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  • Life Sciences and Materials Sciences

    Staying the Course

    Royal DSM N.V. Annual Report 2009

  • www.dsm.comAnnual Report 2009

    DSM at a glance

    DSM Nutritional Products DSM Nutritional Products is the world’s largest supplier of nutritional ingredients, such as vitamins, carotenoids (antioxidants and pigments), enzymes, other biochemicals and fine chemicals and premixes for humans and animals.

    - Human Nutrition and Health Leading developer and manufacturer of a wide range of food ingredients for the food industry and personal care ingredients for cosmetics and skin care product companies, often providing health benefits.

    - Animal Nutrition and Health World market leader in vitamins, carotenoids, enzymes and premixes for the feed industry. Its products contribute to animal performance and the environment.

    DSM Food Specialties DSM Food Specialties is a global supplier of advanced ingredients for the food industry, mainly manufactured with the aid of fermentation and enzyme technology, among other technologies, based on in-depth application knowledge of the chosen market segments.

    DSM Pharmaceutical Products DSM Pharmaceutical Products is one of the world’s leading providers of high-quality global primary and secondary custom manufacturing services (small as well as large molecules) to the pharmaceutical, biotech and agrochemical industries.

    DSM Anti-Infectives DSM Anti-Infectives holds global leadership positions in penicillin G and penicillin intermediates (6-APA and 7-ADCA), in active pharmaceutical ingredients such as semi- synthetic penicillins and semi-synthetic cefalosporins (beta-lactams) and in other active pharmaceutical ingredients such as nystatin.

    DSM’s activities have been grouped into business groups representing coherent product/market combinations. The business group directors report directly to the Managing Board. For reporting purposes the activities are grouped into five clusters.

    Nutrition Pharma

  • www.dsm.comAnnual Report 2009

    In addition DSM reports on a number of other activities, which have been grouped under Other activities.

    Base Chemicals and Materials

    DSM Engineering Plastics DSM Engineering Plastics is a global player in polyamides, polyesters and extrudable adhesive resins. These materials are used mainly in technical components for the electrical and electronics, automotive, engineering and packaging industries.

    DSM Dyneema DSM Dyneema is the inventor and manufacturer of Dyneema®, the world’s strongest fiber™. This polyethylene fiber is used in many applications in various end-markets, such as life protection, shipping, fishing, offshore, sailing, medical and textiles.

    DSM Resins DSM Resins manufactures and sells high-quality resins which are used in a wide variety of applications such as paints, wind mills and automotive. End-markets include building and construction, transport and industry.

    DSM Fibre Intermediates DSM Fibre Intermediates produces caprolactam and acrylonitrile, which are raw materials for synthetic fibers and engineering plastics. Caprolactam is the raw material for polyamide 6, a versatile material that is used in textiles, floor coverings, industrial yarns and engineering plastics.

    Performance Materials

    Polymer Intermediates

    DSM Agro DSM Agro produces ammonia and nitrogen fertilizers for grasslands and agricultural crops, which it supplies to agricultural wholesalers.

    DSM Melamine DSM Melamine produces melamine, a product used in impregnating resins and adhesive resins for the wood processing industry.

    DSM Elastomers DSM Elastomers manufactures synthetic rubbers and thermoplastic elastomers for use in cars, white goods, various industrial products, construction materials and as motor-oil additives.

  • Our purpose is to create brighter lives for people today and generations to come.

    We connect our unique competences in Life Sciences and Materials Sciences to create solutions that nourish, protect and improve performance.

    DSM – the Life Sciences and Materials Sciences Company Royal DSM N.V. creates solutions that nourish, protect and improve performance. Its end markets include human and animal nutrition and health, personal care, pharmaceuticals, automotive, coatings and paint, electrical and electronics, life protection and housing. DSM manages its business with a focus on the triple bottom line of economic prosperity, environmental quality and social equity, which it pursues simultaneously and in parallel. DSM has annual net sales of € 8 billion and employs some 22,700 people worldwide. The company is headquartered in the Netherlands, with locations on five continents. DSM is listed on Euronext Amsterdam. More information:

    www.dsm.comAnnual Report 2009

  • Key data for 2009

    Net sales, continuing operationsNet sales, continuing operations (x million)

    Operating profit,Operating profit, continuing operationscontinuing operations11

    (x million)

    Net profit, continuing operationsNet profit, continuing operations11

    (x million)

    Net profit, total DSM Net profit, total DSM (x million)

    Capital expenditure andCapital expenditure and acquisitionsacquisitions (x million)

    Net earnings per ordinary shareNet earnings per ordinary share

    Dividend per ordinary shareDividend per ordinary share Workforce (at year-end) Workforce (at year-end) Cash provided by operating Cash provided by operating activities, total DSMactivities, total DSM (x million)

    € 7,732 € 370 € 197

    €337 € 467 € 2.01

    €1.20 22,738 € 1,276

    Forward-looking statements This document 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. Examples of forward-looking statements include statements made or implied about the company’s strategy, estimates of sales growth, financial results, cost savings and future developments in its existing business as well as the impact of future acquisitions, and the company’s financial position. These statements can be management estimates based on information provided by specialized agencies or advisors.

    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 the company’s actual performance and position to differ materially from these statements. These factors include, but are not limited to, macro-economic, market and business trends and conditions, (low-cost) competition, legal claims, the company’s ability to protect intellectual property, changes in legislation, changes in exchange and interest rates, changes in tax rates, pension costs, raw material and energy prices, employee costs, the implementation of the company’s strategy, the company’s ability to identify and complete acquisitions and to successfully integrate acquired companies, the company’s ability to realize planned disposals, savings, restructuring or benefits, the company’s ability to identify, develop and successfully commercialize new products, markets or technologies, economic and/or political changes and other developments in countries and markets in which DSM operates.

    As a result, DSM’s actual future performance, position and/or financial results may differ materially from the plans, goals and expectations set forth in such forward-looking statements. DSM has no obligation to update the statements contained in this document, unless required by law. The English language version of this document is leading.

    1 Before exceptional items

    Annual Report 2009 1

  • 3 Key financial data

    4 Letter from the Chairman

    8 Staying the Course

    20 Report by the Managing Board 20 Highlights of 2009 22 Vision 2010 progress 28 Innovation and R&D 37 Sustainability 40 Human resources 42 Corporate Services 43 External recognition 45 Macro-economic environment 46 Financial policy 47 Financial results

    54 Review of business 57 Nutrition 63 Pharma 69 Performance Materials 75 Polymer Intermediates 79 Base Chemicals and Materials 81 Other activities

    84 Corporate governance and risk management 84 Introduction 86 Dutch corporate governance code 87 Governance framework 88 Risk management 94 Statements of the Managing Board

    96 Report by the Supervisory Board 96 Supervisory Board report 99 Remuneration policy regarding the Managing Board

    and the Supervisory Board

    112 Corporate organization

    116 Information about the DSM share

    Table of contents

    119 Financial statements

    120 Consolidated financial statements 120 Summary of significant accounting policies 128 Consolidated statements 135 Notes to the consolidated financial statements of

    Royal DSM N.V.

    178 Financial statements of Royal DSM N.V. 179 Notes to the Royal DSM N.V. financial statements

    188 Other information 188 Auditor's report 189 Profit appropriation 189 Special statutory rights

    192 DSM figures: five-year summary

    196 Explanation of some financial concepts and ratios

    Annual Report 2009 2

  • Key financial data (consolidated)

    Throughout this report: • operating profit (EBIT) and EBITDA do not include exceptional items; • net profit (before exceptional items) is defined as net profit available for profit appropri

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