Financial policy

As a basis for and contribution to effective risk management and to ensure that the company will be able to pursue its strategies even during periods of economic downturn, DSM retains a strong balance sheet and limits its financial risks. One of the key targets of Vision 2010 is to achieve a cash flow return on investment (CFROI) which exceeds the weighted average cost of capital (WACC) by at least 100 basis points. DSM further aims for a net debt which is between 30 and 40% of equity plus net debt in normal times (currently the objectivies to stay below 30%) and an operating profit before amortization and depreciation (EBITDA) which is at least 8.5 times the balance of financial income and expense. This underlines the company’s aim of maintaining its single-A long-term credit rating.

As part of the acceleration of the Vision 2010 – Building on Strengths strategy, DSM announced a new dividend policy. This policy reflects the transformation of DSM’s portfolio and consequently the increased profit stability. DSM aims to provide a stable and preferably rising dividend.  Dividends are paid entirely in cash.

The Annual General Meeting of shareholders decides on the final dividend. The dividend record date is the third business day after the AGM and the ex-dividend date is the second business day after the AGM. Dividends are paid entirely in cash.

Barring unforeseen circumstances DSM pays an interim dividend to holders of ordinary shares after the results of the first half year have been published. This interim dividend is set at one third of the total dividend over the previous year and gives no indication for the total dividend to be paid over the running year. The ex-interim dividend date is the first business day after the publication of the H1 results and the interim dividend record date is the third business day after the publication of the H1 results. Interim-dividends are paid entirely in cash.

An important element of DSM’s financial strategy is the allocation of cash flow. DSM primarily allocates cash flow to investments aimed at strengthening its business positions and to dividend payments to its shareholders. The cash flow is further used for strengthening the Life Sciences and Materials Sciences businesses by means of selective acquisitions. As the occasion arises, the company may choose to buy back shares, if excess cash is available in the context of a medium-term analysis of primary cash-flow allocation requirements and a sustained single-A rating.

An important acquisition criterion is that the business concerned should be compatible with DSM in terms of technological and/or market competencies. Acquired companies are in principle required to contribute to DSM’s cash earnings per share from the very beginning and to meet the company’s profitability and growth requirements. In some cases, for instance in the case of small innovative growth acquisitions, this requirement may not be appropriate and will therefore not be applied.

The investor relations function’s primary task is to maintain contacts with current and potential shareholders of DSM and with analysts who advise shareholders. The objective of this function is to provide quality information to investors and analysts about developments at DSM, ensuring that relevant information is equally and simultaneously provided and accessible to all interested parties.

In the period preceding the publication of the results of that quarter, DSM will be in a "silent period". (See Calendar & Presentations) During this time we will not hold meetings with analysts or investors, make presentations at financial conferences, or hold discussions/conference calls with investors and analysts.