DCSIMG
10 Associates and joint ventures - Annual Report 2015 - DSM

10 Associates and joint ventures

DSM applies IFRS 11 since 2013. The interests in POET-DSM Advanced Biofuels and DSM Sinochem Pharmaceuticals are classified as joint venture in accordance with IFRS 11 and accounted for using the equity method. DSM has a 49% interest and significant influence in Patheon since the formation of this company early in 2014 and a 35% interest and significant influence in ChemicaInvest since the formation of this partnership in July 2015. DSM accounts for these interests using the equity method. Relations with these joint ventures and associates and their strategic importance are discussed in more detail in the sections ' Partnerships and Innovation Center in the Report by the Managing Board. Entities that meet the definition of joint operations of IFRS 11 were not identified.

DSM's share in its most important associates and joint ventures is disclosed below:

Table 1

Company
   
DSM interest
   
2015
2014
       
DSM Sinochem Pharmaceuticals, Ltd. (Hong Kong, China)
joint control
50%
50%
POET-DSM Advanced Biofuels LLC (Sioux Falls, South Dakota, USA)
joint control
50%
50%
JLL/Delta Patheon Holdings, L.P. (Cayman Islands)
significant influence
48.9%
49%
ChemicaInvest Holding B.V. (Netherlands)
significant influence
35%
-

The following table provides an overview of DSM's investments in associates and joint ventures.

Table 2: Associates and joint ventures

Associates and joint ventures
 
2015
2014
 
Patheon
DSP
POET-DSM 1
Chemica-
Invest
Other2
Total
 
               
Balance at 1 January
413
142
147
-
60
762
295
               
Changes:
             
- Share of profits
56
8
(13)
(14)
(14)
23
(61)
- Capital payments
-
13
15
-
23
51
35
- Repayments
(14)
(17)
-
-
-
(31)
-
- Dividend received
(141)
-
-
-
(3)
(144)
(3)
- New loans
-
-
-
161
5
166
53
- Disposals
-
-
-
-
(27)
(27)
(1)
- Consolidation changes
-
-
-
18
-
18
397
- Reclassification to held for sale
-
-
-
-
-
-
(1)
- Transfers
-
(6)
-
-
-
(6)
-
- Exchange differences
27
1
17
(3)
3
45
67
- Other
10
1
-
-
4
15
(19)
               
Total changes
(62)
-
19
162
(9)
110
467
               
Balance at 31 December
351
142
166
162
51
872
762
Of which carrying amount of the investment
351
129
120
1
43
644
617
Of which loans granted
-
13
463
161
8
228
145
1 The future value of the investment in DSM-POET is subject to the realization of the business objectives of the company and the development of the market price for bio-ethanol
2 Amongst others Japan Fine Coatings and Actamax are included in Other
3 The outstanding loan receivable is secured for 50% by a guarantee from the joint venture partner POET LLC

Loans include a €54 million shareholder loan with an annual fixed interest rate of 9.875% and a €108 million bridge loan with an annually rising interest rate from 7 to 10%, both with an expected 4-year maturity, granted to ChemicaInvest; a loan of €12 million to DSP maturing in 2017; a USD 50 million loan to POET-DSM with a 5% interest rate repayable in 2018 and secured for 50% by a guarantee from the joint venture partner. Loans 2014 include a USD 61 million loan granted to Patheon (DPx) in 2014 with an annual fixed interest rate of 10.75% and an expected 5-year maturity (from 2015 onward the loan is in included in the carrying amount of the investment in Patheon); loans of €6 million and €12 million to DSP maturing in 2016 together with a loan of CNY 115 million to be repaid in or before 2017; a USD 50 million loan to POET-DSM with a 5% interest repayable in 2018 and secured for 50% by a guarantee from the joint venture partner.

The next page gives an overview of associates and joint ventures (on a 100% basis).
Patheon is included from 11 March 2014 until the end of fiscal year 2014 (31 October) for 2014 and from 1 November 2014 until 31 October 2015 for 2015. Furthermore the book result of the divestment of the generics business of Banner Life Sciences in December 2015 has been included in exceptional items for € 39 million (100% basis). A post-tax result discontinued operations of €93 million has been reported, which includes the businesses of Banner Pharmacaps in Mexico City (Mexico), Biosolutions Operations in Capua (Italy) and the DPx Fine Chemicals division.

ChemicaInvest is included from 31 July 2015.

POET-DSM Advanced Biofuels is included in Other in view of the commercial start-up of the plant. At year-end 2015, total assets amounted to € 292 million (2014: €258 million) and net assets amounted to € 240 million (2014: € 211 million). Revenue for 2015 was € 2 million (2014: € 0 million) and EBITDA was -€ 23 million (2014: -€ 8 million). Furthermore, Japan Fine Coatings and Actamax are included among others.

Table 3: Associates and joint ventures on a 100% basis

Associates and joint ventures on a 100% basis
 
Patheon
DSP
ChemicaInvest1
Other
Total
 
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Assets
                   
Intangible assets
1,351
1,405
22
16
9
-
11
21
1,393
1,442
Property, plant and equipment
863
819
234
241
545
-
349
315
1,991
1,375
Other non-current assets
473
110
30
36
166
-
4
15
673
161
Inventories
340
362
81
75
171
-
14
13
606
450
Receivables
348
296
142
172
376
-
25
83
891
551
Cash and cash equivalents
567
70
102
67
107
-
33
48
809
185
Other current assets
-
-
-
-
7
-
10
5
17
5
Total assets
3,942
3,062
611
607
1,381
-
446
500
6,380
4,169
                     
Liabilities
                   
Provisions (non-current)
-
-
1
3
1
-
-
3
2
6
Borrowings (non-current)
2,422
1,625
46
47
534
-
80
80
3,082
1,752
Other non-current liabilities
339
299
10
9
295
-
6
6
650
314
Provisions (current)
23
42
-
-
3
-
-
-
26
42
Borrowings and financial derivatives (current)
26
25
127
145
82
-
21
22
256
192
Other current liabilities
513
410
165
181
366
-
27
99
1,071
690
Total liabilities
3,323
2,401
349
385
1,281
-
134
210
5,087
2,996
                     
Net assets (100% basis)
619
661
262
222
100
-
312
290
1,293
1,173
Of which non-controlling interest
62
-
4
4
94
-
-
-
160
4
Net assets excluding goodwill
619
661
262
222
100
-
312
290
1,293
1,173
Contingent liabilities
-
-
-
-
-
-
-
-
-
-
                     
Summarized statement of profit or loss
                   
Revenue (net sales)2
1,621
984
418
399
756
-
214
368
3,009
1,751
Operating profit (EBIT)
191
92
28
9
(32)
-
(42)
(25)
145
76
Interest income
-
-
1
-
-
-
-
-
1
-
Interest expense
(133)
(56)
(7)
(6)
(18)
-
(2)
(4)
(160)
(66)
Other financial income and expense
10
(1)
-
8
(4)
-
(1)
-
5
7
Share of the profit of associates
(2)
(1)
-
-
4
-
-
-
2
(1)
Profit before income tax expense
66
34
22
11
(50)
-
(45)
(29)
(7)
16
Income tax expense
8
9
(6)
(5)
10
-
(4)
-
8
4
Profit for the year (continuing operations)
74
43
16
6
(40)
-
(49)
(29)
1
20
Post-tax result discontinued operations
93
-
-
-
-
-
-
-
93
-
Exceptional items as reported by associates / joint ventures
(18)
(152)
-
-
-
-
-
2
(18)
(150)
Income tax expense exceptional items
(16)
4
-
-
-
-
-
-
(16)
4
Profit for the year (total)
133
(105)
16
6
(40)
-
(49)
(27)
60
(126)
Other comprehensive income
2
(35)
-
(4)
-
-
-
-
2
(39)
Total comprehensive income
135
(140)
16
2
(40)
-
(49)
(27)
62
(165)
of which non-controlling interest
20
-
-
-
-
-
-
-
20
-
                     
EBITDA
366
177
57
23
(3)
-
(31)
(18)
389
182
Depreciation, amortization and impairment
(175)
(85)
(29)
(14)
(29)
-
(11)
(7)
(244)
(106)
1 ChemicaInvest will update the initial recognition of assets and liabilities acquired on the basis of a purchase price allocation in 2016
2 Excluding sales to DSM of €10 million (DSP) and €123 million (ChemicaInvest)