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-firmenich uses its incremental borrowing rate as the discount rate. In determining the incremental borrowing rate, dsm-firmenich 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-firmenich splits the contractual consideration into a lease and a non-lease component based on their relative stand-alone prices. For vehicle leases, however, dsm-firmenich 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-firmenich 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.
|
|
2023 |
|
2022 |
||||
|---|---|---|---|---|---|---|---|---|
|
|
Total |
|
Of which current |
|
Total |
|
Of which current |
Bonds |
|
4,133 |
|
500 |
|
2,741 |
|
- |
Private loans |
|
254 |
|
104 |
|
116 |
|
14 |
Lease liabilities |
|
415 |
|
84 |
|
179 |
|
44 |
Credit institutions |
|
28 |
|
28 |
|
28 |
|
28 |
Total |
|
4,830 |
|
716 |
|
3,064 |
|
86 |
In agreements governing loans with a residual amount at year-end 2023 of €4,133 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 €1,340 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.
|
|
2023 |
|
2022 |
|---|---|---|---|---|
2023 |
|
- |
|
86 |
2024 |
|
716 |
|
558 |
2025 |
|
633 |
|
579 |
2026 |
|
1,560 |
|
775 |
2027 and 2028 |
|
581 |
|
528 |
After 2028 |
|
1,340 |
|
538 |
Total |
|
4,830 |
|
3,064 |
A breakdown by currency is given in the following table.
|
|
2023 |
|
2022 |
|---|---|---|---|---|
EUR |
|
4,283 |
|
2,833 |
CNY |
|
140 |
|
80 |
USD |
|
142 |
|
84 |
CHF |
|
102 |
|
20 |
BRL |
|
23 |
|
19 |
Other |
|
140 |
|
28 |
Total |
|
4,830 |
|
3,064 |
On balance, total borrowings increased by €1,766 million due to the following changes.
|
|
2023 |
|
2022 |
|---|---|---|---|---|
Balance at 1 January |
|
3,064 |
|
3,098 |
|
|
|
|
|
Loans taken up |
|
15 |
|
51 |
Repayments |
|
(549) |
|
(29) |
Unwinding (interest) |
|
28 |
|
9 |
Acquisitions/consolidation changes |
|
2,195 |
|
9 |
Transfers |
|
28 |
|
- |
Disposals |
|
(2) |
|
(28) |
Reclassification to held for sale |
|
- |
|
(8) |
Changes in debt to credit institutions |
|
- |
|
(21) |
New lease arrangements (incl. remeasurements) |
|
128 |
|
34 |
Payment of lease liabilities |
|
(73) |
|
(57) |
Exchange differences |
|
(4) |
|
6 |
Balance at 31 December |
|
4,830 |
|
3,064 |
A breakdown of bonds is given below.
|
|
|
|
|
|
Nominal amount |
|
2023 |
|
2022 |
|---|---|---|---|---|---|---|---|---|---|---|
EUR loan |
|
2.38% |
|
2014–2024 |
|
500 |
|
500 |
|
500 |
EUR loan |
|
1.00% |
|
2015–2025 |
|
500 |
|
500 |
|
499 |
EUR loan |
|
0.75% |
|
2016–2026 |
|
750 |
|
749 |
|
749 |
EUR loan |
|
0.25% |
|
2020–2028 |
|
500 |
|
498 |
|
496 |
EUR loan |
|
0.63% |
|
2020–2032 |
|
500 |
|
496 |
|
498 |
CHF loan |
|
1.00% |
|
2020–2023 |
|
475 |
|
- |
|
|
EUR loan |
|
1.38% |
|
2020–2026 |
|
750 |
|
711 |
|
|
EUR loan |
|
1.75% |
|
2020–2030 |
|
750 |
|
679 |
|
|
Total |
|
|
|
|
|
4,725 |
|
4,133 |
|
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%
The bonds issued by Firmenich Productions Participations SAS (guaranteed by Firmenich International SA) have a fixed interest rate and are listed on the Euronext Dublin.
- The 1.375% EUR bond 2020–2026 of €750 million has an effective interest rate of 3.18%
- The 1.750% EUR bond 2020–2030 of €750 million has an effective interest rate of 3.47%
The 1% CHF bond 2020–2023 of CHF475 million issued by Firmenich Productions Participations SAS was redeemed on 19 December 2023.
A breakdown of private loans is given below.
|
|
2023 |
|
2022 |
|---|---|---|---|---|
CNY loan |
|
128 |
|
63 |
Other loans |
|
126 |
|
53 |
Total |
|
254 |
|
116 |
A breakdown of the lease liabilities is given below.
|
|
2023 |
|
2022 |
|---|---|---|---|---|
2023 |
|
- |
|
49 |
2024 |
|
92 |
|
40 |
2025 |
|
77 |
|
28 |
2026 |
|
56 |
|
20 |
2027 |
|
40 |
|
15 |
2028 |
|
33 |
|
10 |
After 2028 |
|
196 |
|
50 |
Total undiscounted lease liabilities at 31 December |
|
494 |
|
212 |
|
|
|
|
|
Lease liabilities included in the Balance Sheet at 31 December |
|
415 |
|
179 |
|
|
|
|
|
Current |
|
84 |
|
44 |
Non-current |
|
331 |
|
135 |
In addition to the contractual lease commitments, dsm-firmenich has identified explicit renewal options available to dsm-firmenich, 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-firmenich, are estimated around €181 million (undiscounted; 2022: €86 million).
The interest expense on the lease liabilities was €8 million (2022: €6 million) and the total repayments of the lease liabilities amounted to €73 million in 2023 (2022: €57 million). These cash flows are reported as financing cash flows.
dsm-firmenich’s policy regarding financial risk management is described in Note 23 Financial instruments and risks.