DSM Integrated Annual Report 2020

19 Borrowings

 

 

2020

 

2019

 

 

Total

 

Of which current

 

Total

 

Of which current

 

 

 

 

 

 

 

 

 

Debenture loans

 

3,237

 

-

 

2,244

 

-

Private loans

 

81

 

7

 

41

 

8

Lease liabilities

 

215

 

47

 

236

 

49

Credit institutions

 

53

 

53

 

132

 

132

Total

 

3,586

 

107

 

2,653

 

189

In agreements governing loans with a residual amount at year-end 2020 of €3,237 million (31 December 2019: €2,244 million), negative pledge clauses have been included that restrict the provision of security.

The documentation of the €500 million bond issued in March 2014, the €500 million bond issued in April 2015, the €500 million bond issued in September 2015, the €750 million bond issued in September 2016, and both €500 million bonds issued in June 2020 include a change-of-control clause. This clause allows the bond investors to request repayment at par if 50% or more of the DSM shares are controlled by a third party and if the company is downgraded below investment grade (< BBB-). In October 2020, Moody’s affirmed DSM’s credit rating of ‘A3’ with a stable outlook. Standard & Poor’s affirmed DSM’s credit rating of ‘A-‘ with a stable outlook in June 2020. At 31 December 2020, there was €1,813 million in borrowings outstanding with a remaining term of more than 5 years (at 31 December 2019, €1,265 million).

The schedule of repayment of borrowings is as follows.

Borrowings by maturity

 

 

2020

 

2019

 

 

 

 

 

2020

 

-

 

189

2021

 

107

 

49

2022

 

548

 

528

2023

 

37

 

25

2024 and 2025

 

1,081

 

1,036

After 2025

 

1,813

 

826

Total

 

3,586

 

2,653

A breakdown by currency is given in the following table.

Borrowings by currency

 

 

2020

 

2019

 

 

 

 

 

EUR

 

3,351

 

2,413

USD

 

88

 

101

CNY

 

80

 

74

TWD

 

12

 

6

BRL

 

11

 

15

Other

 

44

 

44

Total

 

3,586

 

2,653

On balance, total borrowings increased by €933 million due to the following changes.

Movements of borrowings

 

 

2020

 

2019

 

 

 

 

 

Balance at 1 January

 

2,653

 

2,652

 

 

 

 

 

Opening balance lease labilities (adoption IFRS 16)

 

-

 

215

Loans taken up

 

1,123

 

7

Repayments

 

(268)

 

(302)

Unwinding (interest)

 

7

 

8

Acquisitions / consolidation changes

 

205

 

29

Reclassification to held for sale

 

(4)

 

-

Changes in debt to credit institutions

 

(95)

 

57

New lease arrangements (incl. remeasurements)

 

34

 

39

Payment of lease liabilities

 

(55)

 

(53)

Exchange differences

 

(14)

 

1

Balance at 31 December

 

3,586

 

2,653

The average effective interest rate on the portfolio of borrowings outstanding in 2020, including hedge instruments related to these borrowings, amounted to 1.78% (2019: 2.31%).

A breakdown of debenture loans is given below.

Debenture loans

 

 

 

 

 

 

Nominal amount

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

EUR loan

 

2.38%

 

2014–2024

 

500

 

499

 

499

EUR loan

 

1.00%

 

2015–2025

 

500

 

498

 

498

EUR loan

 

1.38%

 

2015–2022

 

500

 

500

 

499

EUR loan

 

0.75%

 

2016–2026

 

750

 

748

 

748

EUR loan

 

0.25%

 

2020–2028

 

500

 

497

 

-

EUR loan

 

0.625%

 

2020–2032

 

500

 

495

 

-

Total

 

 

 

 

 

3,250

 

3,237

 

2,244

All debenture loans have a fixed interest rate and are listed on the AEX.

  • The 2.375% EUR bond 2014–2024 of €500 million was pre-hedged by means of forward starting swaps, resulting in an effective interest rate for this bond of 3.97%, including the settlement of the pre-hedge
  • The 1% EUR bond 2015–2025 of €500 million was pre-hedged by means of forward starting swaps, resulting in an effective interest rate for this bond at 3.65%, including the settlement of the pre-hedge
  • The 1.375% EUR bond 2015–2022 of €500 million has an effective interest rate of 1.40%
  • The 0.75% EUR bond 2016–2026 of €750 million was pre-hedged by means of a collar resulting in an effective interest rate for this bond of 1.08%, including the settlement of the pre-hedge
  • The 0.25% EUR bond 2020–2028 of €500 million has an effective interest rate of 0.29%
  • The 0.625% EUR bond 2020–2032 of €500 million has an effective interest rate of 0.70%

A breakdown of private loans is given below.

Private loans

 

 

2020

 

2019

 

 

 

 

 

CNY loan

 

57

 

40

Other loans

 

24

 

1

Total

 

81

 

41

A breakdown of the lease liabilities is given below.

Lease liabilities by maturity

 

 

2020

 

2019

 

 

 

 

 

2020

 

-

 

49

2021

 

47

 

40

2022

 

38

 

33

2023

 

32

 

27

2024

 

27

 

24

2025

 

20

 

18

After 2025

 

72

 

65

Total undiscounted lease liabilities at 31 December

 

236

 

256

 

 

 

 

 

Lease liabilities included in the Balance Sheet at 31 December

 

215

 

236

 

 

 

 

 

Current

 

47

 

49

Non-current

 

168

 

187

In addition to the contractual lease commitments, DSM has identified explicit renewal options available to DSM, which are currently not reasonably certain to be exercised and are therefore not included in the measurement of the lease.

The associated future lease payments which are uncommitted and optional for DSM, are estimated around €78 million (undiscounted; 2019: €76 million).

The interest expense on the lease liabilities was €6 million (2019: €7 million) and the total repayments of the lease liabilities amounted to €55 million in 2020 (2019: €53m). These cash flows are reported as financing cash flows.

DSM’s policy regarding financial-risk management is described in Note 23.