table of contents - dsm | bright science. brighter living.™ · · 2018-04-033 table of contents...

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Table of Contents

Page

5 DSM - Bright Science. Bright Living™

6 Strategy: DSM in motion: driving focused growth

10 Overview key financial data

12 Clusters12 Nutrition20 Pharma26 Performance Materials34 Polymer Intermediates38 Emerging business Areas

42 Sourcing

44 Organization

46 History

47 Five Year Financial Summary

50 Disclaimer .

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Our purpose is to create brighter lives for people todayand generations to come.

We connect our unique competences in Life Sciences andMaterials Sciences to create solutions that nourish,

protect and improve performance.

Mission Statement

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Royal DSM N.V. is a global science-based company active in health, nutrition and materials. By connecting its unique competencesin Life Sciences and Materials Sciences DSM is driving economic prosperity, environmental progress and social advances to createsustainable value for all stakeholders. DSM delivers innovative solutions that nourish, protect and improve performance in globalmarkets such as food and dietary supplements, personal care, feed, pharmaceuticals, medical devices, automotive, paints, elec-trical and electronics, life protection, alternative energy and bio-based materials. DSM’s 22,000 employees deliver annual netsales of around € 9 billion. The company is listed on NYSE Euronext. More information can be found at www.dsm.com

DSM’s activities have been grouped into business groups representing coherent product/market combinations.

DSM – Bright Science. Brighter Living.™

Performance MaterialsGrowing via sustainable, innovative solutions

The Performance Materials cluster comprises the businessgroups DSM Engineering Plastics (DEP), DSM Dyneema (DD) andDSM Resins (DR). These business groups specialize in the manu-facture of technologically sophisticated, high-quality productsthat are tailored to meet customers’ performance criteria. DSMis recognized as a front-runner in creating and introducing sus-tainable innovative solutions. Its performance materials areused in a wide variety of end-use markets: the automotive in-dustry, the aviation industry, the electrical and electronicsindustry, the marine industry, the sports and leisure industries,the paint and coatings industry and the construction industry.

Polymer IntermediatesStrengthening backward integration for DSM EngineeringPlastics

The Polymer Intermediates product cluster comprises caprolac-tam and acrylonitrile produced by DSM Fibre Intermediates(DFI). These products are raw materials for synthetic fi bersand plastics. Caprolactam is a key feedstock for DSM Engineer-ing Plastics’ polyamide production. Globally, DFI is the largestmerchant caprolactam supplier and the third largest merchantacrylonitrile supplier. In addition, the business group producesammonium sulfate, sodium cyanide, cyclohexanone and diami-nobutane.

NutritionContinued value growth

The Nutrition cluster comprises DSM Nutritional Products (DNP)and DSM Food Specialties (DFS). The nutrition and food ingredi-ents businesses serve the food, feed, cosmetic and pharmaceu-tical industries. Activities are based on in-depth knowledge ofcustomer/market needs. With customized formulation activitiesin more than 44 locations and a marketing/sales presencereaching over 60 countries, customer intimacy is a key successfactor. Technical expertise is based on application know-howand innovation translating market needs into products and ser-vices with new benefits. Technologies in the Nutrition clusterare broad, utilizing DSM’s competences in biotechnology(including fermentation), chemical process technology and par-ticle engineering. DSM is the world’s largest vitamin producerand holds leading positions in the ingredient markets for animaland human nutrition and health as well as personal care.

PharmaLeveraging partnerships for growth

The Pharma cluster comprises the business groups DSM Pharma-ceutical Products (DPP) and DSM Anti-Infectives (DAI). For re-porting purposes the business unit DSM BioSolutions is part ofDPP. DPP is one of the world’s leading independent suppliers tothe pharmaceutical industry. Many of today’s medicines aroundthe world contain ingredients produced by DSM. DAI is one ofthe few producers and marketers of beta-lactam active phar-maceutical ingredients with a global presence, using cutting-edge low- footprint enzymatic and water-based manufacturingtechnology.

Emerging Business AreasDSM’s EBAs (Emerging Business Areas) comprise new innovative growth platforms based on the combination of DSM’scompetences in Life Sciences and Materials Sciences.

DSM Biomedical develops novel materials-based solutions to meet the needs of the medical device and biopharmaceuticalindustries with coatings, drug delivery platforms and a wide range of biomedical materials for use in implantable medicaldevices.DSM Bio-based Products & Services is creating solutions for bioconversion of feedstocks for the production of bio-based chemi-cals and materials as well as developing the technologies to enable the production of second generation biofuels.DSM Advanced Surfaces provides solutions for the development and application of smart coatings that boost performanceand/or improve aesthetics across a wide range of industries and applications, including picture framing, solar glass and thelighting industry.

http://www.dsm.com/

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Global trendsDSM’s strategy is a response to key global societal trends thatare affecting economies, people and markets in different ways.By focusing on these trends, DSM will be better able to supportits customers in developing solutions that meet current andfuture needs.

A major driver of these global trends is the continuous growthand aging of the world population from around 7 billion peopletoday to an estimated 9 billion in 2050, together with increasedconsumption. The three major global societal trends underlyingDSM's strategy are global shifts, climate and energy and healthand wellness.

Global ShiftsDSM’s customers know that the world is changing faster thanever – influencing where demand comes from, how and wherepeople are living and how they connect with each other. Ur-banization and economic prosperity are promoting dietarychanges and increased spending on housing, transport, lifestyleand energy, all of these being areas where the chemical indus-try has sustainable solutions to offer.

Climate and EnergyClimate change is a reality and future production and efficientuse of energy is a central challenge for society. In this context,DSM’s customers are seeking sustainable value chains with

Strategy

higher yields, reduced waste, lower energy use and fewergreenhouse-gas emissions. There is also a growing focus on al-ternative, renewable raw materials, made possible with thehelp of industrial biotechnology to produce chemical buildingblocks, materials or energy.

Health and WellnessPrevention is better than cure. Today many health issues andthe associated drug use are food and/or lifestyle induced. Cus-tomers need to address core health needs, whether throughnutrition, medicines or lifestyle improvements. The populationsof many countries around the globe are aging and there is costpressure in all healthcare systems. At the same time, healthare demand in high growth economies is increasing. Nutritionsecurity and access are increasingly recognized as critical forhuman mental and physical development in both the West andthe East. There is also a growing demand for safer and health-ier foods and pharmaceuticals.

DSM in motion: driving focused growthDSM in motion: driving focused growth marks the shift from anera of intensive portfolio transformation to a strategy of maxi-mizing sustainable and profitable growth of ‘the new DSM’. Thecurrent businesses compose the new core of DSM in Life Sci-ences and Materials Sciences.

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DSM’s focus on Life Sciences (Nutrition and Pharma) and Ma-terials Sciences (Performance Materials and Polymer Interme-diates) is fueled by the above-mentioned societal trends andthe company aims to meet the unmet needs resulting fromthese with innovative and sustainable solutions.

It is DSM’s ambition to fully leverage the unique opportunitiesin Life Sciences and Materials Sciences, using four growthdrivers (High Growth Economies, Innovation, Sustainabilityand Acquisitions & Partnerships) and bringing all four driversto the next level. At the same time DSM aims to make maxi-mum use of the potential of all four growth drivers to mutu-ally reinforce each other and generate a greater number ofcompelling business opportunities.

Regional organizations, functional excellence groups andshared services enhance the performance of the businessgroups which together operate as ‘One DSM’. DSM will cap-ture regional business opportunities and synergies and imple-ment excellence throughout the global organization.

The culture change program that is currently in progress(focusing on external orientation, accountability for perform-ance and inspirational leadership) will be further rolled outwith an emphasis on collaboration and speed of execution tosupport this strategy. All this is based on sustainability asDSM’s core value and its true belief in diversity, includinginternationalization.

Targets ands aspirationsDSM has set itself ambitious targets for the next strategyperiod. With its transformation completed, DSM can now fo-cus on, and accelerate, growth. The company has high aspi-rations, based on an assessment of the opportunities, par-ticularly in high growth economies.

For 2013 two profitability targets have been set: an increasein EBITDA to a level of € 1.4 – 1.6 billion and an increase inReturn on Capital Employed (ROCE) to more than 15%.

For the period 2011 – 2015 capital expenditure can be expectedat a level comparable to that in the accelerated Vision 2010period (€ 500-550 million per year on average). For the totalperiod, capital expenditure is expected to amount to € 2.5 - 2.7billion, of which approximately USD 1 billion in China. In addi-tion, DSM aspires to keep working capital as a percentage ofnet sales below 19%.

In the field of sustainability a number of ambitious aspirationshave been set. For 2011 – 2015 the following value creatingperformance aspirations have been defined regardingsustainability:

Dow Jones Sustainability Index: Top ranking (SAM GoldClass, which means a total score of at least 75% and within5% of the SAM sector leader)ECO+ (innovation): 80%+ of pipeline is ECO+ECO+ (running business): from ~34% towards 50%Energy efficiency: 20% improvement in 2020, compared to2008Greenhouse-gas emissions: -25% (absolute) by 2020, com-pared to 2008Engagement Survey: towards High Performance NormDiversity & People: to be updated in 2011

High Growth Economiesfrom reaching out to being truly global

All the evidence indicates that fast-growing economies such asChina, India, Brazil and Russia and other emerging areas will bethe major global growth engines for the world economy overthe next decade.

DSM’s ambition now is to broaden this approach and accelerategrowth in multiple economies and regions. By 2015 DSM expectssales from high growth economies to grow towards 50% of itstotal net sales. Over 70% of DSM’s growth in the period to 2015is expected to come from high growth economies.

DSM's strong focus on China will continue and the company ex-pects to grow its China sales from USD 1.5 billion to over USD3.0 billion by 2015. To support this growth DSM intends to in-vest USD 1 billion in China in this strategy period. DSM will alsoincrease its presence in other markets, doubling or even treb-ling revenues in India, Latin America and Russia.

Innovationfrom ‘building the machine’ to doubling innovation output

DSM has adopted a new innovation target definition which ismore in line with other mainstream innovators in the industry:percentage of sales created by new products and applicationsintroduced in the last five years. This replaces the previoustarget of an absolute amount of additional sales through inno-vation.

DSM aims to increase innovation sales from 12% towards 20% oftotal sales by 2015. This target reflects DSM’s aspiration to fur-ther boost innovative growth as well as portfolio renewal andthe speed of innovation. The EBAs should grow to a combinedturnover of more than € 1 billion in 2020.

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Single A ratings within a short period of time.There are exceptions to the cash earnings per share criterion.The criterion may for instance not be appropriate in the case ofsmall innovative growth acquisitions.

Combining growth driversEach of DSM’s four strategic growth drivers is important in itsown right but they also reinforce one another. By combiningmultiple growth drivers, DSM will be able to generate a greaternumber of compelling, high-potential business opportunities.

Organization and cultureTo meet the next-level ambitions for all four growth drivers,DSM is transforming its organization and culture to create agenuinely global organization to achieve its strategic ambitions.

'One DSM' – a global drive for a well-networked, high-performance organization – will enable DSM to reach its targetsand ambitions.

The transformation of DSM’s organization will be furthersupported by DSM’s culture change program, which hasestablished a shared understanding of essential DSM values andprinciples to drive growth:

External orientation and drive for innovation: bringing DSMcloser to customers, suppliers, partners and other key influ-encers such as non-governmental organizations and manyexternal partiesAccountability for performance: setting ambitious targets,delivering results, learning from mistakes individually andcollectivelyInspirational leadership: the complementary and consistentcombination of setting direction with ambition and passion,taking decisions based on a healthy sense of urgency, withconnecting with people by demonstrating authenticity, en-gagement and strong motivation

DSM’s culture change program will be further rolled out with anemphasis on collaboration and speed of execution. All this isbased on DSM’s belief in sustainability and diversity, includinginternationalization. At DSM, diversity is now centered on gen-der, nationality and background. Research has shown that theseare the strongest differentiators in creating a more balancedmix of behaviors and mindsets.

Sustainabilityfrom responsibility to a business driver

DSM is consciously expanding its sustainability approach.From an internal value and a tool for making a responsiblecontribution to society, sustainability has become a strategicbusiness driver.

DSM’s strategy is strongly connected to the company’s mis-sion to create brighter lives for people today and for genera-tions to come. DSM is therefore proud of its strong track re-cord in sustainability achievements. DSM believes that sus-tainability will be a key differentiator and value driver overthe coming decades and that the company is uniquely posi-tioned to capture new value-creating opportunities.

DSM has set new and ambitious aspirations for sustainability.By 2015 ECO+ products will account for over 80% of innova-tion sales and towards 50% of the total running business sales(compared to an estimated 34% in September 2010). Thequalification ECO+ is based upon internal expert opinionswhere various impact categories are evaluated, for a growingnumber of products supported by Life Cycle Assessments. Theimpact categories DSM is considering are human health, eco-system quality and resources. These developments will makeDSM an industry leader and preferred partner in value crea-tion through sustainability.

Acquisitions & Partnershipsfrom ‘portfolio transformation’ to ‘driving focused growth’

DSM applies stringent strategic, financial and sustainabilitycriteria to any potential acquisition or partnership. In thescreening process a first selection is made on the basis ofstrategic fit. This results in a shortlist to which DSM appliesits financial criteria.

A key strategic criterion is that the business or partner shouldadd or increase a leadership position and should add value toDSM in terms of technological and/or market competencies.

DSM will also look for opportunities to strengthen competen-cies and market positions in the other three strategic growthdrivers: expansion in High Growth Economies, Innovation andSustainability.

As DSM is fully committed to maintaining its Single A creditrating, the key financial criterion is that any acquisitionshould be cash earnings per share accretive from the begin-ning and should be supportive to the other financial targets.

In the exceptional case that a very attractive acquisition op-portunity arises of a size that would put pressure on financialmetrics, DSM may be willing to accept a temporary deviationfrom the credit metrics commensurate with its rating target.However, DSM believes that Single A ratings are the rightplace to be for the company to ensure sufficient financialand strategic flexibility at all times, and DSM would seek tomanage its balance sheet and underlying financials after suchan acquisition to allow the company to re-align ratios with

Strategy

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Overview key financial data

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Business and trendsThe Nutrition cluster concentrates on the food, feed andpersonal care ingredients markets. These markets are experi-encing many of the same global trends that are impactingDSM as a whole, but also specific business and societal devel-opments that are profoundly shaping the future.

Established and still influential trends such as consumer de-mands for convenient and indulgent products are supple-mented by an ever-deepening concern about the health andwellness of rapidly aging populations and the emerging de-mand patterns in high growth economies, all of which com-bine with a continuing focus on cost.

Sustainability and food safety concerns continue to riseacross all sectors, and increasingly across all major markets.Ingredients and methods of production and supply are notexempt from these concerns. Regulators are applying stricterstandards to the oversight of product content, claims, proc-essing methods and emissions.

More specific to the food ingredient sector, but linked to theissue of health and wellness, is the desire for natural ingredi-ents. This captures the ‘clean label’ spirit, where some opin-ion-forming consumers in more mature markets are asking forfewer E- numbers, and ‘no artificial flavors or preservatives’.

Nutrition

2010 Sales by end-market

51%

31%

5%

13%

Animal Nutrition &Health

Human Nutrition &Health

Personal Care

Food Specialties

2010 Sales by destination

36%

36%

23%

5%Europe

Americas

Asia

RoW

DSM expects this trend to widen over the coming years. Al-though it will not represent a major part of the quantitativedemand for some time, it will be addressed pro-actively.

These trends create a series of clear criteria for ingredientcompanies such as DSM. While the fastest future growth willcome from high growth economies, the established economiesremain vital not only as the largest markets but also as the cen-tral drivers of product innovation (especially the United Statesand Europe).

What is clear is that future growth in this industry will belargely driven by innovation. The total ingredients sector isgrowing faster than global GDP, but this hides a divergencebetween well-established ingredients and forms and more inno-vative ones. Growth is higher than GDP growth in markets forinnovative solutions, such as new enzymes or new forms ofestablished ingredients. In more established ingredients, suchas ascorbic acid (generic vitamin C), growth is at or even belowGDP growth. However, this is accompanied by a continuousdrive towards more quality and safety, enabling companieswith a premium positioning such as DSM to further expand theirmarket share.

The ClusterThe Nutrition cluster comprises the business groups DSM Nutri-tional Products and DSM Food Specialties.

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About DSM Nutritional Products

DSM Nutritional Products is the leading supplier of vitamins,carotenoids, nutritional ingredients, UV filters and premixesfor human and animal nutrition and health. It also has themost complete feed enzymes portfolio worldwide. Its maincustomers are feed, food, beverage, dietary supplement,pharmaceutical, personal care and flavor/fragrance compa-nies.

Market Animal Nutrition & Health (2010)

Animal Nutrition & Health addresses the nutritional additivessegment of the feed ingredients market which is estimated at€ 7.5 billion in 2010. Most relevant markets are carotenoids,feed enzymes and vitamins. Average market growth is 2-4%.

Main customers (Animal Nutrition & Health)Global players in feed / premix and animal proteinproducers (e.g. Nutreco, Cargill, Tyson , CP, BR Foods,AHIC)Many midsize local and/or regional organized feed /premix companies and animal protein producersFarmers served via franchised stores (more than 150 inChina)

Market Human Nutrition & Health (2010)

Within the global food ingredients market, estimated at € 34billion in 2010, Human Nutrition & Health largely addressesthe nutritional ingredients part. This is the fastest growingsegment (3-5%) of the food ingredients market with close to€ 8 billion in 2010.

Main customers (Human Nutrition & Health)Large world class food companies (e.g. Nestlé, Coca Cola,Kraft, Unilever, etc. )World class dietary supplement companies (e.g. Pfizer,Bayer, etc.)Regional/local medium sized food, dietary supplementcompanies

RawMaterials

IngredientProducer

Feed/FoodPharmaCosmetic industry

Retail Endconsumer

DSM Nutritional Products

active forms premix

Key Drivers Profitability

Leadership in global markets: differentiation, innovation,scale, cost, quality.Strong customer value proposition – Quality for Life™programLong history of nutrition innovationValue strategyPremix footprint expansion in high growth economiesFocus on quality and manufacturing excellence

Key success factors DSM Nutritional Products

Global sales, marketing and distribution network includingglobal/regional key account managementInnovation (products, concepts and processes)Complete product portfolio and full value chain playerStrong differentiation

DSM Nutritional Products

ANH market distributionCarotenoids

Feed enzymes

Vitamins

Amino acids

Other

HNH market distributionColor

Preservation

Processing aids

Nutrional ingredients

Texture

Taste

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Personal Care (2010)

The global Personal Care ingredients market has a size ofest. € 10 billion. DSM Personal Care is focusing on the activeand performance ingredients in sun care, skin care and haircare industries. Average market growth is 3-6%.

Main customers (Personal Care)Global leading cosmetic companies (e.g. Unilever, Procter &Gamble, L’Oreal, Beiersdorf, Johnson & Johnson, etc.)Regional/local medium sized cosmetic companiesContract manufactures and distributors within the cosmeticindustry

Main Competitors DNPDSM is the only company to offer the complete value chain ofstraights, forms and pre-mixes. In addition DSM provides abroad range of cosmetic ingredients. All competitors cover onlypart(s) of the value chain.Typical ones are BASF, Adisseo, NEPG, NHU, NCPC, XP & Shiji-azhuang Weishen for vitamins & carotenoids, Danisco for en-zyme.

Most attractive markets DNPThe high growth economies with big population represent sub-stantial growth opportunities for the nutrition and cosmeticsbusiness, we are actively expanding our business in the highgrowth economies while extending our competitive advantagescontinuously in Europe and North America.

Current DSM Market positionDSM holds leading positions in the ingredient markets for humanand animal nutrition & health and for personal care.

StrategyThrough operational excellence, DSM Nutritional Productsmust maintain a cost position that is at least on par with thecompetition. This means continuing to look for process inno-vations and improvements, rigorous site selection, and pur-suing ‘asset light’ strategies.Continued differentiation in the market is the key to captur-ing value and margin growth. DSM Nutritional Products willcontinue to be the premium player in the sector, pursuingproduct and process innovation by making optimum use ofits technology. Connecting technological advances with con-sumer trends and customer needs, DSM remains the innova-tion front-runner in nutrition.The company will also look to grow by extending partner-ships and via acquisitions. This will focus on complementaryingredients, with a bias towards naturals, which can be mar-keted through DSM’s existing global infrastructure.

Main competitive advantagesGlobal reach, proximity to customersScaleFully integrated playerQuality for life™ programInnovation capabilities

Main productsVitamins (13 in total), as only player DSM Nutritional Prod-ucts can supply the complete range of vitamins in the mostsuitable forms for all possible human and animal usesCarotenoids, a wide range of different carotenoids aremanufactured as nature-identical coloring or stabilizingagentsThe most complete Feed enzymes portfolio in the industryPremixes for Animal Nutrition and HealthPremixes for Human Nutrition and HealthCosmetic ingredients for sun, skin and hair careSpecialty ingredients such as: PUFA, lutein, lycopene, HyD,eubiotics, feed enzymes (e.g. Ronazyme P, ProAct)

Leendert StaalPresident

“DNP is well positioned to build onits vast experience, science and tech-nical know-how, and extensive globalreach. Our innovation, addressingurgent societal needs, is a key driverfor creating value for customers andstakeholders around the world.”

Personal Care market distribution

Basic

Active

Technical

Production FacilitiesPremix facilityMain Sales Offices

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Manufacturing detailsManufacturing locations (CH, DE, FR, UK, China, US)45 premix facilities globally distributed.Worldwide network of 42 sales offices.

TechnologyHighly complex multi-step synthesisBiotechnologyFormulation technology, ActleaseTM

Natural product synthesisHeterogenous catalysisMicronisation and encapsulationApplication in feed, food, nutritional supplements andpersonal care

Key raw materials / intermediatesDiverse set of various raw materials.Main raw materials are secured through long-termpartnerships.

Main capex plannedExpansion of pre-mix facilities in both ANH and HNHbusiness

Innovation strategyInnovate through entire life cycleContinued improvements via incremental application driveninnovationsOpen innovation with key customers and other partners

Key innovationsRONOZYME® ProAct - an enzyme preparation that maxi-mizes protein utilization in feed

ROVIMIX® MaxiChickTM – a unique poultry feed solution toimprove egg fertility, embryo hatchability and chick livabil-ity.

i-Nutrition brands - inaugurated successfully the ‘Businessto Consumer’ channel with the introduction of i-flexTM andi-coolTM in the North American market.

Fruitflow® - was launched the first ingredient with a healthclaim approved by the European Food Safety Authority.Fruitflow® is a tomato-based concentrate that ‘helps main-tain normal platelet aggregation, which contributes tohealthy blood flow’.

TILAMAR® - most innovative polymers for hair care

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Markets

Total Food ingredients market adds up to EUR 34bn.

Global market growth 2008-2012 (AAGR)Food enzymes 6-8%Cultures and media 5-7%Savory ingredients 3-5%

The growth in high growth economies is above average.

Most attractive marketsDairy, baking, savory and beverage industry in North Americaand Western Europe, with a growing focus on high growtheconomies such as China, India, Brazil and Russia.

About DSM Food Specialties

DSM Food Specialties is a leading global manufacturer of foodenzymes, cultures, yeast extracts and other specialty ingredi-ents for the food and beverage industries. DSM Food Special-ties’ advanced ingredients make a considerable contributionto the success of the world’s favorite food brands for thedairy, baking, fruit juice, beer, wine, savory and functionalfood segments.

Main customersLeading large world class food manufacturing companiesMany medium-sized food and beverage processorsIn-depth partnership with Martek on ARA

Main CompetitorsDSM Food Specialties main competitors, e.g. Danisco,Chr. Hansen, Novozymes and LeSaffre offer a comparableportfolio or are focused on one of DSM Food Specialties’market segments.

Current DSM market positionDSM Food Specialties is leading in food and beverageenzymes, yeast extracts and cultures.DSM Food Specialties holds leading positions (#1 or #2) inthe relevant segments of its portfolio.

DSM Food Specialties

Rawmaterials

FoodIngredientsandAdditives

Foodproducer

Retail/Endconsumer

Key drivers of profitability

Innovation in enzymes, savory ingredients and bio-activesScale and production efficiency

Key success factors of DSM Food Specialties

Innovation and value differentiationKey customer intimacyGlobal distribution networkQuality and application know-how

16%

9%

11%

6%

6%

11%

9%

12%

1%18%1%

BeveragesDairy

BakeryPreserves

SavoryMeat/Fish

Oils/fats

ConfectioneryOther

Funct. FoodSupplements

Food ingredients by application (global)

15%

12%

11%

11%5%

2%

33%

6%

5%

DSM

Danisco

Hansen

Novozymes

BioSpringer

ABF

Kerry BS

Cargill

Others

DSM relevant marketsize (€ 2.7bn)

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StrategyDSM Food Specialties’ growth strategy is to exploit opportuni-ties of current businesses via organic growth based on radicalinnovation, geographical expansion in emerging economies,and acquisitions.

Main competitive advantagesInnovation capabilitiesUnique patent protected ingredients, both on(fermentation) process and applicationsQuality for Life™ programGlobal reach through local distribution and applicationnetwork

Main productsThe product portfolio consists of many branded uniqueproducts that can be categorized in:

Food enzymesCultures and mediaPreservation systemsAntibiotic residue testsProcess flavoursYeast extractsArachidonic acid

Manufacturing detailsDSM Food Specialties has manufacturing locations across theworld: Europe (6), Americas (2) and in Asia Pacific (2).

TechnologyDSM Food Specialties has a world-class knowledge-intensivetechnology base, founded on two leading technologies:

fermentationenzyme technology

This technology base is focused on the core functionalitiesTaste, Texture and Nutrition. DSM Food Specialties uses bothclassical and modern biotechnology techniques including ge-netic engineering to produce its products.

Key raw materials / intermediatesGlucose and molasses.

Main capex plannedNone

Innovation strategyMarket driven product, process and system innovationContinued improvements via incremental applicationdriven innovationsOpen innovation with key customers and other partners

Key InnovationsMaxagusto™, a new range of natural flavors that delivertaste and aroma authenticity was launched. It deliversintense, authentic flavor profiles using only natural ingre-dients – an unprecedented combination for flavorists andflavor creators.

Brewers Compass™ – a unique enzyme solution that en-ables brewers to produce up to 100 percent barley beersof the highest quality.

Panamore™ Soft, a new enzymatic solution for the bakingindustry , designed to improve the shelf life of bread.Containing a patent protected blend of enzymes,Panamore™ Soft helps bakers meet consumer demand forbreads that look better and stay fresher for longer.

PreventASe® - First process aid that reduces acrylamidein dough-based products

Brewers Clarex™ - Prevention of chill haze formation inbeer by simplefying the complex and costly beer coldstabilization process

Maxilact™ LGX - Long lasting clean taste in lactose-freeproducts

DELVO®-YOG cultures for yoghurt applications

"Future growth in the food ingredi-ents industry will be largely drivenby innovation. Consumer demand forconvenient and indulgent products,health & wellness and sustainabilityand food safety concerns createclear innovation criteria. DSM hasthe leading technologies, in-depthapplication expertise and world-classfacilities to develop (new) solu-tions in reply to these demands"

Hans-Christian AmbjergPresident

Production FacilitiesMain Sales Offices

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Business and trendsThe pharmaceutical market in general is facing a range ofquickening trends and dynamics that question existing busi-ness models and are leading to some fundamental changes inthe industry.

The patented pharmaceutical market’s challenges are welldocumented. It is becoming ever harder to discover new ac-tive molecules with sufficient additional patient benefits andan acceptable risk profile – and which the FDA and otherregulatory bodies are prepared to approve. This ‘perfectstorm’ of developments is calling into question the‘blockbuster model’: costs are rising at the same time as allhealth service providers – governments or insurance compa-nies – are under enormous pressure to reduce cost.

Medicines are becoming an increasing element of healthcarecosts, typically accounting for around 10% of total healthcarespend. As a consequence, both governments and insurancecompanies are looking to save by going ‘out to tender’ fordrug supply contracts, explicitly searching for the lowestcost. At the same time, the industry is facing a ‘patentcliff’: it is estimated that USD 260 billion worth of sales willgo ‘off patent’ in the next five years.

This is reflected in the steep growth of generic sales in bothdeveloping and developed markets, including emerging ‘bio-similars’. Latest estimates indicate that generics and bio-similars will rise from 10-12% of global spending on medicinesto 15% by 2015.

Pharma


4%

13%

83%

Pharmaceuticals

Agriculture

Other


37%

36%

24%

3%Europe

Americas

Asia

RoW

The implications of all this are profound. Pharmaceuticalcompanies are consolidating, reviewing their business modelsand product ranges, and competing to develop increasingly‘niche’, narrow spectrum and specialized drugs, often ‘difficultto administer’ drugs and bio-pharmaceuticals used only in hos-pitals. Whilst these can be high value, volumes are lower.

At the same time pharmaceutical companies are also pursuingthe opposite: high volume, lower value opportunities in highgrowth economies. In response, many Western pharmaceuticalcompanies have sought partnerships with low-cost country pro-ducers, with whom they can manufacture and market brandedgeneric options, and focus on outsourcing. Also, the generalimportance of manufacturing and supply chain costs as a sourceof margin improvement for pharmaceutical companies has be-come much more prominent.

These changes in the industry present attractive growth oppor-tunities for DSM. The intensity of cost pressure and openness toreview business models across the industry is likely to meanabove-GDP growth in the pharmaceutical outsourcing market.

There is an increasing trend towards outsourced manufacturing;particularly for drugs nearing the end of their (patented) lifecycle. The imperative to rationalize assets will lead to agreater focus on finding experienced and highly qualified part-ners to optimize the value chain.

The ClusterThe Pharma cluster comprises the business groups DSMPharmaceutical Products (DPP) and DSM Anti-Infectives (DAI).These business groups concentrate on the pharmaceuticaloutsourcing markets and the generic antibacterial market,

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About DSM Pharmaceutical Products

DSM Pharmaceutical Products (DPP) is a leading provider ofhigh-quality custom contract manufacturing and developmentservices to the pharmaceutical, biopharmaceutical and agro-chemical industries.With the increased focus on outsourced resources by leadingpharma and agro companies, DSM is a contract manufacturingorganization (CMO) prepared to provide solutions for the fu-ture of manufacturing with sustainability as a business driver,innovative solutions, global business partnerships, and in-creased sourcing and sales from emerging markets.

Broadmaterial base

Inter-mediates

Activepharma-ceuticalIngredients

Finaldosage

Pharmadistribution

Endconsumer

DSM Pharmaceutical Products

Markets

DSM is active globally in the primary and secondary manufac-turing of pharmaceuticals and focuses on the innovative (bio)pharma market as well as pharma fine chemicals markets andgeneric drugs.The pharma outsourcing market has a size of USD 40 bn.

Market growth 2008-2012The global contract manufacturing market is expected toincrease at a CAGR of 9% (2003-2013) with respective seg-ments growing at the following rates:

primary manufacturing, 7%secondary manufacturing, 11%biopharmaceutical, 13%.

Source: Kalorama

The average growth of worldwide pharmaceuticals sales for2009/2010 was 4-5% and for biopharmaceuticals 9%.Sources: IMS, EvaluatePharma

Most attractive marketsChemical API (primary) manufacturing: Europe and NorthAmerican marketBiopharmaceutical API (primary) manufacturing: GlobalBiopharmaceutical technology licensing and equipmentsales: GlobalFinished dosage (secondary) manufacturing: North AmericanmarketCrop protection (primary) manufacturing: Global

Current DSM market positionDSM ranked 4th in contract manufacturing revenue globally in2009.Source: PharmSource, 2010 and Company Public Filings

Main customersDSM serves 9 of the top 10 global pharmaceutical companies,other large and mid-size pharmaceutical companies (e.g. Am-gen, Shire, etc.) as well as select emerging pharmaceuticalcompanies all over the world.

Main competitorsPharma Chemicals: Lonza, BASF, Siegfried, Evonik,Dr. Reddy’s LabsBiologics: Rentschler, Boehringer Ingelheim, Lonza, CMCFinished Dosage: Patheon, Catalent, Ben Venue, Vetter


Focus on end-of-lifecycle drugs and new products pipelinein pharma industryInnovative technologies for the future of pharmamanufacturingIncreased outsourcing by pharma, including tech transfers

Key success factors of DSM Pharmaceutical Products

Strong pipeline of service contracts based on:Large strategic customer partnershipsDelivery to the DSM Quality for Life™ standards for quality,reliability and traceabilityContinued commitment to sustainability and innovativesolutions for customer success

DSM Pharmaceutical Products

Global outsourcing market

41%

22%

20%

7%10% Contract research

Primary mfg

Secondary mfg

Formulation dev.

Other

23


TechnologiesA broad range of technologies with world-class competenciesincluding: biocatalysis, homogeneous catalysis, mammalian celllines, fermentation and chiral technologies.

Key raw materials / intermediatesVery diverse set of raw materials, whose procurement ismainly driven by customers’ regulatory filings.Sourcing other volumes from low cost countries such asChina and India.

Main CAPEXOur new Brisbane, Australia 70,000 square-foot mammalianbiopharmaceutical manufacturing facility, to be operational in2013, is fully funded by the Australian Governments(Queensland State Government and the Commonwealth of Aus-tralia).

Innovation strategyTo maintain a leading and proactive position in delivering cus-tomer solutions through innovations in R&D, (bio)chemical,biologics and fermentation production technologies to supportincreasingly sustainable outsourcing by pharmaceutical compa-nies.

Key InnovationsMicro Reactor technology – unique proprietary highproductivity technology for pharma chemicals

XD® technology – unique proprietary technology to improveyield dramatically in biologics

Lyo Advantage™ / Liquid Advantage™ – state of the artdistribution control system

“As we see the pharmaceutical busi-ness model continue to shift, out-sourcing of manufacturing becomesmore of a strategic focus forpharma. With changes in the valuechain, DSM offers a range andbreadth of services that can enhanceour customers’ ability to succeed.”

Alexander WesselsPresident and CEO

StrategyFurther optimization of DPP’s current assets and re-focusthem towards lower cost assets in the high growth econo-mies.Intention to significantly expand range of own products.Partnership with another company which has strengths com-plementary to DPP.

Main competitive advantagesExtensive portfolio of services across the supply chain forsmall and large molecules and final dosage deliveryBroad range of innovative and cost-effective technologiesparticularly in green chemistry and biopharmaceuticalsStrong quality and regulatory compliance track record

Main products / premium servicesDSM Pharmaceutical Products is a global provider of contractmanufacturing and development services including:

Clinical to commercial scale production of Active Pharma-ceutical Ingredients (APIs) – chemical and biologicalClinical trial and commercial scale finished dosage formsand packagingXD® proprietary mammalian cell culture production yieldoptimization technologyRhobust™ biopharmaceutical harvest optimizing technologyInnovative technologies in Green Chemistry (e.g. InnoSyn™route scouting services)Micro reactor commercial scale productionAseptic liquid filling and Lyophilization, including CytotoxicsPharma-grade crop protection ingredients

Manufacturing detailsGreenville, US Sterile and finished dosage productsLinz, Austria, cGMP/ISO custom manufacturingVenlo, Netherlands, cGMP custom manufacturingRegensburg, Germany, cGMP scale-up facilityGroningen, Netherlands, cGMP biologics custom mfg.Brisbane, Australia, cGMP biologics custom mfg. (2013)

DSM Pharmaceutical Products’ facilities are approved by the USFDA, EMEA, Japan and many foreign regulatory agencies. DSMPharmaceuticals, Inc. is licensed by the US DEA to manufacturescheduled drugs.

24

About DSM Anti-Infectives

DSM is a leading supplier of beta-lactam active pharmaceuti-cal ingredients such as semi-synthetic penicillins and semi-synthetic cefalosporins (beta-lactams), and other active ingre-dients such as nystatin, which represent the biggest class ofAPIs in anti-infectives. DSM is the only FDA approved penicillinproducer in the Western hemisphere. DSM Anti-Infectives isalso one of the few API manufacturers that continuously investin R&D for generic antibiotics.

Markets

The total global antibacterial market is estimated to be USD36bn. DSM is mainly active in the beta-lactams (penicillin,SSPs) and the Cephalosporins (SSCs). In addition, DSM sellsbeta-lactam intermediates such as 6-APA and 7-ADCA .

Market growth 2009-2013Average overall market growth is 3-5% for semi-syntheticcephalosporins (SSCs) to 4-5% for semi-synthetic penicillins(SSPs) with the highest market growth expected in Asia (SSP6-8%, SSC 3-5%) .

ActivePharmaceuticalIngredient

Glucose PEN/Inter-mediates

Finaldosage

Pharmadistribution

Endconsumer

DSM Anti-Infectives.

6%6%

4%

5%

13%

13%

26%

27%

Beta-lactamsCephalosporinsMacrolidesQuinolonesTetracyclinsAminoglycosidesSulfonamidesOther


Basic PEN priceAccess to regulated marketsCurrency exchange rateProduction cost PENConversion margins from PEN to SSPs and SSCs

Key success factors of DSM Anti Infectives

Market access through global presence/alliancesNew technologiesAccess to ChinaProduct differentiation / Brand ValueOperational excellenceAccess to quality oriented customers

Current DSM market positionDSM Anti-Infectives belongs to the largest players in the field ofbeta-lactams with leading positions in the higher value addedsegments.

Most attractive marketsAlthough currently the western economies are the most attrac-tive markets, DSM Anti-Infectives has an increased focus on therapidly growing markets in Asia and Latin America.

Main customersLeading large pharmaceutical companies such as GlaxoSmithKline, Sandoz, Teva, as well as local midsized pharmaceuticalcompanies all over the world

Main competitorsCompetition is coming predominantly from Chinese/Indian pro-ducers (e.g. United Laboratories, CSPC, Aurobindo) and Euro-pean producers (e.g. Antibioticos, Sandoz)

StrategyThe business group has retained profitability by implementingsignificant cost reductions and introducing new technologies,which is an ongoing process in any strategic context.DSM Anti-infectives’ strategy has three main pillars:

to retain its leading position in the global market for peni-cillin and penicillin derivatives, further strengthening of theposition in especially Chian is a prerequisite.to broaden the portfolio with generic APIs from other thera-peutic classes but anti-Infectives, andto integrate forward into final dosage in selcted markets

DSM Anti-infectives

AMEA China

EU&USRoW0

20

40

60

80

2005 2008 2010 2015

High growth economiesRoW

SSP, SSC market distribution (2010) SSP, SSC market growth (2010)

5%-7%

25

Benefits of DSMPureActivesTM

Higher yield due to higher purityLess overages required due to higher purity and anincreased retest periodImproved machine efficiency due to better flowablilityWith larger batch size, testing and administration at QCdepartments will be reducedRelief of registration efforts due to reduced impurity levelGuaranteed activity of active substance over shelf lifeWaste produced during production is reduced by up to 90%Greenhouse-gas emissions reduced by over 50%Reduced emissions of residual solvents to airEmissions to water are reduced by approximately 50%Reduced toxicity of antibiotic ingredient, owing to absenceof almost all chemicals and solventsBetter taste due to the absence of residual solvents

The recent formation of the joint venture between DSM andSinochem of China strongly supports the achievement of thesestrategic targets, where partners continue to be a potentialdriver for further growth in line with the overall strategic ob-jectives of DSM’s corporate strategy.

Main competitive advantagesRegulatory and product qualityReliability and after sales serviceEnzymatic technologyGlobal market access

Main productsDSM Anti-Infectives is a leading supplier of active pharmaceuti-cal ingredients such as:

Penicillin (PEN)Intermediates such as 6-amino-penicillanic acid (6-APA),7-amino-deacetoxycephalosporanic acid (7-ADCA)Semi-synthetic penicillins (SSPs) such as amoxicillin andampicillinSemi-synthetic cephalosporins (SSCs) such as cephalexinand cefadroxilNystatinProcess enzymes

Manufacturing detailsPenicillin Mexico, China6-APA China, Mexico, India7-ADCA NetherlandsSSPs Spain, Mexico, China, IndiaSSCs Spain, ChinaNystatin Capua, Italy

TechnologyDSM has integrated its competences in biotech and chemistryfor the development of a new range of high quality semi-synthetic penicillin and semi-synthetic cephalosporin. The re-sults of this effort are the DSMPureActives™, each producedwith our innovative enzymatic technology. The APIs producedvia these proprietary biotechnology routes also offer advan-tages in terms of increased patient safety based on the higherpurity of the products, and lower spillage in the processing stepfrom API to finished dosage form.

Key raw materials / intermediatesGlucose, sodium phenylacetate/phenylacetic acid,phenyl glycin.

Main capex plannedDSM Anti-Infectives is actively pursuing joint ventures in China,resulting in capacity expansion and a significant improvementin economies of scale.

Key InnovationsInnovation in technology (implementing best technologiesthroughout global network)Expansion of DAI portfolio in generic APIs through productinnovationBranding PureActives™ (green routes)

“DAI is a global leader in beta-lactam antibiotics. Our clients valuethe way we live up to our commit-ments, the constant display of asustainable and responsible way ofexecuting our business and the factthat our enthusiastic employeesnever stop to further improve on ouroffering to them.” Stefan Doboczky

PresidentProduction FacilitiesMain Sales Offices

26

Business and trendsClimate change and the adverse effects of over-dependenceon fossil fuels continue to be the most important trends driv-ing the materials industry. DSM’s customers in virtually everysector are seeking products that reduce energy use or emis-sions in their own operations or, even more importantly,throughout their value chains.

In many cases DSM is active in the business of replacing metalswith lighter alternatives, for example, and supports customerswho are increasingly seeking polymer solutions that are basedon renewable (rather than fossil-based) raw materials andsolvent-free products and processes that can help create moresustainable value chains. Resource scarcity, which also im-pacts costs, is increasingly contributing to these develop-ments.

Energy reduction is key. This means not only finding new, lessenergy-intensive ways to manufacture DSM’s own products,but also, for example, developing resins systems that requireless energy for curing, thereby saving energy in the applica-tion of DSM’s products. By providing lighter weight solutionsthan, for instance, conventional metal structures, DSM prod-ucts help reduce energy consumption during use as well, thusmaking a significant contribution to the reduction of energyand carbon footprints across the planet.

Performance Materials


32%

17%3%

16%

12%

20%

Metal/B&C

Automotive/Transport

Textiles

E&E

Packaging

Other


49%

19%

31%

1% Europe

Americas

Asia

RoW

Workplace health and safety standards are becoming morecommon across the world as prosperity grows. Health and well-ness also translates into meeting the needs of an increasingelderly population. These needs require new thinking, and newapplications.

Urbanization is an important driver for building and construc-tion – one of the areas in which DSM plays an important rolewith innovative resins solutions.

An ageing population is just one of the radical global shifts DSMis now seeing. The world has become multi-polar and moredifficult to predict, with rapidly growing prosperous middleclasses in many formerly ‘emerging’ countries. Demand forplastics and resins is therefore high and increasing in thesemarkets, not only because manufacturers are seeking to meetgrowing local needs, but also because global manufacturing hasshifted to these countries.

At the same time, concerns about personal safety and globalthreats have not diminished. Innovation in this area is needed.The elimination of hazardous substances such as halogens inflame retardants in consumer electronics and the replacementof solvent-based resins by water-based resins continues.

The clusterThe Performance materials cluster comprises of DSM Engineer-ing Plastics, DSM Dyneema and DSM Resins.

28

About DSM Engineering Plastics

DSM Engineering Plastics is a global player in polyamides, andpolyesters. These materials are used in components for theelectrical and electronics, automotive, engineering and pack-aging industries.

DSM Engineering Plastics

MarketsKey segments for semi-crystalline engineering plastics:automotive, electrical & electronics (E&E), (food)packaging, optical & glazing, and consumer/industrialKey products are polyamide 6, 66, 6/66, heat resistantresins (HRR), polyesters (PBT, PET), POMs, thermoplasticcopolymers

Total global market size for engineering plastics: ~ EUR 25bnin 2008


Market growth in key segments and regionsSustainable solutions: green materials, weight reduction(replacing metal, fuel efficiency reduced emissionshalogen free), driving innovationDrive for miniaturization, functionality and performanceGrowth in market share in high-end innovativeapplications

Key success factors of DSM Engineering Plastics

Global market leadership in chosen marketsGlobal presence (follow customers)Cost positionThe right portfolio of engineering plastics matching needsin chosen marketsAbility to commercialize market-driven innovationsProduct, application and value chain know-how

Most attractive marketsSegments: electrical power distribution, electroniccomponents, automotive under the hood, automotive safetysystems, flexible food packagingRegions: Asia, especially China and India, but also Europe.US is becoming more and more attractive because ofincreasing drive for sustainable solutionsProducts: heat resistant resins, polyamides

Market growth 2010-2015Growth of the engineering plastics market is expectedabove GDP, with highest growth in Asia Pacific, especially inChina and in IndiaThe highest growth per product is in heat resistant resins

Distribution by regionChina

Rest of Asia

Europe

North America

RoW

Market by segmentAutomotive

E&E

Packaging & extrusion

Consumer & industrial

Market by productsPA6

PA66

PBT.PET

HRR

POM

TPC

DSM Engineering Plastics

Oil/gas Monomers Processingmolder

Systemsupplier

OEM/end user

Polymeri-zation

Com-pounding

29

Examples of customersAutomotive: Bosch, Valeo, Peugeot, Tata MotorsE&E: Schneider, Siemens, Samsung, Philips, Nokia(Food) packaging: VF Verpackungen, WipackGeneral: Salomon

Main CompetitorsPA6: BASF, Lanxess, UBEHigh temperature PA: Dupont, Kuraray, Solvay, MitsuiThermoplastic copolyesters: Dupont, Toyobo

Current Global DSM Market position#1 in high temperature polyamides#2 in polyamide 6#2 in thermoplastic copolyesters#3 overall in semi-crystalline engineering plastics

StrategyTarget 10% top line growth annually via strong innovationdrive and global expansionFurther reduce impact of general economic conditions andinput costs by focusing on selected high growth segments,global presence and backward integrationExtend global leadership in high temperature polyamides,polyamide 6 and TPCExtend leadership positions in selected end markets

Main competitive advantagesGlobal reach through regional networkInnovation and sustainability drive and excellence inlaunching innovationsUpstream integration with DSM Fiber Intermediates(caprolactam for PA6)

“Customers – Our Passion

Brighter Lives – Our Innovations

Greener Planet – Our Drive”

Roelof WesterbeekPresident

Key products of DSM Engineering PlasticsAkulon® and Novamid® polyamide 6, polyamide 66,polyamide 6/66Stanyl® polyamide 46Stanyl® ForTii™EcoPaXX™Arnite® polyester (PBT, PET)Arnitel® copolyester elastomer (TPC)

Manufacturing detailssee world map below

TechnologyInjection molding, extrusion, blow molding

Key raw materials / intermediatesCaprolactam, DAB, benzene/phenol, BDO

Main Capex (2010)2nd Stanyl® ForTii™ market development unit in Geleen

Innovation strategyCreate maximal profitable growth as solution provider for per-formance thermoplastics. Capture opportunities from main so-cietal trends such as Climate and Energy, Functionality andPerformance and high growth economies.

Key InnovationsEcoPaXX™, the ecofriendly new green engineering plasticStanyl® ForTii™, DSM’s new polyamide with the highest heatresistance among DSM’s polymersHalogen-free flame retardants engineering plasticsAkulon® UltraflowAkulon® Fuel LockStanyl® thermoconductive polyamideAkulon® for integrated oil sumpsArnitel® C for high temperature resistant cablesArnitel® XG for halogen free FR cables

Production FacilitiesMain/Regional Sales Offices

30

MarketsDyneema® is used extensively in ropes, cables and nets in thefishing, shipping and offshore industries. It is also used in safetygloves for the metalworking industry and in fine yarns for appli-cations in sporting goods. In addition, it is applied in bullet-resistant armor and clothing for law-enforcement personnel andthe military. A number of new markets are in various stages ofscouting & development. The business group will continue tofocus on the further development of ultra high-performancepolyethylene materials and technologies and on extractingvalue from its IP assets.

Most attractive marketsLife protection (e.g vests, vehicle protection)Commercial marine (shipping, offshore, fishing)Sports (sails & rigging, fishing lines)High performance textiles (cut resistant gloves,clothing)

Market growth 2010-2015UHMwPE fiber and its derivative products are regarded as high-performance, high-value replacements for more traditionalmaterials such as polyester, polyamide, steel or other high-per-formance fibers, such as aramids. Competitive products aresegment specific. Penetration in existing markets was in pre-recession years over 10% per annum. During the recession,lower demand in industrial segments has impacted growth.However, additional applications, have continued to come onstream, such as lightweight containers for airfreight. The totalattainable market therefore is continuously growing as newapplications arise.

DSM Dyneema

About DSM Dyneema

DSM Dyneema is the inventor, manufacturer and marketer ofDyneema®, the world’s strongest fiber™.This product, based on ultra high molecular weight polyethyl-ene (UHMwPE) is produced by means of DSM’s proprietaryprocesses. The Dyneema® brand enjoys very high recognitionin the value chains served


Market growth and penetration into existing applicationsSuccess of innovations, new launchesDyneema® and Dyneema Purity® brands

Key success factors of DSM Dyneema

Capability to manage growth, both in hardware and inpeopleAbility to commercialize market-driven innovationsProduct, application and value chain know howStrong, healthy IP position (patents and trademarks)Brand value (trust and innovation)

UHMwPENaphta /ethylene

Converter OEM End userUHMwPEfiberDyneema®

Examples of customersLife Protection: Ten Cate (vests, vehicle protection)Commercial Marine: Unitex (lifting slings), Badinotti (fishingnets), Samson (mooring lines)Sports: Gottifredi Maffioli (sailing ropes), Pure Fishing(fishing lines)Others: Bluewater Energy Services (LNG transport hoses),Hoffman Ace (cargo nets)

Main competitorsHoneywell (Spectra® UHMwPE).DuPont (Kevlar® aramid)Steel & polyester producers

Current DSM market positionMarket leader in UHMwPE, overall leader in high performancefibers in many segments.

31


“The Dyneema® brand stands for abusiness culture which enables itspeople to do what it takes to consis-tently deliver the brand promise toall its stakeholders. “

StrategyDrive penetration of existing applications, exploitingadvantages in total cost of ownership and sustainablesolutions to substitute traditional offeringsEstablish strong relationships with key value chain playersAccelerate entry into targeted new markets (geographiesand end-uses)

Main competitive advantagesTechnical benefits related to physical attributes. Dyneema®

is up to 15 times stronger than quality steel and up to 40%stronger than aramid fibers; it floats on water and isextremely durable and resistant to moisture, UV light andchemicalsDyneema® brand: highly valued throughout the valuechains servedInnovation capabilities (products, applications,technologies) and excellence in launching innovationsClear eco-footprint advantages

Manufacturing detailsDyneema® yarn and Dyneema® UD are produced inGreenville, North Carolina (USA) and Heerlen (Netherlands)The new tape technology is applied in Flaach (Switzerland)DSM is also a partner in a manufacturing joint venture inJapan for fiber

TechnologyDyneema® is manufactured through DSM’s proprietary gelspinning process. Dyneema® Tape and UD are also subject toextensive patent coverage.

Key raw materials / IntermediatesUltra High Molecular Weight Polyethylene (UHMwPE)

Gerard de ReuverPresident

Main capex plannedLarge scale tape facility in Greenville due for completionlate 2011

Innovation strategyIntroduce new applications and new products for Dyneema®Continue to build and extend Dyneema® brand valueProtect and strengthen IP positionsExtend eco+ and benefits of product portfolio

Key innovationsDyneema® Tape Technology for vehicle and personalprotection

Dyneema® Panels, Dyneema® Laminated Fabrics andDyneema® Sewing Thread, all initially targeted at theaviation cargo industry

32

Main markets / applicationsFocus for DSM Resins is to combine the ‘winning solutions’ witha market-oriented, innovation-driven organization and alreadyexisting strong market positions. Main markets are shown in thegraphs.

DSM Resins

About DSM Resins

DSM Resins is a global player in the manufacture, marketingand sale of high quality resins for the coatings, inks and mate-rials industries. The company employs over 2,400 people andhas 22 manufacturing plants across the world. This reflectsDSM Resins’ global activities and its dedication to local andglobal customers.


Market growth in key segments and regionsSustainable solutions: lighter, materials andenvironmentally friendly, safer, solvent free paintsGrowth in market share in high-end innovativeapplications

Key success factors of DSM Resins

Global market leadership and presenceBrand value (differentiation, reliability)Ability to commercialize market-driven innovationsLeading low footprint technology platforms gearedtowards markets

MonomersRawMaterials

CoatingsInksMaterials

OEM End userResins

Market growth 2010 - 2015Markets for both Coating Resins and Composite Resins are ex-pected to grow above GDP.

Most attractive marketsSelected key segments: right combination of end-markets, re-gions and technologies to capture the fastest growth such asindustrial wood, industrial metal (can & coil), automotive andoptical fiber.

Current DSM market positionDSM has a leading position in many industrial segments:

Coating Resins:In Industrial Coatings (wood, powder), DSM is the globalleader, together with Cytec. In Metal (Can & Coil) , DSM isthe global leader together with Evonik. In Architecural /Deco, DOW and BASF are the global leaders.In the Fiber Optic Material segment, DSM is the globalleader.

Composite Resins:DSM Resins is the European market leader in unsaturatedpolyester resins with a market share of ~ 30%, followed byReichold, CrayValley and Ashland.

Examples of customersCoating Resins: AkzoNobel, PPG, DuPontComposite Resins: Menzolit, Beneteau Group

Main competitorsCoating Resins: BASF, Dow, Cytec, Hexion, 3D SystemsComposite Resins: Cray Valley, Reichhold, Ashland

Global Coating Resins market 2008 (€20bn)

Architectural (Deco & DIY)

Automotive

Metal (incl. Can & Coil)

Industrial Wood

Powder

Others (inc graphic art,optical fiber)

Global Composite Resins market 2008 (€7bn)

Building & Construction

Automotive

Marine

Tanks, Pipes & Relining

Advanced Composites

33

StrategyCoating Resins: Be global no 1 in specialty resins throughinnovation, focus and dedication.Composite Resins: Leading the composite resins industrythrough dedication and innovationAmbitious strategy will result in strong, double digit growthin net sales and a consistently improving financialperformance

DSM's resins business generates value with and for customersthrough continuous innovation so that they meet regulatoryneeds (such as REACH) and respond better to end-user demandsfor sustainability and quality. DSM will only be able to continuemeet these customer demands for innovation with its resinsbusiness if sustainable compensation for these efforts isreceived, beyond the increase in raw material costs. DSM be-lieves a fundamental upward shift in pricing for the resins'value chain has therefore become unavoidable.

Main competitive advantagesGlobal reach through regional networkInnovation and sustainability drive and excellence inlaunching innovationsStrong unique technology position (f.i. waterbased resins,high solid resins, optical fiber coatings)DSM Resins brand highly valued through value chain served

Main productsThe resin primarily determines the properties of the end-products, such as coatings and composites.

Coating Resins:Waterborne resins for coatings and inksHigh solid resinsPowder resinsUV-curable resins and coatings

Composite Resins:Unsaturated polyester / vinyl ester resinsThermoset urethane resinsSizings and binders

Manufacturing detailsCoating Resins: United States (Illinois, North Carolina,Indiana, Massachusetts, Rhode Island), China, Japan,Germany, Spain, the NetherlandsComposite Resins: China, France, Italy, UK, the Nether-lands and Spain

Main Capex (on stream in 2010)New factory for waterborne acrylic resins in Waalwijk(Netherlands)New plant for production of wet polyesters and otherspecialty resins in Meppen (Germany)

Key raw materials / intermediatesGlycols, styrene, maleic-, phthalic anhydride, acrylates,isocyanates, acrylic monomers

Innovation strategyInvestment to create and execute innovation pipelineMarket-driven dedicated organizationSustainable innovations: providing solutions to globalsocietal issues

Key InnovationsDesoLite® Supercoatings: the newest generation of opticalfiber coatings, with improved microbend sensitivity

RP-10: aluminum replacing panel material made fromDyneema® HPPE fiber and Aeronite® composite resin

UVolve®: instant floor coatings

Uralac® EasyCure: low temperature cure powder coatingresins

Palapreg® ECO: the resin with the highest bio-renewablecontent (55%) on the market ever without sacrificing proc-essing standards and product performance

DSM and Novomer Inc. (Waltham, MA, USA) are workingon development of a revolutionary coating resin usingcarbon dioxide (CO2) as a raw material.

"Driven by the fact that most tradi-tional materials are made of non-renewable finite resources, sustain-ability and responsible behavior arequickly gaining importance withinthe resins and functional materialsindustries. We, as DSM, want toprovide new, more sustainable solu-tions, and look for example at bio-based and bio-renewable productsto move towards potentially limit-less raw material supplies." Dimitri de Vreeze

President


34

Polymer IntermediatesBusiness and trendsCaprolactam

Caprolactam’s key outlet is polyamide 6, of which approxi-mately 4 million tons per year are produced worldwide. Theapplications of polyamide 6 are very diverse, covering manyend-markets, from carpets and textiles to cars, electricaldevices and packaging film. Some of these applications aresensitive to the larger economic cycle (automotive, housing,luxury electronics), while others (like textiles) are quite sta-ble.

DSM Fibre Intermediates is the global leader in the produc-tion and supply of caprolactam, the raw material for polyam-ide 6.

Acrylonitrile

Acrylonitrile is a key ingredient for bright, fashionable acrylictextile and carpet fibers and for materials (acrylonitrile-butadienestyrene, ABS and styrene-acrylonitrile, SAN) forautomobile components, electronic devices, toys and sportsequipment. The application of acrylonitrile in a wide range ofvaluable specialty products (e.g.: DSM carbon fibers, watertreatment additives, enhanced oil recovery, detergents) israpidly growing.


12%

15%

45%

15%

13%Metal/B&C

Automotive/Transport

Textiles

E&E

Packaging


41%

15%

43%

1% Europe

Americas

Asia

RoW

With its market share of 25%, DSM Fibre Intermediates is theleading supplier in the European merchant acrylonitrile marketwhile globally it ranks third.

The ClusterThe polymer intermediates cluster consists of DSM Fibre Inter-mediates which supplies key intermediates to DSM EngineeringPlastics.

36

Most attractive marketsPolyamide 6 for E&E, automotive and food packagingAsia, mainly China, Taiwan

About DSM Fibre IntermediatesWith its market share of 20%, DSM Fibre Intermediates is thelargest merchant caprolactam producer in the world. Withplants in the Netherlands, the United States and China, itholds a global market position, a solid partnership in China,excellent performance, technological leadership and a grow-ing secured supply to DSM Engineering Plastics.With a market share of 25%, DSM Fibre Intermediates is a ma-jor player in the merchant acrylonitrile market in Europe. Inaddition, the business group produces ammonium sulfate, so-dium cyanide and diaminobutane.

DSM Fibre Intermediates

Oil Gas

PhenolCyclohexaneAmmonia

CaprolactamAcrylonitrile

PolyamidePA6, PA46Engineeringpolymers

OEM(parts)YarnsFilms

AutomotiveE&E, Films,TextilesCarpets


Growth (engineering plastics, China)High utilization ratesVolatility of raw materials prices

Key success factors of DSM Fibre Intermediates

Low cost operationsSecurity of sales (excellent global coverage)Reliable supply, consistently good product qualityTechnology leadership

MarketsCaprolactam, with a total global demand of some 4,200kt(merchant and captive) in 2010, is used predominantly for poly-amide 6, a high performance polymer, used in:

Textiles (lingerie, sportswear, leisurewear, fashion wear,travel and outdoor gear)Floor coverings (carpets, rugs)Industrial yarns (bias ply tyres, conveyor belts, mechanicalrubber goods, ropes, nets, fishing lines)Engineering plastics: automotive (air-inlets, engine covers),E&E (switches, connectors), equipment housingsFilms (food packaging, industrial packaging) Films (foodpackaging, industrial packaging)

Acrylonitrile’s main applications are textiles, building & con-struction (acrylic fibers), automotive and E&E (ABS, adiponi-trile), water purification (acrylamide). Global acrylonitriledemand is around 5000kt.

Ammonium sulfate is mainly used as fertilizer, sodium cyanideis used in detergents and in vitamins synthesis, diaminobutaneis an intermediate for Stanyl®

Main markets CaprolactamTextiles

Floor covering

Industrial yarns

Engineering plastics

Film

Caprolactam market distribution DSMCapro Corp.CPDCUbeHoneywellBASFSumitomo

SinopecOthers

Acrylonitrile production distribution IneosAsahiAscendDSMSeccoFPCTaekwangJilinOthers

37

"Our goal is to further strengthen ourglobal market position and remainleading in caprolactam and acryloni-trile. Increasing demand and goodmargins provide a solid base for ex-panding capacity by building a second,next generation caprolactam line inChina."

Ed SheuPresident

Market growth 2010-2015Global growth of acrylonitrile / caprolactam ~ 2,5% - 3% peryear due to limited supply and few new capacity in comingyearsRegional: Strongest growth caprolactam in China / Taiwan >6% per yearUS and Europe relatively stableHalf the world’s caprolactam consumption is already con-sumed in Asia

In 2015, half the world’s caprolactam consumption is expectedto be in China / Taiwan.

Main customersCaprolactam: manufacturers of PA-6 products such as DSMEngineering PlasticsAcrylonitrile: manufacturers of acrylic fibers, ABS/SAN,acrylamide, nitrile rubber

StrategyCaprolactam: DSM Fibre Intermediates has a threefold ap-proach to capitalize on the opportunities that are arising:doubling production capacity in China; continuously improv-ing existing assets by means of life time extension and vari-able cost reduction projects; and a firm commitment tosustainability.Acrylonitrile: maintain our sustainable position as one ofthe leading players in Europe.

Main competitive advantagesGlobal presenceCost leadershipOnly global producer in fast growing ChinaReliable partnerTechnology leadershipIntegration with DSM Engineering Plastics (PA6)

Manufacturing detailsCaprolactam ~700 kt total(Geleen, Netherlands; Nanjing, China; Augusta, US)Acrylonitrile (Geleen, Netherlands) 275 ktSodium cyanide 28 ktAmmoniumsulfate 1200 kt

TechnologyDSM has proprietary world-class caprolactam technologies(HSO, HPO, HPOplus, Anone), with multiple licensees world-wide.

Key raw materials / intermediatesCyclohexane or phenol, ammonia for caprolactamAmmonia and propylene for acrylonitrile

Main capex plannedSecond, strongly improved caprolactam production line inChinaLife time extension projectsSustainability projects efficiency driven investments to saveon energy and raw materials and reduce emissions

Key InnovationsNew caprolactam production technologies from bio-renewable resources

Sustainability programs to radically reduce carbon footprintand reinforce our ‘green’ industry leadership

Process innovations to lower cost per ton produced


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About DSM Biobased Products & Services (DBPS)At the core of DSM’s strategic focus on Life Sciences andMaterials Sciences is our key competency in IndustrialBiotechnology (also widely known as White Biotechnology).This serves as the focal point of our Emerging Business Areawhere we are creating solutions for bioconversion of secondgeneration feedstocks and for the production of bio-basedchemicals and materials.

Biobased products & services

RenewableFeedstockAgri-waste

Pre-treatmentEnzymaticConversion

PrimaryConversionFermentation

SecondaryConversionChemistry

OEM Endconsumer

Markets

The total global market for biofuels and biochemicals / bio-based materials is currently estimated to be around USD 70bn.The estimated market size for ethanol in 2010 is USD 50billionThe biochemical and biopolymers market size (incl oleo-chemicals) is estimated to be EUR 39 billion in 2010/11.The relevant market size for DSM is ~ USD 20 billion andinclude bio chemicals such as lactic acid, succinic acid, etc;bio polymers such as polyols, bioPE, bioPVC, PLA, PHA, etc;and oleochemicals such as bio surfactants, bio solvents andbio lubricants

(Source: McKinsey)

Market growthMarkets are expected to grow above 15% p.a.Total 2G market expected to grow to above USD 80bn by2022

(source UBS)

Current DSM market positionDSM holds no. 1 position in yeasts for 2G bio fuelsDSM holds top position in enzymes for 2G bio fuelsUnique and essential combination yeasts and enzymes for 2Gbio fuelsUnique combination biotechnology and tradition chemicalsynthesis and polymer technologies (materials)Proven track record in green processes

Most attractive marketsInclude the enzyme, yeast and other micro-organism part forthe 2G biofuel market, currently estimated to be above USD0.5 billion, with rapid growth thereafter

Main customersSee customers in DSM’s Nutrition and Pharma cluster for tra-ditional biotechSee customers in DSM’s Materials Sciences clusters for bio-chems and biomaterialsBio refineries (2G bioconversion)

Main competitorsNovozymes, Danisco, LeSaffre, Lallemand, BASF, CSMDSM has unique combination of enzymes and yeasts which areessential for cellulosic conversion into 2G biofuelsClear alliances throughout the value chain needed for success

Main productsBio-succinnic acidEnzymes (a/o mixes to break down bio-masses)Yeasts (a/o to convert C5/C6 sugars)Others not disclosed yet


Market potential of biosolutionEco-footprint: Intrinsically more sustainable(a/o minimal impact on food supply)Drive at customers toward sustainable innovative solutionsPrice, availability and eco-footprint of conventionalresourcesGovernment backing

Key success factors DSM Bio-based Products & Services

Time to the marketNot competing with high capital intensive sectorHigh certainty of technological success andhigh technological spin-offSuccessful alliances throughout the value chain

Market distribution

Bio fuels

Bio chemicals

Bio materials

DSM Biobased Products & Services

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StrategyLicense and service model to cellulosic 2G ethanol industryProduction of bio-based chemicalsFocus on green materials with better performance andlower environmental footprintCombined Sales target with Biomedical Materials andAdvanced Surfaces in 2020 > € 1bn

Main competitive advantagesDSM’s unique combinations in biotech andchemistry (biomaterials)DSM’s unique combination in enzymes and yeasts(2G biofuels)Specialty portfolio such as heat resistant enzymesStrong partnerships (a.o. Roquette/Abengoa)Deep understanding of value chain and end-users becauseof presence in Materials Sciences

Production / research facilities DBPSDelft (Netherlands), Lestrem (France, JV with Roquette),Elgin (Illinois, US), Sao Paulo (Brazil), Shanghai (China)Next to these DBPS locations, the DSM business clustershave biotech facilities all over the world

TechnologyUnique combination of biotechnology competences: yeasts,enzymes, bacteria, algeaUtilizing existing Life Sciences technologies to address to-day’s needs in renewable energy and sustainable materialsWe also create opportunities to combine our biotechnologyknowledge and skills with DSM’s in-depth knowledge of tra-ditional chemistry and manufacturing excellence to bringnovel integrated solutions across a variety of industry sec-tors

Key raw materials / intermediatesBiobased and renewable productsNon-edible raw materials, cellulosic based

Main capex plannedDSM intends to expand its biosuccinic acid production ca-pacity to 5kta by 2012 from 300 ton level todayOther announcements to be expected in 2011

Key InnovationsNew robust enzymes mix able to break down biomass moreefficiently at higher temperatures

Advanced yeast strain capable of converting C6 / C5 sugarsinto bio-ethanol

Bio-succinic acid demo plant in operation, customers intesting phase

“With its unique focus on Life Sciencesand Materials Sciences, DSM is wellpositioned at the forefront of anemerging bio-industrial era broughtabout by the need for renewable en-ergy sources and sustainable chemis-try and materialsWe see that viable alternatives canand will be created by harnessing thepower of nature in creative sustain-able ways” Anton Robek

PresidentDBPS locations

40

About DSM Biomedical

As one of the Emerging Business Areas, DSM Biomedicalprovides a proprietary product portfolio of coatings, drugdelivery platforms and a wide range of biomedical materialsthat enable the replacement, repair, enhancement andultimately the regeneration of tissue and organ function in thebody. Their novel materials-based solutions are designed tomeet the present and future needs of the medical device andbiopharmaceutical industries.

Market: Biomedical materialsThe market for biomedical materials is driven by the ongoingmarket growth in medical devices and the need for more so-phisticated pharma drug delivery systems.

The biomedical materials market is estimated at USD 1.5 -2 bn with growth rates at 10-15% annually (2010).

The worldwide medical devices market is estimated atapprox. USD 140 bn in 2010.

Main customersLeading medical device companiesWorld class pharmaceutical companies

Most attractive marketsThe most attractive market is the USA, followed closely byWestern Europe and Japan. In this market, the cardiovascu-lar, the opthalmology and orthopedics segments are the mainfocus areas for biomedical materials.

Main competitorsMaterials - AdvanSource, Arkema, Bayer MaterialScience,Invibio (Victrex), Lubrizol, Ticona, SurmodicsDrug Delivery - Durect, Flamel, pSividia

Typically, competitors only serve one market segment ratherthan the whole market.

Current DSM market positionDSM Biomedical has a leadership position in the marketfor polymer based biomedical materials.DSM is the only company worldwide covering all majorapplications consuming biomedical materials, fromcoatings and implants to drug delivery systems.

StrategyDSM Biomedical develops materials-based solutions to meetthe present and future needs of the medical device and bio-pharmaceutical industries, specifically focused on developingsolutions for the cardiovascular, ophthalmic and orthopedicmarkets:

Biomedical materials - polymers for medical applicationsincluding neurostimulation leads, pacemakers, contactlenses, orthopedic implants, stents, implantable sensorsamong others.Coatings - hydrophilic, antimicrobial and non-fouling coat-ing technologies for medical devices such as catheters,with patient comfort as a priority.Drug Delivery - resorbable materials that deliver activecompounds to targeted parts of the body with a high levelof control and chemistry based design.

DSM Biomedical’s strategy actively exploits open innovationand to set up business models that are typical of knowledge-based rather than production-based businesses.

Key Profitability Drivers

Product pipeline in medical devices and pharmaThe development of medical treatments using biomedicalmaterialsImpact of health insurance policies

Key success factors for DSM Biomedical

Balanced product portfolio(Open) innovation competences and networkAccess to medical device and pharmaceutical industryIn-depth materials and pharma know-how

Biomedical

RawMaterials

Biomedicalsolutionprovider

MedicalDevice -Pharmaindustry

Patients

DSM Biomedical

Hospitals/Pharmacies

Source: Frost & Sullivan, others

Medical device market (2009) CardiovascularOrthopedicsUrologyOphthalmologyWound CareNeurologyGeneral surgeryCosmetic surgeryOther

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“Materials that belong to the body”

"By connecting our unique expertisein both materials and life sciences,DSM Biomedical is in the perfectposition to develop innovativesolutions that improve performanceand create brighter lives for peopletoday and generations to come,offering excellent opportunities forgrowth and ensuring the continued,long-term success of DSM” Christophe Dardel

PresidentManufacturing/R&D FacilitiesSales Offices

Main competitive advantagesWide range of high quality innovative materials solutionsExcellent clinical track record in the medical andpharmaceutical fieldIP assets, comprising an extensive patent portfolio, recog-nized brands, master file data for regulatory submissionsand the know how to tailor materials to meet customerneedsIn house, in-depth compentences in the Life Sciences andthe Materials SciencesExtensive network through partnerships in the public andprivate sector

Main productsBiomedical materials: Bionate® PCU, BioSpan® SPU, CarboSil®

TSPCU, Dyneema Purity® Fiber, Elasthane™ TPU, PurSil® TSPU,UHMWPECoatings: ComfortCoat® coatings, VitroStealth® coatingsDrug delivery systems: Trancerta™ Drug delivery

Manufacturing detailsManufacturing, and Research and Development centers inBerkeley (USA) and Geleen (The Netherlands)Manufacturing center in Greenville (USA)

Technologyc-GMP manufacturingWide range of materials and coatings technologies

Key raw materials / IntermediatesHighly diverse set of various raw materialsRaw materials are a minor element in the knowledge basedoffering by DSM Biomedical

Main capex plannedCompletion and validation of new Dyneema Purity® manufac-turing line in USA

Innovation strategyDSM Biomedical aims to complement cross companycompetences through open innovation:

Partnerships with key customersResearch alliances and cooperationsLicensing/venturingScientific Advisory Board

Key innovationsComfortCoat® coatings - These coatings include innovativeHydrophilic and two types of anti-microbial coatings(silverbased and hemocompatible) that can help improvepatient comfort and care.

Bionate® II PCU - This thermoplastic polycarbonateurethane is an industry-leading medical grade polymer foruse in long-term implants and is backed by an establishedFDA Master File.

Dyneema Purity® fiber - the Ultra High Molecular WeightPolyethylene fiber is a superior alternative to traditionalmaterials in the orthopedic and cardiovascular fields, 15times stronger than quality steel with a lower profile, soft-ness and abrasion resistance, the fiber is also available asDyneema Purity® BLUE, the first 100% colored implantablegrade UHMWPE fiber.

Trancerta™ Drug delivery - a unique drug & biologicsdelivery system that is non-inflammatory and allows forgreater control over the rate and duration of release of thetherapeutic payload.

42

Sustainable, innovative global supply chains in Life Sciences& Materials Sciences are vital as we strive to reach our stra-tegic ambitions and realize our brand promise. The need forlong-lasting and meaningful relationships with key suppliers isbecoming more important every day – for sustainability, forinnovation, and for effective risk management. Our purchas-ing organization’s mission is therefore to connect customerneeds with supplier solutions. By doing this, we extend thevalue chain to our suppliers, so that they truly contribute tovalue creation and support our competitiveness in areas suchas:

SustainabilityInnovationBusiness growth, especially in High Growth EconomiesSecurity and quality of supplyNew business models and strategic alliancesCash management and cost control

Sustainability and supplier conductWe collaborate with our suppliers as a central way to help usachieve our sustainability goals and set our sustainabilityagenda for the years to come. DSM’s Supplier SustainabilityProgram is comprised of two main elements – compliance(supplier conduct) and business opportunities (supplier solu-tions). It has also helped make us a consistent winner in theDow Jones Sustainability World Index. The program involves athree-step approach with a Code of Conduct (covering > 90%of our external spend), supplier self-assessment question-naires and supplier audits for large or high-risk suppliers. Inaddition we increasingly work with our suppliers to developnew ways to achieve our sustainability and innovation goals.For example, we substitute oil-based raw materials with re-newable resources, and we have increased our use of renew-able energy.

Supplier managementOur selection criteria for suppliers include, but are not lim-ited to, the following capabilities:

Business commitment: their level of strategic alignment,resource allocation, innovation and commitment to priceand cost reductionSecurity of supply: whether a supplier has delivered ontime and has put supply assurance systems in placeSustainability: whether they comply with a code of con-duct, and contribute to sustainable solutions for the valuechainQuality assurance: whether they conduct quality perform-ance for products, services and documentation, and whattheir response is to non-performance

We work with our suppliers to continuously improve our rela-tionship and performance by:

Managing key supplier relationships to better utilize thetrue capabilities of our most important suppliersUsing our supplier development program to develop thesupplier’s true strategic capabilityConducting regular supplier performance evaluationsExpecting suppliers to conduct their activities inaccordance with our Supplier Code of Conduct andpurchase conditions

Sourcing / PurchasingAbout purchasingPurchasing is a globally-operating functional group that consistsof a central DSM Sourcing unit and Business Group Purchasingdepartments, under the leadership of the Chief Purchasing Offi-cer. We distinguish two spend areas:

Chemicals & Utilities, which are the majority of thenecessary building blocks for the vast range of DSM productsIndirect Goods & Services, which cover the most diverserange of purchasing needs for DSM that are not directlyprocessed in our products (Facility Goods & Services, ICT,Physical Distribution, Technical Goods & Services)

The Purchasing organization’s mission is to connect customerneeds with supplier solutions. With in-depth knowledge of sup-ply markets and close collaboration with our businesses andsuppliers, our Purchasing professionals bring supplier capabili-ties to DSM in an efficient and transparent way. We ensure thebest value by balancing quality of supply, price and risk man-agement (Total Cost of Ownership), and we actively contributeto differentiated business strategies and goals for sustainabil-ity, innovation and ‘asset lite’ (capital efficiency).

Our matrix organization aims for world-wide collaboration be-tween all Purchasing employees fully integrated in our busi-nesses. We emphasize a professional, collaborative, challengingand trustworthy approach, which creates competitive advan-tages by getting the most possible value from our supplier rela-tionships.

External spend

DSM's external spend in 2010 was € 6.5bn including the nowdivested Base Chemicals & Materials cluster (€ 5.6bn for con-tinuing business). The new DSM Life Sciences and Materials Sci-ences spend is almost 10% less oil sensitive than the formerspend.

Purchasing spend distribution

for continuing businessHighly oil dependant

Utilities/energy

Low/moderate oil dependant

Inorganics

Indirect

Natural products

43

DSM has a decentralized organizational structure built aroundbusiness groups that are empowered to carry out all short-termand long-term business functions. At the operational level, thebusiness groups are the primary organizational and entrepre-neurial building blocks. The business groups are grouped intoclusters. Business groups within a cluster report to one memberof the Managing Board. The clusters are the main entities forexternal strategic and financial reporting.

This structure ensures a flexible, efficient and fast response tomarket changes. DSM has a number of functional and regionalorganizations to support the Managing Board and the businessgroups. Intra-group product supplies and the services of a num-ber of shared service departments and research departmentsare contracted by the business groups on an arm's length basis.

Koninklijke DSM N.V. (Royal DSM) is a company limited byshares listed on NYSE Euronext, with a Managing Board and anindependent Supervisory Board. Members of the ManagingBoard and the Supervisory Board are appointed (and, if neces-sary, dismissed) by the General Meeting of Shareholders.

The Managing Board is responsible for the company's strategy,its portfolio policy, the deployment of human and capital re-sources, the company’s risk management system and the com-pany's financial performance.

The Supervisory Board supervises the policy pursued by theManaging Board, the Managing Board's performance of its mana-gerial duties and the company's general course of affairs, takingaccount of the interests of all the company's stakeholders. Theannual financial statements are approved by the SupervisoryBoard and then submitted for adoption to the Annual GeneralMeeting of Shareholders, accompanied by an explanation by theSupervisory Board of how it carried out its supervisory dutiesduring the year concerned.

The company is governed by Dutch law and its Articles of Asso-ciation, which can be consulted at the DSM website(www.dsm.com). The General Meeting of Shareholders decideson an amendment to the Articles of Association by an absolutemajority of the votes cast. A decision to amend the Articles ofAssociation may only be taken at the proposal of the ManagingBoard, subject to approval of the Supervisory Board.

Organization

The DSM Managing Board (from left to right): Rolf-Dieter Schwalb, Feike Sijbesma (chairman/CEO), Stephan Tanda and Nico Gerardu,

http://www.dsm.com)./

44

Supervisory Board

Organization

Cor Herkströter (1937, m), chairman. First appointed: 2000. End of current term: 2012.Position: retired; last position held: President of Koninklijke Nederlandsche Petroleum Maatschappij N.V. andchairman of the Committee of Managing Directors of Royal Dutch/Shell Group.Nationality: Dutch.Supervisory directorships and other positions held: chairman of the Advisory Committee of Royal NIVRA, mem-ber of the Capital Market Committee (Netherlands Authority for the Financial Markets), member of the Advi-sory Council of Robert Bosch, Emeritus Professor of International Management at the University of Amsterdam.

Ewald Kist (1944, m), deputy chairman. First appointed: 2004. End of current term: 2012.Position: retired; last position held: chairman of the Managing Board of the ING Group.Nationality: Dutch.Supervisory directorships and other positions held: member of the Supervisory Boards of De NederlandscheBank N.V., Royal Philips Electronics N.V., Stage Entertainment and Moody’s Investor Services, member of theBoard of Governors of the Peace Palace in The Hague (Netherlands) and member of the Executive Board of theJohan Cruyff Foundation

Pierre Hochuli (1947, m). First appointed: 2005. End of current term: 2013.Position: retired; last position held: Chairman of the Board of Directors of Devgen N.V.Nationality: Swiss.Supervisory directorships and other positions held: member of the Board of Directors of Domes of Silence Hold-ings Ltd.

Claudio Sonder (1942, m). First appointed: 2005. End of current term: 2013.Position: retired; last position held: chairman of the Managing Board of Celanese.Nationality: Brazilian and German.Supervisory directorships and other positions held: chairman of the Board of Lojas Renner S.A., member of theSupervisory Boards of Companhia Suzano de Papel e Celulose S.A., RBS S.A. Media Group, and Hospital AlbertEinstein, Executive Vice President of Suzano Holding S.A.Cyrela Brazil Realty S.A.OGX S.A.

Tom de Swaan (1946, m). First appointed: 2006. End of current term: 2014.Position: retired; last position held: member of the Managing Board and Chief Financial Officer / Chief RiskOfficer ABN AMRO.Nationality: Dutch.Supervisory directorships and other positions held: nonexecutive director of the Board of GlaxoSmithKline Plcand of the Board of Zurich Financial Services, chairman of the Supervisory Board of Van Lanschot Bankiers N.V.,vice chairman of the Supervisory Board of Royal Ahold N.V., board member of Royal Concertgebouw Orchestraand member of the Board of Trustees of Netherlands Cancer Institute-Antoni van Leeuwenhoek Hospital.

Rob Routs (1946, m). First appointed: 2010. End of current term: 2014.Position: retired; last position held: Executive Director Downstream and member of the Board of Royal DutchShell plcNationality: Dutch.Supervisory directorships and other positions held: chairman of the Supervisory Board of Aegon N.V., memberof the Supervisory Board of Royal KPN N.V., member of the Board of Directors of Canadian Utilities Ltd., A.P.Moeller-Maersk Group and UPM-Kymmene Corporation.

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Managing Board

Feike Sijbesma (Dutch) studied medical biology at the University of Utrecht and business administrationat Erasmus University in Rotterdam. In 1987, he joined the Industrial Pharmaceuticals division of Gist-brocades, where he was responsible for strategic planning and business development. From 1990 to 1993,he was the division’s Marketing and Sales Director. Thereafter he was given leadership of Savoury Ingredi-ents, later on a business unit of Gist-brocades’ Food Specialties Division. In 1995, he was made director ofthat division and joined Gist-brocades’ Executive Committee. Following the acquisition by DSM in 1998 hebecame Director of DSM Food Specialties business group. In 2000, Mr. Sijbesma joined DSM’s ManagingBoard of Directors. He became Chairman of the Managing Board and CEO in 2007.

Feike Sijbesma received the United Nations Humanitarian of the Year Award in 2010.

Nico Gerardu (Dutch) studied Chemistry at the Eindhoven University of Technology (Netherlands) andBusiness Administration at Hasselt University (Belgium). He started his career with DSM in 1975 as Chemi-cal Engineer in DSM’s Engineering Department. He held a number of management positions in variousparts of DSM (Stamicarbon, Plastic Products Division, Polymers Division and DSM Andeno). In 1996 he wentto Linz (Austria) as Business Unit Director DSM Chemie Linz in Austria. From 2000 till January 2006 he wasBusiness Group Director DSM Anti-Infectives in Delft, the Netherlands. Mr. Gerardu became a member ofthe Managing Board of Directors in 2006. His prime business responsibilities are the Performance Materi-als, Polymer Intermediates and Base Chemicals and Materials clusters.

Rolf-Dieter Schwalb (German) studied Mathematics and Business Administration at the University of Gies-sen, Germany. In 1976 he joined Procter & Gamble Germany, where, over a period of 15 years, he heldvarious positions in the IT and Finance disciplines, including that of Controller of Procter & Gamble Ger-many. In 1991 Mr. Schwalb joined the European Headquarters of Procter & Gamble in Brussels, Belgium,where he was responsible for the planning and controlling of all European activities. Mr. Schwalb joinedBeiersdorf AG in Hamburg, Germany, in 1994. He took on the responsibility of Division Controller and laterthat of Manager Corporate Accounting/Controlling Beiersdorf AG. In October 2000 he was appointed CFOand Member of the Executive Board of Beiersdorf AG. In October 2006, Mr. Schwalb was appointed asmember of the Managing Board and CFO of DSM.

Stephan Tanda (Austrian) studied polymer engineering at the University of Leoben, Austria, and BusinessAdministration at the Wharton Business School of the University of Pennsylvania, USA. Stephan started hiscareer in 1991 with DuPont in Switzerland. After assignments in Finance and Operations with DuPont inthe USA, he was appointed Global Business Director, based In Luxembourg. In 1998 Mr. Tanda becameDirector Corporate Planning and later Vice President Strategic Planning & New Business Development Agri-culture, Nutrition and Bio-Based Materials. In 2000 he was appointed President of Protein TechnologiesInternational, Inc. and later President and CEO of The Solae Company. In 2004 Stephan was appointedPresident and CEO of Freudenberg Nonwovens, a global group of industrial businesses, based in Weinheim,Germany, and Durham, USA. In 2007, Mr. Tanda joined the Managing Board of DSM. His prime businessresponsibilities are the Nutrition and Pharma clusters.

46

History of the companyThere are few companies, and even fewer successful chemicalcompanies, with a history to match that of DSM: companiesthat have changed so much over time, reinvented themselvesand repeatedly adjusted to changing circumstances while ful-filling the promises to their stakeholders.

In 1902, the Dutch government formed the coal mining com-pany ‘De Nederlandse Staatsmijnen' (Dutch State Mines), laterrenamed DSM. As the mining operation grew, so did the com-pany's coal-processing operation. A by-product of this opera-tion, coke oven gas, was converted into ammonia, an importantintermediate for a number of chemicals, including nitrogenousfertilizers.

In the 1950s, chemical products became more prominent. DSMstarted focusing on providing industrial chemicals and raw ma-terials for synthetic fibers and yarns.

In 1965, the Dutch government decided to close down the coalmining activities in the Netherlands. In 1975, the country's lastmine was closed. Fortunately, DSM had anticipated this and hadchanged its focus before that time.

By 1970 chemicals and fertilizers comprised the company'smain activities, accounting for two-thirds of its turnover. In the1970s and '80s DSM underwent major reorganizations to ensuresufficient scale and to diversify into high-quality plastics andfine chemicals.

After 1985, DSM developed a series of ambitious innovationprojects resulting in specialties such as the polyethylene fiberDyneema®, the World’s strongest fiber™.

In 1989, DSM was privatized and listed publicly.During the 1990s, the company paid greater attention to creat-ing a balance between commerce and research and developingvalue-adding processes and products, particularly products forthe pharmaceutical and the food industries and performancematerials for the automotive and transport industry and theelectrical and electronics sector.

In 1998 DSM acquired Gist-Brocades and its divisions were inte-grated into the DSM Life Science Products cluster.

In 2002 DSM completed the sale of its petrochemicals businessin anticipation of future market movements. This was followedby the acquisition of Roche's Vitamins & Fine Chemicals Divisionin October 2003, which was subsequently renamed DSM Nutri-tional Products.

Recent history 2005— 20102005

Acquisition of NeoResinsSale of DSM Bakery Ingredients to Gilde Investment Mana-gementNew DSM strategy towards 2010: accelerate growth,innovation, portfolio quality

History2006

DSM sells iodine business to Sociedad Química y Minera deChile (SQM)Holland Sweetener Company exits from aspartame businessDSM strengthens position in weight management byacquiring Lipid Technologies Provider AB

2007DSM acquired Pentapharm Holding Ltd.DSM announces new breakthrough polymerDSM NeoResins+ completes new factory for waterbornealkyd resins in Hoek van HollandDSM announces plans to accelerate its focus on Life Sciencesand Materials Sciences and divest all non-core businesses by2010

2008DSM acquires American specialty-resins producer SoluolDSM completes acquisition of The Polymer TechnologyGroup Inc.DSM doubles Stanyl® capacity with opening of new plant inGeleenDSM to sell Solutech to Lydall, Inc.

2009Opening of DSM China CampusDSM celebrates twenty years as a listed companyDSM opens new factory for waterborne acrylic resins inWaalwijkDSM and NCPC sign contracts to establish nutrition and anti-infectives joint ventures in ChinaDSM acquires Biopract in GermanyDSM first company to endorse the 'Roadmap to End GlobalHunger'DSM sells urea-licensing business (Stamicarbon) to MaireTecnimontDSM sells DSM Energy to TAQA

2010DSM sells DSM Agro and DSM Melamine to OrascomConstruction Industries (OCI)DSM sells Sarlink® unit to Teknor ApexDSM sells Citrique Belge to AdcuramDSM finalizes portfolio transformation and enters era offocused growthDSM to complete divestment program through sale of DSMElastomers (Keltan®)DSM completes sale of DSM Special Products to EmeraldPerformance MaterialsDSM to form global anti-infectives joint venture withSinochem GroupDSM to acquire Martek to add new Nutrition growth platform

47

Five-year summary

48

Five-year summary

50

DisclaimerDISCLAIMER

This document may contain forward-looking statements with respect to DSM's future (financial) performance and position. Suchstatements are based on current expectations, estimates and projections of DSM and information currently available to the com-pany.

Examples of forward-looking statements include statements made or implied about the company’s strategy, estimates of salesgrowth, financial results, cost savings and future developments in its existing business as well as the impact of future acquisitions,and the company’s financial position. These statements can be management estimates based on information provided by special-ized agencies or advisors.

DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore itshould be understood that many factors can cause the company's actual performance and position to differ materially from thesestatements.

These factors include, but are not limited to, macro-economic, market and business trends and conditions, (low-cost) competition,legal claims, the ability to protect intellectual property, changes in legislation, changes in exchange and interest rates, changes intax rates, pension costs, raw material and energy prices, employee costs, the implementation of the company’s strategy, the com-pany’s ability to identify and complete acquisitions and to successfully integrate acquired companies, the company’s ability torealize planned disposals, savings, restructuring or benefits, the company’s ability to identify, develop and successfully commer-cialize new products, markets or technologies, economic and/or political changes and other developments in countries and mar-kets in which DSM operates.

As a result, DSM’s actual future performance, position and/or financial results may differ materially from the plans, goals and ex-pectations set forth in such forward-looking statements.

DSM has no obligation to update the statements contained in this document, unless required by law. The English language versionof this document is leading.

A more comprehensive discussion of the risk factors affecting DSM’s business can be found in the company’s latest Annual Report,a copy of which can be found on the company's corporate website, http://www.dsm.com

http://www.dsm.com/

DSM Investor RelationsP.O. Box 6500, 6401 JH HeerlenThe NetherlandsTel: +31 45 578 2864Fax: +31 10 459 0275Email: [email protected]

DSM Media RelationsP.O. Box 6500, 6401 JH HeerlenThe NetherlandsTel: +31 45 578 2421Fax: +31 45 574 0680E-mail: [email protected]

mailto:[email protected]

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