Contingent liabilities and other financial obligations
The contingent liabilities and other financial obligations in the following table are not recognized in the balance sheet.
|
2018
|
2017
|
|
|
Operating leases and rents
|
240
|
245
|
|
Guarantee obligations on behalf of associates and third parties
|
167
|
113
|
|
Outstanding orders for projects under construction
|
8
|
12
|
|
Other
|
42
|
17
|
|
Total
|
457
|
387
|
Guarantee obligations are principally related to VAT and duties on the one hand and to financing obligations of associated companies on the other. Guarantee obligations will only lead to a cash outflow when called upon. At year-end, no obligations had been called upon. Most of the outstanding orders for projects under construction will be completed in 2019. Property, plant and equipment under operating leases primarily concerns cars, catalysts, buildings and various equipment items.
The commitments for operating leases and rents are spread as follows:
Operating leases and rents
|
2018
|
2017
|
|
|
2018
|
-
|
66
|
|
2019
|
49
|
42
|
|
2020
|
39
|
30
|
|
2021
|
30
|
20
|
|
2022
|
25
|
18
|
|
2023
|
21
|
16
|
|
After 2023
|
76
|
53
|
|
Total
|
240
|
245
|
Litigation
DSM has a process in place to monitor legal claims periodically and systematically.
DSM is involved in several legal proceedings, most of which are related to the ordinary course of business. DSM does not expect these proceedings to result in liabilities that have a material effect on the company's financial position. In cases where it is probable that the outcome of the proceedings will be unfavorable, and the financial outcome can be measured reliably, a provision has been recognized in the financial statements and disclosed in Note 18 'Provisions'.
In 2015, an award was issued against DSM Sinochem Pharmaceuticals India Private Ltd. (DSP India) in a protracted arbitration case in India going back to 2004 involving a joint venture that DSP India had formed with Hindustan Antibiotics Ltd., which suspended its operations in 2003. DSP India (after divestment by DSM in 2018 renamed to Centrient Pharmaceuticals) is covered by an indemnity from Koninklijke DSM N.V. for this case. In 2015, DSP India made an application with the Civil Court in Pune (India) to set aside the arbitral award. The award amounts to approximately €18 million (excluding interest of 12% per year). At the end of 2018, the application proceedings were still pending. DSM has always viewed this case as unfounded and is of the opinion that the likelihood of the award being ultimately set aside is high. Therefore no liability is recognized in respect of this case.