18 Provisions
|
|
2007
|
2006
|
|
Restructuring costs and termination benefits
|
75
|
50
|
105
|
74
|
|
Environmental costs
|
38
|
13
|
45
|
16
|
|
Other long-term employee benefits
|
36
|
1
|
27
|
2
|
|
Other provisions
|
112
|
27
|
138
|
35
|
|
|
|
|
|
|
|
Total
|
261
|
91
|
315
|
127
|
In cases where the effect of the time value of money is material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The discount rate used is based on swap rates for various terms, increased by 75 to 100 basis points depending on those terms. The balance of provisions measured at present value increased by €5 million in 2007 in view of the passage of time and changes in the discount rate.
The Provisions for restructuring costs and termination benefits mainly relate to the costs of redundancy schemes connected to the dismissal and transfer of employees, costs of termination of contracts and consulting fees. These provisions have an average life of 1 to 3 years.
The Provisions for environmental costs relate to soil clean-up obligations, among other things. These provisions have an average life of more than 10 years.
Several items have been combined under Other provisions, for example obligations ensuing from future drilling-platform decommissioning and site restoration, expenses relating to claims and onerous contracts. These provisions have an average life of 5 to 10 years.
The total of non-current and current provisions decreased by €54 million. This is the balance of the following changes:
|
|
|
|
|
|
|
|
|
|
Restructuring costs and termination benefits
|
105
|
31
|
(13)
|
(48)
|
(1)
|
1
|
75
|
|
Environmental costs
|
45
|
4
|
-
|
(10)
|
(1)
|
-
|
38
|
|
Other long-term employee benefits
|
27
|
11
|
(0)
|
(2)
|
(0)
|
-
|
36
|
|
Other provisions
|
138
|
36
|
(4)
|
(60)
|
(3)
|
5
|
112
|
|
|
|
|
|
|
|
|
|
|
Total
|
315
|
82
|
(17)
|
(120)
|
(5)
|
6
|
261
|
The other changes included in Other provisions relate to revision of the costs for future drilling-platform decommissioning and site restoration.
The additions to the Provisions for restructuring costs and termination benefits mainly relate to the Nutrition cluster (€16 million) and to Other activities (€10 million). The withdrawal from this provision concerns expenditure related to restructuring operations at DSM Nutritional Products, DSM Food Specialties, DSM Pharmaceutical Products, DSM Anti-Infectives, DSM Resins and DSM Industrial Services (Copernicus project).
The additions to the Other provisions mainly relate to a provision for claims relating to the Nutrition, Pharma and Performance Materials clusters. The withdrawal from this provision relates to expenditures regarding an onerous contract at DSM Nutritional Products and regarding the restructuring of the Geleen (Netherlands) and Linz (Austria) sites and profit improvement activities at DSM Nutritional Products.
