1 General information

Basis of preparation

In 2023, the basis of preparation was impacted by the merger of equals between DSM and Firmenich. The Group’s consolidated financial statements have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB) and Swiss law.

The merger transaction was accounted for as a business combination using the acquisition method of accounting under IFRS 3. DSM N.V. in substance was identified as the acquirer via its prior subsidiary DSM-Firmenich AG. Following the acquisition method of accounting under IFRS 3, the Firmenich results are included in the consolidated financial statements as of the merger date 8 May 2023. The comparative numbers included in these consolidated financial statements reflect the historical financial information as reported by DSM N.V. in the past.

In the following notes all amounts are shown in millions of euros (€), unless otherwise stated.

Changes in accounting policies

dsm-firmenich adopted International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12) upon their release on 23 May 2023. dsm-firmenich 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-firmenich operates. Since the newly enacted tax legislation is 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-firmenich is actively monitoring developments and the global legislative status of Pillar Two implementation in the jurisdictions where we operate. 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-firmenich does not expect Pillar Two to have a material impact for financial year 2024.

Other new or amended standards that are effective from 1 January 2023 do not have a material effect on dsm-firmenich’s consolidated financial statements. In addition, new or amended standards effective after 1 January 2023 were neither adopted early, nor 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-firmenich’s operations are included in the relevant notes and applied throughout the consolidated financial statements.

Principles of consolidation

As a parent company, DSM-Firmenich AG 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-firmenich 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.

A joint arrangement is an entity in which dsm-firmenich holds an interest and which is jointly controlled by dsm-firmenich and one or more other venturers under a contractual arrangement. A joint arrangement can either be a joint venture whereby dsm-firmenich and the other partner(s) have rights to the net assets of the arrangement, or a joint operation where dsm-firmenich 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. For a joint operation, assets, liabilities, revenues, and expenses are recognized in the financial statements of dsm-firmenich in accordance with the contractual entitlement or obligations of dsm-firmenich.

Foreign currencies

The Group’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.



Exchange rate at 31 December


Average exchange rate

1 euro =









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Emission rights

dsm-firmenich 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-firmenich, 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, 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-firmenich 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-firmenich 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.

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