Associates and joint arrangements
In 2018 the following events took place related to the associates and joint arrangements:
In the reporting year, the legal structure of ChemicaInvest changed. Chemicalnvest is owned 35% by DSM and 65% by CVC Capital Partners. As a result of the restructuring and the divestment of the caprolactam business of Fibrant by ChemicaInvest, DSM now has a direct share in the acrylonitrile business of AnQore (35%) and in the composite resins business of AOC Aliancys (18.9%). ChemicaInvest sold its share in the caprolactam business of Fibrant in the Netherlands and China to Highsun. DSM anticipates receiving about €200 million in cash related to this transaction, of which €120 million was received in 2018.
On 31 October 2018, DSM divested its share in DSM Sinochem Pharmaceuticals (DSP). Bain Capital acquired DSP from DSM and Sinochem Group, who each held an equity stake of 50%. DSM received €247 million for its equity stake, excluding an earn-out (recognized at €36 million) and transaction costs, resulting in a book profit of €109 million on the transaction. DSM received €271 million in cash following closing, including repayment of debt and after transaction costs.
Divestment of share in DSM Sinochem Pharmaceuticals
|
Consideration
|
247
|
|
Earn-out
|
36
|
|
Total consideration
|
283
|
|
Book value associate
|
144
|
|
Book result
|
139
|
|
Translation reserve
|
(12)
|
|
Transaction and other related costs
|
(18)
|
|
Total transaction result in income statement
|
109
|
Following the outcome of the court case in January 2018, DSM deconsolidated Yantai Andre Pectin with effect from 1 January 2018. DSM's 28.95% stake in Yantai Andre Pectin is now accounted for as a Share in an associate, initially at fair value (€43 million). This deconsolidation has led to an accounting profit of €11 million.
On 4 October 2018, DSM Innovation Center sold its 22.8% share in Essential Medical for a consideration of USD 14.7 million plus an estimated earn-out of USD 3 million. The book result amounts to €13 million.
Associates and Joint ventures
The following table analyses, in aggregate, the carrying amount and share of profit and other results of associates and joint ventures.
|
2018
|
2017
|
|||
|
Associates
|
Joint Ventures
|
Total
|
Total
|
|
|
Balance at 1 January
|
38
|
189
|
227
|
586
|
|
- Share of the profit of associates and joint ventures
|
54
|
(18)
|
36
|
(116)
|
|
- Other comprehensive income
|
-
|
-
|
-
|
(14)
|
|
- Capital payments and dividends received
|
9
|
44
|
53
|
60
|
|
- Disposals
|
(2)
|
(144)
|
(146)
|
(249)
|
|
- Other
|
40
|
(5)
|
35
|
(40)
|
|
Balance at 31 December
|
139
|
66
|
205
|
227
|
Disposals relate mainly to the divestment of DSM Sinochem Pharmaceuticals.
Other includes the initial recognition of Yantai Andre Pectin at fair value, following its deconsolidation.
Joint operations
In 2017, DSM and Evonik established Veramaris®, a joint operation for omega-3 fatty acid products from natural marine algae for animal nutrition. DSM Nutritional Products and Evonik Nutrition & Care each hold a 50% share in the joint operation and will co-own the production facility, which is currently being built in Blair (Nebraska, USA). The construction of the USD 200 million facility, in which both joint operators will invest USD 100 million over two years, is progressing on time and according to plan. Commercial quantities of algal oil are scheduled to be ready for delivery in mid-2019. Pilot-scale quantities are already being supplied to selected feed producers and farmers for market development. The joint operation is headquartered in Delft (Netherlands). DSM accounts for the assets, liabilities, revenues and expenses relating to Veramaris® in accordance with IFRS 11 for joint operations.