DSM Integrated Annual Report 2022

19 Borrowings

 

 

2022

 

2021

 

 

Total

 

Of which current

 

Total

 

Of which current

 

 

 

 

 

 

 

 

 

Debenture loans

 

2,741

 

-

 

2,739

 

-

Private loans

 

116

 

14

 

115

 

12

Lease liabilities

 

179

 

44

 

202

 

49

Credit institutions

 

28

 

28

 

42

 

42

Total

 

3,064

 

86

 

3,098

 

103

In agreements governing loans with a residual amount at year-end 2022 of €2,741 million (31 December 2021: €2,739 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 €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-). DSM’s credit rating has been kept stable throughout 2022 and is set out as follows: Moody’s: “A3”/stable outlook and S&P: “A-”/stable outlook. At 31 December 2022, there was €1,044 million in borrowings outstanding with a remaining term of more than 5 years (at 31 December 2021, €1,043 million).

The schedule of repayment of borrowings is as follows.

Borrowings by maturity

 

 

2022

 

2021

 

 

 

 

 

2022

 

-

 

103

2023

 

86

 

74

2024

 

558

 

550

2025

 

579

 

555

2026 and 2027

 

797

 

823

After 2027

 

1,044

 

993

Total

 

3,064

 

3,098

A breakdown by currency is given in the following table.

Borrowings by currency

 

 

2022

 

2021

 

 

 

 

 

EUR

 

2,833

 

2,864

CNY

 

80

 

93

USD

 

84

 

80

CHF

 

20

 

20

BRL

 

19

 

10

Other

 

28

 

31

Total

 

3,064

 

3,098

On balance, total borrowings decreased by €34 million due to the following changes.

Movements of borrowings

 

 

2022

 

2021

 

 

 

 

 

Balance at 1 January

 

3,098

 

3,586

 

 

 

 

 

Loans taken up

 

51

 

37

Repayments

 

(29)

 

(513)

Unwinding (interest)

 

9

 

7

Acquisitions/consolidation changes

 

9

 

16

Disposals

 

(28)

 

(30)

Reclassification to held for sale

 

(8)

 

-

Changes in debt to credit institutions

 

(21)

 

12

New lease arrangements (incl. remeasurements)

 

34

 

19

Payment of lease liabilities

 

(57)

 

(54)

Exchange differences

 

6

 

18

Balance at 31 December

 

3,064

 

3,098

The average effective interest rate on the portfolio of borrowings outstanding in 2022, including hedge instruments related to these borrowings, amounted to 1.90% (2021: 1.86%).

A breakdown of debenture loans is given below.

Debenture loans

 

 

 

 

 

 

Nominal amount

 

2022

 

2021

 

 

 

 

 

 

 

 

 

 

 

EUR loan

 

2.38%

 

2014–2024

 

500

 

500

 

499

EUR loan

 

1.00%

 

2015–2025

 

500

 

499

 

499

EUR loan

 

0.75%

 

2016–2026

 

750

 

749

 

749

EUR loan

 

0.25%

 

2020–2028

 

500

 

496

 

498

EUR loan

 

0.625%

 

2020–2032

 

500

 

498

 

495

Total

 

 

 

 

 

2,750

 

2,741

 

2,739

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 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

 

 

2022

 

2021

 

 

 

 

 

CNY loan

 

63

 

73

Other loans

 

53

 

42

Total

 

116

 

115

A breakdown of the lease liabilities is given below.

Lease liabilities by maturity

 

 

2022

 

2021

 

 

 

 

 

2022

 

-

 

48

2023

 

49

 

39

2024

 

40

 

31

2025

 

28

 

23

2026

 

20

 

17

2027

 

15

 

12

After 2027

 

60

 

48

Total undiscounted lease liabilities at 31 December

 

212

 

218

 

 

 

 

 

Lease liabilities included in the Balance Sheet at 31 December

 

179

 

202

 

 

 

 

 

Current

 

44

 

49

Non-current

 

135

 

153

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 €86 million (undiscounted; 2021: €79 million).

The interest expense on the lease liabilities was €6 million (2021: €5 million) and the total repayments of the lease liabilities amounted to €57 million in 2022 (2021: €54 million). These cash flows are reported as financing cash flows.

DSM’s policy regarding financial risk management is described in Note 23 Financial instruments and risks.