At €8.8 billion net sales from continuing operations in 2007 were almost 5% higher than in the previous year. Organic volume growth accounted for a 3% increase in net sales. Selling prices were on average 4% higher than in 2006. Exchange rates, acquisitions and disposals on balance had a negative effect of 2%.

Operating costs rose compared to 2006, closing the year at €8.1 billion. The main component of these costs, the cost of raw materials and consumables for goods sold, corrected for acquisitions and disposals, rose by approximately €250 million. Total autonomous fixed costs increased.

The operating profit from continuing operations before exceptional items decreased by €12 million (1%), from €835 million in 2006 to €823 million in 2007. The EBITDA margin (operating profit before depreciation and amortization as a percentage of net sales) declined from 15.3% in 2006 to 14.2% in 2007 as higher sales volumes and prices were offset by higher feedstock costs, lower exchange rates and exceptional items.

With selling prices increasing more than raw-material prices, the average margin (the selling price per unit of product less variable costs) was above the 2006 level.

The net profit from continuing operations before exceptional items increased by €7 million to €558 million. Per share, net earnings from continuing operations before exceptional items increased from €2.85 in 2006 to €3.07 in 2007.

Net finance costs, before exceptional items, stood at €75 million in 2007, compared with €81 million in 2006. Favorable exchange-rate effects and one-off items compensated for the higher net debt and increased interest rates.

At 25%, the effective tax rate in 2007 was lower than in 2006 (26%). The decrease of 1 percentage point was due mainly to the lower tax rate in the Netherlands.

In 2007, an impairment was applied to the assets of DSM Anti-Infectives for an amount of €150 million before taxes.

Net profit decreased from €547 million in 2006 to €429 million in 2007. Net profit per ordinary share declined from €2.83 in 2006 to €2.35 in 2007.

Capital expenditure on intangible assets and property, plant and equipment amounted to €475 million in 2007 and was €51 million above the level of amortization and depreciation. In 2008 the level of capital expenditure, including small and new-business-development-type acquisitions, is expected to be substantially above the level of amortization and depreciation. At €825 million, net cash provided by operating activities was about 9.4% of net sales.

The balance sheet total (total assets) decreased slightly in 2007 and amounted to €9.8 billion at year-end (2006: €10.1 billion). Equity decreased by €472 million compared with the position at the end of 2006; this was due mainly to the repurchase of own shares. Equity as a percentage of total assets decreased from 58% at the end of 2006 to 55% at the end of 2007. The current ratio (current assets divided by current liabilities) increased from 1.61 in 2006 to 1.78 in 2007. Net debt stood at 20% of equity plus net debt at the end of 2007.

The operating working capital was €74 million higher than in 2006. Cash and cash equivalents decreased and amounted to €369 million.

DSM aims to provide a stable and preferably rising dividend. DSM’s adjusted dividend policy reflects the transformation of DSM’s portfolio and consequently the increased profit stability.

The dividend on ordinary shares proposed for the year 2007 amounts to €1.20 per share (2006: €1.00 per share). An interim dividend of €0.33 per ordinary share having been paid in August 2007, the final dividend will amount to €0.87 per ordinary share.

The ex dividend date is 28 March 2008.

Looking ahead to 2008, DSM expects continuing good organic growth, particularly from emerging markets and the launch of new products. In addition, the current programs underway in the Nutrition and Anti-Infectives businesses will result in improved contributions to profit from these businesses. DSM also expects a continuation of the improved pricing levels seen in 2007 in the more mature part of the Nutrition business, especially in vitamins.

At the same time, DSM is faced with a number of headwinds, including the continuing weakness of the US dollar, high raw-material and energy prices as well as the return to lower pricing in the anti-infectives markets, and the expiration of Roche contracts in 2007. Despite these headwinds, it remains a core part of DSM’s strategy to invest in innovation which will deliver the company’s growth in future years, and DSM will be gearing up this effort further in 2008.

Guidance on profitability is a difficult task this year, given the current macro-economic uncertainty. However, assuming a slowdown in the US economy without substantial effects on macro-economic conditions elsewhere, a EUR/USD exchange rate around 1.45 and current raw-material and energy prices throughout 2008, DSM expects that, with the benefit of the programs we have in place, it will be possible to approach the operating profit before exceptional items achieved in 2007.

Overall, DSM remains on track to meet the objectives set out in the accelerated Vision 2010 strategy, with the continuing transformation of DSM’s business towards a Life Sciences and Materials Sciences company, focused on innovation and capable of delivering sustainable growth.