Alternative performance measures (APMs)

In presenting and discussing DSM's financial position, operating results and net results, management uses certain alternative performance measures not defined by IFRS. These Alternative performance measures should not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used as supplementary information in conjunction with the most directly comparable IFRS measures. Alternative performance measures do not have standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies.

To provide clear reporting on the underlying developments of the business, APM adjustments are made that impact the EBIT(DA), net profit, ROCE and the EPS. A reconciliation of these Alternative performance measures to the most directly comparable IFRS measures can be found in table Alternative performance measures.

The APM adjustments to net profit, as included in the APMs, can be specified as follows:

 
2017
2016
 
Continuing operations
Discontinued operations
Total
Continuing operations
Discontinued operations
Total
APM adjustments:
      
- Acquisitions/divestments
11
-
11
(13)
28
15
- Restructuring
60
-
60
101
-
101
- Other
26
-
26
-
-
-
- Impairments of PPE, intangible assets and business activities
14
-
14
18
-
18
- Income tax related to adjustments
(28)
-
(28)
(31)
-
(31)
- Adjustments to result in associates and joint ventures
(1,158)
-
(1,158)
(212)
-
(212)
       
Total APM adjustments (income)/expense
(1,075)
-
(1,075)
(137)
28
(109)

2017

The APM adjustments in 2017 are listed below:

  • Restructuring costs of €60 million relate to project costs of the restructuring projects together with the redundancy schemes connected to the dismissal of employees and costs of termination of contracts.
  • Acquisition and divestment costs of €11 million relate to acquisition costs of €4 million for among others Amyris Brasil and Twilmij, and the divestment costs for Innovative Synthesis Research of €7 million.
  • The other APM adjustments of €26 million relate mainly to the demolition of buildings (€15 million), and some site closure and relocation costs (€11 million).
  • The impairments of property, plant and equipment (PPE) and intangible assets of €14 million mainly relate to asset impairments within DSM Food Specialties (€4 million), DSM Bio-based Products & Services (€11 million) and an asset write-off of a plant of DSM Nutritional Products in China (€7 million), offset by some reversals of impairments within DSM Resins & Functional Materials (€8 million).
  • APM adjustments to the result from associates mainly relate to a gain on the sale of the shares in Patheon N.V. of €1,250 million, offset by an impairment of the joint venture POET-DSM of €65 million and other associated companies of €30 million in total. See Note 10 for further details.

2016

The APM adjustments in 2016 are listed below:

  • Restructuring costs of €101 million relate to project costs of the restructuring projects together with the redundancy schemes connected to the dismissal of employees and costs of termination of contracts.
  • The impairments of property, plant and equipment (PPE), intangible assets, and business activities of €18 million in total relate mainly to the impairment of PPE at DSM Engineering Plastics in the US (€10 million) and intangible assets at DSM Bio-based Products & Services in Brazil (€10 million).
  • Acquisition and divestment costs of €15 million relate to the adjustments due to various settlements relating to the divestment of DSM Fibre Intermediates and Composite Resins to ChemicaInvest of €28 million and other acquisition-related costs (€4 million), offset partly by the release of an acquisition-related liability (€17 million).
  • APM adjustments to the result from associates mainly relate to the gain of €232 million on the IPO of Patheon N.V. and the secondary offering, partly offset by financing, reorganization and acquisition-related costs of Patheon (€20 million).

Alternative performance measures

 
2017
2016
 
Continuing operations
Discontinued operations
Total
Continuing operations
Discontinued operations
Total
       
Operating profit
846
-
846
685
(28)
657
Depreciation, amortization and impairments
502
-
502
489
-
489
EBITDA
1,348
-
1,348
1,174
(28)
1,146
       
APM adjustments to EBITDA:
      
- Acquisitions/divestments
11
-
11
(13)
28
15
- Restructuring
60
-
60
101
-
101
- Other
26
-
26
-
-
-
Total APM adjustments
97
-
97
88
28
116
       
Adjusted EBITDA
1,445
-
1,445
1,262
-
1,262
       
Operating profit
846
-
846
685
(28)
657
       
APM adjustments to Operating profit:
      
- APM adjustments to EBITDA
97
-
97
88
28
116
- Impairments of PPE and intangible assets
14
-
14
18
-
18
Total APM adjustments
111
-
111
106
28
134
       
Adjusted operating profit
957
-
957
791
-
791
       
Net profit
1,781
-
1,781
657
(28)
629
       
APM adjustments to:
      
- Operating profit
111
-
111
106
28
134
- Result relating to associates/joint ventures
(1,158)
-
(1,158)
(212)
-
(212)
Income tax related to APM adjustments
(28)
-
(28)
(31)
-
(31)
Total APM adjustments
(1,075)
-
(1,075)
(137)
28
(109)
       
Adjusted net profit
706
-
706
520
-
520
Profit attributable to non-controlling interests
(12)
-
(12)
(8)
-
(8)
Dividend on cumulative preference shares
(8)
-
(8)
(4)
-
(4)
       
Adjusted net profit available to holders of ordinary shares
686
-
686
508
-
508
       
Earnings per share
      
       
Average number of ordinary shares outstanding (x 1,000)
  
174,795
  
175,100
Effect of dilution due to share options (x 1,000)
  
683
  
603
Adjusted average number of ordinary shares outstanding (x 1,000)
  
175,478
  
175,703
       
Earnings per share (EPS) (in €):
      
- Net basic EPS
10.07
-
10.07
3.68
(0.16)
3.52
- Net diluted EPS
10.04
-
10.04
3.67
(0.16)
3.51
- Adjusted net basic EPS
3.92
-
3.92
2.90
-
2.90
- Adjusted net diluted EPS
3.91
-
3.91
2.89
-
2.89
Alternative performance measures
2017
 
2016
    
Capital employed
   
Intangible assets
3,058
 
3,188
Property, plant and equipment
3,313
 
3,325
Investment grants / drawing rights
(104)
 
(109)
Inventories
1,848
 
1,800
Current receivables
1,690
 
1,653
Current liabilities
(2,039)
 
(1,972)
Other
-
 
4
    
Capital employed at 31 December
7,766
 
7,889
    
Average capital employed
   
Capital employed at 1 January
7,889
 
7,553
Capital employed at 31 March
7,913
 
7,456
Capital employed at 30 June
7,692
 
7,616
Capital employed at 30 September
7,620
 
7,620
Capital employed at 31 December
7,766
 
7,889
    
Average capital employed
7,776
 
7,627
    
Adjusted operating profit
957
 
791
Average capital employed
7,776
 
7,627
ROCE in %
12.3%
 
10.4%