4 Segment information

Notes to the consolidated financial statements of Royal DSM

DSM's operating segments are Nutrition, Materials and the Innovation Center. DSM has segmented its operations by business activity from which revenues are earned and expenses incurred. These operating results are regularly reviewed by the entity's chief operating decision maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance. DSM uses Adjusted EBITDA as the main indicator to evaluate the consolidated performance as well as the performance per segment. Discrete financial information is available for each identified segment. The accounting policies of the operating segments are the same as those described in the Summary of significant accounting policies. Transactions between segments are generally executed at market-based prices. Interest income, interest expense, and income tax expense or income are not allocated to segments as these amounts are not included in the measure of segment profit or loss reviewed by the CODM, or otherwise regularly provided to the CODM.

Nutrition serves the global industries for animal feed, food & beverages, pharmaceuticals, infant nutrition, dietary supplements, and personal care. It does so by the production of pure active ingredients, their incorporation into sophisticated forms, and the provision of tailored premixes and forward solutions.

Materials is a global player in specialty plastics, which are used in components for the electrical and electronics, automotive, flexible food-packaging, and consumer goods industries. Furthermore, Materials is a global player in providing innovative, sustainable resins solutions for paints and industrial and optical fiber coatings, as well as the fiber Dyneema®.

The Innovation Center focuses on innovation and the growth of DSM's existing core business through adjacent technologies via its Corporate Research Program as well as through the company's venturing and licensing activities. Additionally, it identifies and invests in new and innovative growth options. The Innovation Center is responsible for developing and extracting value from DSM's Emerging Business Areas.

Any consolidated activities outside the three reported segments are reported as 'Corporate Activities'. These mainly comprise operating and service activities as well as several costs that cannot be allocated to the clusters.

DSM does not have a single external customer that represents 10% or more of total sales.

Geographical information

2018	Nether-lands	Rest of Western Europe	Eastern Europe	North America	Latin America	China	India	Japan	Rest of Asia	Rest of the world	Total
Net sales by origin
In € million	2,299	3,301	195	1,403	574	938	95	113	264	85	9,267
In %	25	36	2	15	6	10	1	1	3	1	100

Net sales by destination
In € million	405	2,229	597	2,070	1,081	1,131	233	322	906	293	9,267
In %	4	24	7	22	12	12	3	3	10	3	100

Workforce at year-end (headcount)	3,827	5,069	523	3,281	2,214	4,104	556	204	904	295	20,977
Average workforce (FTE)	3,644	4,851	511	3,258	2,139	4,335	545	199	884	284	20,650

Intangible assets and Property, plant and equipment
Capital expenditure	150	208	7	121	36	116	3	3	6	3	653
Carrying amount	1,678	1,961	33	1,823	362	568	19	41	93	23	6,601

Total assets (total DSM)	5,094	2,732	143	2,778	939	1,064	132	170	482	107	13,641

2019
Net sales by origin
In € million	2,173	2,667	197	1,568	722	976	97	136	370	104	9,010
In %	24	30	2	17	8	11	1	2	4	1	100

Net sales by destination
In € million	351	2,088	591	2,046	1,116	1,098	236	301	898	285	9,010
In %	4	23	7	23	12	12	3	3	10	3	100

Workforce at year-end (headcount)	3,960	5,133	575	3,346	2,134	4,960	681	205	888	292	22,174
Average workforce (FTE)	3,785	5,004	534	3,336	2,232	4,515	558	209	924	293	21,390

Intangible assets and Property, plant and equipment
Capital expenditure	164	210	10	125	22	76	1	3	9	3	623
Carrying amount	2,052	2,071	44	1,946	380	822	56	50	102	32	7,555

Total assets (total DSM)	4,111	3,109	156	2,874	944	1,406	165	148	419	111	13,443

Business segments

2019	Nutrition	Materials	Innovation Center	Corporate Activities	Elimina- tions	Total
Financial performance
Net sales	6,028	2,746	194	42	-	9,010
Supplies to other clusters	50	11	19	-	(80)	-

Supplies	6,078	2,757	213	42	(80)	9,010

Adjusted EBITDA¹	1,250	509	22	(97)	-	1,684
EBITDA	1,224	493	18	(149)	-	1,586
Adjusted operating profit¹	881	363	(19)	(150)	-	1,075
Operating profit	832	347	(23)	(202)	-	954

Depreciation and amortization	350	144	37	41	-	572
Impairments	42	2	4	12	-	60
of which included in APM adjustments	23	-	-	-	-	23
Additions to provisions	8	11	2	50	-	71
Result related to associates and joint ventures	7	-	(2)	49	-	54
R&D costs²	148	106	63	32	-	349
Employee benefit costs	1,062	373	90	286	-	1,811

Financial position
Total assets	8,324	2,238	776	2,105	-	13,443
Total liabilities	2,119	628	57	2,804	-	5,608
Capital employed at year-end	6,731	1,927	616	37	-	9,311
Capital expenditure	420	139	34	30	-	623
Share in equity of associates and joint ventures	29	3	74	49	-	155

Adjusted EBITDA margin (in %)	20.7	18.5				18.7

Workforce
Average in FTE	13,874	4,767	707	2,042	-	21,390
Year-end (headcount)	14,599	4,762	726	2,087	-	22,174

See Note 2 'Alternative performance measures' for the reconciliation to Adjusted EBITDA of €1,684 million (2018: €1,822 million) and other IFRS performance measures.
R&D costs relate to the functional area Research and development and exclude R&D costs included in the functional areas Cost of sales and Marketing and sales as well as R&D expenditure capitalized.

Business segments

2018	Nutrition	Materials	Innovation Center	Corporate Activities	Elimina- tions	Total
Financial performance
Net sales	6,137	2,913	172	45	-	9,267
Supplies to other clusters	46	9	19	-	(74)	-

Supplies	6,183	2,922	191	45	(74)	9,267

Adjusted EBITDA	1,407	512	8	(105)	-	1,822
EBITDA	1,379	490	7	(122)	-	1,754
Adjusted operating profit	1,111	383	(14)	(135)	-	1,345
Operating profit	1,050	362	(15)	(152)	-	1,245

Depreciation and amortization	291	128	22	28	-	469
Impairments	38	-	-	2	-	40
of which included in APM adjustments	33	(1)	-	-	-	32
Additions to provisions	8	11	2	14	-	35
Result related to associates and joint ventures	3	-	(2)	128	-	129
R&D costs¹	153	114	50	31	-	348
Employee benefit costs	1,023	361	79	290	-	1,753

Financial position
Total assets	7,201	2,293	735	3,412	-	13,641
Total liabilities	2,011	729	59	3,027	-	5,826
Capital employed at year-end	5,683	1,878	597	23	-	8,181
Capital expenditure	463	132	32	26	-	653
Share in equity of associates and joint ventures	54	3	71	77	-	205

Adjusted EBITDA margin (in %)	22.9	17.6				19.7

Workforce
Average in FTE	13,432	4,566	681	1,971	-	20,650
Year-end (headcount)	13,628	4,643	701	2,005	-	20,977

R&D costs relate to the functional area Research and development and exclude R&D costs included in the functional areas Cost of sales and Marketing and sales as well as R&D expenditure capitalized.

2019Statements