Explanation of some concepts and ratios - Annual Report 2015 - DSM

Explanation of some concepts and ratios



Eubiotics is the science of hygienic and healthy living. The term is used to refer to a healthy balance of the micro-flora in the gastrointestinal tract.

Frequency Index (FI)

The Frequency Index is a way to measure safety performance. The number of accidents of a particular category per 100 employees per year.

Inclusion Index

The Inclusion Index is a subset of items in the Employee Engagement (Pulse) Survey to specifically measure Inclusion. Inclusion is: “A working environment where all employees are a full and equal member of a team; wherediverse perspectives are valued, and investment is made in their development; where people are respected and able to contribute as they are and not having to conform; where they can reach their potential, and where they can speak up without fear of retribution.

LWC-rate DSM own

The LWC-rate DSM own is the number of lost workday cases per 100 DSM employees in the past 12 months:
LWC-rate = 100 * (number of LWCs (past 12 months) / average effective manpower (past 12 months)).

Occupational Health Incident

This refers to any abnormal condition or disorder requiring medical treatment – other than one resulting directly from an accident – caused by, or mainly caused by, repeated exposure to work-related factors.


People+ solutions are products and services that, when considered over their whole life cycle, offer a clear social benefit compared to the mainstream reference solutions. The social benefit can occur at any stage of the product life cycle. People+ solutions, in short, create more value with a better social impact. The qualification People+ is based upon the DSM People Life Cycle Assessment (LCA) method. From 2016, DSM will refer to its People+ solutions as Brighter Living Solutions. Brighter Living Solutions are products and services that, when considered over their whole life cycle, offer a clear environmental benefit (ECO+) and/or a social benefit (People+).

People Life Cycle Assessment (People LCA)

The People LCA identifies the social impacts of products over its life cycle on the dimensions of health, comfort and well-being, working conditions and community development. The methodology has been developed by DSM based on international standards, extensive road testing and external stakeholder dialogues. DSM takes an active approach to further harmonize and standardize this metrics in the Roundtable for Product Social Metrics and World Business Council for Sustainable Development (WBCSD).

REC-rate DSM all

The REC-rate DSM all is the number of recordable injuries per 100 DSM employees and contractor employees in the past 12 months: REC-rate = 100 * (number of RECs (past 12 months) / average effective manpower including contractor employees (past 12 months)).

Safety, Health and Environment (SHE)

DSM’s policy is to maintain business activities and produce products that do not adversely affect safety or health, and that fit with the concept of sustainable development. The company does this by setting the following objectives: to provide an injury-free and incident-free workplace; to prevent all work-related disabilities or health problems; to control and minimize the risks associated with DSM's products for their whole life cycle and to choose production processes and products such that the use of raw materials and energy is minimized; to evaluate and improve DSM's practices, processes and products continuously in order to make them safe and acceptable to its employees, the customers, the public and the environment.

United Nations Global Compact

A strategic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labor, environment and anti-corruption.

United Nations’ Universal Declaration of Human Rights

On 10 December 1948, the General Assembly of the United Nations adopted and proclaimed the Universal Declaration of Human Rights. Following this historic act, the Assembly called upon all Member countries to publicize the text of the Declaration and 'to cause it to be disseminated, displayed, read and expounded principally in schools and other educational institutions, without distinction based on the political status of countries or territories'.



A fuel which is derived from renewable organic resources, as distinct from one which is derived from non-renewable resources such as oil and natural gas.

Carbon footprint

The impact of a certain activity in terms of the emission of non-renewable CO2 to the atmosphere.

Circular economy

Circular economy refers to an economy that is restorative and in which materials flows are of two types: biological nutrients, designed to re-enter the biosphere safely, and technical nutrients, which are designed to circulate at high quality without entering the biosphere throughout their entire lifecycle.


Carbon dioxide, a gas that naturally occurs in the atmosphere. It is part of the natural carbon cycle through photosynthesis and respiration. It is also generated as a by-product of combustion. Carbon dioxide is a greenhouse gas.

Chemical Oxygen Demand (COD)

COD is an indicator of the degree of pollution of waste water by organic substances.


ECO+ is DSM’s program for the development of sustainable, innovative products and solutions with environmental benefits. Products qualify as ECO+ when their environmental impact is lower than competing mainstream products that fulfill the same function. When considered over their entire life cycle, ECO+ solutions offer superior performance with a lower eco-footprint. The environmental benefits can be created at any stage of the product life cycle, from the raw materials through to manufacturing and potential re-use and end-of-life disposal. ECO+ solutions, in short, create more value with the least environmental impact. The qualification ECO+ is based upon internal expert opinions where various impact categories are evaluated. For a growing number of products these expert opinions are supported by Life Cycle Assessments (LCA). As of 2016, the expert opinion process will be prescribed to harmonize the processes for expert opinion and LCA-based ECO+ solutions. From 2016, DSM will refer to its ECO+ solutions as Brighter Living Solutions. Brighter Living Solutions are products and services that, when considered over their whole life cycle, offer a clear environmental benefit (ECO+) and/or a social benefit (People+).

Environmental Life Cycle Assessment (Eco LCA)

The Environmental Life Cycle Assessment (Eco LCA) identifies the material, energy and waste flows associated with a product or process over its entire life cycle to determine environmental impacts and potential improvements; this full life cycle approach is also referred to as ‘Cradle to Grave’. It is also possible to assess a partial life cycle of a product or process with the most common type being ‘Cradle to Gate’ which assesses the environmental impacts of a manufacturing process without accounting for use phase or end of life impacts. There are many different environmental impact categories that can be assessed using LCA; at DSM the standard approach is to evaluate the carbon footprint and eco-footprint, published by the WBCSD Chemical Sector in 2014.


Eco-efficiency is a concept (created in 1992 by WBCSD) that refers to the creation of more goods and services while using less resources and creating less waste and pollution throughout their entire life cycle. DSM applies the concept to its ECO+ program. In the context of DSM’s SHE targets, eco-efficiency relates specifically to the reduction of emissions and energy and water consumption, relative to the production volumes of DSM’s plants.

Greenhouse-gas emissions (GHGE) reduction over volume-related revenue (VRR)

The GHGE definition is according to the Kyoto Protocol and includes carbon dioxide (CO2), methane, nitrous oxide (N2O), sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons. VRR is net sales adjusted for changes in selling prices, exchange rates and the impact of acquisitions and divestments. GHGE/VRR is one of the ratios in the Long-Term Incentive part of the Managing Board remuneration and relates to a three-year period.

Greenhouse-gas emissions (GHGE) efficiency improvement

The GHGE efficiency improvement is the amount of GHG emissions per unit of output (specific emissions) in a given year compared to the specific emissions in the prior year. GHG efficiency improvements are one of the ratios in the Long-Term Incentive part of the Managing Board remuneration and relate to a three-year period.


The Global Reporting Initiative (GRI) has developed Sustainability Reporting Guidelines that strive to increase the transparency and accountability of economic, environmental, and social performance. The GRI was established in 1997 in partnership with the United Nations’ Environment Programme. It is an international, multi-stakeholder and independent institution whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. These Guidelines are for voluntary use by organizations for reporting on the economic, environmental, and social dimensions of their activities, products, and services.


Nitrogen. A mostly inert gas constituting 78% of the earth’s atmosphere, nitrogen is present in all living organisms.


Nitrous oxide. A gas that is formed during combustion. When emitted to the environment, it contributes to global warming.


Nitrogen oxides. These gases are released mainly during combustion and cause acidification.

Renewable resources

A natural resource which is replenished by natural processes at a rate comparable to, or faster than, its rate of consumption by humans or other users. The term covers perpetual resources such as solar radiation, tides, winds and hydroelectricity as well as fuels derived from organic matter (bio-based fuels).


Sulfur dioxide. This gas is formed during the combustion of fossil fuels and causes acidification.


Volatile organic compounds. The term covers a wide range of chemical compounds, such as organic solvents, some of which can be harmful.



In calculating financial profitability ratios, use is made of the average of the opening and closing values of balance sheet items in the year under review.

The financial indicators per ordinary share are calculated on the basis of the average number of ordinary shares outstanding (average daily number). In calculating Shareholders’ equity per ordinary share, however, the number of shares outstanding at year-end is used.

In calculating the figures per ordinary share and the ‘net profit as a percentage of average Shareholders’ equity available to holders of ordinary shares’, the amounts available to the holders of cumulative preference shares are deducted from the profits and from Shareholders’ equity.

Capital employed

The total of the carrying amount of intangible assets and property, plant and equipment, inventories, trade receivables and other receivables, less trade payables and other current liabilities.

Capital expenditure

This includes all investments in intangible assets and property, plant and equipment as well as the acquisition of subsidiaries and associates and related cash flows.

Core earnings

Core earnings represent profit or loss from continuing operations excluding exceptional items and excluding amortization of intangible assets recognized from the application of purchase accounting for business combinations.


This includes the disposal of intangible assets and property, plant and equipment as well as the disposal of participating interests and other securities.

Earnings before interest, tax, depreciation and amortization (EBITDA)

EBITDA is the sum total of operating profit plus depreciation and amortization.

Earnings per ordinary share

Net profit attributable to equity holders of Koninklijke DSM N.V. minus dividend on cumulative preference shares, divided by the average number of ordinary shares outstanding.

Innovation sales

Innovation sales are defined as products and applications that have been introduced over the last five years.

Operating working capital

The total of inventories and trade receivables, less trade payables.

Organic sales growth

Organic sales growth is the total impact of volume and price/mix.

Return on capital employed (ROCE)

Operating profit as a percentage of weighted average capital employed.

Total shareholder return (TSR)

Total shareholder return is capital gain plus dividend paid.