Integrated Annual Report 2024

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-firmenich 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 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.

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-firmenich 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 and experience, and are validated by external valuation specialists, where deemed necessary by management.

Merger and acquisitions

In 2024, dsm-firmenich did not acquire any business (in 2023: €290 million consideration for acquisitions and €14,277 million related to the business combination of DSM and Firmenich).

In 2023, the business combination of DSM and Firmenich contributed €3,110 million to net sales, €312 million to operating result and €624 million to Adjusted EBITDA during the period from 8 May until 31 December 2023. If the merger had occurred on 1 January 2023, additional net sales would have been approximately €4,807 million, operating result €506 million and Adjusted EBITDA €958 million in 2023.

Finalization of the PPA related to the merger of equals between DSM and Firmenich

In the reporting year, the Purchase Price Allocation (PPA) related to the merger of equals between DSM and Firmenich in 2023 was finalized without any changes in relation to the purchase price allocation as disclosed in the annual report of 2023.

Finalization of Adare Biome PPA

The Purchase Price Allocation (PPA) related to the acquisition of Adare Biome in France in 2023 was finalized without any changes in relation to the purchase price allocation as disclosed in the annual report of 2023.

Divestments

Jiangshan

At the end of 2023, dsm-firmenich committed to the sale of its vitamin C business in Jiangshan (China) and therefore classified the assets and liabilities as held for sale at the end of the reference year. On 8 March 2024, dsm-firmenich completed the sale and transfer of its 100% equity interest in DSM Jiangshan Pharmaceutical Co., Ltd. to Jingjiang Cosfocus Health Technology Co., Ltd. Besides the derecognition of the assets and liabilities held for sale, the liability that was recognized in 2023 toward the buyer was settled at closing of the transaction.

CanolaPRO®

On 15 February 2024, dsm-firmenich and Avril entered into an Implementation Agreement setting out certain amendments to the Olatein joint arrangement, leading to a change of dsm-firmenich’s share from a controlling stake of 75% into a 50/50 joint-control partnership with Avril. As a consequence, dsm-firmenich has deconsolidated the CanolaPRO® business and accounts for its interest in Olatein as a joint venture applying the equity method. The fair value of the remaining share in the joint venture at the date when control was lost amounted to €30 million.

DRT-Anthea

On 10 December 2024, dsm-firmenich reduced its stake in the partnership DRT-Anthea in India from a controlling shareholding of 50% to a minority shareholding of 25%. As a consequence, dsm-firmenich has deconsolidated the DRT-Anthea business and accounts for its interest as an associate applying the equity method. The fair value of the remaining share in the associate at the date when control was lost amounted to €23 million.

dsm-firmenich performed a strategic review process and announced the outcome on 3 June 2024. As part of dsm-firmenich’s tuning of its portfolio, the company de-prioritized certain business segments and decided to divest the yeast extract and MEG-3® fish oil businesses.

Marine lipids

On 30 September 2024, the company completed the divestment of its MEG-3® fish oil business to KD Pharma Group SA, a contract development and manufacturing organization (CDMO) active in pharmaceutical and nutritional lipids. As part of the transaction, dsm-firmenich has obtained a minority stake of 29% in KD Pharma’s parent company MidCo Omega GmbH. The fish-oil business was part of the Business Unit Health, Nutrition & Care, and represented approximately €170 million sales in 2023, with approximately 200 employees who were transferred to KD Pharma.

Yeast extracts

On 1 October 2024, the company completed the divestment of its yeast extract business to Lesaffre, a key global player in fermentation and micro-organisms. Yeast extracts was part of dsm-firmenich’s Business Unit Taste, Texture & Health, with annual sales of about €120 million. After the completion of the deal, dsm-firmenich will continue to supply yeast extracts produced in Delft to Lesaffre until the end of 2025, after which point the production of yeast extracts in Delft will be discontinued. Upon divestment, dsm-firmenich recognized a provision for onerous contracts and severance payments amounting to €50 million. See also Note 18 Provisions.

As these businesses were not considered a major line of business, the results of these businesses (the ‘disposal groups’) were not reclassified to discontinued operations.

Summary of divestments in 2024

See the table below for the book result and the impact on the cash flow statement of the divestments and deconsolidations that took place in the reporting year.

Summary of divestments in 2024

 

 

MEG-3 business
(divestment)

 

Yeast extract business
(divestment)

 

Jiangshan vitamin C
(divestment)

 

Olatein
(deconsolidation)

 

DRT-Anthea
(deconsolidation)

 

Other

 

Total

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill and intangible assets

 

(40)

 

–

 

–

 

(43)

 

(15)

 

(1)

 

(99)

Property, plant and equipment

 

(64)

 

(73)

 

–

 

(50)

 

(23)

 

–

 

(210)

Other non-current assets

 

–

 

–

 

–

 

5

 

–

 

–

 

5

Inventories

 

(117)

 

(5)

 

1

 

(1)

 

(21)

 

–

 

(143)

Receivables and other current assets

 

(4)

 

–

 

(9)

 

13

 

(5)

 

–

 

(5)

Cash and cash equivalents

 

(10)

 

–

 

(3)

 

–

 

(8)

 

–

 

(21)

Total assets

 

(235)

 

(78)

 

(11)

 

(76)

 

(72)

 

(1)

 

(473)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions

 

–

 

50

 

–

 

–

 

3

 

–

 

53

Non-current liabilities

 

–

 

–

 

–

 

(42)

 

(3)

 

–

 

(45)

Current liabilities

 

(5)

 

8

 

(57)

 

(6)

 

(13)

 

–

 

(73)

Total liabilities

 

(5)

 

58

 

(57)

 

(48)

 

(13)

 

–

 

(65)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets

 

(230)

 

(136)

 

46

 

(28)

 

(59)

 

(1)

 

(408)

Non-controlling interest

 

–

 

–

 

–

 

4

 

(19)

 

–

 

(15)

Net assets dsm-firmenich shareholders

 

(230)

 

(136)

 

46

 

(32)

 

(40)

 

(1)

 

(393)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consideration (net of selling costs, translation differences and net debt)

 

156

 

157

 

(65)

 

9

 

48

 

7

 

312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book result 2024

 

(74)

 

21

 

(19)

 

(23)

 

8

 

6

 

(81)

Income tax

 

5

 

(5)

 

–

 

(3)

 

(4)

 

(2)

 

(9)

Net book result

 

(69)

 

16

 

(19)

 

(26)

 

4

 

4

 

(90)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact on the cash flow statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consideration (net of selling costs, translation differences and net debt)

 

156

 

157

 

(65)

 

9

 

48

 

7

 

312

Of which via an equity stake in target company

 

(159)

 

–

 

–

 

(30)

 

(23)

 

–

 

(212)

Of which deferred payments, non-cash and internal financing

 

(3)

 

(13)

 

14

 

21

 

–

 

(1)

 

18

Consideration in cash

 

(6)

 

144

 

(51)

 

–

 

25

 

6

 

118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash in divested company

 

(10)

 

–

 

(3)

 

–

 

(8)

 

–

 

(21)

Other divestment-related cash-in/(out)

 

–

 

–

 

–

 

–

 

(3)

 

(52)

 

(55)

Total cash-in/(out) related to disposals

 

(16)

 

144

 

(54)

 

–

 

14

 

(46)

 

42

Discontinued Operations

In 2024, no business was classified as discontinued operations.

Breakdown net profit into continuing and discontinued operations

 

 

2024

 

2023

 

 

Continuing operations

 

Discontinued operations

 

Total

 

Continuing operations

 

Discontinued operations

 

Total

Net sales

 

12,799

 

–

 

12,799

 

10,627

 

388

 

11,015

Adjusted EBITDA

 

2,118

 

–

 

2,118

 

1,443

 

(2)

 

1,441

EBITDA

 

1,991

 

–

 

1,991

 

810

 

2,827

 

3,637

Total expenses

 

12,238

 

–

 

12,238

 

11,124

 

(2,439)

 

8,685

Adjusted operating profit

 

926

 

–

 

926

 

430

 

(2)

 

428

Operating profit

 

561

 

–

 

561

 

(497)

 

2,827

 

2,330

Financial income and expense

 

(134)

 

–

 

(134)

 

(150)

 

(1)

 

(151)

Profit (loss) before income tax expense

 

427

 

–

 

427

 

(647)

 

2,826

 

2,179

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(147)

 

–

 

(147)

 

18

 

(37)

 

(19)

Results related to associates and joint ventures

 

–

 

–

 

–

 

(7)

 

-  

 

(7)

Net profit (loss) for the year

 

280

 

–

 

280

 

(636)

 

2,789

 

2,153

 

 

 

 

 

 

 

 

 

 

 

 

 

Of which:

 

 

 

 

 

 

 

 

 

 

 

 

- Attributable to non-controlling interests

 

30

 

–

 

30

 

16

 

-  

 

16

- Dividend on Cumulative Preference Shares

 

–

 

–

 

–

 

6

 

-  

 

6

- Available to holders of ordinary shares

 

250

 

–

 

250

 

(658)

 

2,789

 

2,131

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

- Net basic EPS

 

0.94

 

–

 

0.94

 

(2.82)

 

11.96

 

9.14
Impact on cash flow statement (discontinued operations)

 

 

2024

 

2023

Net cash provided by/(used in):

 

 

 

 

- Operating activities

 

–

 

70

- Investing activities

 

–

 

3,517

Net change in cash and cash equivalents

 

–

 

3,587

Assets and liabilities held for sale

End of 2024, dsm-firmenich is not committed to the sale of any of its businesses, and therefore has not classified assets and liabilities as held for sale.

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