In agreements governing loans with a residual amount at year-end 2007 of €1,417 million, none of which were of a short-term nature (31 December 2006: €1,118 million, of which €403 million short term), clauses have been included which restrict the provision of security. The documentation of the €300 million bond issued in November 2005 and the documentation of the €750 million bond issued in October 2007 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-).

At 31 December 2007, borrowings to a total of €1,316 million had a remaining term of more than 5 years.

The schedule of repayment of borrowings (excluding debt to credit institutions) is as follows:

A breakdown of the borrowings by currency (excluding debt to credit institutions) is given in the following table:

On balance, total borrowings increased by €238 million owing to the following changes:

The changes in fair value of borrowings are offset by the changes in fair value of related financial derivatives.

The average effective interest rate on the portfolio of borrowings outstanding in 2007, including financial instruments related to these borrowings, amounted to 4.5% (2006: 4.3%).

A breakdown of debenture loans is given below:

All debenture loans have a fixed interest rate.

The 6.38% EUR loan 2000-2007 matured in December 2007 and was fully repaid.

The fixed interest rate of the 6.75% USD loan 1999-2009 has been swapped to floating rates by means of interest-rate swaps (fair-value hedges). This loan was assigned as a net investment hedge to hedge the currency risk of net investments in USD-denominated subsidiaries.

The 4% EUR loan 2005-2015 was swapped into CHF to hedge the currency risk of net investments in CHF-denominated subsidiaries. This loan was pre-hedged (cash flow hedge) in 2005 by means of a forward starting swap, which led to a lower effective fixed interest rate of 3.66%.

The 5.25% EUR loan 2007-2017 was partly swapped into CHF in 2007 for an amount of €650 million to hedge the currency risk of net investments in CHF-denominated subsidiaries. This loan was partly pre-hedged (cash flow hedge) in 2006 and 2007 by means of forward starting swaps, which led to a lower effective fixed interest rate of 4.89% for the full loan.

A breakdown of private loans is given below:

The fixed interest rate of the 5.51% USD loan 2003-2013 was swapped into a floating rate by means of an interest-rate swap (fair value hedge). During 2005 this interest-rate swap was unwound. The gain from this will be amortized until maturity, leading to an effective fixed USD interest rate of 4.29% for the loan. This 5.51% USD loan was assigned as a net investment hedge to hedge the currency risk of net investment in USD-denominated subsidiaries.

The currency component of the 5.61% USD loan 2003-2015 was swapped into euros (cash flow hedge). The resulting EUR obligation was swapped into CHF to hedge the currency risk of net investments in CHF-denominated subsidiaries (net investment hedge).

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