Integrated Annual Report 2023
86
Consolidated financial statements – Notes to the consolidated financial statements
Net investment hedges
The partial hedging of the currency risk associated with the translation of DSM’s CHF-denominated investments was zero
at end of 2023 (same as 2022).
2022
Nominal amount hedged item
Carrying amount assets
Carrying amount liabilities
Line item balance sheet
Change in the value of the hedging instrument
Costs of hedging recognized in OCI
Reclassified from hedging reserve to income statement
Line item income statement
.
2023
Nominal amount hedged item
Carrying amount assets
Carrying amount liabilities
Line item balance sheet
Change in the value of the hedging instrument
Costs of hedging recognized in OCI
Reclassified from hedging reserve to income statement
Line item income statement
Cash flow hedges
Foreign currency risk
Inventory purchases
Other
29
1
-
Derivatives
4
4
10
Cost of sales
12
1
-
Derivatives
-
-
2
Cost of sales
194
18
-
Derivatives
(28)
1
30
Sales
108
25
(1)
Derivatives
(6)
(30)
(24)
Sales
Fair value of financial instruments
The fair value of derivatives and long-term instruments are based on calculations, quoted market prices or quotes
obtained from intermediaries.
The portfolio of derivatives consists of average-rate forward contracts that are valued against average foreign exchange
forward rates obtained from Bloomberg and other derivatives that are valued using a discounted cash flow model,
applicable market yield curves and foreign exchange spot rates. Inputs for the fair value calculations represent
observable market data that are obtained from external sources that are deemed to be independent and reliable.
DSM uses the following hierarchy for determining the fair value of financial instruments:
Level 1: quoted prices in active markets for identical assets or liabilities
•
•
•
Level 2: other techniques for which all inputs that have a significant effect on the fair value are observable, either
directly or indirectly
Level 3: techniques that use inputs that have a significant effect on the fair value that are not based on
observable market data
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for the financial assets and financial liabilities
measured at amortized cost if the carrying amount is a reasonable approximation of the fair value.
DSM Integrated Annual Report 2023
87
Consolidated financial statements – Notes to the consolidated financial statements
Fair value of financial instruments
Carrying amount
Fair Value
Amort.
Cost
Fair value
hedging
instr.
FVTPL
FVOCI
Total
Level 1 Level 2 Level 3
Total
Assets 2022
Non-current derivatives
Other participating interests
Non-current loans to associates and JVs
Other non-current receivables
Trade receivables
Other current receivables
Current derivatives
Current investments
Cash and cash equivalents
Liabilities 2022
Non-current borrowings
Non-current derivatives
Other non-current liabilities
Current borrowings
Current derivatives
Trade payables
Other current liabilities
.
Assets 2023
Non-current derivatives
Other participating interests
Non-current loans to associates and JVs
Other non-current receivables
Trade receivables
Other current receivables
Current derivatives
Current investments
Cash and cash equivalents
Liabilities 2023
Non-current borrowings
Non-current derivatives
Other non-current liabilities
Current borrowings
Current derivatives
Trade payables
Other current liabilities
-
-
2
158
1,508
78
-
125
1,262
(2,978)
-
(82)
(86)
-
(1,415)
(490)
-
-
4
63
1,535
286
-
101
1,250
(2,487)
-
(85)
(631)
-
(1,364)
(1,179)
4
-
-
-
-
-
42
-
-
-
(4)
-
-
(23)
-
-
2
-
-
-
-
-
35
-
-
-
(3)
-
-
(28)
-
-
78
-
-
-
-
-
-
-
1,493
-
-
(123)
-
-
-
-
44
-
-
-
-
-
-
-
931
-
-
(45)
-
-
-
-
-
125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
139
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82
125
2
158
1,508
78
42
125
2,755
(2,978)
(4)
(205)
(86)
(23)
(1,415)
(490)
46
139
4
63
1,535
286
35
101
2,181
(2,487)
(3)
(130)
(631)
(28)
(1,364)
(1,179)
-
27
82
62
-
36
82
125
-
42
1,493
-
-
-
42
1,493
(2,432)
-
-
-
-
-
(4)
-
-
(23)
-
-
(123)
-
-
(2,432)
(4)
(123)
-
(23)
-
38
46
78
-
23
46
139
-
35
931
-
-
-
35
931
(2,065)
-
-
(498)
-
-
(3)
-
-
(28)
-
-
(45)
-
-
(2,065)
(3)
(45)
(498)
(28)
DSM Integrated Annual Report 2023
88
Consolidated financial statements – Notes to the consolidated financial statements
24 Employee benefits
Accounting policy
Short-term employee benefits
Short-term employee benefits are generally recognized as an expense in the period the employee renders services to
DSM.
Post-employment benefits: Defined contribution plans
For DSM’s defined contribution plans, the obligations are limited to the payment of contributions, which are recognized
as Employee benefit costs.
Post-employment benefits: Defined benefit plans
For defined benefit plans, the aggregate of the value of the defined benefit obligation and the fair value of plan assets for
each plan is recognized as a net defined benefit liability or asset. Defined benefit obligations are determined using the
projected unit credit method. Plan assets are recognized at fair value. If the fair value of plan assets exceeds the present
value of the defined benefit obligation, a net asset is only recognized to the extent that the asset is available for refunds
to the employer or for reductions in future contributions to the plan. Defined benefit pension costs consist of three
elements: service costs, net interest, and remeasurements. Service costs are part of Employee benefit costs and consist
of current service costs. Past service costs and results of plan settlements are included in Other operating income or
expense. Net interest is part of Finance income and expense and is determined on the basis of the value of the net
defined benefit asset or liability at the start of the year, and on the interest on high-quality corporate bonds.
Remeasurements are actuarial gains and losses, the return (or interest cost) on net plan assets (or liabilities) excluding
amounts included in net interest and changes in the effect of the asset ceiling. These remeasurements are recognized in
Other comprehensive income as they occur and are not recycled through profit or loss at a later stage.
Post-employment defined benefit plans include pension plans and other post-employment benefits.
Other employee benefits
The service cost, the net interest on the net defined liability (asset) and remeasurements of the net defined liability
(asset) related to other long-term employee benefits, such as jubilee and incentive plans, are recognized in profit or loss.
Estimates and judgments
Management makes assumptions regarding variables such as discount rate, future salary increases, life expectancy, and
future healthcare costs. Management consults with external actuaries regarding these assumptions at least annually for
significant plans. Changes in these key assumptions can have a significant impact on the projected defined benefit
obligations, funding requirements and periodic costs incurred.
The Employee benefit liabilities of €291 million (2022: €292 million) consist of €249 million related to pensions (2022:
€247 million), €20 million related to other post-employment benefits (2022: €16 million) and €22 million related to other
employee benefits (2022: €29 million). See also the table below.
Employee benefit liabilities
Pension plans and other post-employment benefits
Other employee benefits
Total
Of which current
DSM Integrated Annual Report 2023
2023
2022
269
22
291
2
263
29
292
5
89
Consolidated financial statements – Notes to the consolidated financial statements
The Group operates a number of defined benefit plans and defined contribution plans throughout the world, the assets
of which are generally held in separately administered funds. The pension plans are generally funded by payments from
employees and from the relevant group companies. The Group also provides certain additional healthcare benefits to
retired employees in the US and Switzerland.
Post-employment benefits are employee benefits (other than termination benefits and short-term employee benefits)
that are payable after the completion of employment. Post-employment benefit accounting is intended to reflect the
recognition of post-employment benefits over the employee’s approximate service period, based on the terms of the
plans and the investment and funding.
The charges for post-employment benefit costs recognized in the income statement (Note 5 Net sales and costs to the
consolidated financial statements) relate to the following.
Post-employment benefit costs
Defined benefit plans:
- Current service costs pension plans
- Other post-employment benefits
Defined contribution plans
Total pension costs included in employee benefit costs
- Pension costs included in Other operating (income) / expense
Total in operating profit, continuing operations
Pension costs included in Financial income and expense
Total continuing operations
Discontinued operations
Total
Of which:
- Defined contribution plans
- Defined benefit plans
2023
2022
30
3
63
96
(1)
95
7
102
4
106
65
41
38
3
61
102
(2)
100
3
103
19
122
79
43
For 2024, costs for the defined benefit plans relating to pensions are expected to be €43 million (2023: €40 million).
Changes in net liabilities of the post-employment benefits recognized in the balance sheet are shown in the following
overview.
DSM Integrated Annual Report 2023
90
Impact of
minimum
funding
requirement/
asset ceiling
-
Net liabilities/
(assets)
recognized in
the
balance sheet
269
Consolidated financial statements – Notes to the consolidated financial statements
Balance at 1 January 2022
Included in income statement:
- Current service cost
- Interest expense / (income)
Total included in income statement
Included in other comprehensive income:
- Loss / (gain) from change in financial assumptions
- Return on plan assets excluding interest income
- Asset ceiling change, excluding movement through income statement
Total included in other comprehensive income
Other
- Benefits paid (including transfers in and out)
- Contributions by plan participants
- Employer contributions
- Currency translation adjustment and other
- Reclassification held for sale
Total other
Funded and
unfunded
defined
benefit
obligations
2,156
40
19
59
(500)
-
-
(500)
(84)
19
-
63
(5)
(7)
Fair value of plan
assets
(1,887)
-
(16)
(16)
-
369
-
369
70
(19)
(42)
(68)
-
(59)
-
-
-
-
-
126
126
-
-
-
3
-
3
Balance at 31 December 2022
1,708
(1,593)
129
.
Net defined benefit assets
Net defined benefit liabilities
Total
.
- Current service cost
- Interest (expense) / income
Total included in income statement
Included in other comprehensive income:
- Loss / (gain) from change in demographic assumptions
- Loss / (gain) from change in financial assumptions
- Experience loss / (gain)
- Return on plan assets excluding interest income
- Asset ceiling change, excluding movement through income statement
Total included in other comprehensive income
Other
- Benefits paid (including transfers in and out)
- Contributions by plan participants
- Employer contributions
- Settlements
- Balance sheet transfer
- Acquisition / disposals
- Currency translation adjustment and other
Total other
.
Balance at 31 December 2023
.
Net defined benefit assets
Net defined benefit liabilities
Total
DSM Integrated Annual Report 2023
35
49
84
(3)
112
26
-
-
135
(90)
20
-
(190)
4
3
79
(174)
-
(45)
(45)
-
-
-
(43)
-
(43)
67
(20)
(46)
186
-
-
(84)
103
-
3
3
-
-
-
-
(58)
(58)
-
-
-
-
-
-
5
5
1,753
(1,578)
79
254
(15)
269
254
91
40
3
43
(500)
369
126
(5)
(14)
-
(42)
(2)
(5)
(63)
244
(19)
263
244
35
7
42
(3)
112
26
(43)
(58)
34
(23)
-
(46)
(4)
4
3
-
(66)
Consolidated financial statements – Notes to the consolidated financial statements
The fair value of the plan assets consists of 93% of quoted assets (2022: 94%).
Pension-plan assets by category
Equities
Bonds
Derivatives
Property
Insurance policies
Other
Cash and bank deposits
Total plan assets
2023
2022
445
606
-
362
2
140
22
389
730
-
350
1
108
15
1,577
1,593
The pension-plan assets include neither ordinary DSM shares nor property occupied by DSM.
The countries with the most significant defined benefit obligations for DSM are specified in the following table.
Defined benefit plans in core countries
Switzerland
United
States of
America
United
Kingdom
Germany
Other
countries
Total
Defined benefit plans 2022
Funded and unfunded defined benefit
obligations
Fair value of plan assets
Net excess of liabilities/(assets) over
obligations
Unrecognized assets due to asset ceiling
Net excess of liabilities/(assets) over
obligations recognized
.
Composed of
Net defined benefit assets
Net defined benefit liabilities
Total changes
.
Defined benefit plans 2023
Funded and unfunded defined benefit
obligations
Fair value of plan assets
Net excess of liabilities/(assets) over
obligations
Unrecognized assets due to asset ceiling
Net excess of liabilities/(assets) over
obligations recognized
.
Composed of
Net defined benefit assets
Net defined benefit liabilities
Total changes
DSM Integrated Annual Report 2023
1,096
(1,228)
(132)
124
(8)
(9)
1
(8)
1,320
(1,407)
(87)
79
(8)
(9)
1
(8)
201
(203)
159
(154)
(2)
4
2
(10)
12
2
9
(6)
3
-
3
(6)
9
3
5
1
6
-
6
6
164
(154)
10
-
10
-
10
10
244
(8)
236
-
236
-
236
236
244
(11)
233
-
233
-
233
233
8
-
8
-
8
-
8
8
16
-
16
-
16
-
16
16
1,708
(1,593)
115
129
244
(19)
263
244
1,753
(1,578)
175
79
254
(15)
269
254
92
Consolidated financial statements – Notes to the consolidated financial statements
The main actuarial assumptions for the year (weighted averages) are:
Actuarial assumptions for major plans
2022
Discount rate
Price inflation
Salary increase
Pension increase
.
2023
Discount rate
Price inflation
Salary increase
Pension increase
Switzerland
United States of
America
United Kingdom
Germany
2.20%
1.25%
2.25%
0.00%
1.30%
1.25%
2.25%
0.00%
5.40%
0.00%
3.00%
0.00%
5.00%
0.00%
3.00%
0.00%
4.80%
3.35%
0.00%
3.15%
4.50%
3.15%
0.00%
3.00%
3.70%
0.00%
3.20%
2.60%
3.20%
0.00%
2.80%
2.20%
The above-mentioned actuarial assumptions are harmonized for all defined benefit plans in a country.
Sensitivities of significant actuarial assumptions
The discount rate, the future increase in wages and salaries and the pension increase rate were identified as significant
actuarial assumptions. The following impacts on the defined benefit obligation are to be expected.
• A 0.25% increase/decrease in the discount rate would lead to a decrease/increase of 2.6% (2022: 2.5%) in the
defined benefit obligation
• A 0.25% increase/decrease in the expected increase in salaries/wages would lead to an increase/decrease of
0.3% (2022: 0.3%) in the defined benefit obligation
• A 0.25% increase/decrease in the expected rate of pension increase would lead to an increase/decrease of less
than 1.4% (2022: 0.6%) in the defined benefit obligation
The sensitivity analysis is based on realistically possible changes as at the end of the reporting year. Each change in a
significant actuarial assumption was analyzed separately as part of the test. Interdependencies were not taken into
account.
Main defined benefit plans description
The DSM Group companies have various pension plans, which are geared to the local regulations and practices in the
countries in which they operate. As these plans are designed to comply with the statutory framework, tax legislation,
local customs, and economic situation of the countries concerned, it follows that the nature of the plans varies from
country to country. The plans are based on local legal and contractual obligations.
DSM‘s current policy is to offer defined contribution retirement benefit plans to new employees wherever possible.
However, DSM still has a (small) number of defined benefit pension and healthcare schemes from the past or in countries
where legislation does not allow us to offer a defined contribution scheme. Generally, these schemes have been funded
through external trusts or foundations, where DSM faces the potential risk of funding shortfalls.
DSM Integrated Annual Report 2023
93
Consolidated financial statements – Notes to the consolidated financial statements
The most significant defined benefit schemes are:
•
•
•
•
DSM Nutritional Products (DNP) AG Pension Plan in Switzerland (DNP AG)
DSM UK Pension Scheme in the UK
Consolidated Pension Plan of DSM North America, Inc. in the US
Pension Plan at DSM Nutritional Products GmbH in Germany (DNP GmbH)
For each plan, the following characteristics are relevant:
DNP AG Pension Plan in Switzerland
The DNP AG Pension Plan is a typical Swiss Cash Balance plan. For accounting purposes, this plan is qualified as a defined
benefit plan. It is a contribution-based plan, with no promise of indexation for on-going pensions. The Swiss state minimal
requirements for occupational benefit plans have however to be respected.
The purpose of the plan is to protect the (legacy) DSM employees against the economic consequences of retirement,
disability and death. The employer and employees pay contributions to the pension plan at rates set out in the pension
plans rules based on a percentage of salary. The amount of the retirement account can be taken by the employee at
retirement in the form of pension or capital.
The weighted average duration of the defined benefit obligation is 10.8 years (2022: 10.0 years) which could be seen as
an indication of the maturity profile of the scheme.
According to the Swiss Federal Law on Occupational Retirement, Survivors and Disability (LPP/BVG), the Swiss Pension
plans are managed by independent and legally autonomous entities which have the legal structure of foundation. The
Pension Boards are composed of equal numbers of employee and employer representatives. Each year, the Pension
Boards decide the level of interest, if any, to apply to the retirement accounts in accordance with the pension policy.
It is also responsible for the investment of the assets and defining the investment strategy for long-term returns with an
acceptable level of risk. The plan assets are collectively invested (no individual investment choice).
DSM UK Pension Scheme
The DSM UK Pension Scheme was closed as of 30 September 2016 for all pension accruals. An unconditional indexation
policy is applicable for the vested pension rights.
The weighted average duration of the defined benefit obligation is 13.9 years (2022: 14.3 years), which could be seen as
an indication of the maturity profile of the scheme.
The pension plan is managed and controlled by a DSM company pension fund. The Board of Trustees consists of
representatives of the employer and the employees who have an independent role. Till last year, there were two company
guarantees in place: (1) a guarantee from DNP AG (capped at GBP 14 million) related to the 2012 valuation, and (2) a
guarantee from DSM B.V. (capped at GBP 11 million) related to arrangements with respect to former UK divestments. Both
guarantees were surrendered by a one-time payment of the company.
There is a long-term de-risking strategy for the DSM UK Pension Scheme in place with the objective to align the
company’s intentions and the Trustees responsibility with respect to this plan.
Consolidated Plan of DSM North America, Inc. in the US
The Consolidated Plan in the US has been closed to new entrants since 2014. As of 31 December 2016, the plan was
closed for pension accrual of the non-unionized employees, and as a result of the DRF divestment in 2021, it was fully
frozen for all unionized employees as well. In December 2023, all pension liabilities within the plan were fully settled with
an insurance company.
DSM Integrated Annual Report 2023
94
Consolidated financial statements – Notes to the consolidated financial statements
As a result of the settlement, the weighted average duration of the defined obligations is 0.0 years (2022: 9.7 years).
The pension plan was managed and controlled by a DSM company pension fund. The pension fund will finalize the last
formalities and will finally be liquidated.
DNP GmbH Pension Plan in Germany
The DNP GmbH Pension Plan in Germany has been closed to new entrants as of 31 December 2008. The accrual is still
applicable for employees who have been participating in the plan since 2008. The pension plan is a final-pay pension
plan (averaged over the last 12 months prior to retirement) and service-related benefit.
The liability is on the balance sheet of DSM Nutritional Products GmbH. No assets are allocated to this liability. All
reimbursements will be paid out by the local company.
The weighted average duration of the defined benefit obligation is 12.0 years (2022: 12.9 years), which could be seen as
an indication of the maturity profile of the scheme.
Other employee benefits
Other employee benefits comprise jubilees, long-term incentive (LTI) plans to senior management and deferred
compensation liabilities. The changes in other employee benefits are listed below.
Balance at 1 January 2022
Of which current
Changes:
- Additions
- Uses
- Reclassification to held for sale
Total changes
Balance at 31 December 2022
Of which current
.
Changes:
- Acquisition
- Additions
- Releases
- Uses
- Other change
Total changes
Balance at 31 December 2023
Of which current
Other employee benefits
40
5
(3)
(4)
(4)
(11)
29
5
-
2
(2)
(7)
-
(7)
22
2
DSM Integrated Annual Report 2023
95
Consolidated financial statements – Notes to the consolidated financial statements
25 Net debt
The development of the components of net debt is as follows.
Balance at 1 January 2022
Change from operating activities
Change from investing activities
Reclassification from non-current to
current
Transfers
Dividend
Interest
Proceeds from reissued shares
New/unwinding leases
Repurchase of shares
Other
Change from financing activities
Exchange differences
Total changes
Cash and
cash
equivalents
1,561
965
876
-
(58)
(345)
(52)
25
-
(210)
(5)
(645)
(2)
Current
investments
489
-
(364)
-
-
-
-
-
-
-
-
-
-
1,194
(364)
Non-
current
borrowings
(2,995)
Current
borrowings
Derivatives
Total
(103)
29
(1,019)
(9)
7
40
17
-
-
-
(34)
-
-
23
(4)
17
-
20
(40)
39
-
-
-
-
-
-
(1)
(2)
17
65
1,021
-
539
-
2
-
-
-
-
-
(5)
-
-
(345)
(52)
25
(34)
(210)
(10)
(3)
(626)
6
(2)
68
932
Balance at 31 December 2022
2,755
125
(2,978)
(86)
97
(87)
.
Change from operating activities
Change from investing activities
Reclassification from non-current to
current
Transfers
Dividend to shareholders on AEX
Interest
Proceeds from reissued shares
New/unwinding leases
Repurchase of shares
Funding cash pool
Other
Change from financing activities
Exchange differences
Total changes
Balance at 31 December 2023
576
2,711
-
(73)
(3,935)
(14)
8
-
(256)
425
(7)
(3,852)
(9)
(574)
2,181
-
(24)
-
-
-
-
-
-
-
-
-
-
-
-
-
544
57
-
(2)
-
(108)
-
-
-
491
-
-
(13)
(544)
12
-
-
-
-
-
-
-
(532)
(51)
525
-
2,674
-
-
-
4
- (3,935)
(16)
-
-
8
(108)
-
(256)
-
425
-
-
(7)
4 (3,889)
-
-
(9)
(24)
491
(545)
(47)
(699)
101
(2,487)
(631)
50
(786)
For the explanation of change related to Funding cash pool, see Note 26 Notes to the cash flow statements to the
consolidated financial statements.
In 2023, the gearing (net debt / equity plus net debt) was 8.1% (in 2022: 0.8%).
DSM Integrated Annual Report 2023
96
Consolidated financial statements – Notes to the consolidated financial statements
26 Notes to the cash flow statements
The cash flow statement provides an explanation of the changes in cash and cash equivalents. It is prepared on the basis
of a comparison of the balance sheets at 1 January and 31 December. Changes that do not involve cash flows, such as
changes in exchange rates, amortization, depreciation, impairment losses and transfers to other balance sheet items, are
eliminated.
Changes in working capital due to the acquisition or disposal of consolidated companies are included under Investing
activities.
The Consolidated cash flow statement includes an analysis of all cash flows in total, therefore including both continuing
and discontinued operations. For the amounts related to discontinued operations split by activities and a reconciliation
of results from continuing operations to total, see Note 3 Change in the scope of the consolidation to the consolidated
financial statements.
Most of the changes in the cash flow statement can be traced back to the detailed statements of changes for the
balance sheet items concerned.
Acquisition of subsidiaries of €389 million consists of the cash related part of the consideration for Adare Biome of
€290 million and acquisition/integration/earn-out related costs of €100 million, offset partly by the cash held by the
acquired entities of €1 million. The disposal of subsidiaries, businesses and associates of €3,533 million consists
primarily of the cash impact of the divestment of the Engineering Materials business for €3,553 million. See also Note 3
Change in the scope of the consolidation to the consolidated financial statements.
Funding Cash pool
Funding cash pool relates to Group cash management facility within the dsm-firmenich Group. Cash balances of the
dsm-firmenich Group are pooled and transferred to a centralized treasury function within DSM to the extent legally and
fiscally possible. Cash balances of dsm-firmenich subsidiaries are swept daily to bank accounts centrally held by DSM
Finance B.V., to the extent legally possible, which as such result in a receivable balance on or payable balance to DSM
Finance B.V.
27 Share-based compensation
Accounting policy
Share-based compensation at DSM consists of the granting of Performance Share Units (PSUs) and Restricted Share
Units (RSUs), and stock option plans to eligible employees.
PSUs and RSUs generally vest after three years on the achievement of predefined vesting conditions. The cost of PSUs
and RSUs is measured by reference to the fair value of the DSM-Firmenich AG and former Koninklijke DSM N.V. shares on
the date on which the PSUs and RSUs were granted or modified. The cost is recognized in profit or loss (Employee benefit
costs) during the vesting period, together with a corresponding increase in equity. The transaction is classified as an
equity-settled transaction because DSM has no obligation to settle the transaction with its eligible employees. The
obligation to settle was transferred to DSM-Firmenich AG (the parent and issuing entity) following the swap of shares
after the merger. Vesting conditions other than market conditions are considered by adjusting the number of equity
instruments, so that the amount recognized during the vesting period in employee benefit costs is based on the number
of share units that eventually vest.
DSM Integrated Annual Report 2023
97
Consolidated financial statements – Notes to the consolidated financial statements
Estimates and judgments
Key estimates related to share-based compensation costs for PSUs and RSUs are the estimation of fair values of the
shares on the grant or modification date, and the number of shares that will vest. An independent third party conducts
the fair value calculation as far as vesting is tied to market conditions, using the Monte Carlo method.
Restricted- and Performance Share Unit Plan
Following the merger, all shares in the Restricted- and Performance Share Unit Plan based on former Koninklijke DSM N.V
shares of the plans were converted to shares of DSM-Firmenich AG.
The DSM and dsm-firmenich Restricted- and Performance Share Unit Plans provide rules for the grant of RSUs and/or
PSUs to eligible employees. Considering the plan rules that allow multiple grant dates, best practice is to effectuate the
grant of share units on the last trading day at the Amsterdam Stock Exchange in March. In principle PSUs will be granted;
RSUs may be granted in specific circumstances.
The number of share units to be granted is based on job level, contribution, and the face value of the dsm-firmenich
share over a reference period. As a result, the number of share units to be granted annually will fluctuate with the share
price development.
RSUs and PSUs are subject to a vesting period of 3 years starting at the grant date. Vesting of RSUs is subject to
continued employment until the vesting date (‘time vesting’). In addition, vesting of PSUs is also subject to the
achievement of predefined performance targets at the end of the performance period. In view of the merger of equals
between DSM and Firmenich, it was decided (as included in the Offering Circular) that the PSUs granted under DSM’s
Long-Term Incentive plan in 2021 and 2022, respectively, shall vest against the average of the vesting result achieved over
the vesting that occurred in 2020, 2021 and 2022. Non-vested share units will be forfeited. If employment is terminated
prior to the vesting date, specific rules regarding vesting and forfeitures apply.
As included in the Offering Circular, all rights of eligible persons recorded as outstanding immediately prior to the
settlement of the merger related to equity grants made under DSM legacy plans related to DSM stock, such as PSUs,
RSUs or stock options, have been exchanged for equivalent rights related to dsm-firmenich stock (‘roll-over’).
The 2023 grant of PSUs under the dsm-firmenich Restricted- and Performance Share Unit Plan to Members of the
Executive Committee and other eligible employees is based on the at target level; in 2023 this concerned 156,299 share
units.
At DSM, grants to the Executive Committee were based on the maximum number to vest while the grant to other eligible
employees is – as of 2021 – based on the ‘at-target’ grant level (in previous years this was the ‘maximum number’ that
could vest). This ‘at-target’ grant level includes RSUs as well as PSUs. The 2020 grant vested 31 March 2023. The vesting
percentage for the Managing Board / Executive Committee was 105% of the at target grant (or 70% of the maximum to
vest i.e., the number initially granted). For other eligible employees, all outstanding RSUs vested the vesting date, while the
vesting % for the PSUs was 135% of the at target grant. In total 110,985 share units of this series vested.
DSM Integrated Annual Report 2023
98
Consolidated financial statements – Notes to the consolidated financial statements
Overview of share units eligible employees from DSM
Year of
grant
In 2023
Granted
Vested¹
Outstanding
at
31 Dec. 2022
Forfeited/
expired
Outstanding
at
31 Dec. 2023
Share price
at date of
grant (€)
Expiry date
2020
2021
2022
2023
2023
Total
97,386
83,711
85,707
-
14,762
-
-
156,299
(110,985)
(11,650)
(10,165)
(1,546)
(1,163)
(2,178)
(3,033)
(2,864)
-
69,883
72,509
151,889
103.50
144.30
162.50
97.67
31 Mar 2023
31 Mar 2024
31 Mar 2025
31 Mar 2026
266,804
at
31 Dec. 2021
171,061
(134,346)
(9,238)
294,281
at
31 Dec. 2022
2022
Total
1 Restricted- and Performance Share Units may partly vest upon termination of employment in connection with, for example, divestments, reti rement or
266,804
(24,630)
236,833
(35,885)
90,486
early retirement.
In September 2022, a group of senior key employees (excluding the Co-CEOs) at DSM received an RSU grant, which was
subject to completion of the merger between DSM and Firmenich. As the merger was completed, the RSUs were finally
granted. Upon vesting, the respective grant will be settled in cash. These cash-settled RSUs vest in September 2025 and
have a fair value on 31 December 2023 of €92.00.
Overview of cash-settled RSUs
Year of
grant
Granted
Outstanding
at
31 Dec. 2022
In 2023
Vested
Forfeited/
expired
Outstanding
at
31 Dec. 2023
Share price
at date of
grant (€)
Expiry date
2022
92,861
194
(4,141)
(4,130)
84,784
117.45 30 Sep 2025
Measurement of fair value
The following assumptions were used to determine the fair value of the equity-settled share units at grant date.
Assumptions equity-settled share units
Share units granted to certain executives
Risk-free rate¹
Expected share life in years
Nominal share life in years
Share price in €¹
Expected dividend in €
Fair value of share granted in €
1 The differences in the risk-free rate and share price are due to different grant dates.
2023
2022
2.79%
3
3
100.50
1.00
97.67
0.25%
3
3
162.50
2.50
156.37
Share-based compensation
An amount of €23 million is included in the costs for wages and salaries for share-based compensation (2022: €35
million). The following table specifies the share-based compensation.
Share-based compensation
Stock options
Equity-settled share units
Cash-settled share units
Total expense
DSM Integrated Annual Report 2023
2023
2022
-
18
5
23
7
27
1
35
99
Consolidated financial statements – Notes to the consolidated financial statements
28 Related parties
Accounting policy
DSM has identified its key management personnel, the other entities from the dsm-firmenich Group and its associates
and joint ventures as related parties. For associates and joint ventures, see also Note 10 Associates and joint
arrangements to the consolidated financial statements.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, as defined by IAS 24 ‘Related Parties’. IAS 24 requires disclosure of key
management personnel split in the total of short-term employee benefits (salary and short-term incentive), post-
employment (pension expenditure) and other long-term benefits, termination benefits and share-based payment cost
(share-based compensation).
Transactions with related parties
DSM-Firmenich AG (equity holder)
Sales to
Receivables from
In-house cash receivables (payables)
Interest from
Firmenich entities
Sales to
Receivables from
In-house cash receivables (payables)
Associates and joint ventures
Sales to
Purchases from
Loans to
Receivables from
Payables to
Interest from
Commitments to
2023
2022
17
33
(692)
4
62
46
177
8
96
4
16
3
-
6
-
-
-
-
-
-
18
35
1
17
4
1
-
DSM issued dividends to DSM-Firmenich AG for respectively €3.5 billion as part of the merger with Firmenich group and
€278 million as regular dividends in 2023. See Note 26 Notes to the cash flow statements and Note 16 Equity to the
consolidated financial statements for more information on those transactions. DSM recharged to DSM-Firmenich AG €14
million of cost recharge.
DSM may issue guarantees as credit enhancement of associates to acquire bank facilities for these associates. DSM has
provided guarantees to third parties for debts of associates for an amount of €28 million (2022: €60 million). Expected
credit losses for receivables from related parties amount to zero (same as 2022).
Other related-parties disclosures relate entirely to key management of DSM, being represented by the company’s
management. For further details about their remuneration, see below.
Key management personnel
The remuneration of key personnel concerns the Supervisory Board and Executive Committee (which includes the
Managing Board) of Koninklijke DSM N.V., renamed DSM B.V.
DSM Integrated Annual Report 2023
100
Consolidated financial statements – Notes to the consolidated financial statements
On April 18, 2023, DSM-Firmenich AG, the parent company of the merger combination DSM and Firmenich, was listed on
Euronext Amsterdam. As a result, the expenses reported herein concern two periods. The first period is about the
remuneration awarded to the members of the Supervisory Board and the Executive Committee (including the Managing
Board) of DSM, insofar as their appointment in such capacity relates to the period from 1 January 2023 until 18 April 2023.
The second period concerns the remuneration awarded to the members of the Supervisory Board and the Managing
Board DSM B.V., insofar as their appointment in such capacity relates to the period from 18 April 2023 until 31 December
2023. For that period, their costs were borne by DSM-Firmenich AG and not directly charged to DSM.B.V. or its
subsidiaries.
Remuneration expenses Supervisory Board, Managing Board, and Executive Committee of DSM awarded
to members of the Supervisory Board, Managing Board and Executive Committee of DSM appointed in
that capacity for the period 1 January 2023 until 18 April 2023
x € thousand
2023
2022
Base salary / Supervisory Board fees
Employer pension contribution
Short-Term Incentive¹
Share-based compensation²
Other³
Total
1 Short-Term Incentive based on target level minus weight of EBITDA target.
2,391
471
869
2,518
16,562
6,521
1,197
3,399
7,778
6,612
22,811
25,507
2 Represents the expenses of Performance Share Units (PSUs) awarded according to IFRS rules. These costs are considered over the vesting period and
therefore cover several years.
3
Includes benefits, severance payments for Executive Committee members that left the Company because of the merger, special payments as included
in the Offering Circular (issued 22 November 2022) related to the merger, settlement DSM STI Deferral and Matching Plan, social security contributions
and obligations following Article 32bb of the Dutch Wage Tax Act (1964).
29 Service fees paid to external auditors
The service fees recognized in the financial statements 2023 for the services of KPMG amounted to €6.4 million (2022:
€8.8 million). The amounts per service category are shown in the following table.
Audit of the Group financial statements
Audit of other (statutory) financial statements
Other assurance services
Permitted non-assurance services
Total assurance services charged to DSM
Total service fee
KPMG
2023
5.5
0.7
0.1
0.1
6.4
KPMG
2022
4.7
0.9
3.2
-
8.8
Of which
KPMG NL KPMG NL
2022
3.2
0.1
2.8
-
6.1
2023
3.7
-
0.1
0.1
3.9
The service fees mentioned in the table for the audit of the financial statements 2023 (2022) relate to the total fees for
the audit of the financial statements 2023 (2022), irrespective of whether the activities were performed during the
financial year 2023 (2022).
The other assurance services rendered by KPMG in 2023 mainly relate to a review engagement. KPMG did provide
permitted non-assurance services related to regulatory filings, agreed-upon procedures on certain information for the
(external) pension fund and their auditor.
DSM Integrated Annual Report 2023
101
Consolidated financial statements – Notes to the consolidated financial statements
30 Events after the balance sheet date
On 13 February 2024, DSM-Firmenich AG completed the voluntary tender offer of 8 January 2024 for 4,163,287 DSM B.V.
ordinary shares for a total consideration amounting to €400 million. DSM-Firmenich AG now holds 98.5% of the shares of
DSM B.V. The company will seek to acquire the remaining 1.5% shares through the statutory buy-out procedure at the
Enterprise Chamber of the Amsterdam Court of Appeal, which started on 17 July 2023. On 14 May 2024, the Enterprise
Court of the Amsterdam Court of Appeal awarded DSM-Firmenich AG’s claims in the Buy-Out.
On 15 February 2024, dsm-firmenich announced the initiation of a process to carve-out and separate out the Animal
Nutrition & Health (ANH) business from the Group. The company believes that the full potential of the ANH business
could be best realized through a different ownership structure for which all potential separation options will be
considered. dsm-firmenich would expect to be in a position to separate the business in the course of 2025
On 8 March 2024, DSM successfully sold and transferred its 100% equity interest in the vitamin C plant DSM Jiangshan
Pharmaceutical Co., Ltd. (Jinjiang, China) to Jingjiang Cosfocus Health Technology Co., Ltd.
DSM Integrated Annual Report 2023
102
Parent company financial
statements
Balance sheet at 31 December of DSM B.V. before profit appropriation
x € million
Assets
Intangible assets
Financial assets
Deferred tax assets
Other deferred items
Non-current assets
Receivables
Cash and cash equivalents
Current assets
Total
Shareholders' equity and liabilities
Share capital
Share premium
Treasury shares
Legal reserves
Other reserves, incl. retained earnings
Undistributed results:
- Net profit for the year
- Less: interim dividend
Shareholders' equity
Borrowings
Other non-current liabilities
Non-current liabilities
Current liabilities
Borrowings
Other current liabilities
Current liabilities
Total
Notes
2023
2022
2
3
4
5
6
6
6
6
6
6
6
6
6
7
7
8
469
13,110
53
2
13,634
81
-
81
466
15,634
52
1
16,153
51
1
52
13,715
16,205
261
469
-
778
4,988
2,318
-
8,814
2,243
8
2,251
500
2,150
2,650
13,715
328
471
(196)
829
7,774
1,700
(163)
10,743
2,741
8
2,749
-
2,713
2,713
16,205
The accompanying notes are an integral part of these parent company financial statements.
DSM Integrated Annual Report 2023
103
Parent company financial statements
Income statement of DSM B.V.
x € million
Other income
Cost of outsourced work and other external costs
Wages and salaries
Other movements in the value of intangible assets
Other operating expense
Total operating expenses
Operating profit (loss)
Financial income
Financial expense
Profit (loss) before income tax
Income tax
Share of the profit of subsidiaries
Profit after income tax
Income from receivables attributable to non-current assets and from
investments
Net profit available to equity holders of DSM B.V.
Notes
1
10
11
11
4
3
2023
1
(1)
(4)
-
(1)
(6)
(5)
83
(229)
(151)
44
2,425
2,318
-
2,318
2022
18
(21)
(8)
-
(1)
(30)
(12)
7
(114)
(119)
25
1,794
1,700
-
1,700
DSM Integrated Annual Report 2023
104
Parent company financial statements – Notes to the parent company financial statements
Notes to the parent company financial statements
1 General
Unless stated otherwise, all amounts are in € million.
Summary of the accounting policies
These separate financial statements have been prepared in accordance with Title 9, Book 2 of the Dutch Civil Code. The
accounting policies used are the same as those used in the consolidated EU-IFRS financial statements, in accordance
with the provisions of article 362-8 of Book 2 of the Dutch Civil Code.
In these separate financial statements, investments in subsidiaries are accounted for using the net asset value, with
separate presentation of the goodwill component under intangible fixed assets. Results on transactions involving the
transfer of assets and liabilities between the Company and its participating interests and mutually between participating
interests themselves are eliminated to the extent that they can be considered as not realized. For an appropriate
interpretation of these statutory financial statements, the separate financial statements should be read in conjunction
with the consolidated financial statements.
Participating interests with a negative net asset value are valued at nil. This measurement also covers any receivables
provided to the participating interests that are, in substance, an extension of the net investment. In particular, this relates
to loans for which settlement is neither planned nor likely to occur in the foreseeable future. A share in the profits of the
participating interest in subsequent years will only be recognized if and to the extent that the cumulative unrecognized
share of loss has been absorbed. If the Company fully or partially guarantees the debts of the relevant participating
interest, or if has the constructive obligation to enable the participating interest to pay its debts (for its share therein),
then a provision is recognized accordingly to the amount of the estimated payments by the Company on behalf of the
participating interest.
Information on the use of financial instruments and on related risks for the group is provided in Note 23 Financial
instruments and risks to the consolidated financial statements. The Company makes use of the option to eliminate
intragroup expected credit losses against the book value of loans and receivables from the Company to participating
interests, instead of elimination against the equity value / net asset value of the participating interests.
Other income consists mainly of the charge out of the parent company related corporate overhead and services to the
group companies, which is fully realized in the Netherlands.
Statutory and fiscal seat
The entity Koninklijke DSM N.V. changed its legal form to DSM B.V on 31 May 2023 as a result of the merger with Firmenich
group.
The statutory seat of DSM B.V. is Heerlen (Netherlands). A list of DSM B.V.’s participations has been filed with the Chamber
of Commerce (Netherlands) and is available from the company upon request. DSM is registered in the Dutch Commercial
Register under number 14022069.
The company forms a fiscal unity for corporate income tax and VAT purposes together with the group companies in the
Netherlands. Each of the companies recognizes the portion of corporate income tax that the relevant company would
owe as an independent tax payer, taking into account tax liabilities applicable to the company, as well as the tax position
of the fiscal unity.
DSM Integrated Annual Report 2023
105
Parent company financial statements – Notes to the parent company financial statements
2 Intangible assets
The carrying amount of intangible assets comprises goodwill on the acquisition of the Erber Group in 2020 (€423
million), Pentapharm in 2007 (€36 million) and Crina in 2006 (€10 million). For full information on these assets including
the discussion of the related impairment tests, see Note 8 Goodwill and intangible assets to the consolidated financial
statements.
Intangible assets of DSM B.V.
Balance at 1 January 2022
Cost
Amortization and impairment losses
Carrying amount
Changes in carrying amount:
- Exchange rate difference
Balance at 31 December 2022
Cost
Amortization and impairment losses
Carrying amount
Changes in carrying amount:
- Exchange rate difference
Balance at 31 December 2023
Cost
Amortization and impairment losses
Carrying amount
Total
469
5
464
2
471
5
466
3
475
6
469
DSM Integrated Annual Report 2023
106
Parent company financial statements – Notes to the parent company financial statements
3 Financial assets
Share in
Subsidiaries
Balance at 1 January 2022
13,784
Other
participating
interests
5
Receivables
Total
-
13,789
Changes:
- Share in profit
- Dividend received
- Disposal of subsidiaries
- Net actuarial gains/(losses)
- Change in Fair value reserve
- Change in Hedging reserve
- Exchange differences
- Intra-group transfers
- Other
Balance at 31 December 2022
Changes:
- Share in profit
- Capital payments
- Dividend received
- Disposal of subsidiaries
- Net actuarial gains/(losses)
- Change in Fair value reserve
- Change in Hedging reserve
- Exchange differences
- Intra-group transfers
- Transfer
- Other
Balance at 31 December 2023
1,794
(99)
(74)
(3)
(62)
22
272
-
(7)
15,627
2,425
1,089
(5,540)
(411)
(25)
(34)
26
(87)
-
-
(3)
13,067
-
-
-
-
-
-
-
-
2
7
-
-
-
-
-
(8)
-
-
-
44
-
43
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,794
(99)
(74)
(3)
(62)
22
272
-
(5)
15,634
2,425
1,089
(5,540)
(411)
(25)
(42)
26
(87)
-
44
(3)
13,110
The disposal of subsidiaries relates to the divestment of the DSM Engineering Materials business. The dividend received
mainly relates to the proceeds of the disposal.
A list of DSM participations can be downloaded from the company website.
4 Deferred tax assets and income tax
The deferred tax asset of €53 million (2022: €52 million) relates to net operating losses and temporary differences in the
Dutch fiscal unity. The effective tax rate in 2023 was 29% (2022: 21%).
The variation in the effective tax rate arises due to changes in the result in combination with among others changes in tax
exempt income, tax positions and non-deductible expenses.
DSM Integrated Annual Report 2023
107
Parent company financial statements – Notes to the parent company financial statements
5 Receivables
Receivables from subsidiaries
Other receivables
Total
2023
2022
75
6
81
13
38
51
The carrying values of the receivables are a reasonable approximation of their respective fair values, given the short
maturities of the positions and the fact that allowances for doubtful debts have been recognized, if necessary. All
receivables have an estimated maturity shorter than one year.
The Receivables from subsidiaries of €75 million (2022: €13 million) mainly include receivables relating to the Dutch fiscal
unity. Other receivables €6 million (2022: €38 million) mainly consist of VAT and other tax receivables and prepaid
expenses.
DSM Integrated Annual Report 2023
108
Parent company financial statements – Notes to the parent company financial statements
6 Shareholders’ equity
Share
capital
Share
prem.
Treas.
shares
Trans-
lation
res.
Capital
dev.
costs
Part.
inte-
rest
Reval.
reserve
Hedg.
reserve
Fair
value
res.
Share-
based
comp.
Undistri
buted
results
Ret.
Earn.
Legal reserves
Other reserves
Total
share-
holder
equity
328
471
(177)
177
239
121
(77)
17
39
6,644
1,536
9,318
x € million
Balance at 31
December 2021
Added to other
reserves
Net profit
Dividend
Reissued shares
Repurchase of
shares
Fair value
changes of
derivatives
Release to
income
statement
Fair value
changes of other
financial assets
Exchange
differences
Options and
performance
shares granted
Options and
performance
shares
exercised/cancel
ed
Transfer to
retained earnings
Changes in joint
ventures and
associates
Income tax
Remeasurement
s of defined
benefit pension
plans
Balance at 31
December 2022
.
Added to other
reserves
Net profit
Dividend
Reissued shares
Repurchase of
shares
Cancellation of
shares
Fair value
changes of
derivatives
Release to
income
statement
Fair value
changes of other
financial assets
Exchange
differences
Options and
performance
shares granted
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
191
(210)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16)
-
-
-
-
-
-
-
-
-
267
-
-
-
-
(4)
-
-
-
-
-
17
61
-
-
-
-
-
-
-
-
-
-
328
471
(196)
424
256
182
-
-
-
-
-
-
-
-
-
-
-
-
-
63
(256)
(67)
(2)
345
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
-
-
(102)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
DSM Integrated Annual Report 2023
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(29)
29
-
(28)
-
(50)
-
-
-
-
(11)
(10)
-
-
-
10
(33)
(72)
44
7,802
1,537
10,743
-
-
-
-
-
-
-
(61)
-
-
-
-
-
-
-
-
(6)
53
-
-
-
-
-
-
(3)
-
-
-
-
-
-
27
-
-
-
-
-
-
-
-
-
-
-
-
(37)
-
-
-
-
-
-
-
-
-
-
-
34
-
-
-
-
-
-
-
-
-
-
1,536
-
(296)
(50)
(1,536)
1,700
(163)
-
-
1,700
(459)
141
-
(210)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6)
37
(61)
267
34
-
-
(11)
(17)
10
(256)
-
27
6
(37)
(103)
23
109
1,537
-
(3,935)
(39)
(1,537)
2,318
-
-
-
2,318
(3,935)
24
-
(276)
-
-
-
(1)
-
-
-
-
-
-
23
-
-
Parent company financial statements – Notes to the parent company financial statements
Share
capital
Share
prem.
Treas.
shares
Trans-
lation
res.
Capital
dev.
costs
Part.
inte-
rest
Reval.
reserve
Hedg.
reserve
Fair
value
res.
Share-
based
comp.
Undistri
buted
results
Ret.
Earn.
Legal reserves
Other reserves
Total
share-
holder
equity
-
-
-
-
-
-
-
-
-
(23)
23
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44
-
-
-
-
-
(17)
37
-
-
-
-
-
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44
-
(5)
-
(15)
-
-
-
(1)
-
-
-
-
-
-
-
-
-
-
(9)
9
(34)
(4)
-
-
-
-
(9)
7
(34)
(4)
261
469
-
327
239
219
-
(7)
(114)
44
5,058
2,318
8,814
x € million
Options and
performance
shares
exercised/cancel
ed
Transfer to other
participating
interests
Transfer to
retained earnings
Changes in joint
ventures and
associates
Income tax
Remeasurement
s of defined
benefit pension
plans
Other
Balance at 31
December 2023
For details see the consolidated statement of changes in Note 16 Equity to the consolidated financial statements.
Legal reserves
In Shareholders’ equity, a total amount of €778 million (2022: €829 million) is included for legal reserves required by
Dutch law. The translation reserve relates to exchange gains and losses arising from the translation of the functional
currency of foreign operations to the reporting currency of DSM B.V. Further, a legal reserve is recorded for capitalized
development costs. The legal reserve for participating interests is recorded to the extent that there are limitations for
DSM B.V. to arrange profit distributions from its participating interests. The hedging reserve relates to cash flow hedge
accounting. The negative hedge reserve of -€7 million (2022: -€33 million) as part of the legal reserve should be
deducted from the freely distributable reserve. In addition, a revaluation reserve has been included for fair value changes
of unquoted equity instruments of participating interests with no frequent notations owned by DSM; debit balances are
recorded as part of Other reserves, which are considered freely distributable reserves.
Other reserves
The Other reserves comprise a Fair value reserve for fair value changes of unquoted equity instruments of participating
interests with frequent notations, debit balances of the legal reserve for fair value changes of unquoted equity
instruments of participating interests owned by DSM, and a Reserve for share-based compensation.
In the ‘Consolidated financial statements’, the Other reserves consist of the Translation reserve, Fair value reserve,
Hedging reserve and Reserve for share-based compensation. See Note 16 Equity to the consolidated financial
statements.
Profit appropriation
According to article 23 of the Articles of Association of DSM B.V. and with the approval of the Supervisory Board, every
year the Managing Board determines the portion of the net profit to be appropriated to the reserves. For the year 2023,
the net profit is €2,318million (2022: €1,700 million) and the amount to be appropriated to the reserves has been
established at €1,645 million (2022: €1, 533 million).
DSM Integrated Annual Report 2023
110
Parent company financial statements – Notes to the parent company financial statements
The remaining undistributed profit of €673 million (2022: €161 million after distribution of dividends on the Cumulative
Preference Shares A) will be put at the disposal of the Annual General Meeting of Shareholders in accordance with the
provisions of Article 32, section 5 of the Articles of Association.
The Managing Board proposes to add the remaining undistributed profit to the reserves (2022: dividend on ordinary
shares of €0.93 per share). No interim dividend for the year 2023 was paid.
If the Annual General Meeting of Shareholders decides in accordance with the proposal, the net profit will be
appropriated as follows.
in € million
Net profit for the year
Profit appropriation:
- To be added to the reserves
- Dividend on Cumulative Preference Shares A
- Interim dividend on ordinary shares
- Final dividend distributable on ordinary shares
7 Borrowings
Bonds
Total
2023
2,318
2,318
-
-
-
2022
1,700
1,533
6
161
-
2023
Total
2,743
2,743
Of which
current
500
500
2022
Total
2,741
2,741
Of which
current
-
-
At 31 December 2023, there were five bonds (€2,743 million, maturing in 2024, 2025, 2026 and from 2026 through 2032).
The repayment schedule for borrowings is as follows.
Borrowings by maturity
2024
2025 and 2026
After 2026
Total
2023
500
1,249
994
2,743
2022
500
1,248
993
2,741
In agreements governing loans with a residual amount at year-end 2023 of €2,743 million (31 December 2022: €2,741
million), clauses have been included which restrict the provision of security. More information on borrowings is provided
in Note 19 Borrowings to the consolidated financial statements.
8 Other current liabilities
Liabilities to subsidiaries
Other liabilities
Total
2023
2,109
41
2,150
2022
2,691
22
2,713
The Liabilities to subsidiaries concern mainly the current account toward the DSM internal financing company. These
liabilities carry a short-term maturity and are interest-bearing. The decrease of this current account in 2023 is mainly
caused by changing financing needs.
DSM Integrated Annual Report 2023
111
Parent company financial statements – Notes to the parent company financial statements
The carrying values of the recorded liabilities are a reasonable approximation of their respective fair values, given the
short maturities of the positions. All liabilities have an estimated maturity shorter than one year.
9 Contingent liabilities
Guarantee obligations on behalf of affiliated companies and third parties amounted to €569 million (31 December 2022:
€591 million). DSM B.V. has declared in writing that it accepts several liabilities for debts arising from acts in law of a
number of consolidated companies (including relating to the Dutch fiscal unity for income tax and VAT). These debts are
included in the consolidated balance sheet.
10 Personnel
During the 2023 financial year, the number of staff employed by DSM B.V. amounted to 2 employees from 1 January until
18 April and no employees from 18 April till the end of the year (full year 2022: 2 employees). Both were employed inside
the Netherlands.
11 Financial income and expense
Financial income of €83 million (2022: €7 million) consists of interest income on outstanding in-house cash balances;
financial expense of €229 million (2022: €114 million) mainly consists of the interest expense on debit in-house cash
balances (€176 million) and interest costs on bonds issued and the counterpart of the net investment hedge (€53
million). See also Note 19 Borrowings and Note 23 Financial instruments and risks to the consolidated financial
statements.
12 Remuneration of key personnel
Introduction
The remuneration of key personnel concerns the Supervisory Board and the Executive Committee (which includes the
Managing Board) of Koninklijke DSM N.V., renamed DSM B.V.
On April 18, 2023, DSM-Firmenich AG, the parent company of the merger combination DSM and Firmenich, was listed on
Euronext Amsterdam. As a result, the expenses reported herein concern two periods. The first period is about the
remuneration awarded to the members of the Supervisory Board and the Executive Committee (including the Managing
Board) of Royal DSM, insofar as their appointment in such capacity relates to the period from 1 January 2023 until 18 April
2023. The second period concerns the remuneration awarded to the members of the Supervisory Board and the
Managing Board DSM B.V., insofar as their appointment in such capacity relates to the period from 18 April 2023 until 31
December 2023.
Remuneration of members of the Supervisory Board, Managing Board and Executive Committee
appointed in that capacity for the period 1 January 2023 until 18 April 2023
The remuneration policy for the Supervisory Board and the Managing Board as approved by the 2019 Annual General
Meeting of DSM applied.
The remuneration awarded to members of the Supervisory Board, the Executive Committee (that includes the Managing
Board) of DSM, insofar as their appointment in such capacity relates to the period from 1 January 2023 until 18 April 2023
is laid out in the below table. It concerns:
•
The remuneration (for the period between 1 January until 18 April 2023) of the members of the Supervisory Board of
DSM who transferred to the Board of Directors of DSM-Firmenich AG on 18 April 2023. The 2023 remuneration
awarded by DSM-Firmenich AG for the period after 18 April 2023 is accounted for in the remuneration report
included in the Integrated Annual Report of DSM-Firmenich AG
DSM Integrated Annual Report 2023
112
Parent company financial statements – Notes to the parent company financial statements
•
•
•
The remuneration (for the period between 1 January and 18 April 2023) of the members of the Managing Board and
Executive Committee of DSM who transferred to the Executive Committee of DSM-Firmenich AG on 18 April 2023.
The 2023 remuneration awarded by DSM-Firmenich AG for the period after 18 April 2023 is accounted for in the
remuneration report included in the Integrated Annual Report of DSM-Firmenich AG
The remuneration (for the period between 1 January and 18 April 2023) for members of the Executive Committee of
DSM who remained employed by DSM-Firmenich AG in another capacity and who no longer meet the criteria of key
personnel as of 18 April 2023
Remuneration expenses incurred in financial year 2023 for members of the Supervisory Board or the Executive
Committee of DSM who were not appointed as a member of the Board of Directors or Executive Committee DSM-
Firmenich AG nor in another capacity and who left the organization after and due to the merger.
The total remuneration expenses incurred, amount to €22.8 million (2022: €25.5 million). Comparing the remuneration
expenses reported for 2023 with those of 2022 can only be done with extreme caution, because the expenses for 2023
are characterized by the special circumstance of the merger and contain several one-off items.
Total remuneration expenses awarded to members of the Supervisory Board, Managing Board and
Executive Committee of DSM appointed in that capacity for the period 1 January 2023 until 18 April 2023
2022
2023
Base salary/Supervisory Board fees
Pension contributions
Short-Term Incentive¹
Share-based compensation²
Other³
2,391
471
869
2,518
16,562
6,521
1,197
3,399
7,778
6,612
Total remuneration
Of which Managing Board remuneration
Of which Supervisory Board remuneration
1 Short-Term Incentive based on at-target level minus the weight of EBITDA target pro-rated for the period 1 January to 1 April 2023 or at target pay-out
22,811
3,613
243
25,507
6,717
844
over the period of employment in 2023
2 Represents the expenses of Performance Share Units (PSUs) awarded according to IFRS rules. These costs are considered over the vesting period and
therefore cover several years
3
Includes:
(i) Settlement of the STI Deferral and Matching scheme (€4.6m) and special bonus payments (€3.5m) as included in the Offering Circular (issued 22
November 2022) related to the merger
(ii) Severance payments for ExCo members that left the Company because of the merger (€1.8m); payments in lieu of notice (€1.3m) a nd obligations
following Article 32bb of the Dutch Wage Tax Act (1964) (€2.2m)
(iii) Social security contributions (€0.6m) and contractual items related to International Assignment arrangements (€1.6m)
(iv) Other (€1.0m)
Remuneration members Supervisory Board and Managing Board appointed in that capacity for the
period 18 April 2023 until 31 December 2023
No remuneration was awarded to members of the Supervisory Board and the Managing Board of DSM B.V. appointed in
that capacity for the period from 18 April 2023 to 31 December 2023.
DSM Integrated Annual Report 2023
113
Parent company financial statements – Notes to the parent company financial statements
Maastricht, 14 May 2024
Maastricht, 14 May 2024
Managing Board,
Supervisory Board,
Dimitri de Vreeze, CEO
Thomas Leysen, Chair
Ralf Schmeitz, CFO
John Ramsay, Deputy Chair
Corien Wortmann
DSM Integrated Annual Report 2023
114
OTHER INFORMATION
Independent auditor’s report
To: the General Meeting of Shareholders and the Supervisory Board of DSM B.V.
Report on the audit of the financial statements 2023 included in
the annual report
Our opinion
In our opinion:
•
•
the accompanying consolidated financial statements give a true and fair view of the financial position of DSM B.V. as
at 31 December 2023 and of its result and its cash flows for the year then ended, in accordance with International
Financial Reporting Standards (‘IFRS’) as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the
Dutch Civil Code.
the accompanying parent company financial statements give a true and fair view of the financial position of DSM B.V.
as at 31 December 2023 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch
Civil Code.
What we have audited
We have audited the financial statements 2023 of DSM B.V. (the ‘Company’ or ‘DSM’) based in Heerlen. The financial
statements include the consolidated financial statements and the parent company financial statements.
The consolidated financial statements comprise:
1.
2.
3.
the consolidated balance sheet as at 31 December 2023;
the following consolidated statements for 2023: the income statement, the statements of comprehensive income
and changes in equity, and the cash flow statement; and
the notes comprising group material accounting policies and other explanatory information.
The company financial statements comprise:
1.
2.
3.
the parent company balance sheet as 31 December 2023;
the parent company income statement for 2023; and
the notes comprising a summary of the accounting policies and other explanatory information.
DSM Integrated Annual Report 2023
115
Independent auditor’s report
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities
under those standards are further described in the ‘Our responsibilities for the audit of the financial statements’ section
of our report.
We are independent of DSM in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij
assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence)
and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening
gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
We designed our audit procedures in the context of our audit of the financial statements as a whole and in forming our
opinion thereon. The information in respect of going concern, fraud and non-compliance with laws and regulations,
climate and the key audit matters was addressed in this context, and we do not provide a separate opinion or conclusion
on these matters.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Information in support of our opinion
Summary
Materiality
Materiality of EUR 30 million
3.1% of the 5-years’ averaged earnings before interest, taxes, depreciation and amortization
Group audit
Audit coverage of 77% of total assets
Audit coverage of 75% of revenue
Risk of material misstatements related to Fraud, NOCLAR, Going concern and Climate risks
Fraud risks: presumed risk of management override of controls, presumed risk of revenue recognition and
goodwill impairment testing Animal Nutrition & Health identified and further described in the section ‘Audit
response to the risk of fraud and non-compliance with laws and regulations’.
Non-compliance with laws and regulations (NOCLAR) risks: no reportable risk of material misstatements
related to NOCLAR risks identified.
Going concern risks: no going concern risks identified.
Climate-related risks: We have considered the impact of climate-related risks on the financial statements
and described our approach and observations in the section ‘Audit response to climate-related risks’.
Key audit matters
Goodwill impairment testing Animal Nutrition & Health
Vitamin transformation program
Materiality
Based on our professional judgement we determined the materiality for the financial statements as a whole at EUR 30
million (2022: EUR 32.5 million). The materiality is determined with reference to the 5-years’ averaged earnings before
interest, taxes, depreciation and amortization (‘EBITDA’) to reflect the volatility in the vitamins market and the significant
impairments and merger-related costs in 2023. Materiality as a percentage of the 5-years’ averaged EBITDA is 3.1%.
Compared to the previous year, we have changed the benchmark for determining materiality from profit before income
tax to EBITDA. We consider EBITDA a more representative metric to assess the Company’s performance than profit
DSM Integrated Annual Report 2023
116
Independent auditor’s report
before income tax expense. We have also taken into account misstatements and/or possible misstatements that in our
opinion are material for the users of the financial statements for qualitative reasons.
We agreed with the Supervisory Board that misstatements identified during our audit in excess of EUR 1.5 million would
be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
Scope of the group audit
DSM is at the head of a group of components. The financial information of this group is included in the financial
statements of DSM.
In our group audit we identified significant components. These are components that are (i) of individual financial
significance to the group, or (ii) that, due to their specific nature or circumstances, are likely to include significant risks of
material misstatement to the group financial statements. We identified five significant components in Switzerland, the
Netherlands, the United States and Brazil.
We have:
•
•
•
performed audit procedures at group level in respect of the parent entity, the group consolidation, the financial
statement disclosures, treasury, shared service center activities and a number of more complex accounting and
valuation items. This included procedures performed regarding the annual goodwill impairment tests, other asset
impairment (trigger) assessments, income tax for the Dutch fiscal unities, acquisitions of subsidiaries and
accounting for divestments.
used the work of local KPMG auditors (‘component auditors’) when auditing reporting packages or performing
specified audit procedures at component level.
for the residual population we performed analytical procedures in order to corroborate that our scoping remained
appropriate throughout the audit.
By performing the procedures mentioned above at components, together with additional procedures at group level, we
have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an
opinion about the financial statements.
Our procedures as described above can be summarized as follows:
66%
Audit of the complete
reporting package
56%
Audit of the complete
reporting package
Total assets
11%
Specified audit procedures
Revenue
19%
Specified audit procedures
23%
Covered by additional
procedures performed at group
level
25%
Covered by additional
procedures performed at group
level
DSM Integrated Annual Report 2023
117
Independent auditor’s report
Audit response to the risk of fraud and non-compliance with laws and
regulations
As part of our audit, we have gained insights into DSM and its business environment and the DSM’s risk management in
relation to fraud and non-compliance. Our procedures included, among other things, assessing the code of business
ethics, alert cases (whistleblowing procedures), compliance policies and its procedures to investigate indications of
possible fraud and non-compliance. Furthermore, we performed relevant inquiries with the Managing Board, Supervisory
Board and other relevant functions, such as Corporate Operational Audit department, Legal Counsel and Fraud
Committee and evaluated correspondence with relevant supervisory authorities and regulators. We have also
incorporated elements of unpredictability in our audit, such as: changes in the scope of the group audit and specific risk
assessment procedures on possible non-compliance with local laws and regulations within the group, and involved
forensic specialists in our audit procedures.
As a result from our risk assessment, we identified the following laws and regulations as those most likely to have a
material effect on the financial statements in case of non-compliance:
• Health and safety regulation (reflecting the nature of DSM’s production and distribution processes);
•
Environmental regulation (reflecting the environmental clean-up responsibilities related to mainly DSM’s former
production and distribution processes);
• Competition legislation (reflecting DSM’s operations across the world and potential investigations by national
competition authorities);
• Consumer product law relating to product safety (reflecting the nature of DSM’s diverse product base).
• Anti-bribery and corruption (reflecting DSM’s significant operations in jurisdictions with high perceived levels of
public sector corruption)
Based on the above and on the auditing standards, we identified the following fraud risks that are relevant to our audit,
including the relevant presumed risks laid down in the auditing standards, and responded as follows:
Management override of controls (a presumed risk)
Risk:
- Management is in a unique position to manipulate accounting records and prepare fraudulent financial
statements by overriding controls that otherwise appear to be operating effectively.
Responses:
- We evaluated the design and the implementation of internal controls that mitigate fraud risks, such as controls
related to journal entries.
- We performed a data analysis of high-risk journal entries and evaluated key estimates and judgments for bias by
management, including retrospective reviews of prior years’ estimates such as with respect to impairment
testing of goodwill, acquisition-related and internally generated intangibles and employee benefit liabilities.
Where we identified instances of unexpected journal entries or other risks through our data analytics, we
performed additional audit procedures to address each identified risk, including testing of transactions back to
source information.
Revenue recognition (a presumed risk)
Risk:
- We identified a fraud risk in relation to the recognition of revenue of goods sold. This risk inherently includes the
fraud risk that management deliberately overstates revenue in the cut-off period, as management may feel
pressure to achieve planned results for the current year.
Responses:
- We evaluated the design and the implementation of internal controls that mitigate fraud risks with respect to
revenue recognition.
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Independent auditor’s report
-
-
-
In June 2023, dsm-firmenich AG issued a trading update in which it lowered the full year 2023 outlook. As DSM
forms a significant part of the dsm-firmenich group, we assessed the effect thereof on our fraud risk
assessment, and concluded to focus the fraud risk with respect to revenue recognition specifically to sales cut-
off before year-end. This was also confirmed by the risk assessment of our component auditors based on an
assessment of local facts and circumstances.
To assess whether revenue was recognized in the appropriate period, for selected sales transactions recognized
before year-end we inspected agreements with the customers and shipping documents.
Further, we inspected selected credit notes issued before year-end to assess whether revenue was recognized
appropriately.
- We performed journal entry testing, specifically taking into account high risk criteria in relation to revenues.
Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance that are
considered material for our audit. Our evaluation of procedures performed related to fraud did not result in a key audit
matter.
We communicated our risk assessment, audit responses and results to the Managing Board and the Supervisory Board.
Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance that are
considered material for our audit.
Audit response to going concern
The managing board has performed its going concern assessment and has not identified any going concern risks. To
assess the management board’s assessment, we have performed, among other things, the following procedures:
• we considered whether the Managing Board’s assessment of the going concern risks includes all relevant
information of which we are aware as a result of our audit;
• we inspected the financing agreements for terms or conditions that could lead to significant going concern risks;
• we analyzed the operating results forecast and the related cash flows compared to the actual results of 2023,
developments in the business sector, macro-economic developments impacting amongst others vitamins prices
and any information of which we are aware as a result of our audit;
• we analyzed the company’s financial position as at year-end and compared it to the previous financial year in
terms of indicators that could identify significant going concern risks.
The outcome of our risk assessment procedures did not give reason to perform additional audit procedures on
management’s going concern assessment.
Audit response to climate-related risks
Management prepared the financial statements, including considering whether the implications from climate-related
risks and commitments have been appropriately accounted for and disclosed, in accordance with the applicable
financial reporting framework. The climate-related risks are managed by DSM as part of its regular risk management
process and as such are taken into account in the preparation of the financial statements.
As part of our audit we performed a risk assessment of the impact of climate-related risk and the commitments and
ambitions made by DSM in respect of climate change on the 2023 financial statements and our audit approach. Based on
the procedures performed we considered whether there is a risk of material misstatement specific to climate relative to
the going concern assumption and valuation of long-lived assets. Considering the risk assessment work performed, we
did not identify a risk of material misstatement specific to climate and thus no further audit response was considered
necessary.
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Independent auditor’s report
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial statements. We have communicated the key audit matters to the Supervisory Board. The key audit matters are
not a comprehensive reflection of all matters discussed.
Compared to last year the key audit matter with respect to the transformation of the DSM businesses and divestment of
Protective Materials business are not included, as these specifically relate to the financial year 2022 and previous years.
The announced divestment of Engineering Materials business is also not included as a key audit matter considering the
measurement and presentation was already assessed in previous year and the level of subjectivity is considered
relatively limited. Furthermore, compared to last year the key audit matter with respect to the goodwill impairment
testing Animal Nutrition & Health and the vitamins transformation have been added as both were related to 2023 events
which were most significant to our audit.
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Independent auditor’s report
Goodwill impairment testing Animal Nutrition & Health
Description
As of 31 December 2023, the consolidated financial statements included goodwill amounting to EUR 3,040 million of
which EUR 983 million is allocated to the Animal Nutrition and Health (‘ANH’) cash generating unit.
Goodwill is assessed for impairment by management at least annually by determining the recoverable amount (the
higher of its value in use and fair value less costs of disposal), which is then compared to the carrying amount.
Management applies judgment in assessing the cash flow projections of the (groups of) cash generating units at which
level goodwill is allocated and determining the relevant valuation assumptions.
Valuation of goodwill is a key audit matter because the impairment test process is complex. It involves a high degree
of management judgment and assumptions, such as cash flow forecasts, growth rates and discount rates of the CGU,
being used in the Group’s impairment tests.
As disclosed in note 30 to the financial statements on 15 February 2024, dsm-firmenich AG announced to separate
business unit Animal Nutrition & Health (ANH) from the Group. Management considered the effects of the decision in
the preparation of the consolidated financial statements.
Our response
We obtained and documented our understanding of the impairment testing process, the sensitivity analysis and
tested the design and implementation of the relevant controls therein.
We assessed the determination of the CGUs taking into account the IFRS accounting standards and our knowledge of
the organisation, structure and governance of the DSM Group.
We assessed the Group’s ability to accurately prepare cash flow projections for their CGUs by comparing the actual
financial performance to the projections made earlier.
We evaluated the accuracy of impairment test, the reasonableness of the key assumptions used to determine the
recoverable amounts – including long term growth rates and discount rates based on our understanding of the related
CGUs’ cash flow projections – and the methodology used by management to prepare its cash flow forecasts.
We involved our in-house valuation specialists with specialized skills and knowledge who assisted in assessing the
reasonableness of the discount rates and long term growth rates through testing the source information underlying
their determination, and in developing a range of independent estimates and comparing those to the discount and
long term growth rates applied by management.
We inquired and challenged BU management on their initiatives to realize sales and margin growth and we have
spoken with the Vitamins Transformation program director.
We also considered the adequacy of the disclosures on impairment testing and sensitivity tests in the consolidated
financial statements.
We have also considered the accuracy of the disclosure regarding the ANH separation.
Our observation
We consider that the outcome of management’s impairment testing of the ANH cash generating unit is appropriate
and adequately disclosed in Note 8 to the financial statements.
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Independent auditor’s report
Vitamins transformation program
Description
During 2023 the Group decided to implement a vitamins transformation program to enable acceleration of strategic
actions. This company-wide program is designed to improve the profitability of its vitamin activities and structurally
reduce exposure to volatility from price fluctuations.
The plan included a restructuring of the vitamin asset footprint resulting in the closure of the vitamin B6 plant in
Xinghuo (China) and the termination of vitamin C production in the plant in Jiangshan (China).
As the company has ceased to use these plants. management prepared an impairment assessment for the plants and
related assets on a stand-alone basis. Based on the impairment assessment, losses for the affected property, plant
and equipment were recognized in the amount of EUR 106 million for the vitamin B6 Xinghuo plant respectively EUR
125 million for the vitamin C Jiangshan plant. Furthermore, a liability was recognized for remaining contractual
obligations.
As per 31 December 2023 the assets and liabilities related to the vitamin C business in Jiangshan are classified as held
for sale.
Given the financial impact and the non-recurring nature of these events, the accounting for these impairments is
significant to our audit of the financial statements.
Our response
We inquired management and inspected relevant documentation to gain an understanding of the vitamins
transformation program. Further, we evaluated management’s assessment of impairment indicators as a result of the
restructuring of the vitamins assets footprint for the Xinghuo and Jiangshan plants in China and tested the design and
implementation of the relevant controls therein.
As a result of the identified impairment indicators, the management has prepared impairment tests. We assessed the
results of management’s impairment tests and evaluated the appropriateness of the recoverable amount determined
for both plants.
For both plants we inspected underlying documentation, amongst others related to internal and external
communication of the closure and applicable contractual obligations.
In addition for the closure of the Xinghuo vitamin B6 plant, we performed a site visit and observed that the plant is no
longer in use. We enquired local employees and management about future plans and relevant government regulations.
We also considered the adequacy of the disclosures on the impairments in the consolidated financial statements.
Our observation
We consider that the impairments are appropriately reflected in the financial statements and adequately disclosed in
Note 9 to the financial statements
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Independent auditor’s report
Report on the other information included in the annual report
In addition to the financial statements and our auditor’s report thereon, the annual report contains other information.
Based on the following procedures performed, we conclude that the other information:
•
•
is consistent with the financial statements and does not contain material misstatements; and
contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and
other information.
We have read the other information. Based on our knowledge and understanding obtained through our audit of the
financial statements or otherwise, we have considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the
Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of
the financial statements.
The Managing Board is responsible for the preparation of the other information, including the information as required by
Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements
Engagement
We were initially appointed by the Annual General Meeting of Shareholders as auditor of DSM on 7 May 2014 (at that time
Royal DSM N.V.), as of the audit for the year 2015 and have operated as statutory auditor ever since that financial year.
No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific
requirements regarding statutory audits of public-interest entities.
Description of responsibilities regarding the financial statements
Responsibilities of the Managing Board and the Supervisory Board for the
financial statements
The Managing Board is responsible for the preparation and fair presentation of the financial statements in accordance
with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Managing Board is responsible for such
internal control as management determines is necessary to enable the preparation of the financial statements that are
free from material misstatement, whether due to fraud or error. In that respect the Managing Board, under supervision of
the Supervisory Board, is responsible for the prevention and detection of fraud and non-compliance with laws and
regulations, including determining measures to resolve the consequences of it and to prevent recurrence.
As part of the preparation of the financial statements, the Managing Board is responsible for assessing DSM’s ability to
continue as a going concern. Based on the financial reporting frameworks mentioned, the Managing Board should prepare
the financial statements using the going concern basis of accounting unless the Managing Board either intends to
liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Managing Board should
disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going
concern in the financial statements.
The Supervisory Board is responsible for overseeing the DSM’s financial reporting process.
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Independent auditor’s report
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and
appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all
material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified
misstatements on our opinion.
A further description of our responsibilities for the audit of the financial statements is included in appendix of this
auditor's report. This description forms part of our auditor’s report.
Amstelveen, 14 May 2024
KPMG Accountants N.V.
P. J. Groenland – van der Linden RA
Appendix:
Description of our responsibilities for the audit of the financial statements
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Independent auditor’s report
Appendix
Description of our responsibilities for the audit of the financial statements
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in
accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included
among others:
•
•
•
•
•
•
identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or
error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than the risk resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control;
obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
DSM’s internal control;
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Managing Board;
concluding on the appropriateness of the Managing Board’s use of the going concern basis of accounting, and
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on DSM’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
a company to cease to continue as a going concern;
evaluating the overall presentation, structure and content of the financial statements, including the disclosures;
and
evaluating whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
We are solely responsible for the opinion and therefore responsible to obtain sufficient appropriate audit evidence
regarding the financial information of the entities or business activities within the group to express an opinion on the
financial statements. In this respect we are also responsible for directing, supervising and performing the group audit.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant findings in internal control that we identify during our audit. In this
respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on
specific requirements regarding statutory audits of public-interest entities. The information included in this additional
report is consistent with our audit opinion in this auditor’s report.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine the key audit matters: those matters that
were of most significance in the audit of the financial statements. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not
communicating the matter is in the public interest.
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Other information – Special statutory rights
Special statutory rights
DSM does not hold any special statutory rights. Together with DSM B.V.’s conversion into a Dutch private limited liability
company (besloten vennootschap met beperkte aansprakelijkheid), the Articles of Association of the Company were
amended. By virtue of the amended Articles of Association, Cumulative Preference Shares B can no longer be issued. The
DSM Preference Shares Foundation that had the right to acquire such Preference Shares (call option), ceased to exist on
July 17, 2023.
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