Annual Review 2010
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Cautionary statement regarding forward-
looking statements: This document contains
forward-looking statements, which can be
identified by terminology such as “expect”,
“would”, “will”, “potential”, “plans”, “prospects”,
“estimated”, “aiming”, “on track” and similar
expressions. Such statements may be subject
to risks and uncertainties that could cause
the actual results to differ materially from
these statements.
We refer you to Syngenta’s publicly available
filings with the US Securities and Exchange
Commission for information about these and
other risks and uncertainties. Syngenta
assumes no obligation to update forward-
looking statements to reflect actual results,
changed assumptions or other factors.
This document does not constitute, or form
part of, any offer or invitation to sell or issue,
or any solicitation of any offer, to purchase or
subscribe for any ordinary shares in Syngenta
AG, or Syngenta ADSs, nor shall it form the
basis of, or be relied on in connection with,
any contract therefor.
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
® Registered trademarks of a Syngenta
Group Company
™ Trademarks of a Syngenta Group Company
The SYNGENTA Wordmark, BRINGING
PLANT POTENTIAL TO LIFE and the Purpose
icon device are trademarks or registered
trademarks of a Syngenta Group Company.
Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016841.040
Syngenta
Annual Review 2010
Annual Review 2010
Syngenta is one of the world’s leading
companies with more than 26,000 employees
in over 90 countries dedicated to our purpose:
Bringing plant potential to life. With our innovation
in Crop Protection and Seeds, we contribute to
addressing global challenges.
Contents
Overview
Contributing to
food security
Our offer
Addressing
growers’ needs
Creating our offer
Governance
and financials
i Strategic imperatives
ii Group performance
01 Business highlights
02 Chairman’s letter
04 Chief Executive Officer’s letter
07 A global challenge
08 Sustainable production systems for agriculture
09 Grow more from less
10 Better solutions for the farmer of the future
11 Increasing resource efficiency
12 Strengthening rural economies
14
Integrated solutions for today’s farmer
17 Corn
19 Soybean
20 Cereals
21 Rice
22 Sugar cane
23 Oilseeds and sugar beet
24 Vegetables
25 Lawn and Garden
27 Research and Development
30 People
32 Operations
35 Crop Protection product line performance
37 Seeds product line performance
38 Board of Directors
40 Executive Committee
42 Financial information
50 Corporate Responsibility performance summary
54 Shareholder information
Annual Review 2010
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w
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R
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u
n
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A
a
t
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g
n
y
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Cautionary statement regarding forward-
looking statements: This document contains
forward-looking statements, which can be
identified by terminology such as “expect”,
“would”, “will”, “potential”, “plans”, “prospects”,
“estimated”, “aiming”, “on track” and similar
expressions. Such statements may be subject
to risks and uncertainties that could cause
the actual results to differ materially from
these statements.
We refer you to Syngenta’s publicly available
filings with the US Securities and Exchange
Commission for information about these and
other risks and uncertainties. Syngenta
assumes no obligation to update forward-
looking statements to reflect actual results,
changed assumptions or other factors.
This document does not constitute, or form
part of, any offer or invitation to sell or issue,
or any solicitation of any offer, to purchase or
subscribe for any ordinary shares in Syngenta
AG, or Syngenta ADSs, nor shall it form the
basis of, or be relied on in connection with,
any contract therefor.
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
® Registered trademarks of a Syngenta
Group Company
™ Trademarks of a Syngenta Group Company
The SYNGENTA Wordmark, BRINGING
PLANT POTENTIAL TO LIFE and the Purpose
icon device are trademarks or registered
trademarks of a Syngenta Group Company.
Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016841.040
Syngenta
Annual Review 2010
Annual Review 2010
Syngenta is one of the world’s leading
companies with more than 26,000 employees
in over 90 countries dedicated to our purpose:
Bringing plant potential to life. With our innovation
in Crop Protection and Seeds, we contribute to
addressing global challenges.
Contents
Overview
Contributing to
food security
Our offer
Addressing
growers’ needs
Creating our offer
Governance
and financials
i Strategic imperatives
ii Group performance
01 Business highlights
02 Chairman’s letter
04 Chief Executive Officer’s letter
07 A global challenge
08 Sustainable production systems for agriculture
09 Grow more from less
10 Better solutions for the farmer of the future
11 Increasing resource efficiency
12 Strengthening rural economies
14
Integrated solutions for today’s farmer
17 Corn
19 Soybean
20 Cereals
21 Rice
22 Sugar cane
23 Oilseeds and sugar beet
24 Vegetables
25 Lawn and Garden
27 Research and Development
30 People
32 Operations
35 Crop Protection product line performance
37 Seeds product line performance
38 Board of Directors
40 Executive Committee
42 Financial information
50 Corporate Responsibility performance summary
54 Shareholder information
Syngenta
Annual Review 2010
Strategic imperatives
Group performance
i
Creating superior value
for our customers
and delivering
strong performance
Integrate
We are bringing together our world leading
Crop Protection portfolio and our broad Seeds
platform to develop a fully integrated offer on a
global crop basis.
Engagement
We aim to create shared value for
all our stakeholders through fostering
partnerships and open dialogue.
Group sales1
Crop Protection sales1,2
Seeds sales1
2010
2009
2008
11.64
10.99
11.62
2010
2009
2008
8.88
8.49
9.23
2010
2009
2008
2.80
2.56
2.44
$11.6bn +4% (CER)
$8.9bn +3% (CER)
$2.8bn +8% (CER)
Innovate
Business ethics
Earnings per share3
Free cash flow4
Dividend per share5
We will harness our knowledge of agriculture
and our understanding of growers to deliver
game-changing technologies which will drive
land productivity.
Our code of conduct commits us to maintain
high ethical standards in all business practices,
and we promote a culture of transparency.
2010
2009
2008
$16.44
16.44
16.15
16.40
+2%
2010
2009
2008
1,129
528
729
2010
2009
2008
$1,129m
+114%
CHF7.00
7.00
6.00
6.00
+17%
Outperform
Health, safety and environment
Number of farmers trained
Nationalities in senior management
Our aim is to gain market share across our
combined businesses and to create value
for our shareholders by first creating value
for our customers.
We are committed to the highest safety and
environmental standards for the production,
handling and disposal of our products, and
we support our business partners in adopting
comparable standards.
2010
2009
2008
4.3m
CO2e emissions
2010
2009
2008
4.3
3.9
2.4
0.66
0.76
0.75
2010
2009
2008
24
Illness and injury rate6
2010
2009
2008
24
24
22
0.39
0.42
0.50
Read more about our strategy in the
Chief Executive Officer’s letter on page 4
0.66
CO2e kg /$EBIT
0.39
1 Growth at constant exchange rates (CER)
2 Including inter-segment sales
3 Fully diluted excluding restructuring
and impairment
4 For a definition of free cash flow see page 48
5 Subject to shareholder approval at the Annual
General Meeting on April 19, 2011
6 Recordable injury and illness rate (IIR) per
200,000 hours according to US OHSA definition
Syngenta
Annual Review 2010
Independent Assurance Report on the
Syngenta Corporate Responsibility Reporting
To the Head of Legal and Taxes, Syngenta
International AG, Basel (‘Syngenta’):
Main Assurance Procedures
Our assurance procedures included the following work:
55
We have performed assurance procedures to provide
assurance on the following aspects of the 2010
Corporate Responsibility (CR) reporting of Syngenta.
– Evaluation of the application of group guidelines
Reviewing the application of the Syngenta internal
HSE and CCI reporting guidelines;
Subject matter
Data and information disclosed with the CR reporting
of Syngenta and its consolidated subsidiaries, for the
financial year ended December 31, 2010 on the
following aspects:
– The application of the Syngenta internal Health,
Safety and Environment (HSE) and Corporate
Community Investment (CCI) reporting guidelines to
the CR reporting;
– The internal reporting system and procedures,
including the control environment, to collect and
aggregate CR data; and
– The CR Performance Summary disclosed on pages
– Site visits
Visiting the regional site of Syngenta’s Crop
Protection and Seeds Business Units in Singapore
and two selected sites of Syngenta’s Seeds
Business Unit in Thailand. The selection was based
on quantitative and qualitative criteria;
Interviewing personnel responsible for internal
reporting and data collection at the sites we visited
and at the Group level;
– Assessment of the performance indicators
Performing tests on a sample basis of evidence
supporting the CR Performance Summary relative to
completeness, accuracy, adequacy and consistency;
50 to 53 of the Syngenta Annual Review 2010.
– Review of the documentation
Our assurance procedures do not cover the indicator
on Salaries in the Performance Summary on page 51
of the Annual Review.
Criteria
– The Syngenta internal Health, Safety and
Environment (HSE) and Corporate Community
Investment (CCI) reporting guidelines; and
– The defined procedures by which the CR data are
gathered, collated and aggregated internally.
Responsibility and Methodology
The accuracy and completeness of CR performance
indicators are subject to inherent limitations given their
nature and methods for determining, calculating and
estimating such data. Our assurance report should
therefore be read in connection with Syngenta’s
internal guidelines, definitions and procedures on
the reporting of its CR performance.
The Board of Directors of Syngenta is responsible
for both the subject matter and the criteria. Our
responsibility is to provide a conclusion on the subject
matter based on our assurance procedures in
accordance with the International Standard on
Assurance Engagements (ISAE) 3000.
Reviewing the relevant documentation on a sample
basis, including management and reporting
structures and documentation;
– Assessment of the processes and data consolidation
Reviewing the appropriateness of the management
and reporting processes for CR reporting; and
Assessing the consolidation process of data at the
Group level.
Conclusions
In our opinion
– The internal HSE and CCI guidelines are being
applied properly; and
– The internal reporting system and procedures to
collect and aggregate CR data are functioning as
designed and provide an appropriate basis for its
disclosure.
Based on our work described in this report, nothing
has come to our attention that causes us to believe
that the data and information mentioned in the subject
matter and disclosed with the Corporate Responsibility
reporting in the Syngenta Annual Review 2010 does
not give a fair picture of Syngenta’s performance in the
area of Corporate Responsibility.
PricewaterhouseCoopers AG
Zurich, February 11, 2011
Dr. Thomas Scheiwiller
David Pritchett
Syngenta
Annual Review 2010
Strategic imperatives
Group performance
i
Creating superior value
for our customers
and delivering
strong performance
Integrate
We are bringing together our world leading
Crop Protection portfolio and our broad Seeds
platform to develop a fully integrated offer on a
global crop basis.
Engagement
We aim to create shared value for
all our stakeholders through fostering
partnerships and open dialogue.
Group sales1
Crop Protection sales1,2
Seeds sales1
2010
2009
2008
11.64
10.99
11.62
2010
2009
2008
8.88
8.49
9.23
2010
2009
2008
2.80
2.56
2.44
$11.6bn +4% (CER)
$8.9bn +3% (CER)
$2.8bn +8% (CER)
Innovate
Business ethics
Earnings per share3
Free cash flow4
Dividend per share5
We will harness our knowledge of agriculture
and our understanding of growers to deliver
game-changing technologies which will drive
land productivity.
Our code of conduct commits us to maintain
high ethical standards in all business practices,
and we promote a culture of transparency.
2010
2009
2008
$16.44
16.44
16.15
16.40
+2%
2010
2009
2008
1,129
528
729
2010
2009
2008
$1,129m
+114%
CHF7.00
7.00
6.00
6.00
+17%
Outperform
Health, safety and environment
Number of farmers trained
Nationalities in senior management
Our aim is to gain market share across our
combined businesses and to create value
for our shareholders by first creating value
for our customers.
We are committed to the highest safety and
environmental standards for the production,
handling and disposal of our products, and
we support our business partners in adopting
comparable standards.
2010
2009
2008
4.3m
CO2e emissions
2010
2009
2008
4.3
3.9
2.4
0.66
0.76
0.75
2010
2009
2008
24
Illness and injury rate6
2010
2009
2008
24
24
22
0.39
0.42
0.50
Read more about our strategy in the
Chief Executive Officer’s letter on page 4
0.66
CO2e kg /$EBIT
0.39
1 Growth at constant exchange rates (CER)
2 Including inter-segment sales
3 Fully diluted excluding restructuring
and impairment
4 For a definition of free cash flow see page 48
5 Subject to shareholder approval at the Annual
General Meeting on April 19, 2011
6 Recordable injury and illness rate (IIR) per
200,000 hours according to US OHSA definition
Syngenta
Annual Review 2010
Independent Assurance Report on the
Syngenta Corporate Responsibility Reporting
To the Head of Legal and Taxes, Syngenta
International AG, Basel (‘Syngenta’):
Main Assurance Procedures
Our assurance procedures included the following work:
55
We have performed assurance procedures to provide
assurance on the following aspects of the 2010
Corporate Responsibility (CR) reporting of Syngenta.
– Evaluation of the application of group guidelines
Reviewing the application of the Syngenta internal
HSE and CCI reporting guidelines;
Subject matter
Data and information disclosed with the CR reporting
of Syngenta and its consolidated subsidiaries, for the
financial year ended December 31, 2010 on the
following aspects:
– The application of the Syngenta internal Health,
Safety and Environment (HSE) and Corporate
Community Investment (CCI) reporting guidelines to
the CR reporting;
– The internal reporting system and procedures,
including the control environment, to collect and
aggregate CR data; and
– The CR Performance Summary disclosed on pages
– Site visits
Visiting the regional site of Syngenta’s Crop
Protection and Seeds Business Units in Singapore
and two selected sites of Syngenta’s Seeds
Business Unit in Thailand. The selection was based
on quantitative and qualitative criteria;
Interviewing personnel responsible for internal
reporting and data collection at the sites we visited
and at the Group level;
– Assessment of the performance indicators
Performing tests on a sample basis of evidence
supporting the CR Performance Summary relative to
completeness, accuracy, adequacy and consistency;
50 to 53 of the Syngenta Annual Review 2010.
– Review of the documentation
Our assurance procedures do not cover the indicator
on Salaries in the Performance Summary on page 51
of the Annual Review.
Criteria
– The Syngenta internal Health, Safety and
Environment (HSE) and Corporate Community
Investment (CCI) reporting guidelines; and
– The defined procedures by which the CR data are
gathered, collated and aggregated internally.
Responsibility and Methodology
The accuracy and completeness of CR performance
indicators are subject to inherent limitations given their
nature and methods for determining, calculating and
estimating such data. Our assurance report should
therefore be read in connection with Syngenta’s
internal guidelines, definitions and procedures on
the reporting of its CR performance.
The Board of Directors of Syngenta is responsible
for both the subject matter and the criteria. Our
responsibility is to provide a conclusion on the subject
matter based on our assurance procedures in
accordance with the International Standard on
Assurance Engagements (ISAE) 3000.
Reviewing the relevant documentation on a sample
basis, including management and reporting
structures and documentation;
– Assessment of the processes and data consolidation
Reviewing the appropriateness of the management
and reporting processes for CR reporting; and
Assessing the consolidation process of data at the
Group level.
Conclusions
In our opinion
– The internal HSE and CCI guidelines are being
applied properly; and
– The internal reporting system and procedures to
collect and aggregate CR data are functioning as
designed and provide an appropriate basis for its
disclosure.
Based on our work described in this report, nothing
has come to our attention that causes us to believe
that the data and information mentioned in the subject
matter and disclosed with the Corporate Responsibility
reporting in the Syngenta Annual Review 2010 does
not give a fair picture of Syngenta’s performance in the
area of Corporate Responsibility.
PricewaterhouseCoopers AG
Zurich, February 11, 2011
Dr. Thomas Scheiwiller
David Pritchett
Business highlights
Syngenta
Annual Review 2010
01
Advancing solutions
for Brazilian growers
Record sales
of AMISTAR®
In April, Syngenta entered into a long-term multi-crop
partnership with Embrapa, the Brazilian Agricultural
Research Corporation, to advance solutions for Brazilian
growers to improve crop quality and yield. The initial
focus will be on corn, cotton and soybean.
In May we opened new capacity for azoxystrobin, the
active ingredient used in our leading fungicide AMISTAR®.
Immediate demand for the increased production was
reflected in sales growth for the year of 20 percent (CER).
Isopyrazam – next
generation fungicide
Isopyrazam was launched on barley in the UK in March
and on wheat in New Zealand in July. It is the first in
a new class of next generation fungicides and sets
new standards of disease control and yield response.
Sustainable Agroecosystems
professorship
Syngenta announced in November that it will donate
CHF 10 million to the ETH Zürich Foundation to finance
a new professorship and associated research staff.
The professorship aims to advance science, education
and public dialogue related to sustainable agriculture
and food security.
Breakthrough corn
trait technology
Syngenta celebrates
10 years
AGRISURE VIPTERA™, with a new mode of action
for broad spectrum insect control, was launched in
the USA in time for the 2011 growing season. Field
trials of trait stacks containing AGRISURE VIPTERA™
showed a clear advantage over competing products.
CEO Mike Mack rang the closing bell on Wall Street on
November 12 to celebrate the anniversary of Syngenta’s
creation and of the Company’s first listing on the New York
Stock Exchange. Over the last 10 years, Syngenta has
become one of the world’s leading companies with
a fivefold increase in market capitalization.
Substantial dividend
increase
Syngenta Photo
Prize 2010
In 2010 the company generated record free cash flow
of $1.1 billion. We are proposing a 17 percent increase
in the dividend, from CHF6.00 to CHF7.00.
The Syngenta Photo Prize 2010 competition recognized
outstanding photography with the theme “Bringing plant
potential to life”. Winners from around the world were
announced on November 16 at a special exhibition in
Basel, Switzerland.
Syngenta
Annual Review 2010
Chairman’s letter
02
Meeting
the
challenge
“The central facts are these: every year the planet
has 80 million more mouths to feed; population
growth is overwhelmingly in the emerging markets;
and by 2050 over 70 percent of the world’s
population will live in urban areas.”
1.
2.
As the dust settled after the financial crisis of 2009,
it became clear that the economic center of gravity
had shifted markedly to the so-called developing
countries of Latin America and Asia. The acceleration
of this long-term, structural change was particularly
notable in agriculture where growth in emerging
markets significantly outpaced the advanced markets
of North America and Western Europe. Syngenta
was extremely well placed to capture these growth
opportunities and capitalized on the investments
made in these regions over the past few years.
The inexorable growth in productivity, population
and prosperity in these countries led, in part, to
the upward pressure on global commodity prices,
including staple food crops. In addition, drought in
Russia led to an export ban on wheat which propelled
the price significantly higher in the second half of
the year. Supply concerns in corn and soybean
compounded the problem such that grain prices
ended the year some 50 percent higher than they were
at the end of 2009. This, once again, caused concern
amongst policy makers and other stakeholders and
reignited the debate about global food security.
The central facts are these: every year the planet has
80 million more mouths to feed; population growth
is overwhelmingly in the emerging markets; and by
2050 over 70 percent of the world’s population will
live in urban areas. The one variable that will not grow,
however, is the planet’s natural resources – these are
finite and in some cases actually shrinking. The key
question, therefore, is how to address this apparently
insoluble problem?
The answer lies in innovation and collaboration.
Innovation in bringing new technologies and business
models to life, and collaboration between each
member of the food value chain to bring their skills,
resources and capabilities to tackle the problem. At
Syngenta, we believe our unique contribution lies in
innovation through integrating our technologies. By
doing so we believe we can discover products that
have the attributes of enhancing calories produced
per acre; protecting and maximizing the earth’s natural
resources and ensuring that rural communities remain
vibrant and economically viable.
1
2
Speaking at the UNCTAD
World Investment Forum
in Xiamen, China, on
September 7, 2010,
involving global leaders
from many countries
around the world.
Touring field trials carried
out by the Pathumthani Rice
Research Center. The
Syngenta team in Thailand
cooperates closely with
the Department of Rice on
rice productivity.
Syngenta
Annual Review 2010
3.
4.
03
3
At a Flowers exhibition in the
young plant production facility
in De Lier, The Netherlands.
4
Visiting a retailer of Syngenta
products in the Fujian Province,
China. The retailers are the vital
link between the local Syngenta
teams and the growers.
This is an integrated approach from which we are
already seeing tangible results. In Brazil, for example,
our new solution for sugar cane growers, PLENE™,
will fundamentally change how this crop is planted,
grown and harvested. With greatly enhanced yield,
lower water usage and better carbon sequestration
PLENE™ ensures a more productive and sustainable
crop. In addition, through a partnership with industry
association, Unica, we are helping to provide new,
safer and better job opportunities for the workers
who previously toiled in the field in hot and
dangerous conditions.
That partnership was one of many that we forged
during 2010 in order to find novel ways to address
the many challenges of providing food security. Also
in Brazil, we signed a ground-breaking agreement with
Embrapa, the national agricultural research corporation
to share technologies in corn, soybean and cotton
and ensure access to growers both large and small.
In April, we signed a public-private partnership with
the International Maize and Wheat Improvement
Center (CIMMYT) to develop and enhance technology
in wheat. In Asia, we strengthened our partnership
with the International Rice Research Institute (IRRI) in
order to develop the potential of rice across the region.
Finally, in November, we announced a 10-year
collaboration with ETH Zurich to fund research into
sustainable agroecosystems. These agreements point
the way to our increasingly crop and grower-focused
approach to our business, as you see reflected in this
year’s report.
On my visits this year around the world to see our
customers I learned more about the increasingly
complex challenges that they face. My discussions
with them, and also with many Syngenta employees,
underpinned my confidence that the Company is
uniquely placed to offer growers differentiated
products and solutions that address their challenges
both today and in the future.
As well as speaking to our customers, I also met
with numerous other stakeholders around the world.
The contribution that Syngenta makes is increasingly
recognized and our standing and reputation continues
to grow. Our collective reputation rests with the
individual actions and conduct of the more than
26,000 employees around the world. Throughout
2010, our revised Code of Conduct was further
embedded in the organization. Compliance with this
code, in addition to all aspects of legal, ethical, societal
and environmental matters is overseen by the
Corporate Responsibility Committee of the Board.
Ensuring the protection of the Company’s economic,
physical and reputational assets, along with oversight
of the strategic direction and financial performance of
the Company comprise the primary focal points of
the Board of Directors. I am indebted to my Board
colleagues for the diligence and enthusiasm with
which they discharged their duties throughout the year.
2010 marked the tenth anniversary of Syngenta.
The Company has achieved a great deal in those
years. As we look into the future, agriculture has never
been more central to the world’s social, political and
economic development. The production of sufficient
affordable, high quality food is not a given and is reliant
upon innovation. The production of this food in a more
sustainable way will require innovation, collaboration
and a new, holistic way of looking at value creation.
I am pleased to say that Syngenta is at the forefront
of these developments and is well placed to be highly
successful for the next 10 years of its life.
Martin Taylor
Chairman
Syngenta
Annual Review 2010
Chief Executive Officer’s letter
04
Integrating
our offer
Syngenta’s results for 2010 illustrate the transformation
in the scale of the Company since its creation ten years
ago. Sales of $11.6 billion are 84 percent higher and
earnings per share of $16.44 compared with $2.20 in
2001. While agricultural markets have certainly
expanded over the period, these figures also reflect
steady gains in market share and an outstanding
record of innovation. In addition, continuing focus on
operational efficiency has increased profitability while
creating the headroom for investments in strategic
growth areas. Most notably we have expanded our
presence in the emerging markets, which now
account for almost 50 percent of sales.
“The path Syngenta is now pursuing recognizes
the imperative of yield gain but also goes beyond
it, to encompass all the resources involved in
achieving global food security.”
Emerging markets were the main driver of our Crop
Protection business in 2010, enabling us to achieve
growth in sales over the previous year. We achieved
this in the face of a highly competitive pricing
environment, notably in North America, which led to
a reduction in group earnings in the first half. This was
offset by higher operating income in the second half,
with rapid growth in the emerging markets of Asia
Pacific and strong demand in the main season in
Latin America.
In Latin America, we have been attentive to multiple
opportunities across crops in the many countries of
the region, while maintaining our leading position for
soybean in the key Brazilian market. This reflects the
success of PRIORI XTRA®, based on our world
leading fungicide AMISTAR®. Global sales of
AMISTAR® reached $1.2 billion in 2010 with growth
of 20 percent (CER) on the previous year, demonstrating
the excellence in product development which enables
us to maximize product lifecycles and to maintain high
margins on blockbuster products. The opening of
new capacity for AMISTAR® at Grangemouth,
1.
2.
3.
4.
Syngenta
Annual Review 2010
Scotland, in May underpins our expectation of further
substantial growth in the coming years.
launch of PLENE™ on sugar cane in Brazil and the
development of an integrated rice seedling offer in Asia.
05
Seeds registered broad-based growth across all
product lines and all regions. Vegetables and Diverse
Field Crops continued to show steady underlying
growth, supplemented by acquisitions in sugar beet
and sunflower. Industry-leading profitability in both
these product lines is testimony to the depth and
variety of our germplasm pools and to our breeding
expertise. These strengths are also becoming
increasingly apparent in the performance of Corn &
Soybean: in the USA, field trials showed that the
diversity of our corn genetics is now producing yield
outperformance against major competitors. Our triple
stack corn seed reached market penetration levels in
2010 and will be complemented in the 2011 season
by the new trait AGRISURE VIPTERA™, which delivers
unrivalled broad lepidoptera control. The advances
in our portfolio are reflected in a further marked
improvement in Seeds profitability in 2010.
The progress made by Seeds, in both financial and
portfolio terms, gives further impetus to the new
commercial direction we are now formally implementing
worldwide. This strategy is founded on three core
objectives: Integrate, Innovate and Outperform. Our
aim is to bring together Crop Protection and Seeds
to develop a fully integrated offer on a global crop
basis. A first step will be the merging of commercial
operations globally over the next two years, building on
models already successfully introduced in our second
largest market Brazil as well as in a number of smaller
countries. The commercial integration will be overseen
on a regional basis by our two Chief Operating
Officers, who will each have cross-business executive
responsibility for two regions: John Atkin for Europe,
Africa and the Middle East and Latin America, and
Davor Pisk for North America and Asia Pacific. John
and Davor will continue to guide the Crop Protection
and Seeds businesses respectively. They will also
each have global strategic responsibility for four of the
eight major crops in which we will be focusing our
investments over the coming years. We shall at the
same time be investing in our people, to ensure that
we maximize the wealth of experience and talent
which gives us a unique capability to address the
increasing complexity of the challenges facing farmers.
We define innovation in the broadest sense, signifying
new markets and ways of reaching customers as well
as new products. Continuing investment in Research
and Development is inherent in our company purpose
of Bringing plant potential to life and will play a key role
in the delivery of integrated technologies. We are
establishing common R&D platforms based on the
understanding of plants which informs both chemical
and biological solutions. We will increase the return
on R&D through value-adding partnerships and
collaborations, such as the agreement with CIMMYT
signed in April which has as an objective the
combination of crop protection and seeds to enhance
plant performance in wheat. Breakthroughs in the
realization of innovative integrated offers include the
Our aim is to outperform in both operational and
financial terms. We believe that the creation of unique
solutions to meet grower needs will lead to sustained
market share growth across the business. We will
measure financial performance by targeting Cash Flow
Return on Investment in excess of 12 percent and a
group EBITDA margin in the range of 22 to 24 percent
by 2015. We will target a continuous increase in the
dividend with the new higher payout in 2011 as the
starting point.
Syngenta’s new commercial strategy is actually the
culmination of plans and initiatives that have been
underway in the Company for some time. Over the last
12 months I have visited operations in many parts of
the world and have witnessed both the potency of
our portfolio and the energy of our people in bringing
a crop-based offer to market. Examples range from
new technologies for coffee growers in Colombia to
integrated solutions for vegetables in Vietnam. We are
taking the concept of customer relationships to a new
level, by systematically thinking like a grower as he
considers the increasingly complex set of decisions
relating to his crop inputs and how best to integrate
them on the farm to maximize his investment. It is by
imbuing our entire organization with this mindset that
we will create competitive advantage in the future.
The path Syngenta is now pursuing recognizes the
imperative of yield gain but also goes beyond it, to
encompass all the resources involved in achieving
global food security. A recent study by the World
Business Council for Sustainable Development, which
I had the honor of co-chairing, looked at the economic
and resource challenges of sustaining a world population
of 9 billion in 2050. To enable this number of people to
live well and within the limits of the planet, agriculture
must achieve a doubling of world food production
while conserving water and energy. This can only
happen through a holistic and long-term vision of the
way we grow crops. Syngenta is already deploying
an array of tools and expertise to help make this vision
a reality.
On behalf of the Board and the Executive Committee,
I would like to thank all our employees for making
Syngenta what it is today and for bringing the
Company to this exciting stage of its development.
I know that I can count on their energy, enthusiasm
and dedication as we work together to forge a
meaningful contribution to the development of
agriculture worldwide.
Michael Mack
Chief Executive Officer
1
In discussion with Marc Hillard,
Transformation Manager, at
a special exhibition in Basel
that marked the completion
of Syngenta’s capacity
expansion program.
2
Andrés Álvarez, Marketing
Manager Andean, Caribbean &
Central America discusses
coffee growing at La Holanda
plantation in Colombia.
3
Examining the roots of a rice
plant with Huynh Van Thon,
Chairman of AGPPS (An Giang
Plant Protection Service),
Vietnam’s largest distributor.
4
Looking at the different seed
treatment offerings for Flowers
and Vegetable seeds in
Enkhuizen, The Netherlands.
Syngenta
Annual Review 2010
06
Contributing
to food
security
Syngenta
Annual Review 2010
Scarcity of water, energy and land is expected to define food
production in the coming decades. This will increase the existing
pressure on farmers, who are working to meet the world’s needs
for food, fuel and fiber. Demand for food has long exceeded
supply in some regions. Every day, almost 1 billion people go
to bed hungry. With the global population expected to reach
9 billion by 2050, this figure could rise if action is not taken.
07
climate that is changing more rapidly; in many areas,
this will mean higher temperatures and erratic weather
patterns. They will have to contend with limited
availability of land and water – already agriculture uses
40 percent of the world’s land surface and 70 percent
of all available fresh water2. And their agricultural
practices will need to protect biodiversity through
increasing productivity without further expanding into
natural ecosystems.
While great strides have been made, many regions
fall short of producing their full potential of local
crops, and this agricultural yield gap must be closed
to achieve food security. Worldwide, this represents
nearly 500 million farms of 2 hectares or less,
supporting over 2 billion people. Increasing
productivity in these areas is vital to reaching
food security.
Although the challenges ahead are daunting, they are
by no means insurmountable. Agriculture has a major
role to play in opening the way for food security while
protecting precious natural resources and contributing
to rural economic growth.
A global challenge
“ People used the equivalent of 1.5 planets
in 2007 to support their activities.”
The Living Planet Report 2010
World Wildlife Fund (WWF)
The World Food Summit of 1996 defined that food
security exists “when all people, at all times have
access to sufficient, safe, nutritious and affordable
food to maintain a healthy and active life.” To make
this happen, farmers will need to achieve at least a
70 percent increase in food production by 20501.
The journey to food security won’t be easy. Drivers
of food insecurity range from environmental stress
and natural disasters to political and trade issues.
The megatrends of growing population, greater
affluence and urbanization mean that more people
want greater amounts of better quality food.
Yet while demand for food is growing, farmers’ ability
to increase productivity is challenged as never before.
In the coming years, they will have to deal with a
1 FAO, “How to feed the world in 2050”
2 UNESCO
Syngenta
Annual Review 2010
Contributing to food security
08
Sustainable
production systems
for agriculture
In February 2010, Syngenta collaborated with 29
other businesses and the World Business Council for
Sustainable Development (WBCSD) to launch “Vision
2050: The new agenda for business.” This study lays
out a pathway leading to a global population of some
9 billion people living well and within the resource limits
of the planet by 2050. We are contributing to making
this vision a reality by helping farmers produce enough
food for a growing population.
Syngenta takes a system-wide approach to
sustainable agriculture that focuses on the links
between technology, land and people. Strong rural
economies are the keystone of the sustainable
agricultural system and fundamental to achieving food
security. Our technology – combined with supporting
infrastructure, access to markets and financial
resources – enables better solutions for farmers so they
can increase productivity and improve farm profitability.
At the same time, our agricultural solutions can have a
beneficial impact on water, land and biodiversity by
allowing more efficient use of basic natural resources.
Thus, agricultural technologies enable a sustainable
production system that protects the long-term
economic and environmental viability of farming.
Farmers can earn better incomes, live better lives
and become stewards of the land.
Find out more
www.syngenta.com/ar2010
Preserving the environment
through agriculture
Lucas do Rio Verde, a major agricultural
city of Brazil’s Mato Grosso, is an area
historically affected by deforestation.
In 2007, Syngenta, its distributor Fiagril and
other partners co-created Lucas do Rio
Verde Legal to raise awareness among local
governments, farmer associations and the
broader population that it was possible to
grow and produce without violating the
state’s forestry and labor legislation codes.
Results were so positive that the state
government of Mato Grosso has since
expanded the project to all other
municipalities, and the federal government
has created a similar initiative.
“Our region is a major soybean
producer, so implementing a model
for environmental conservation
wasn’t an easy journey. However, it
turned out to be an overwhelmingly
positive experience as we had so
many partners supporting us.”
Marcos Castro
Regional Sales Manager at Syngenta
Featured above: Marcos Castro (left); Marino
Franz, Mayor of Lucas do Rio Verde municipality
and owner of Fiagril (middle); and Ivanor Cella,
farmer and Syngenta customer (right).
Syngenta
Annual Review 2010
09
Grow more
from less
Syngenta believes that farmers can produce enough
to meet the world’s needs for food, fuel and fiber
and safeguard the only planet we have for future
generations – if we take a system-wide approach
that links technology, land and people. These
three elements build the foundation for a
sustainable production system in which
technology enables better solutions for
farmers to increase productivity and
profitability, to increase resource
efficiency, and help reach food security.
Better solutions
Technology
R
e
s
o
u
r
c
e
e
f
fi
c
i
e
n
c
y
People
Land
Rural economies
Better solutions
Resource efficiency
Rural economies
Choices on the farm
Preserving the land
Building markets
To ensure that farms meet their productivity
potential, we need enabling and transparent
regulations, to make safe technologies
available to farmers.
Accelerating innovation
We need mechanisms to share innovation;
protecting intellectual property helps
stimulate research and development.
Sharing knowledge
Agriculture is based on knowledge supported
by science; we need new partnerships to
raise agronomy skills and share expertise.
We need to increase productivity
on existing farmland.
High stakes for water
Forty percent of water used for agriculture is
wasted; we need solutions that increase
water efficiency.
Vitality of biodiversity
Biodiversity and agriculture depend on
each other; we need to protect the diversity
of nature to secure our food supply and
quality of life.
Growing is not enough; farmers need
supporting infrastructure and access to
markets, finance and information.
Valuing farm work
Rural economies carry the weight of feeding
the world; farming needs to be worthwhile
and profitable.
Community development
We need agriculture to spur socio-economic
development of rural communities.
Syngenta
Annual Review 2010
Contributing to food security
10
Find out more
www.syngenta.com/ar2010
“I’ve never seen a pesticide rate
reduction technology generate this
level of excitement and enthusiasm
among farmers. The benefit of this
program is obvious. I am very
proud to promote it.”
Prof. Ducai Liu
Syngenta Technical Manager,
Yangtzu Business Unit, China
Featured above: Prof. Ducai Liu (left) and
Diyun Liang, Ministry of Agriculture.
Demonstrating value to
smallholder rice farmers
In China, 100 million farmers grow the rice
that is a staple for 1.3 billion people, yet
almost all of them are smallholders.
Demonstrating the value of properly used
Syngenta solutions to these growers has
not been easy in the past.
To show farmers how to reduce the use
of pesticides while increasing yields, the
company’s local Crop Protection team
began collaborating with China’s National
Agro-Tech Extension Center (NATESC).
Farmers in each of the 10 major rice
production provinces were recruited and
trained on how to calibrate equipment,
when to spray, and how to use Syngenta
products that require fewer applications –
such as VIRTAKO® and ARMURE®.
Now three years old, the program has
shown that farmers can grow more using
50 percent less pesticide, and generating
an additional $300 in yield per hectare
on average.
Chinese growers and government
agencies have taken notice. Syngenta
not only increased market share, but
also was honored in 2010 with a prize for
Outstanding Corporate Social Responsibility
Performance, from the China Association
of Enterprises with Foreign Investment
and the China Charity Federation.
Better solutions
for the farmer of
the future
“ The task of increasing food availability through
production on a constant area of land with
reduced inputs is such an enormous challenge
that no useful approach or technology
can be ignored.”
Reaping the benefits: science and the sustainable intensification
of global agriculture, 2009
The Royal Society
Syngenta values farm work – we see the people in
rural communities as our business partners. As with
any business, farmers must have the skills and tools
to prosper. Our contribution goes beyond providing
technologies: we offer advanced, integrated solutions
for the challenges facing farmers today and in the
future. To achieve the best yields under their specific
conditions, farmers must use high quality seeds, water
efficient technologies, nutrients, insect and weed
management, and soil conservation.
These solutions help farmers meet the needs of their
customers and successfully compete in global and
local markets. Consumers all over the world are not
only demanding more food, but a greater variety
including meat, dairy, and higher quality fruits and
vegetables. Syngenta’s training programs enable
farmers to boost yields sustainably, improve quality
of produce, and enhance their livelihoods.
In India, for example, Syngenta has established a “crop
health center,” called Krishi Shakti, which provides
agronomy advice and resources to farmers from
surrounding villages. In parallel, Syngenta started
operating Krishi Shakti vans to support farmers on
their farms. These programs provide crop diagnostics,
soil testing, library facilities, training and education,
demonstration plots and interactions with scientists.
As a result, member farmers use Syngenta products
and have increased yields and quality of their crops.
In another example, our PLENE™ technology, being
launched in 2011, addresses challenges in the sugar
cane industry in Brazil. With this innovative technology,
sugar cane segments are treated with seed care
applications to protect them in early growth stages.
Since mechanized planting is faster and safer with
new technology developed in conjunction with leading
equipment manufacturer John Deere, growers can
harvest and replant their fields more frequently. This
eliminates the typical yield degradation of the crop and
increases overall productivity, leading to a yield gain of
up to 15 percent.
Operation Pollinator™
13
Countries in which the
program is already running.
Increasing resource
efficiency
Syngenta recognizes that better solutions will not
only address the need for increased productivity,
but will also help farmers to manage and protect the
environment: sustainable, intensive farming improves
resource efficiency.
A recent study by Stanford University found that an
area of land larger than Russia has been saved from
cultivation because farmers in many parts of the world
have used modern technology to grow more on their
farms in the last 50 years1. In Brazil, for instance, the
rate of Amazon deforestation plunged to a historic low
in 2009 – nearly 75 percent below its 2004 peak –
while productivity increased faster than in any other
country in the world2. Such productivity gains must
continue, if we are to feed the world without increasing
the area of cultivated land.
As fewer virgin areas are cultivated, the biodiversity
of natural ecosystems is saved from habitat loss.
Protecting biodiversity is not only important for the
wellbeing of the planet, but also vital to healthy and
productive agriculture. This includes crop pollination,
healthy soil, water and air purification, and the genetic
diversity of wild plants.
Syngenta proactively initiates programs to protect
biodiversity around farms. For example, Operation
Pollinator™ 3 works with farmers to create farm borders
of wild flora for pollinating insects, that depend on
nectar and pollen for healthy diets. The results show
a substantial increase in valuable pollinators, including
bees. The program is already running in 13 countries,
and is a good example of how good farming practices
conserve the environment.
Conserving water
Fresh water is critical to productive agriculture; it must
be protected and used more efficiently. Yet, up to
40 percent of the fresh water used in agriculture is
wasted. A recent study by the 2030 Water Resources
Group4 found that existing agricultural technology
can sustainably increase water use efficiency, at
reasonable cost and with little investment.
Syngenta
Annual Review 2010
11
Syngenta’s integrated solutions help farmers produce
the highest yield from water used. These solutions
include improved seeds and crop protection products.
For example, in 2011 we will be the first company to
market corn hybrids that use available moisture more
efficiently, giving higher yields on drought stressed
acres. These hybrids also have the potential to reduce
water use in irrigated farming and protect plants
during unexpected drought.
Herbicides that control weeds and lower the need for
tillage provide another way to save water. No- or low-till
farming improves the soil’s ability to absorb water and
reduces moisture loss. As a result, soil is protected
against erosion and water runoff. Stopping runoff
also prevents agricultural chemicals and soil in fields
from polluting rivers and streams.
Protecting resources
Another way to save natural resources is to prevent
crop loss due to inadequate crop protection. Up to
50 percent of crops are lost in many parts of the
world because of weeds, insects, fungi and spoilage.
Syngenta products reduce crop loss on the field and
after harvesting which, in turn, protects against the
waste of water and energy, and loss of income.
Syngenta has also implemented programs that directly
help preserve the environment. In southwestern
Columbia, for example, the Ecoaguas initiative focuses
on preserving important watersheds. It aims to
regulate the water cycle through planting indigenous
trees grown by community nurseries. Over the last
16 years, more than 760,000 trees have been planted,
and training has promoted environmental awareness
and good farming practices.
1 Greenhouse gas mitigation by agricultural intensification. Proceedings
of the National Academies of Science (2009)
2 Tollefson J, The global farm. Nature, 466, 554-556, (2010)
3 www.operationpollinator.com
4 Charting our water future (2009)
Syngenta
Annual Review 2010
Contributing to food security
12
Strengthening
rural economies
“ Only with sustainable intensification of crop
production can serious progress be made
towards achieving the Millennium Development
Goals on hunger and poverty reduction and
on ensuring environmental sustainability.”
Shivaji Pandey
Director, FAO’s Plant Production and Protection Division,
keynote speech at the IVth World Congress on Conservation
Agriculture in New Delhi, 2009
When rural communities can sustainably grow more
from less and profitably sell their crops, they can live
more prosperous lives. But this isn’t easy considering
the challenges they face. Erratic weather, insects,
disease and weeds can ruin crops and diminish
incomes. Farmers must also deal with the risks of
a volatile market – even with a good crop, prices
may be low.
Syngenta recognizes that the world’s farmers need
more tailored, integrated solutions to make agriculture
an economically viable and rewarding way of life.
In developed countries, rural communities have made
great strides in productivity. The journey to achieve
sustainable increases in productivity continues in the
emerging economies, but this is hindered by lack of
access to modern technologies, knowledge sharing,
financing and markets.
Bringing modern technologies to farmers
Often farmers are unable or unwilling to invest in
the technologies they need to increase productivity.
Smallholders face the constant risk that investment
in better seeds and fertilizer will be lost if drought,
flooding or disease destroy their crops and wipe
out the benefits of their purchase.
But as a result of not using the best inputs, yields
remain far below their potential. To overcome this
problem, the Syngenta Foundation for Sustainable
Agriculture (SFSA) offers creative financial solutions
designed to reduce the risk for farmers investing in
sustainable increases in productivity. For instance,
the Agriculture Index Insurance Initiative launched in
2008 in Kenya aims to develop the potential of micro-
insurance for smallholders. The Syngenta-subsidized
Kilimo Salama program – “safe farming” in Kiswahili –
allows smallholders to insure selected farm inputs
at their local retailer and pay half the premium. If
there is insufficient rainfall as reported by automated
weather stations, then farmers are compensated
for their investment.
Syngenta Foundation for
Sustainable Agriculture
The Syngenta Foundation for Sustainable Agriculture
(SFSA) creates value for smallholders in developing
countries. Through collaborations with local partners,
including government institutions, private companies and
non-governmental organizations (NGOs), SFSA provides
innovations required for sustainable agriculture and eases
access to markets.
The Foundation currently runs projects in Africa, Asia and
Latin America, and it contributes worldwide to the public
debate on agricultural development.
In 2010, SFSA started its first projects in Indonesia and
Vietnam, which focus on improving farmers’ livelihoods
through extra cash crops. It piloted a project with
smallholders in the Peruvian Andes, partnering with
an NGO and the regional division of McDonald’s. And it
invested in the World Bank’s BioCarbon Fund, which buys
carbon credits in developing countries.
As well as piloting new activities, SFSA also places strong
emphasis on successful scale-up. In India, it continued its
rapid expansion of agricultural extension. The aim is to reach
200,000 farmers by 2014, up from some 30,000 at the
start of 2010. In Kenya, SFSA scaled up its weather index
insurance from 200 smallholders in 2009 to about 12,000
in 2010. The creation and rapid uptake of this insurance
have only been possible due to the SFSA’s catalytic lead.
Pictured left: Njeri Muriuki registering a farmer’s drought insurance
through her SFSA-enabled cellular phone.
Find out more
www.syngentafoundation.org
Syngenta
Annual Review 2010
13
Camcoa 300™ in Cameroon
Cocoa is one of the most important cash crops grown in
Cameroon, but often it is difficult for smallholder famers to
access markets and sell their crop. In 2010, Syngenta set
up a program to help these farmers through partnerships
with smallholder cooperatives, government agencies and
cocoa traders. The program provides agronomy training
to produce higher yields and better quality cocoa beans.
“We are also sharing knowledge about entrepreneurship
accounting and savings so farms can operate as
successful businesses and not be forced to sell at lower
prices,” says Aurore Jamet, project manager for Camcoa
300™. Over 500 growers spanning 1,500 hectares have
been trained thus far, with a target to reach 25,000 growers.
“ The Camcoa project will help us to
commercialize our efforts by creating a link
between traders and farmers. The training
about savings will enable farmers to invest in
their cocoa trees, and Syngenta training brings
us the knowledge we need in order to protect
our culture.”
Stephen Nkwen
Cocoa grower
Featured left: Stephen Nkwen (right), Aurore Jamet, Syngenta
in Cameroon (middle); and André Moukam, grower (left).
Watch video and find out more www.syngenta.com/ar2010
Increasing access to markets
Syngenta also works with local partners to help open
markets for farmers. The NUCOFFEE™ initiative in
Brazil, for example, connects growers, cooperatives,
and roasters in a transparent business partnership.
The program helps mitigate the financial risks farmers
face when investing in inputs with the uncertainty
of growing and selling a coffee crop. With the right
agronomy advice and technology, they are able to
meet demanding international quality standards, sell
their harvest and become profitable farmers.
These Syngenta examples demonstrate that global
agriculture demands a range of approaches that are
specific to crops, localities, resources and cultures.
There is no one way to reach food security, but
integrated solutions that recognize the links between
technology, land and people can make great strides
toward this ambition. Syngenta is helping to put into
the hands of growers innovative technologies and
knowledge that can enhance yields, improve incomes,
and protect natural resources.
Average subscription
$0.50
Weekly cost paid by
smallholders in India to
receive timely crop
information on pest and
disease management.
Creative knowledge sharing
Getting information regularly to the farmers who need
it requires creative solutions. For instance, we address
the need for knowledge sharing on a regular basis,
over large and often remote areas in India, through a
partnership with Nokia Life Tools. This partnership has
led to an easy-to-use application for cell phones that
gives growers access to timely, crop-specific tips on
pest and disease management. Farmers subscribe
to the service for a nominal cost of around $0.50 per
week. By the end of 2010, two million subscribers
were using the agriculture service, which includes
information provided by Syngenta.
Syngenta
Annual Review 2010
Our offer
14
Integrated
solutions
for today’s
farmer
Leading in research
and development
Conserving natural
resources
Global reach
and experience
With a $1 billion annual investment in R&D
and a global network of R&D centers,
Syngenta leverages scientific insights
in plant physiology, chemistry, genetics and
biotechnology to provide comprehensive
programs that help address growers’
diverse and changing needs.
Syngenta’s high-yielding seeds and innovative
crop protection products help growers get
more from existing land, and preserve
ecosystems. This is complemented by our
extensive training and stewardship programs
to promote modern agricultural practice.
Our teams in over 90 countries use their
local knowledge and understanding,
together with the breadth of expertise
from across the business, to tailor solutions
that create value for growers. This unique
insight gives Syngenta a sustainable
competitive advantage.
Syngenta
Annual Review 2010
15
Through our world-class science, leading portfolio of
crop solutions and strong presence in all agricultural
markets, we are uniquely positioned to help growers
around the world to grow more from less.
Access to high-
quality genetics
Syngenta has industry-leading genetics and
traits, and we breed high-quality seeds for
corn, soybean, sunflower and other field
crops, vegetables and flowers. We use
conventional breeding techniques as well
as modern biotechnology to provide growers
with the best choice for high yields
and quality.
Protecting and
enhancing plant
performance
Our broad range of safe and efficient
products protect crops from planting to
maturity, guarding them from insects and
disease, while reducing competition from
weeds for nutrients and water. They also
improve plant vigor and help reduce yield
losses in periods of drought.
Benefits for
customers and
rural communities
Our innovations and technology benefit
our customers in many ways. Consumers
appreciate features such as better taste and
healthier food. In rural communities, we help
to improve livelihoods through raising
agricultural productivity, training and
stewardship programs.
Syngenta
Annual Review 2010
16
Addressing
growers’
needs
Syngenta
Annual Review 2010
17
Syngenta uses its expertise in plant breeding,
crop protection and seed care to deliver solutions
designed to bring plant potential to life. Whether they
grow corn or rice, vegetables or flowers, farmers
around the world trust Syngenta to help them
produce healthy, premium crops and minimize
the use of precious natural resources.
Sales in Corn
$m
Corn
Around 60 percent of global corn production is
destined for animal feed. This means that the global
importance of corn is expanding particularly in
emerging markets, where growth in meat consumption
is increasing. Corn growers are also supplying other
end uses such as sweeteners, plastics and –
particularly in the US – biofuels.
Corn is one of the most productive crops: plant one
seed, and you get over 500 kernels in return.
Hybridization over many years has allowed enormous
productivity gains, and this has been complemented in
the last decade by the development of biotech traits in
North America, Latin America, Asia and South Africa.
As a result, the value of corn seed has risen, and seed
selection has become a key grower decision. In addition,
to safeguard their substantial investment in seed,
growers need a range of solutions to protect their
crop from weeds, insects and environmental stress.
Leading herbicide range
These solutions have to evolve to meet new
challenges. In 2010, the full extent of weed resistance
to glyphosate became widely acknowledged, with nine
resistant weeds now identified in the USA. Syngenta
anticipated this development early on, and in 2005
launched glyphosate pre-mixes that deal effectively
with resistant weeds while retaining the convenience
of glyphosate. Sales of HALEX® GT have expanded
rapidly over the last two years, building on the success
of comprehensive pre- and post-emergence weed
control programs such as LUMAX® and LEXAR®.
Crop Protection 1,290
240
Seed Care
850
Seeds
2,380
Total
All crop sales in this
section are based on
Syngenta estimates.
Crop enhancement in corn
Combinations of our leading crop protection
chemistries are also driving crop enhancement in corn.
New fungicide programs including QUILT XCEL® and
QUADRIS® led to a significant increase in adoption
over the previous year, as growers recognized benefits
in yield, quality, and ease of harvesting.
In Seed Care, we have built on the success of
CRUISER® insect control with the launch in the
USA of AVICTA®, the first nematicide seed treatment.
Growers had previously not realized the extent of the
damage caused by nematodes which, by virtue of
their scattered presence, can be difficult to locate
and combat. AVICTA® COMPLETE PAK offers a
convenient and targeted solution that also includes
CRUISER® and the fungicide DYNASTY®, based on
the active ingredient azoxystrobin. AVICTA® has now
also been launched on soybean where it has
significant potential.
Germplasm diversity
Alongside a world-leading crop protection portfolio
for corn, Syngenta has a global corn seed business
founded on research and development platforms that
leverage diverse germplasm resources. We combine
these resources with state-of-the-art breeding
technology and the strength of local breeding
programs to deliver a continuous flow of high-
performance products. Our performance in Southeast
Asia is one example of the success of this strategy:
development of our proprietary tropical germplasm
has given us leading market positions in both Vietnam
and Thailand. And in China, we are broadening our
portfolio by drawing on resources from both Europe
and North America.
Syngenta
Annual Review 2010
Addressing growers’ needs
18
Germplasm performance underpins the rapid
progress in our US corn seed business. Following the
acquisitions of Garst and Golden Harvest in 2004, we
embarked on a major product overhaul that involved
pooling and then crossing the acquired germplasm.
Today, our unique portfolio offers genetic diversity and
demonstrates advantages over the competition in
yield performance.
Innovation in biotechnology
Syngenta’s germplasm is now accompanied by an
outstanding suite of biotech traits. The AGRISURE®
3000GT triple stack reached market levels of
penetration in 2010, accounting for around 60 percent
of the offer. At the end of the year, in time for the 2011
season, we launched AGRISURE VIPTERA™ – our first
distinctive proprietary trait with unparalleled broad
lepidoptera control. Initial yield data and market
reception were highly positive. We were also the first
company to bring to market a water optimization
solution with the launch of AGRISURE ARTESIAN™,
a native trait offer with the potential for subsequent
biotech combinations. An output of our deep
understanding of water use efficiency at the genomics
level combined with extensive breeding programs,
AGRISURE ARTESIAN™, offers 15 percent yield
preservation in mid- to high-drought conditions
without yield drag.
We are leveraging our traits across borders, with the
launch of double stack corn in Argentina and of
VIPTERA in Brazil. Launched initially as a single trait,
VIPTERA has now become part of the first triple stack
product to receive approval in Brazil. We are also
creating stacking possibilities in the Philippines with the
launch of GA21 herbicide tolerance in addition to our
existing Bt offer. Our goal is to enable corn growers
around the world to capture value from the improved
productivity necessary to sustain economic
development. We will do this by offering tailored
solutions that embrace the full range of technologies.
Watch video and find out more
www.syngenta.com/ar2010
Towards the perfect
ear of corn
Every year in the US, yield and grain quality
losses add up to an estimated 238 million
bushels of corn, or $1.1 billion. But like many
corn growers, Mike Schmidt from De Witt,
Iowa, had come to accept the significant
losses that unpredictable and damaging
pests like the black cutworm and corn
earworm can cause. These insects do their
damage unseen, and they are very difficult
to control using traditional insecticides.
The USDA approval of AGRISURE
VIPTERA™ in April and introduction into
the market in autumn 2010 generated
excitement. Nonetheless, growers are
fairly risk-averse and highly tactical in
how they evaluate new corn traits, so there
was some initial skepticism. With a novel
mode of action controlling more above
ground pests than any other product
on the market, Syngenta’s new seed
trait just sounded too good to be true.
But after seeing the results on his fields,
Mike is a believer.
“In our area we haven’t paid as
much attention to above-ground
pest pressure like corn earworm
and black cutworm before,
because by the time we had
noticed the damage, it was too
late or there was no way to
effectively control them.
AGRISURE VIPTERA™ controls
these pests well and gives us
season-long control of these
above-ground pests, so there
is no need to worry or scout
any of these fields.”
Mike Schmidt
Farmer, DeWitt, Iowa, USA
Featured above: Mike Schmidt (left) and
Rich Lee, Syngenta Field Agronomist.
Syngenta
Annual Review 2010
Sales in Soybean
$m
19
Crop Protection 1,290
170
Seed Care
430
Seeds
1,890
Total
Soybean
Protein meal for animals accounts for around 70 percent
of global soybean production, and demand from
emerging markets is increasing. Most of the world’s
production – more than 80 percent – is concentrated
in the USA, Brazil and Argentina. Productivity is vital to
growers in these countries as they compete to satisfy
increasing demand for imports, especially from China.
Latin American growers have made enormous strides
in productivity despite soybean rust, an endemic and
devastating disease. Effective treatment of the disease
has enabled the expansion of soybean production –
the market for related crop protection products is now
over $1 billion. Syngenta plays a leading role with a
one-third share of the market. This reflects the success
of the mixture product PRIORI XTRA®, particularly in
areas of high disease pressure.
Managing weed resistance
US growers have become accustomed to managing
crops more easily since glyphosate was introduced in
the mid-1990s. But the emergence of glyphosate-
resistant weeds over the last five years has made it
imperative to adopt a more differentiated approach.
Syngenta’s portfolio of selective herbicides for soybean –
now marketed in the form of glyphosate pre-mixes – has
provided a cost-effective and convenient solution.
Multiple ways of protecting high quality seeds
Soybean has traditionally been perceived as having
less value than corn. But its potential for yield
improvement through high-quality germplasm,
as well as native and biotech traits, is attracting
increasing attention.
In the USA, the strong performance of Syngenta’s
germplasm underpinned the 2010 gain in market
share. We are building on this advantage by offering
integrated solutions that include seeds, crop protection
and seed care. For example, the Aphid Management
System combines seed varieties bred with genetic
resistance to aphids with CRUISER MAXX® seed
treatment, which also boosts yield and vigor. And high-
yielding varieties with genetic resistance to the
soybean cyst nematode are now complemented by
AVICTA®, the nematicide seed treatment launched for
corn a year ago and now available also for soybean.
In Latin America, where we have already combined
our Crop Protection and Seeds sales forces, integrated
offers will further expand our footprint. In Brazil, the
success of VMAX® soybean, which combines the
advantages of glyphosate-tolerant technology with
fast-maturing germplasm, has driven rapid gains
in market share. In Argentina, the acquisition of SPS
in 2008 gave us a platform for the introduction of
new technology.
We see considerable potential for leverage between our
North and Latin American businesses, and we are using
advanced breeding selection tools to increase speed to
market for high-performing varieties.
Breakthrough seed treatment technology
In 2010, we were able offer soybeans to Argentine growers
that are fully protected from insects and diseases. The
technology brings together Syngenta’s leading seed care
products CRUISER® and AVICTA® with a long lasting
inoculant that increases soybeans’ ability to resist diseases.
This integrated technology protects the seeds from
the moment of planting – the stage at which they are
particularly vulnerable – and also helps the young plants
withstand adverse climatic conditions.
Field trials have shown very encouraging results and first
sales have already reached $3 million. The product is being
produced at three sites in Argentina and has excellent
potential for long-term growth.
“Achieving good seed distribution and
germination is the key for us to obtain the
best yields. We have decided to use Syngenta
technology because sprouting is almost
100 percent.”
Jorge Sunino
Soybean grower, Argentina
Find out more
www.syngenta.com/ar2010
Pictured left: Jorge Sunino (right) and Pablo Rugeroni,
Technical Services Engineer at Syngenta.
Syngenta
Annual Review 2010
Addressing growers’ needs
20
Cereals
Wheat is the world’s largest crop, planted on some
225 million hectares. With bread and pasta as staples
in Western diets and increasing in popularity elsewhere,
it is vital to have a plentiful supply as well as a wide
range of top-quality varieties with different taste and
milling characteristics. And, as consumption in emerging
markets increases due to changing diets, meeting the
additional demand means that the average global yield
of three tons per hectare must rise. There is no doubt
about the potential: growers in some Western European
countries already achieve more than three times
this figure.
But in the summer of 2010, world wheat production
suffered a setback from devastating fires in Russia.
In recent years, Russia has not only expanded its
domestic wheat supply, but has also become a major
exporter. So the cut in production caused world wheat
prices to rise sharply. These events highlight the need
for sustained productivity increases that enable
markets to better withstand future supply shocks.
Expanding the offer in Eastern Europe
An immediate priority for Syngenta is to work with
growers in Russia and across Eastern Europe to
increase their long-term output and profitability.
Expanding the crop protection range is key to this. For
example, despite difficult market conditions in 2010,
sales in the region for our new cereal herbicide AXIAL®
grew by over 50 percent. The fungicide AMISTAR® also
expanded rapidly and is starting to take the place of
older competitor chemistry. And use of CRUISER®
seed treatment on wheat is resulting in increased vigor,
particularly in cold conditions, and enabling growers
to plant their crop earlier.
Integrated growing systems for cereals
Globally, solutions like CRUISER® show the potential
for crop enhancement in wheat. The plant growth
regulator MODDUS®, in addition to its benefits in
creating a shorter, stronger plant, increases root mass,
resulting in improved water and nutrient uptake and
better tolerance to drought and heat. In 2010, we
launched the next-generation fungicide isopyrazam
on barley in the UK and on wheat in New Zealand.
Isopyrazam has a new mode of action, and controls
a wide range of diseases while delivering higher yields.
In barley it is a key element of a new integrated growing
system that enables growers to increase productivity
by treating their crop more systematically, as they
already do for wheat.
By developing new varieties of wheat seeds alongside
our crop protection and seed treatment programs,
Syngenta can target productivity improvements
at many levels. We are the world leader in cereals
seeds, with cutting-edge breeding technologies
that include marker-assisted breeding and double-
haploid technology.
In April 2010, we announced an agreement with the
International Maize and Wheat Improvement Center
(CIMMYT). This public-private partnership will lead to
joint research and development – in the areas of traits,
hybrid wheat, and the combination of seeds and crop
protection – to accelerate plant yield performance. It
will allow Syngenta to take advantage of its genetic
marker technology and traits platform to improve
wheat productivity in emerging markets.
Sales in Cereals
$m
Crop Protection 1,150
170
Seed Care
60
Seeds
1,380
Total
Find out more
www.syngenta.com/ar2010
“The new varieties truly show an
improved performance. Not only
do we see higher yields and
better grain quality, the crops
are hardier too.”
Sandy Norrie
Arable Manager, A J Duncan farm,
Muirden, Scotland
Featured above: Sandy Norrie (left) and
Tom Mitchell, Business Manager at Syngenta.
Braving the weather
Sandy Norrie is Arable Manager at the
A J Duncan farm at Muirden in North East
Scotland. The farm has been involved with
hybrid barley since 2003, when Syngenta
launched Colossus, the world’s first hybrid
winter barley variety. Sandy also has a lot of
experience with Syngenta spring barley
varieties including Optic and, more recently,
Waggon and Forensic.
As a participant of a new hybrid barley
case study in 2010, A J Duncan profiled
Boost, Volume and Element hybrid barley
varieties. The farm saw yield improvements
of 10 percent and more, compared with
standard varieties. Combined with
Syngenta’s leading crop protection
products and expert know-how, the new
innovative hybrid barley varieties come
with major benefits. They can be grown
under challenging weather conditions,
and they deliver an improved grain quality,
helping the grower to get the most from
every hectare.
Rice
Rice plays a more crucial role in human food
consumption than any other major field crop. It
provides 60 percent of the calorie intake for more than
two billion people every day. In Asia, where 90 percent
of the world’s rice is grown, average per capita
consumption is more than one kilogram a week.
And yet progress in rice productivity still lags behind
the advances made in other crops. Governments
in the emerging markets of Asia are increasingly
responding to this challenge with support and
incentives to help modernize farming practices.
Syngenta is participating in the process of
modernization by expanding the range of products
and services available to rice growers. Our goal is
to achieve a step change in yield while improving
rice quality.
Expanding chemical solutions
Until now, chemical usage in rice has focused mainly
on herbicides and older insecticides. With the
expansion of the new insecticide VIRTAKO®, part of the
DURIVO® range, Syngenta is delivering a new mode of
action offering both insect control and increased plant
vigor. We are developing new markets for broad-
spectrum disease control with ARMURE®, and we
see an increasing opportunity for AMISTAR® which,
following the expansion of our production capacity,
we can now start to capture.
Doubling yield potential
Seed Care is another example of the ways in which
Asian rice growers are adopting new technology.
The combination of CRUISER® with high-yielding
hybrids and complete crop protection programs is
delivering benefits to growers in high potential areas.
We are further expanding our integrated offer with the
introduction in India of TEGRA™, a solution for small-
scale rice growers. The solution consists of planting
high quality seed coated with seed treatment, followed
by a new system of mechanical transplanting for the
seedlings to reduce labor input. A crop care protocol
is applied during the growth period and, in total,
TEGRA™ increases yields by an average 30 percent.
Syngenta
Annual Review 2010
Sales in Rice
$m
21
Crop Protection 530
30
Seed Care
Seeds
10
570
Total
Water efficiency
Traditional rice cultivation relies heavily on the availability
of water, and reduced water input during any part of
the growing cycle has an impact on plant growth and
yield. Syngenta is breeding hybrid rice varieties with
short and medium maturities and correspondingly
lower water needs. Because rice growers face variable
conditions – for example, flash flooding that can also
damage the crop – we are developing native traits that
can better withstand temporary submergence.
Bringing technology to smallholders
In Asia alone, there are more than 200 million rice
farmers for whom the extension and transfer of
knowledge will play a vital role in securing a sustainable
livelihood. Syngenta’s locally based teams are focused
on providing not only products but also the necessary
tools, support and training to enable smallholder
farmers to achieve this.
Find out more
www.syngenta.com/ar2010
Growing more rice, more easily
In Asia, rice is life: more than two billion
people depend on the crop for their daily
calorie intake. Productivity currently ranges
from two to eight tons per hectare across
the continent.
In developed Asia, productivity is high and
planting has been standardized through
mechanization for over 15 years. By contrast,
in developing Asia, productivity remains
low and planting is mainly done by hand.
Syngenta launched a project to look at
proven technologies in rice farming and
identify the best ways to make them
accessible to farmers in developing
markets, regardless of the scale of
operation. Our combined expertise in
seeds, plant care, growing media, and
crop protection means we are ideally
placed to deliver an end-to-end solution
for these growers.
The result is TEGRA™: a new seedling
technology, adapted for each unique rice
ecosystem, delivering proprietary products,
mechanically transplanted and supported
by Syngenta’s comprehensive agronomy
consultation services.
“I like the way the Syngenta
agronomist helps me to take good
care of my crop, and to overcome
problems with insects and diseases.
Transplanting is much easier and
the crop stays healthier over the
whole season.”
Nukala Janaki Rami Reddy
Rice grower in India
Featured above: Nukala Reddy (right) with
Hari Gopal, CTP Manager at Syngenta.
Syngenta
Annual Review 2010
Addressing growers’ needs
22
Sales in Sugar cane
$m
Sugar cane
Crop Protection
Seed Care
Seeds
Total
150
0
0
150
Sugar cane meets 70 percent of global sugar needs
and is the most cost-effective feedstock for plant-
derived ethanol. But traditionally, this crop has
attracted little technology investment and yields are
well below what they could be. In order to release
this potential, Syngenta has been making significant
investments in sugar cane. We are now the first
company to market integrated solutions that offer
improved yield and quality to cane growers and millers.
Crop enhancement combined with pest control
In Brazil, which accounts for over 50 percent of global
sugar cane production, our Crop Protection portfolio
is already delivering broad benefits to growers.
A planting revolution for sugar cane
Production of sugar cane is under pressure, as global
demand for sugar and ethanol rapidly outpaces the abilities
of a largely manual industry to keep up. So Syngenta
established a team to focus on technology that would
simplify operations and ensure sustainability.
The result is revolutionary. In 2011 in Brazil, Syngenta will
introduce PLENE™, an innovative technology that allows more
frequent re-planting and therefore higher yields and less
impact on the environment.
PLENE™ simplifies production by providing sugar cane
cuttings treated with seed care to protect against disease
and insects for healthier crops. The cuttings are only 4cm
long – the plant cuttings of conventional systems are
10 times that length. Because of the smaller size, John Deere
was able to develop planting equipment designed especially
for PLENE™ that is lighter on the soil and uses less fuel.
“Thanks to the radical simplification it offers,
PLENE™ is a true game changer. The benefits I
will get in terms of improved convenience and
reduced cost are truly really exciting.”
Gustavo Villa Gomes
Miller, Brazil
Featured left: Gustavo Villa Gomes (right) and Alexandre Peres,
Syngenta Sales Representative New Technologies Cane.
Watch video and find out more www.syngenta.com/ar2010
The insecticide ACTARA® is used to control sucking
and chewing pests, and delivers an additional vigor
effect that results in a 10 percent yield advantage.
The plant growth regulator MODDUS® allows growers
to control the timing of the harvest to achieve
maximum sugar yield; it also enhances root
development in the growing cane, making uptake
of water and nutrients more efficient.
In 2010, we launched ENGEO®, a chemical solution for
termite control. Unlike existing products on the market,
ENGEO® does not persist in the environment or harm
beneficial termites that break down cane residues after
harvesting. PRIORI XTRA®, a fungicide widely used
in Brazil to combat soybean rust, became the first
product to be authorized for orange rust in sugar cane.
Integrated technology
PLENE™ is a breakthrough technology in sugar cane
planting, combining chemistry, plant genetics and
application technology to provide a truly integrated
solution. We will offer top commercial cane varieties in
small cuttings coated with proprietary seed treatment.
A shift from manual to mechanical planting will improve
safety and address the issue of labor shortage.
Growers will now be able to re-plant cane more
frequently, with younger plants producing higher yields.
Broader benefits include the more effective use of
natural resources.
Syngenta
Annual Review 2010
Sales in Oilseeds and
sugar beet $m
23
Crop Protection 290
100
Seed Care
460
Seeds
850
Total
Sugar beet: capturing value for growers
Sugar beet is an industrial crop used in food
processing, as well as in biogas and ethanol
production. For growers in Western and Central
Europe, it is already a high value crop. But in Eastern
Europe, while acreage and volumes are high, there
is substantial scope to increase seed quality.
In 2010, Syngenta consolidated its European business
through the acquisition of the Maribo® brand, sold in
35 countries, together with its seed production and
sales activities.
The size of the sugar beet market in the USA has
doubled in value since 2008, following the introduction
of glyphosate-tolerant sugar beet and the expansion of
seed treatment. Growers’ rapid adoption of glyphosate
tolerance, which in 2010 represented 95 percent of
the market, demonstrates the ability of biotechnology
to transform the economics of growing a crop.
“From grower to processor to
consumer, our high oleic sunflower
varieties add value. 18,000 units of
high oleic seeds were sold in 2010,
more than five times the 2008
figure. Given the need to provide
more healthy oil products to the
Russian people, we are perfectly
positioned to gain market share.”
Hachares Babiyan
Syngenta Territory Sales Manager
Rostov, Russia
Featured left: Hachares Babiyan (left) and
Alexander Sapronov, Chief Agronomist,
Manitek Farm.
Find out more
www.syngenta.com/ar2010
A healthy growth forecast
Due in part to diets high in saturated fats,
life expectancy in Russia continues to lag
behind that in other parts of Europe. At the
same time, the country is the world’s
largest market for sunflower seed, and
while the number of hectares devoted to
sunflowers has been growing, yield
growth has not kept up.
Oil from a high oleic sunflower hybrid –
which has a healthy fatty acid composition
and can lower cholesterol as effectively
as more expensive olive oils – could
have a big impact on this market and
on overall health.
To make this happen, Syngenta combined
product innovation with a commitment
to distribution across the country and
to forging a strong chain from grower
to consumer.
It also sought out a partnership with
a significant oil producer, and found one
in ASTON, a Russian food processor.
The result was Zateya Gold sunflower
oil, now available in supermarkets
across Russia.
Oilseeds and
sugar beet
While food security is a critical concern in many
emerging markets, consumers in developed countries
have the luxury of favoring products that further benefit
their health. Vegetable oils made from sunflower and
oilseed rape are preferred because they are relatively
high in unsaturated fats. High consumer demand
makes these plants attractive for growers, as does
their yield stability under adverse growing conditions
and benefits to the entire production system,
particularly in rotation with cereals.
Oilseeds: improving yield and oil content
In recent years, cultivation of sunflower in emerging
markets has flourished – these markets now account
for 75 percent of global output. Often, growers’ first
impulse is to expand acreage. But to maximize the
sustainability of the crop, they need to focus on the
type and quality of seed used. Syngenta has made
significant emerging market investments in this crop
over the last decade. We are driving the shift towards
high-performing hybrid varieties through the introduction
of best-in-class genetics adapted to local conditions.
Superior germplasm leads to enhanced stability under
stress and to yield increases that are further accelerated
by applying our leading Seed Care products. In addition,
we regularly launch varieties with specific native traits
such as high oleic acid composition and disease
resistance.
Selected acquisitions have augmented our world
leadership in sunflowers. Acquired in 2008, SPS has
broadened our reach by establishing our presence in
the mid-value segment in Argentina. Our acquisition of
Monsanto’s global sunflower business was concluded
at the end of 2010 and complements our existing
germplasm strength in a number of markets.
Syngenta operates a global network of sunflower
breeding stations that target all aspects of yield
improvement, as well as traits to address stress
tolerance and fatty acid composition.
In Northern Europe, oilseed rape is grown to serve
both the edible oil and biodiesel markets. Hybridization
is driving growth in value, and Syngenta is providing
high-performing hybrids with seed care combinations
for strong crop establishment. In Canada, where
oilseed rape is grown as canola, Syngenta sells a
range of crop protection chemicals for application
throughout the season.
Syngenta
Annual Review 2010
Addressing growers’ needs
24
Vegetables
The global vegetable seeds market is worth over
$4 billion and continues to grow, driven by consumer
demand for fresh produce. Technology is playing an
increasing role in meeting multiple requirements that go
beyond consumer priorities of taste and convenience.
Vegetable growers focus on yield, cost and resistance
to disease, while retailers demand attractive
appearance, consistency of supply and long shelf life.
Global growth, rapid emerging market expansion
Vegetable consumption in developed markets
continues to rise, reflecting increased awareness of
the link between health and diet. Yet the fastest growth
rates are found in emerging markets: while increased
meat consumption is often highlighted, growing
prosperity brings a desire for better quality and more
varied vegetables, facilitated by the expansion of
retailer channels. Sales of Syngenta vegetable seeds
in these markets have risen by a compound average
of 21 percent over the last five years.
Integrated technology
Globally, we have augmented consistent increases
in vegetable seeds sales with strategic acquisitions
to broaden our diverse germplasm base. Through
advanced breeding and new native traits, we are
continuously delivering new benefits across the
value chain. We complement our seeds offer with
our range of fungicides and insecticides, which we
have adapted to meet the rigorous quality demands
of both consumers and retailers. The roll-out of our
new fungicide REVUS® in 14 additional countries
in 2010 has further reinforced our position.
Examples of our integrated offer include the
combination of clubroot resistance and insecticide
treatment for cauliflower. New disease-resistant seed
varieties are coated with FARMORE® Seed Care
technology with two components: fungicides to
protect against soil and airborne fungal diseases and
an insecticide treatment to replace field-applied
products in an environmentally favorable way.
Sales in Vegetables
$m
Crop Protection 900
60
Seed Care
660
Seeds
1,620
Total
Global resources, local offer
Syngenta has a global R&D presence that provides
economies of scale and a broad germplasm base.
We leverage this alongside our expertise in genetics to
develop seed varieties tailored to meet local needs.
In emerging markets, the focus is on improving quality
and productivity. In Brazil, for example, we are the only
company driving the rapid expansion of the processed
sweet corn market. We owe our success to a focus on
product features that matter to consumers – tenderness
and taste – as well as on efficiency for processors. We
have pioneered a shift from feed corn into sweet corn
and have developed high-quality tropical varieties that
are opening up new export markets for our customers.
We are now developing our breeding program to
enable expansion into the fresh sweet corn market.
In India, we have a broad offer across a large number
of high-value crops. We have differentiated our
technology by adapting it to the local market, offering
solutions such as native traits for disease resistance
in tomatoes. Our offer increases the reliability and
abundance of the harvest for growers whose livelihood
often depends on a single crop.
Find out more
www.syngenta.com/ar2010
A winning combination
A few seasons ago, Syngenta introduced
new baby plum tomato Angelle to a
selected group of growers in the UK. It
was also introduced at Marks & Spencer,
a retailer known for its high quality
products. Today, Angelle is grown in
several European countries, and is
available all year round thanks to the
unique partnership between Syngenta
and integrated growers and retailers.
Leading Angelle grower Juan Romera from
Almeria, Spain, has always believed in the
value of technology. Supported by technical
experts from his local cooperative, SAT
Acrena, he has been keen to grow new
varieties and implement the most
demanding crop protocols. His production
techniques are recognized by export
markets, and leading retailers are happy
to work with him as a supplier.
“I truly enjoy our partnership: it’s
based on expertise, trust, honesty
and dedication. One great example
is the beneficial insects from
Syngenta Bioline that I use to both
protect my crop from pests and to
provide consumers with healthy
products. With Angelle, Syngenta
bred a distinctive product that
meets the needs of retailers and
consumers, as well as my own
standards as a grower.”
Juan Romera
Grower, Spain
Featured above: Juan Romera (right) and David
Murcia, Tomato Product Manager at Syngenta.
Lawn and Garden
Demand for lawn and garden products is closely linked
to consumer spending. Golf courses represent a major
source of demand for turf products – the more rounds
of golf played, the greater the scope for investment
by golf course superintendents. Demand for flowers
reflects how much consumers are prepared to invest
in their gardens, as well as how much risk retailers are
willing to undertake in terms of inventory. Here, efficient
logistics are vital to minimize waste and ensure quality.
Solutions for growers and their customers
Syngenta combines its genetics, controls and growing
media to provide a comprehensive and integrated offer
to professional ornamental growers. This ensures
healthy plant growth and, together with best-in-class
logistics, aligns plant flowering time with display by
retailers. Only through this level of service can demand
at peak periods be met – for example, with 140 million
poinsettias delivered in time for Christmas.
Our new QMAX technology represents a more efficient
way of growing pelargonium and other crops. Plants
are grown in the dark under sterile conditions, resulting
in an increased growth rate compared with tissue
culture. Now being implemented in Guatemala, the
technology offers lower costs for pelargonium cuttings,
with greater flexibility and reliability.
Consumers want variety and convenience. Over the
past few years, Syngenta has significantly expanded
its range of flowers through several acquisitions.
At the same time, we have gained leading positions
in key crops such as pansy and pelargonium, giving
us an unrivaled ability to refresh and adapt the range
using our large germplasm base. This allows us to
meet consumer demand for plants that are easy to
grow and maintain.
We are also meeting consumer needs with the
expansion of our chemical controls business at
the retail level. We have achieved this through the
establishment of partnerships with leading branded
manufacturers to supply major garden centers and
home improvement outlets.
Syngenta
Annual Review 2010
Sales in Lawn and
Garden $m
25
Crop Protection
Seed Care
Seeds
Total
470
0
340
810
Broad approach to turf market
In the golf market, high quality playability and
aesthetics are key priorities. Purchasing decisions
are still influenced by cost, but the industry is
increasingly moving beyond pest control to solutions
that take environmental issues into account –
including water usage and biodiversity. A collaborative
effort by Syngenta and Marriott Golf has resulted in a
new tool for golf course superintendents in the ongoing
effort to promote sustainability, foster environmental
stewardship and reduce the carbon footprint of golf
course operations.
Find out more
www.syngenta.com/ar2010
“We have been impressed with the
Syngenta products and believe
they have helped us maintain the
playing surfaces more consistently
and economically.”
Gordon Moir
Director of Greenkeeping,
St Andrews Links Trust, Scotland
Maintaining the Home of Golf
St Andrews Links on the east coast of
Scotland is acknowledged as the Home
of Golf, where the game has been nurtured
and developed for over 600 years.
The Old Course, home of the 2010
Open Championship, is renowned
as the pinnacle of links golf.
St Andrews Links Trust Director of
Greenkeeping, Gordon Moir, and his
greenkeeping teams on the seven
outstanding courses managed by the
Trust, employ a range of traditional turf
management techniques to maintain the
most prestigious golf playing surfaces.
This includes using the Syngenta products
RESCUE® and HERITAGE®.
The Old Course at St Andrews Links
remains a public course, open to golfers
from around the world to test their
prowess under conditions that challenge
the world’s greatest.
Syngenta
Annual Review 2010
26
Creating
our offer
Syngenta
Annual Review 2010
27
From the fridge to the field
When Syngenta Research Scientist Greg Warren took a
sample of sour milk to the lab, he probably didn’t expect
that the bacteria species he isolated would lead to a
revolutionary insecticide – one that takes pest control
in corn and cotton to a new level.
Named Vip3A (Vegetative Insecticidal Protein 3A), the new
protein is active against a wide range of insect pests and
can help prolong the life of other related insect control
technologies. The Vip3A-based AGRISURE VIPTERA™ 3111
and VipCot™ products deliver unparalleled broad spectrum
efficacy against corn and cotton insect pests. And
opportunities with other crops like soybean and rice look
very promising.
“While the discovery of Vip3A might sound like
sheer coincidence, it is the result of a very
orderly scientific approach. Our scientists were
deliberately testing a wide variety of materials
that might harbor bacteria with novel toxins. The
fact that the ‘winner’ protein happened to come
from Greg’s fridge was lucky in one sense, but
also the well-deserved reward for the innovative
and diligent work his team had done.”
Eric Chen
Principal Research Scientist at Syngenta
Featured left: Eric Chen (left) and Greg Warren, now a Patent
Attorney at Syngenta.
Find out more
www.syngenta.com/ar2010
Global strength
We have an integrated R&D organization that exploits
the power of our knowledge, capabilities and
resources to solve growers’ problems through the
combination of seeds genetics, traits and chemistry.
Our global product safety and regulatory platforms
enable us to discover, develop and register new
products faster and more efficiently. We are
increasingly working in networks to advance
knowledge on important topics, tapping into the
expertise and ideas of all our scientists.
In Europe, recent investments in Syngenta’s major
Crop Protection research facilities at Jealott’s Hill, UK,
and Stein, Switzerland, have created internationally
renowned centers of excellence. For growers and
stakeholders, these sites are a great place to
experience first-hand the strength of our product
offering and the importance of our technology in
meeting food security challenges.
As our business grows rapidly in emerging markets,
we recognize a wealth of potential opportunities.
R&D investment 2010
$1,032m
$952m1
2009
Research and
Development
Syngenta scientists around the world help meet
growers’ needs by developing new ways to increase
crop yields and quality in a sustainable way. We are
uniquely positioned to develop integrated solutions
for our customers by combining our expertise in
bioscience, chemistry, crop genetics and agronomy.
Research and development (R&D) investment in 2010
was over $1 billion, reinforcing our industry-leading
position. We employ nearly 5,000 people at R&D
centers and field stations around the world, and
continue to invest in the development of our people,
technical capabilities and external partnerships.
1 After effect of accounting policy
change for post-employment
benefits described in Note 2 to
the Syngenta Group consolidated
financial statements in the
Financial Report 2010, which
is available on our website at
www.syngenta.com/ir
Syngenta
Annual Review 2010
Creating our offer
28
Through expansion of R&D activities and partnerships
in Asia, Latin America and Eastern Europe, we can tap
into local scientific expertise and gain useful insights
for future growth.
Our site in Goa, India, is at the center of our efforts to
accelerate new product development through closer
interaction between research and process chemists.
We completed the expansion of the facility there at the
end of 2010. We are also building up our biotechnology
center in Beijing, China, which focuses on early-stage
evaluation of genetically modified traits. In Singapore,
we opened a new center for formulation development
and marker-assisted breeding technology.
Integrated solutions for specific needs
We introduced a number of innovative technologies
in 2010. This included our new insect control trait
technology in corn, AGRISURE VIPTERA™, which was
launched in the US and received a prestigious Agrow
Award in the Best Novel Agricultural Biotechnology
category. And a new mode of action cereal fungicide,
isopyrazam, was launched in the UK for use in winter
and spring barley.
Syngenta scientists are committed to delivering new
solutions that can transform the productivity of world
agriculture, and meeting the stringent criteria of our
industry's regulatory environment. Our main focus is the
discovery and development of high value, high quality,
integrated products that address growers’ needs. For
example, we are developing complementary solutions
based on genetics, crop enhancement chemistry and
improved agronomic practice to improve water use
efficiency. This is a key area of concern for growers,
as competition for water resources will increase with
population growth, urbanization and through the
effects of climate change.
We have launched our first drought tolerant corn
variety in the US – AGRISURE ARTESIAN™. Created
through a native traits breeding approach, it is the first
product to come from our crop genetics research that
focuses on both genetically modified (GM) and non-GM
approaches to protecting yield under water stress.
In wheat, programs using our crop enhancing
MODDUS® have shown a 15–25 percent yield
increase, with 15 percent less requirement for
irrigation. The vigor effect on soybean treated with
CRUISER® seed treatments leads to yield increase
through increased roots and faster development of
the crop canopy. The active ingredient in CRUISER®,
thiamethoxam, activates plant processes that make
crops more resilient under a variety of abiotic stress,
such as drought.
Our pipelines encompass a broad range of chemical
and biotechnology solutions, which we will
progressively merge to reflect our holistic approach
by crop. The current Crop Protection pipeline, with
peak sales potential of over $2 billion, covers all
our main product lines. In 2011, we expect the first
registration of Sedaxane, a broad spectrum seed
treatment fungicide that can protect against diseases
that are difficult to control in a number of crops.
Crop Protection pipeline
Lab
research
Early
development
Late
development
Seed Care fungicide
Herbicide
Insecticide
Fungicide
Stress tolerance
Target
launch
2011–2014
PLENE™
Sedaxane
Bicyclopyrone
Cyantraniliprole
SYN 192
Invinsa™1
Post 2014
Herbicide
Fungicide
Insecticide
New crop enhancer
Peak
sales
>
$
1
.
7
b
n
>
$
0
.
5
b
n
Peak sales percentage split:
1 Invisa™, a trademark of AgroFresh Inc., a subsidiary of DAS
Corn
Soybean
Cereals
Vegetables
Rice
Sugar cane
Speciality
Other crops
Syngenta
Annual Review 2010
We recently established a public-private partnership
with the International Maize and Wheat Improvement
Center (CIMMYT) to advance the development of new
technologies in cereals. Similarly, with the International
Rice Research Institute (IRRI), we are working to
reduce constraints on rice productivity. These
examples show our commitment to delivering effective
solutions to improve global food security.
29
Our pipeline for Corn seeds has a peak sales potential
of more than $2 billion. It covers a broad range of
biotech and native traits, which will be accompanied
by ongoing genetic improvements. At the end of 2011,
subject to regulatory approval, we plan to start
launching refuge stack options in corn. We have
applied for deregulation of our second generation
corn rootworm trait scheduled for launch in 2014,
which has a novel mode of action and is showing
outstanding field trial results.
People and partners
The knowledge and passion of our people is a
tremendous asset, and we recognize the value in
personal development for all our employees. As an
innovation leader, we attract top scientists from around
the world and our focus on people is increasingly
recognized externally. In the “2010 Top Employer”
survey by “Science” magazine and the American
Association for the Advancement of Science,
Syngenta was voted seventh out of 575 companies.
Innovation is vital to grow our business. We look
outwards to find new opportunities and complement
our in-house capabilities. Syngenta has a variety of
individual collaborations with universities and major
agricultural institutes worldwide. For example, we have
established a University Innovation Center at Imperial
College, London, UK, as a hub for collaboration on
systems biology, with initial projects focusing on
predictive toxicology as well as tomato quality and flavor.
Corn seeds pipeline
Launched 2010
AVICTA® COMPLETE CORN
AGRISURE VIPTERA™
AGRISURE ARTESIAN™
Biotic stress
AGRISURE E-Z Refuge™
AGRISURE™ next generation RW
Abiotic stress
Water opt., nitrogen use efficiency
Output traits
ENOGEN™
CarbYield™
Early
development
Late
development
Initial
launches
Peak
sales
2010
2010
2010
2012
2014
Post 2015
2011
Post 2015
>
$
2
.
0
b
n
Syngenta
Annual Review 2010
Creating our offer
30
Employees
26,179
25,925
2009
People
Syngenta Awards
1,100
Entries submitted in 2010.
Every day, employees across the world live
Syngenta’s purpose: Bringing plant potential to life.
Their determination, focus and teamwork enables us
to realize our growth ambitions. The foundations for
our people processes, systems and programs are
driven by the needs of our businesses, providing
opportunities for personal growth, and recognizing
the contribution of each of our employees.
Delivering business excellence
We strive to attract, develop and retain the right global
pool of diverse talent to deliver on commitments to our
stakeholders. We operate in a dynamic world, and our
goal is to ensure that our people are equipped to
deliver the integrated solutions our customers need.
To meet these requirements, Syngenta must have a
scalable, responsive organization that anticipates
new opportunities.
The employee value proposition
Syngenta is committed to providing opportunities
for both professional and personal development.
Through our leadership approach, engagement
programs and people processes, we recognize the
contributions our employees make to our success.
Growth and recognition are the basis of our employee
value proposition.
Our “Taking Root” induction program welcomes new
employees and ensures they have a good business
and cultural understanding of the company as a whole,
from a local and global perspective. The program aims
to provide a richer, more in-depth approach than
typical induction programs.
Graduates are an important group for developing our
leadership pipeline. We have well-established general
management programs such as “Grow in Syngenta”,
a 4-5 year program geared towards broad and fast
development of MBA graduates.
We also run local, specialist trainee programs, such
as the Syngenta R&D training program at our Takfah
station in Thailand where agriculture students learn
about our corn breeding, commercial seed production
and farm management. In Brazil, our trainees gain
business experience by working in sales, marketing,
R&D and supply areas across our Crop Protection and
Seeds business.
Syngenta invests in a variety of learning and
development approaches. These include formal,
classroom-based learning events, e-learning, and
project-based development opportunities. We are
developing mentoring and peer-to-peer coaching
programs that facilitate the sharing of knowledge and
experience. We have a world-class Marketing and
Sales Excellence (MaSE) program, developed and
run in partnership with INSEAD. This long established
program has enabled us consistently to grow market
share and has recently introduced MaSE Masters, an
accreditation scheme to recognize top Marketing and
Sales professionals. Through this scheme, Masters
can practice their skills internationally, develop new
capabilities and share knowledge with colleagues.
Recognizing contribution
Recognizing the efforts of employees is central to our
culture. In 2010, we continued to run our successful
internal recognition program, the Syngenta Awards.
In 2010, around 10,000 employees from over 50
countries entered nearly 1,100 stories. The stories
exemplify Syngenta’s four values: innovation, intensity,
health and performance. We also recognize entries
that demonstrate particular ways of working that will
help shape the future of our company, such as working
in partnership with customers and stakeholders.
In November, we honored the regional finalists and
winners at our global Syngenta Awards ceremony.
We have received a number of awards from external
bodies that recognize the achievements of our
employees. For the second year in a row, Syngenta
was among the top biotechnology and pharmaceutical
employers in a poll by “Science” magazine; ranking
seventh in a field of 575 companies. In Switzerland,
Syngenta was awarded second place at the Swiss
HR Award 2010 for Best Practice in Human
Resource Management.
Looking forward
While celebrating our first ten years, we look forward
to our future with confidence. Over the past decade,
there have been many changes within Syngenta
and the world in which we operate. We firmly believe
that our unique culture plays a key role in anchoring
our organization during times of change and growth.
We are proud of the contribution Syngenta employees
make to living our purpose and values, thereby
ensuring that we are able to help the world address
the global agricultural challenges it faces now and in
the future.
Syngenta
Annual Review 2010
31
Find out more
www.syngenta.com/ar2010
Charting clear paths for
career development
Syngenta’s continued success hinges not just on unlocking
the potential of plants, but also on unlocking the potential
of its many talented professionals. Bruno Frei, Head
Capability and Career Management, knows what it means
to have an exciting career path at Syngenta. When he
started as a research chemist for a predecessor company
25 years ago, he never would have guessed that he would
be running strategic talent management projects for
Human Resources one day.
In 2009, Bruno became one of the “founders” of myCareer,
a program, which was first designed and launched as part
of the Marketing and Sales Excellence initiative (MaSE) to
help people better manage their careers and develop their
skills. In the meantime myCareer has also been developed
in other functions and is rapidly becoming adopted as a
global standard across Syngenta.
“Our myCareer tools help employees to
understand and visualize their potential
career paths. As a result, Syngenta can deliver
targeted learning and development based on
individual needs, as well as the needs of the
organization overall.”
Bruno Frei
Head Capability and Career Development at Syngenta
Featured above: Bruno Frei (right) with Scott McKinnon,
Commercial Support Group Lead at Syngenta.
Syngenta
Annual Review 2010
Creating our offer
32 Operations
The way we do business is central to our success as
a company. This covers our people – where and how
they work – our policies, our processes and our
production. Moreover, it applies not only to our own
activities, but also to those of our suppliers and
partners too. We challenge ourselves to meet the
highest standards.
Excelling in production and supply chain
Syngenta manufactures active ingredients for its
crop protection products at eight manufacturing sites
around the world – in the USA, UK, Switzerland, China
and India – and a further 18 facilities produce and
package the finished products. Our seeds are
produced both on Syngenta sites and by thousands
of contract growers worldwide.
In 2010, Syngenta was ranked as the number one
chemical manufacturer in AMR’s renowned Supply
Chain report. The primary source for the report is the
Fortune Global 500 companies. Expert and peer
panels looked not only at our financial performance,
but also at our strategic agenda, our connections to
customers, and how we handle the volatility of the
supply market.
In May 2010, we marked the completion of our
largest ever single investment program. Designed to
expand production capacity for key active ingredients,
the program involved a capital investment of over
$400 million. Much of this was concentrated in five
locations: Monthey in Switzerland; Grangemouth in
the UK; Goa in India; Omaha in the US; and Paulinia
in Brazil. As a result of this investment, we are able
to bring key products to market more quickly
and efficiently.
We offer suppliers an audit program and help them
achieve higher HSE standards. We also provide
technical support to help suppliers be more efficient
and reduce their variable costs. As a result, Syngenta
receives higher quality supplies on time, and suppliers,
in turn, build a longer-term relationship with an
important customer. Our efforts were recognized in
2010 when we won the global Procurement Leaders
Award for Innovation, which recognizes excellence and
leadership in global procurement and supply chain.
Integrating processes
In 2009, we established Syngenta Business Services
to integrate and standardize our transactional services
across the organization. Today, the new function is
in place across 27 countries. It is already delivering
business services in the areas of finance, procurement
and information systems, all based on common,
scalable tools and processes. It is now moving forward
with a similar approach for human resources.
Health, safety and environment
Protecting the health and safety of our people,
our customers and the environment is of the utmost
importance to Syngenta. This principle is embedded
in Our Code of Conduct, and our Health, Safety and
Environment (HSE) Policy and Standards.
Our global standards for suppliers harmonize existing
local requirements on HSE and ethical behavior with
our Code of Conduct. We have developed a system
to monitor labor standards that focuses on four key
areas: awareness of the Syngenta Code of Conduct
among suppliers, health and safety, wages and
benefits, and child labor.
Syngenta only employs individuals over the age of 16,
unless it is permitted by law and under circumstances
that protect their welfare. Our contracts with seed
producers clearly forbid the use of child labor and
make clear that we will terminate their contracts if they
use children as workers. We work with the Fair Labor
Association (FLA) to set and monitor labor standards
in the seed supply chain.
We monitor the HSE and quality performance
of suppliers manufacturing crop protection products.
Originally these assessments focused on suppliers
in China and India, but we extended them to cover
new contracts in Europe. In 2010, a total of
70 assessments have been completed.
Our HSE Policy and Standards guide our employees
around the world. Strong HSE practices are central
to the way we operate, so meeting the Syngenta
HSE Standards is a core responsibility of every leader
in the company. We measure health and safety
through the global injury and illness rate (IIR, per
200,000 hours worked). We aim to maintain a low
IIR of 0.5 or below. In 2010, the rate was 0.39, which
is a seven percent decrease compared to 2009.
Syngenta is committed to reducing the environmental
impacts of its operations, particularly the greenhouse
gas emissions that contribute to climate change.
In 2010, our CO2-equivalent emissions totaled
1.30 million metric tonnes. We measure our carbon
efficiency based on kilograms of CO2 equivalents per
dollar of operational income (kg CO2e/$EBIT). In 2010,
we emitted 0.66 kg CO2e/$EBIT. Our target is to
reduce this figure to 0.56 by 2012, a 40 percent
reduction compared with the 2006 baseline.
Intellectual property
The protection of intellectual property (IP) is essential
to any research-based business with long-term
investment. An efficient and fair IP system helps to
balance the interests of the inventor and society by
helping to pay for research costs and contributing to
sharing knowledge which stimulates further research
and innovation.
It is our policy not to execute our patent rights where
agriculture is undertaken for subsistence purposes
and we do not enforce patents and applications in
seeds or biotechnology in Least Developed Countries
(LDCs) for private and non-commercial use.
Watch video and find out more
www.syngenta.com/ar2010
Improving working
conditions in India
For many children in rural India, the need to
work to help provide food for their families
is a reality. As a result, they never get the
education that could help them break the
cycle of poverty.
Syngenta first started partnering with the
Fair Labor Association (FLA) to develop a
new approach to the issue of child labor in
2004. In 2009, it launched the “me & mine”
program nationwide in collaboration with
the FLA.
“me & mine” established a code of
acceptable labor standards for seed farms
supplying Syngenta. It prohibits the use of
child labor, while it also reaches out to
adults locally – especially women – to
create awareness and provide incentives.
These efforts are now bearing fruit. To
date, “me & mine” has reached out to
nearly 13,000 growers and their families,
and has monitored 13,000 farms with
nearly 40,000 laborers.
“Over the years, Syngenta has
continued to refine its Corporate
Responsibility policy to address
issues that emerged in the seed
supply chain. With the involvement
of all stakeholders, the company
has already brought about
significant changes in working
conditions in what is a socially
challenging environment. And
I am confident that with time and
persistence, it will continue to
make a difference here.”
Pramod Kulkarni
Regional Production Manager, Syngenta India
Featured above: participants in the “me & mine”
program: Sk. Hassina, Technical Farm Laborer
(left); Mathurabai Shankar Wagh, Farm Owner
(middle); and Mangalabal Sonavane, Technical
Farm Laborer (right).
Syngenta
Annual Review 2010
33
CO2e emissions
0.66
CO2e kg /$EBIT
Illness and injury rate1
0.39
0.42
2009
1 Recordable injury and illness rate
(IIR) per 200,000 hours according to
US OHSA definition
Syngenta
Annual Review 2010
Creating our offer
34
Stewardship
For Syngenta, the responsible and ethical management
of all our products – from discovery through to use and
ultimate disposal or discontinuation – is a top priority.
For example, over the past nine years, the Small
Farmer Syngenta (PAS) Program has been making
an impact in the Andean, Caribbean and Central
American (ACC) region. In collaboration with local
authorities, it has provided over 270,000 small potato
and vegetable farmers with basic training in obtaining
and sowing the best seeds, using crop protection
products safely and effectively, and adopting better
agricultural practices.
In June 2010, we collaborated on a training session
for medical staff in Laikipia East – a district in Kenya
with 60,000 farmers. Conducted by the Head of the
National Poison Center, the session was supported
by the Syngenta Foundation for Sustainable Agriculture
through the Agriculture Agri-chemicals Association
of Kenya and the Government of Kenya National
Poison Centre (Ministry of Health).
The Seeds business actively applies the Excellence
Through Stewardship (ETS) program to our operations.
The program promotes responsible management of
plant biotechnology, primarily by developing and
implementing stewardship practices across the entire
life cycle of a product and educating the public about
these practices. Syngenta is a founding member of
ETS and on the board of directors.
Beyond the safe handling of our products, Syngenta
stewardship encompasses making agriculture more
sustainable by investing in the environment. We lead
many projects that help protect biodiversity and
precious natural resources such as water and soil. We
comply with all government requirements regarding
the management and use of our products, including
the International Code of Conduct on the Distribution
and Use of Pesticides
Another important area of stewardship is application
technology, where product safety and the preservation
of the environment remain top priorities. To prevent
potential problems with application, customers need
to know as much as possible about the interaction
between our products, plants, the application devices,
and environmental factors like temperature, humidity
and wind. We have begun to integrate our expertise
into product and service strategies. And we are working
closely with many external partners, including spray
equipment manufacturers, universities and distributors.
Compliance and risk management
Compliance and risk management are at the heart
of protecting the ongoing value of our business and
the safety of our people, our business partners and
the communities in which we operate. Syngenta has
a formal, coordinated process for actively identifying,
mapping, monitoring and controlling risk – whether it is
financial, operational, or strategic.
The Syngenta Code of Conduct sets our commitment
to ethical, legal, social and environmental responsibility.
It outlines our commitment to build and maintain trust
in Syngenta, and to integrate our responsibilities in
everything we do. We comply with all laws, as well
as national and international codes and conventions,
and uphold the principles set out in the Universal
Declaration of Human Rights and the International
Labor Organization’s Core Conventions.
Compliance and risk management are everybody’s
responsibility. We have established processes to train
and support our employees on compliance matters.
Employees are encouraged to report any suspected
breaches. Local laws and regulations govern our
social and environmental behavior. We set the highest
standards for compliance, which are overseen by
the Compliance and Risk Management Committee.
Engaging with stakeholders
We are committed to meeting the expectations we have
set for ourselves, as well as delivering on what society
expects of us. It matters that our employees and other
stakeholders have confidence in us as a worthy
partner that can genuinely make a difference by
contributing to rural economies and food security.
Syngenta aims to create value with our stakeholders.
From a business perspective, we believe that our
success depends on honest, open dialogue and
collaboration – with other companies, with research
institutions, with governments and NGOs.
Most people today agree on the issues around
agriculture; the debate centers around the solutions.
Syngenta is actively engaged in this debate, both
internally and externally, on the way food is produced,
stored, processed, distributed and accessed.
We believe that clarity and frank discussion – even
around difficult questions – is key to affecting change.
We are members of the Sustainability Consortium
and the Keystone Field to Market Initiative, as well as
a range of other sustainability round tables. We are also
a member of the World Economic Forum and we
actively participate in its work groups for the “New
Vision for Agriculture,” and the “Water Initiative.” As a
global science-based company, we are increasingly
engaged in international forums related to food
security, resource efficiency, and the development
of rural economies.
Syngenta
Annual Review 2010
35
Product line performance
Crop Protection
Selective Herbicides
Sales
$m
2010
2009
2008
2,308
2,221
2,412
Major brands
AXIAL®, CALLISTO® family, DUAL®/BICEP® MAGNUM,
FUSILADE®MAX, TOPIK®
Volume growth was driven in particular by corn
herbicides and more than offset lower prices. The
CALLISTO® family of products showed growth in all
regions, with the main contribution coming from the
USA, where early purchases in advance of the
2011 season were testimony to our strong market
position. Soybean herbicides also showed a good
performance, reflecting their value in combating
glyphosate-resistant weeds.
Non-selective Herbicides
Sales
$m
2010
2009
2008
Major brands
GRAMOXONE®, TOUCHDOWN®
987
1,141
1,329
Sales were lower mainly due to lower prices for
TOUCHDOWN®, in line with developments in the
glyphosate market. TOUCHDOWN® volumes, while
slightly lower for the full year, recovered sharply in the
second half with strong demand in Latin America.
GRAMOXONE® volumes also improved in the second
half with good growth in Asia Pacific.
Fungicides
Sales
$m
2010
2009
2008
2,662
2,442
2,620
Major brands
ALTO®, AMISTAR®, BRAVO®, REVUS®, RIDOMIL
GOLD®, SCORE®, TILT®, UNIX®
Growth in fungicides was driven by AMISTAR®, up
20 percent on the previous year. The main driver
was Latin America, where applications on soybean
increased. Our market share in Latin America was
reinforced with the opening of new azoxystrobin
capacity allowing us to satisfy growing demand. In
Asia Pacific AMISTAR® sales exceeded $100 million
for the first time, with significant further potential as
the product’s yield and vigor benefit are increasingly
recognized. Strong volume growth in North America
almost offset lower prices in the region.
Syngenta
Annual Review 2010
Product line performance
36
Insecticides
Sales
$m
2010
2009
2008
Major brands
ACTARA®, DURIVO®, FORCE®, KARATE®,
PROCLAIM®, VERTIMEC®
Professional Products
Sales
$m
2010
2009
2008
1,475
1,312
1,423
Major brands
FAFARD®, HERITAGE®, ICON®
470
458
527
Improving consumer demand led to a recovery in
the garden and ornamentals segments with new
registrations in Europe also contributing to a strong
performance in the region. Turf sales were lower in
a competitive North American market.
The broad spectrum insecticide ACTARA®, used on
multiple crops worldwide, continues to grow ten years
after its launch; sales in 2010 increased by 25 percent.
Sales of the new product DURIVO® more than doubled
with its expansion on rice and vegetables in a number
of Asian markets and a successful launch on corn and
soybean in Brazil.
Seed Care
Sales
$m
2010
2009
2008
838
821
830
Major brands
AVICTA®, CRUISER®, DIVIDEND®, MAXIM®
Seed Care showed strong volume growth particularly
in emerging markets, where adoption of the
technology is increasing. Sales were lower in North
America, where high channel inventories of treated
seed and a competitive environment affected
CRUISER® and MAXIM®. This was offset by the
introduction of AVICTA® on corn in the USA and
by growth in Brazil.
Syngenta
Annual Review 2010
Vegetables
Sales
$m
2010
2009
2008
37
663
594
603
Major brands
DULCINEA®, ROGERS®, S&G®, Zeraim Gedera
A strong start to the year accelerated in the second
half, with all regions showing double digit growth. In
Europe, the expansion of fresh vegetable sales more
than offset a decline in the processing market. Growth
in emerging markets was broad based, reflecting the
breadth of the portfolio and increased demand for high
quality produce.
1,281
1,210
1,040
Flowers
Sales
$m
2010
2009
2008
337
331
337
Major brands
GoldFisch®, Goldsmith Seeds, Yoder®
Flowers showed moderate growth in the two main
regions of Europe and North America. This reflected
advances in genetics as well as some improvement
in the economic environment.
Seeds
Corn and Soybean
Sales
$m
2010
2009
2008
Major brands
AGRISURE®, GARST®, GOLDEN HARVEST®, NK®
Corn and soybean sales were up by 16 percent
adjusting for the impact of advanced sales in the fourth
quarter of 2009. Fourth quarter growth, which was on
a comparable basis, reflects strong early orders in the
USA. Evidence of Syngenta’s product performance
and innovation is boosting growth in a buoyant market.
Full year sales expanded in all other regions, with
particularly strong performances in Eastern Europe
and Asia Pacific.
Diverse Field Crops
Sales
$m
2010
2009
2008
524
429
462
Major brands
NK® oilseeds, HILLESHÖG® sugar beet
Diverse Field Crop sales increased significantly on
good underlying growth supplemented by acquisitions,
which added nine percent to sales. Growth was
particularly strong in Eastern Europe, with expansion
in Russia and Ukraine on higher sunflower acreage.
Syngenta
Annual Review 2010
Board of Directors
at December 31, 2010
38
From left to right
Peggy Bruzelius, Jacques
Vincent, Peter Thompson,
Martin Taylor, Felix Weber,
Michael Mack, Pierre Landolt,
Jürg Witmer, David Lawrence,
Rolf Watter and Stefan Borgas
at Syngenta’s global R&D center
for flowers and vegetables in
Enkhuizen, The Netherlands.
Jürg Witmer
Vice Chairman, non-executive Director. Member of the
Chairman’s Committee and of the Compensation Committee
Age: 62. Nationality: Swiss. Appointed: 2006. Term of office: 2012.
Jürg Witmer is currently Chairman of Givaudan SA and Clariant AG.
He joined Roche (1978) in the legal department and subsequently
held a number of positions including Assistant to the CEO, General
Manager of Roche Far East based in Hong Kong, Head of
Corporate Communications and Public Affairs at Roche
headquarters in Basel, Switzerland, and General Manager of
Roche Austria. He became CEO of Givaudan Roure (1999) and
then Chairman of the Board of Directors of Givaudan (2005).
Jürg Witmer has a doctorate in law from the University of Zurich,
as well as a degree in international studies from the University
of Geneva.
Stefan Borgas
Non-executive Director. Member of the Audit Committee
Age: 46. Nationality: German. Appointed: 2009. Term of office: 2012.
Stefan Borgas has been President and Chief Executive Officer of
Lonza since June 2004. Prior to joining Lonza, he spent 14 years
with BASF Group where he held various leadership positions in
Fine Chemicals and Engineering Plastics in the USA, Germany,
Ireland and China.
Stefan Borgas holds a degree in Business Administration from the
University of Saarbrücken and a Master of Business Administration
from the University of St. Gallen. He is member of the Board of
SGCI Chemie Pharma Schweiz, the association of Swiss chemical
and pharmaceutical industries, of the Swiss-American Chamber of
Commerce and of the Swiss Management Gesellschaft (SMG).
Membership and qualification
Syngenta is led by a strong and experienced Board. The Board
includes representatives from six nationalities, drawn from broad
international business and scientific backgrounds. Its members
bring diversity in expertise and perspective to the leadership of a
complex, highly regulated, global business.
Martin Taylor
Chairman of the Board, non-executive Director. Chairman of
the Chairman’s Committee and the Corporate Responsibility
Committee, and member of the Compensation Committee.
He is also Chairman of the Syngenta Foundation for
Sustainable Agriculture
Age: 58. Nationality: British. Appointed: 2000. Term of office: 2011.
Martin Taylor is currently Vice Chairman of RTL Group SA.
Previously he was an Advisor to Goldman Sachs International
(1999–2005), Chairman of WHSmith plc (1999–2003), and Chief
Executive Officer of Barclays plc (1993–1998) and Courtaulds
Textiles (1990–1993). He is a member of the British government’s
Independent Banking Commission.
Martin Taylor has a degree in oriental languages from Oxford University.
Michael Mack
Chief Executive Officer (CEO), executive Director. Member of
the Chairman’s Committee and the Corporate Responsibility
Committee
Age: 50. Nationality: American. Appointed: 2008. Term of office: 2013.
Michael Mack was Chief Operating Officer of Seeds (2004–2007)
and Head of Crop Protection, NAFTA Region (2002–2004) for
Syngenta. Prior to this, he was President of the Global Paper
Division of Imerys SA, a French mining and pigments concern,
from the time of its merger in 1999 with English China Clays Ltd.,
where he was Executive Vice President, Americas and Pacific
Region, in addition to being an executive Director of the Board.
From 1987 to 1996 he held various roles with Mead Corporation.
Michael Mack is also Chairman of the Board of the Swiss-American
Chamber of Commerce.
Michael Mack has a degree in economics from Kalamazoo College
in Michigan, studied at the University of Strasbourg, and has an
MBA from Harvard University.
Syngenta
Annual Review 2010
Peggy Bruzelius
Non-executive Director. Chairman of the Audit Committee
Age: 61. Nationality: Swedish. Appointed: 2000. Term of
office: 2012.
Peter Thompson
Non-executive Director. Member of the Audit Committee
Age: 64. Nationality: American. Appointed: 2000. Term of
office: 2011.
39
Peggy Bruzelius is currently Chairman of Lancelot Holding AB.
In addition she serves as Vice Chairman of Electrolux AB and as a
Director of Husqvarna AB, Akzo Nobel NV, Axfood AB and Diageo
plc. Peggy Bruzelius is a member of the Royal Swedish Academy
of Engineering Sciences. In addition she is a member of the Board
of Trustees of the Stockholm School of Economics. Previously she
was Executive Vice President of SEB-bank (1997–1998) and
Chief Executive Officer of ABB Financial Services (1991–1997).
Peggy Bruzelius holds a Master of Science from the Stockholm
School of Economics and an Honorary Doctorate from the
same university.
Pierre Landolt
Non-executive Director. Member of the Corporate
Responsibility Committee. He is also a member of the Board
of the Syngenta Foundation for Sustainable Agriculture
Age: 63. Nationality: Swiss. Appointed: 2000. Term of office: 2012.
Pierre Landolt is currently Chairman of the Sandoz Family
Foundation and a Director of Novartis AG. He is also a partner with
unlimited liabilities of the private bank Landolt & Cie. Pierre Landolt
serves, in Brazil, as President of the Instituto Fazenda Tamanduá,
of the Instituto Estrela de Fomento ao Microcrédito, of AxialPar Ltda
and Moco Agropecuaria Ltda, and, in Switzerland, as Chairman of
Emasan AG and Vaucher Manufacture Fleurier SA, and as Vice
Chairman of Parmigiani Fleurier SA. He is a Director of EcoCarbone
SAS, France, and Amazentis SA, Switzerland. He is also Vice
Chairman of the Montreux Jazz Festival Foundation.
Pierre Landolt graduated with a Bachelor of Laws from the
University of Paris Assas.
David Lawrence
Non-executive Director. Member of the Corporate
Responsibility Committee and Chairman of the Science
and Technology Advisory Board
Age: 61. Nationality: British. Appointed: 2009. Term of office: 2012.
David Lawrence was Head of Research & Development at
Syngenta from September 1, 2002 until the end of September,
2008. Prior to this role, David Lawrence was Head Research &
Technology Projects (2000–2002) for Syngenta. Prior to this, he
was Head International R&D Projects for Zeneca Agrochemicals,
having previously held several senior scientific roles. He is also a
member of the BBSRC Council and a Board member for
Rothamsted Research, Plastid AS and the UK Biosciences
Knowledge Transfer Network for which he chairs the Industrial
Biotechnology Group. He is a member of the UK Foresight Lead
Expert Group on Food and Farming, and of the UK Industrial
Biotechnology Leadership Team.
David Lawrence graduated in chemistry from Oxford University
with an MA and DPhil in chemical pharmacology.
Peter Thompson is currently a Director of Sodexo SA. Previously
he was President and Chief Executive Officer of PepsiCo
Beverages International (1996–2004), President of PepsiCo Foods
International’s Europe, Middle East and Africa Division (1995–1996)
and of Walkers Snack Foods in the UK (1994–1995). Before joining
PepsiCo he held various senior management roles with Grand
Metropolitan plc, including President and Chief Executive Officer of
GrandMet Foods Europe (1992–1994), Vice Chairman of The
Pillsbury Company (1990–1992), and President and Chief Executive
Officer of The Paddington Corporation (1984–1990). He is also
Chairman of the Vero Beach Museum of Art.
Peter Thompson has a degree in modern languages from Oxford
University and an MBA from Columbia University.
Jacques Vincent
Non-executive Director. Member of the
Compensation Committee
Age: 64. Nationality: French. Appointed: 2005. Term of office: 2013.
Jacques Vincent has been Vice Chairman and Chief Operating
Officer of the Danone Group, Paris, from 1998 until 2008. He
retired from this company in 2010 and sits on the board of various
companies, among them Danone, Yakult, Cereplast and
Mediaperformance. He began his career with Danone in 1970 and
has since held various financial and overall management positions
within this group.
Jacques Vincent is a graduate engineer of the Ecole Centrale,
Paris. He holds a bachelor in Economics from Paris University and
a Master of Science from Stanford University.
Rolf Watter
Non-executive Director. Member of the Chairman’s Committee
Age: 52. Nationality: Swiss. Appointed: 2000. Term of office: 2011.
Rolf Watter has been a partner in the law firm Bär & Karrer in Zurich
since 1994. He was a member of its executive board and later an
executive Director from 2000 until 2009. He is a non-executive
Director of Zurich Financial Services (and its subsidiary Zurich
Insurance Company), of Nobel Biocare Holding AG, of UBS
Alternative Portfolio AG and A.W. Faber-Castell (Holding) AG.
He was formerly non-executive Chairman of Cablecom Holding
(2003–2008), a Director of Centerpulse AG (2002–2003), of Forbo
Holding AG (1999–2005) and of Feldschlösschen Getränke AG
(2001–2004). In addition, Rolf Watter is a part-time professor at the
Law School of the University of Zurich and a member of the SIX
Swiss Exchange Regulatory Board and its Disclosure Commission
of Experts.
Rolf Watter graduated from the University of Zurich with a doctorate
in law and holds an LLM degree from Georgetown University; he is
admitted to the Bar of Zurich.
Felix A. Weber
Non-executive Director. Chairman of the Compensation
Committee
Age: 60. Nationality: Swiss. Appointed: 2000. Term of office: 2011.
Felix A. Weber is currently Executive Committee Co-Chairman of
Nomura Switzerland and a Managing Director of Nomura
International Ltd. Previously, he was a Director of Publigroupe
(2005–2009), a Director of Valora (2006–2008), a Director of Glacier
Holdings GP SA and Glacier Holdings S.C.A (former parent entities
of Cablecom GmbH) (2003–2005), a Director of Cablecom GmbH
(2004–2005), Managing Director of Lehman Brothers Ltd.
(2006–2008), Executive Vice President and Chief Financial Officer
of Adecco SA (1998–2004), Associate Project Manager and
Principal of McKinsey & Company in Zurich (1989–1997), and Chief
Executive Officer of Alusuisse South Africa (1982–1984).
Felix A. Weber graduated from the University of St. Gallen with an
MBA in operations research and finance and a PhD in marketing.
Syngenta
Annual Review 2010
Executive Committee
at December 31, 2010
40
Members of the
Executive Committee
Under the direction of the
Chief Executive Officer,
the Executive Committee is
responsible for the operational
management of the Company.
It consists of the Chief Executive
Officer (CEO), the Chief
Operating Officers (COO) of
Crop Protection and Seeds,
the Chief Financial Officer
(CFO), the Head of Research
& Development, the Head of
Global Operations, the Head
of Business Development and
the Head of Legal & Taxes.
Syngenta
Annual Review 2010
41
Christoph Mäder
Head of Legal & Taxes and Company Secretary
Age: 51. Nationality: Swiss. Appointed: 2000.
Christoph Mäder was Head of Legal & Public Affairs for Novartis
Crop Protection (1999–2000) and Senior Corporate Counsel for
Novartis International AG (1992–1998). He is Chairman of SGCI
Chemie Pharma Schweiz, the association of Swiss chemical and
pharmaceutical industries. He is also a member of the Executive
Committee of the Board of economiesuisse, the main umbrella
organization representing the Swiss economy and of the
Executive Board of the Business and Industry Advisory
Committee (BIAC) to the Organization for Economic Co-
operation and Development (OECD).
He graduated from Basel University Law School, and is admitted
to the Bar in Switzerland.
Mark Peacock
Head of Global Operations
Age: 49. Nationality: British. Appointed: 2007.
Mark Peacock was previously Head of Global Supply
(2003–2006) and Regional Supply Manager for Asia Pacific
(2000–2003) for Syngenta. Prior to this he was a Product
Manager in Zeneca Agrochemicals and General Manager of
the Electrophotography Business in Zeneca Specialties.
He has a degree in chemical engineering from Imperial College,
London, and a Masters in international management from McGill
University in Montreal.
Davor Pisk
Chief Operating Officer Seeds
Age: 52. Nationality: British. Appointed: 2008.
Davor Pisk was Region Head Crop Protection Asia Pacific
(2003–2007) for Syngenta and Region Head Asia for Zeneca
Agrochemicals (1998–2001). Prior to 1998, he was Head of
Herbicides for Zeneca (1993–1997) and General Manager of
ICI Czechoslovakia (1991–1993).
He has a BA in Economics and Politics from Exeter University,
UK, and an MA in Political Science from the University of
California, USA.
John Ramsay
Chief Financial Officer
Age: 53. Nationality: British. Appointed: 2007.
John Ramsay was Group Financial Controller (2000–2007) for
Syngenta. Prior to that, he was Zeneca Agrochemicals Finance
Head Asia Pacific (1994–1999), Financial Controller ICI Malaysia
(1990–1993), and ICI Plant Protection Regional Controller Latin
America (1987–1990). Before joining ICI in 1984, he worked in
Audit and Tax at KPMG.
He is a Chartered Accountant and also holds an honors degree
in finance and accounting.
Michael Mack
Chief Executive Officer (CEO), executive Director. Member
of the Chairman’s Committee and the Corporate
Responsibility Committee
Age: 50. Nationality: American. Appointed: 2008.
Michael Mack was Chief Operating Officer of Seeds (2004–2007)
and Head of Crop Protection, NAFTA Region (2002–2004) for
Syngenta. Prior to this, he was President of the Global Paper
Division of Imerys SA, a French mining and pigments concern,
from the time of its merger in 1999 with English China Clays Ltd.,
where he was Executive Vice President, Americas and Pacific
Region, in addition to being an executive Director of the Board.
From 1987 to 1996 he held various roles with Mead Corporation.
Michael Mack is also Chairman of the Board of the Swiss-
American Chamber of Commerce.
Michael Mack has a degree in economics from Kalamazoo
College in Michigan, studied at the University of Strasbourg,
and has an MBA from Harvard University.
Alejandro Aruffo
Head of Research & Development
Age: 51. Nationality: Italian/American. Appointed: 2008.
Alejandro Aruffo was Vice President Global Pharmaceutical
Development, Abbott (2005–2008), President Abbott
Bioresearch Center and Vice President Abbott Immunology
Research and Development (2003–2005), President Abbott
Bioresearch Center and Divisional Vice President Abbott
Immunology Research (2002–2003), Vice President
Cardiovascular and Metabolic Disease Drug Discovery
(2001–2002), and Vice President Immunology Drug Discovery
(1998–2001) for Bristol-Myers Squibb. Prior to these roles he
held various positions at Bristol-Myers Squibb.
He graduated from the University of Washington with BSc
degrees in chemistry and mathematics and from Harvard
University with a PhD in biophysics.
John Atkin
Chief Operating Officer Crop Protection
Age: 57. Nationality: British. Appointed: 2000.
John Atkin was Chief Executive Officer (1999–2000), Chief
Operating Officer (1999), Head of Product Portfolio Management
(1998), and Head of Insecticides and Patron for Asia (1997–1998)
of Novartis Crop Protection. Prior to 1998 he was General
Manager of Sandoz Agro France (1995–1997) and Head of
Sandoz Agro Northern Europe (1993–1995). In 2008 he was
appointed Visiting Professor at the Institute for Research on
Environment and Sustainability (IRES) at the University of
Newcastle upon Tyne. He is also Chairman of CropLife’s Crop
Protection Strategy Council (global industry association).
He graduated from the University of Newcastle upon Tyne with
a PhD and a BSc degree in agricultural zoology.
Robert Berendes
Head of Business Development
Age: 45. Nationality: German. Appointed: 2007.
Robert Berendes was Head of Diverse Field Crops (2005–2006)
and Head of Strategy, Planning and M&A (2002–2005) for
Syngenta. Prior to this, he was a partner and co-leader of the
European chemical practice at McKinsey & Company.
He graduated from the University of Cologne with a diploma in
chemistry and has a PhD in biophysics from the Max-Planck-
Institute for Biochemistry/Technical University of Munich.
Syngenta
Annual Review 2010
Financial information
42
A summary of Syngenta’s consolidated financial statements is provided on pages 42 to 49. For full details and analysis of the Group’s audited financial
results, prepared in accordance with IFRS, please refer to our comprehensive Financial Report which is available on request or on our website
www.syngenta.com/ir
References to EBITDA in the following financial information excludes the impact of restructuring, impairment and discontinued operations1.
Summarized financial information 2010 and 2009
For the year ended December 31 ($m, except per share amounts)
Sales
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
Income before taxes
Income tax expense
Net income
Attributable to minority interests
Attributable to Syngenta AG shareholders:
Earnings/(loss) per share ($)2
– Basic
– Diluted
Gross profit margin excluding restructuring and impairment
EBITDA4
EBITDA margin
Tax rate on results excluding restructuring and impairment
Free cash flow5
Trade working capital as a percentage of 12-month sales
Debt/Equity gearing6
Net debt6
Cash flow return on investment7
Restructuring and
impairment
2009
–
(17)
–
–
–
(130)
(147)
(149)
42
(107)
–
(107)
2010
–
(18)
–
–
–
(159)
(177)
(178)
42
(136)
–
(136)
As reported under IFRS
2009
10,992
5,420
(1,805)
(952)
(714)
(130)
1,819
1,694
(283)
1,411
(3)
1,408
2010
11,641
5,775
(1,892)
(1,032)
(899)
(159)
1,793
1,677
(275)
1,402
(5)
1,397
(1.15)
(1.14)
15.07
14.99
15.11
15.01
(1.47)
(1.45)
2010
CER3
49.7%
21.9%
Excluding restructuring
and impairment1
2009
10,992
5,437
(1,805)
(952)
(714)
–
1,966
1,843
(325)
1,518
(3)
1,515
2010
11,641
5,793
(1,892)
(1,032)
(899)
–
1,970
1,855
(317)
1,538
(5)
1,533
16.54
16.44
2010
49.8%
2,505
21.5%
17.1%
1,129
33%
20%
1,473
13%
16.26
16.15
2009
49.5%
2,427
22.1%
17.6%
528
36%
28%
1,802
13%
1 For further discussion of restructuring and impairment charges, see page 48. Net income and earnings per share excluding restructuring and impairment are provided as additional information
and not as an alternative to net income and earnings per share determined in accordance with IFRS
2 The weighted average number of ordinary shares in issue used to calculate the earnings per share were as follows: For 2010 basic EPS 92,687,903 and diluted 93,225,303; for 2009 basic EPS
93,154,537 and diluted 93,760,196
3 For a description of CER, see page 48
4 EBITDA is defined on page 48
5 2009 free cash flow has been restated to reflect the change in definition of free cash flow implemented by Syngenta during 2010. For a description of free cash flow and details of the change in
definition, page 48
6 For a description of net debt and the calculation of debt/equity gearing, see page 48
7 Syngenta has implemented the cash flow return on investment measure for the first time in 2010. For a description of the calculation, see page 48
Syngenta
Annual Review 2010
Full year product line and regional sales
43
Year ended December 31
Syngenta
Crop Protection
Seeds
Business Development
Inter-segment elimination
Third Party Sales
Crop Protection
Product line
Selective Herbicides
Non-selective Herbicides
Fungicides
Insecticides
Seed Care
Professional Products
Others
Total
Regional
Europe, Africa and Middle East
NAFTA
Latin America
Asia Pacific
Total
Seeds
Product line
Corn and Soybean
Diverse Field Crops
Vegetables
Flowers
Total
Regional
Europe, Africa and Middle East
NAFTA
Latin America
Asia Pacific
Total
1 For a description of CER, see page 48
2010
$m
2009
$m
Actual
%
8,878
2,805
23
(65)
11,641
8,491
2,564
8
(71)
10,992
+5
+9
+197
n/a
+6
2,308
987
2,662
1,475
838
470
138
8,878
2,649
2,383
2,300
1,546
8,878
1,281
524
663
337
2,805
1,047
1,234
275
249
2,805
2,221
1,141
2,442
1,312
821
458
96
8,491
2,667
2,567
1,907
1,350
8,491
1,210
429
594
331
2,564
933
1,187
243
201
2,564
+4
-13
+9
+12
+2
+3
+43
+5
-1
-7
+21
+15
+5
+6
+22
+12
+2
+9
+12
+4
+13
+24
+9
CER1
%
+3
+8
+197
n/a
+4
+1
-16
+7
+11
+2
–
+43
+3
-1
-10
+21
+8
+3
+4
+18
+11
+2
+8
+10
+3
+13
+18
+8
Syngenta
Annual Review 2010
Financial information
44
Condensed consolidated income statement
Year ended December 31 ($m, except share and per share amounts)
Sales
Cost of goods sold
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
Income/(loss) from associates and joint ventures
Financial expenses, net
Income before taxes
Income tax expense
Net income
Attributable to:
– Minority interests
– Syngenta AG shareholders
Net income
Earnings per share (US$):
– Basic
– Diluted
Weighted average number of shares:
– Basic
– Diluted
2010
11,641
(5,866)
5,775
(1,892)
(1,032)
(899)
(159)
1,793
25
(141)
1,677
(275)
1,402
5
1,397
1,402
15.07
14.99
20091
10,992
(5,572)
5,420
(1,805)
(952)
(714)
(130)
1,819
(3)
(122)
1,694
(283)
1,411
3
1,408
1,411
15.11
15.01
92,687,903 93,154,537
93,225,303 93,760,196
1 After effect of accounting policy change for post-employment benefits described in Note 2 to the Syngenta Group consolidated financial statements in the Financial Report 2010, which is
available on our website at www.syngenta.com/ir
All amounts relate to continuing operations
Syngenta
Annual Review 2010
Restructuring and impairment before taxes
45
Year ended December 31 ($m)
Cash costs:
Operational efficiency programs
Integration and acquisition costs
Other restructuring costs
Non-cash restructuring and impairment, net
Total restructuring and impairment before taxes1
2010
2009
101
19
14
134
44
178
98
28
–
126
23
149
1 $18 million (2009: $17 million) is included within cost of goods sold and $1 million (2009: $2 million) is included within income/(loss) from associates and joint ventures
Syngenta
Annual Review 2010
Financial information
46
Condensed consolidated balance sheet
At December 31 ($m)
Assets
Current assets:
Cash and cash equivalents
Trade receivables
Other accounts receivable
Inventories
Derivative and other financial assets
Other current assets
Total current assets
Non-current assets:
Property, plant and equipment
Intangible assets
Deferred tax assets
Derivative financial assets
Other non-current financial assets
Total non-current assets
Total assets
Liabilities and equity
Current liabilities:
Trade accounts payable
Current financial debt
Income taxes payable
Derivative financial liabilities
Other current liabilities
Provisions
Total current liabilities
Non-current liabilities:
Financial debt and other non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Equity:
Shareholders’ equity
Minority interests
Total equity
Total liabilities and equity
2010
20091
1,967
2,554
626
3,844
502
223
9,716
2,964
3,087
824
176
518
7,569
17,285
(2,590)
(992)
(406)
(291)
(846)
(228)
(5,353)
(2,786)
(813)
(884)
(4,483)
(9,836)
1,552
2,506
558
3,922
156
200
8,894
2,738
3,102
747
248
400
7,235
16,129
(2,468)
(281)
(376)
(145)
(827)
(214)
(4,311)
(3,527)
(688)
(1,116)
(5,331)
(9,642)
(7,439)
(10)
(7,449)
(17,285)
(6,473)
(14)
(6,487)
(16,129)
1 After effect of accounting policy change for post-employment benefits described in Note 2 to the Syngenta Group consolidated financial statements in the Financial Report 2010, which is
available on our website at www.syngenta.com/ir
Syngenta
Annual Review 2010
Condensed consolidated cash flow statement
47
Year ended December 31 ($m)
Income before taxes
Reversal of non-cash items
Cash (paid)/received in respect of:
Interest and other financial receipts
Interest and other financial payments
Income taxes
Restructuring costs
Contributions to pension plans, excluding restructuring costs
Other provisions
Cash flow before change in net working capital
Change in net working capital:
Change in inventories
Change in trade and other accounts receivable and other net current assets
Change in trade and other accounts payable
Cash flow from operating activities
Additions to property, plant and equipment
Proceeds from disposals of property, plant and equipment
Purchases of intangible assets
Purchases of investments in associates and other financial assets
Proceeds from disposals of financial assets
Net cash flows from (purchases)/disposals of marketable securities
Acquisitions and divestments
Cash flow used for investing activities
Increases in third party interest-bearing debt
Repayments of third party interest-bearing debt
Sale/(purchase) of treasury shares and options over own shares
Acquisitions of non-controlling interests
Dividends paid
Cash flow from financing activities
Net effect of currency translation on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
2010
1,677
805
144
(308)
(268)
(38)
(335)
(95)
1,582
108
(129)
146
1,707
(396)
13
(118)
(12)
42
31
(10)
(450)
139
(165)
(246)
(48)
(524)
(844)
2
415
1,552
1,967
20091
1,694
615
96
(380)
(165)
(79)
(125)
(81)
1,575
(178)
55
(33)
1,419
(652)
33
(97)
(22)
87
(41)
(188)
(880)
926
(183)
(79)
–
(494)
170
40
749
803
1,552
1 After effect of accounting policy change for post-employment benefits described in Note 2 to the Syngenta Group consolidated financial statements in the Financial Report 2010, which is
available on our website at www.syngenta.com/ir
Free cash flow
Year ended December 31 ($m)
Cash flow from operating activities
Cash flow used for investing activities
Cash flow (from)/used for marketable securities
Cash flow used for acquisitions of non-controlling interests
Cash flow from foreign exchange movements and settlement of hedges of inter-company loans
Free cash flow
2010
1,707
(450)
(31)
(48)
(49)
1,129
2009
1,419
(880)
41
–
(52)
528
Syngenta
Annual Review 2010
Financial information
48
Constant exchange rates (CER)
Results in this report from one period to another period are, where
appropriate, compared using constant exchange rates (CER). To present
that information, current period results for entities reporting in currencies
other than US dollars are converted into US dollars at the prior period’s
exchange rates, rather than at the exchange rates for the current year.
CER margin percentages for gross profit and EBITDA are calculated by
the ratio of these measures to sales after restating the measures and
sales at prior period exchange rates. The CER presentation indicates
the underlying business performance before taking into account
currency exchange fluctuations.
EBITDA
EBITDA is defined as earnings before interest, tax, minority interests,
depreciation, amortization, restructuring and impairment. Information
concerning EBITDA has been included as it is used by management and
by investors as a supplementary measure of operating performance and is
used by Syngenta as the basis of part of its employee incentive schemes.
Management excludes restructuring from EBITDA in order to focus on
results excluding items affecting comparability from one period to the next.
EBITDA is not a measure of cash liquidity or financial performance under
generally accepted accounting principles and the EBITDA measures used
by Syngenta may not be comparable to other similarly titled measures of
other companies. EBITDA should not be construed as an alternative to
operating income or cash flow as determined in accordance with generally
accepted accounting principles.
Restructuring and impairment before taxes
Restructuring represents the effect on reported performance of initiating
business changes which are considered major and which, in the opinion
of management, will have a material effect on the nature and focus of
Syngenta’s operations, and therefore requires separate disclosure to
provide a more thorough understanding of business performance.
Restructuring includes the effects of completing and integrating significant
business combinations and divestments. Restructuring and impairment
includes the impairment costs associated with major restructuring and also
impairment losses and reversals of impairment losses resulting from major
changes in the markets in which a reported segment operates.
The incidence of these business changes may be periodic and the effect
on reported performance of initiating them will vary from period to period.
Because each such business change is different in nature and scope,
there will be little continuity in the detailed composition and size of the
reported amounts which affect performance in successive periods.
Separate disclosure of these amounts facilitates the understanding of
performance including and excluding items affecting comparability.
Reported performance before restructuring and impairment is one
of the measures used in Syngenta’s short-term employee incentive
compensation plans. Syngenta’s definition of restructuring and impairment
may not be comparable to similarly titled line items in financial statements
of other companies.
Free cash flow
Free cash flow comprises cash flow from operating and investing activities:
excluding investments in and proceeds from marketable securities, which
are included in investing activities; excluding cash flows from and used for
foreign exchange movements and settlement of related hedges on
inter-company loans, which are included in operating activities; and
including cash flows from acquisitions of non-controlling interests, which
are included in financing activities.
During 2010, Syngenta changed its definition of free cash flow to exclude
cash flows from or used for foreign exchange movements and settlement
of hedges of inter-company loans because it believes this revised free cash
flow measure is more independent of a group’s internal funding structure
and therefore more easily comparable with that of companies with less
centralized funding structures than Syngenta’s. 2009 free cash flow has
been restated.
Free cash flow is not a measure of financial performance under generally
accepted accounting principles and the free cash flow measure used by
Syngenta may not be identical to similarly titled measures of other
companies. Free cash flow has been included as it is used by many
investors as a useful supplementary measure of cash generation.
Net debt reconciliation
Net debt comprises total debt net of related hedging derivatives, cash
and cash equivalents and marketable securities. Net debt is not a
measure of financial position under generally accepted accounting
principles and the net debt measure used by Syngenta may not be
comparable to the similarly titled measure of other companies. Net debt
has been included as it is used by many investors as a useful measure
of financial position and risk. The following table presents the derivation
of the debt/equity gearing ratio:
($m)
Net debt
Shareholders’ equity
Debt/equity gearing ratio (%)
2010
1,473
7,439
20%
2009
1,802
6,473
28%
Cash flow return on investment
Cash flow return on investment is a new measure implemented by
Syngenta in 2010 in order to compare cash returns to average invested
capital. Gross cash flow comprises cash flow before change in net
working capital, excluding interest and other financial receipts and
payments. In 2010, the accelerated contributions to the defined benefit
pension plans of US$200 million were also excluded. Invested capital
comprises: total current assets, excluding cash and derivative and other
financial assets; total non-current assets, excluding non-current derivative
and other financial assets and defined benefit pension assets, and
adjusted to reflect gross book values of property, plant and equipment
and intangible assets; total current liabilities, excluding derivative financial
liabilities and current financial debt; and deferred tax liabilities.
Syngenta
Annual Review 2010
Full year segmental results excluding restructuring and impairment
49
Year ended December 31, 2010 ($m)
Sales
Gross profit
Marketing and distribution
Research and development
General and administrative
Operating income
EBITDA
EBITDA (%)
Year ended December 31, 2009 ($m)
Sales
Gross profit
Marketing and distribution
Research and development
General and administrative
Operating income
EBITDA
EBITDA (%)
Crop
Protection
8,878
4,382
(1,321)
(555)
(667)
1,839
2,194
24.7
Crop
Protection
8,491
4,229
(1,255)
(508)
(496)
1,970
2,282
26.9
Seeds
2,805
1,373
(559)
(410)
(217)
187
357
12.7
Business
Development
23
12
(12)
(67)
(15)
(82)
(72)
n/a
Inter-segment
elimination
(65)
26
–
–
–
26
26
–
Seeds
2,564
1,220
(540)
(364)
(199)
117
256
10.0
Business
Development
8
(7)
(10)
(80)
(19)
(116)
(106)
n/a
Inter-segment
elimination
(71)
(5)
–
–
–
(5)
(5)
–
Full year
2010
11,641
5,793
(1,892)
(1,032)
(899)
1,970
2,505
21.5
Full year
2009
10,992
5,437
(1,805)
(952)
(714)
1,966
2,427
22.1
Reconciliation of segment EBITDA to segment operating income excluding restructuring and impairment
Year ended December 31, 2010 ($m)
EBITDA
Depreciation, amortization and impairment
Income from associates and joint ventures
Operating income excluding restructuring and impairment
Year ended December 31, 2009 ($m)
EBITDA
Depreciation, amortization and impairment
Income from associates and joint ventures
Operating income excluding restructuring and impairment
Crop
Protection
2,194
(348)
(7)
1,839
Crop
Protection
2,282
(321)
9
1,970
Seeds
357
(151)
(19)
187
Business
Development
(72)
(10)
–
(82)
Inter-segment
elimination
26
–
–
26
Seeds
256
(131)
(8)
117
Business
Development
(106)
(10)
–
(116)
Inter-segment
elimination
(5)
–
–
(5)
Total
2,505
(509)
(26)
1,970
Total
2,427
(462)
1
1,966
Syngenta
Annual Review 2010
Corporate Responsibility performance summary
50
A summary of Syngenta’s performance in the areas of resource efficiency, stewardship, people, environment and compliance is presented on
pages 50–53. The environmental performance numbers have been normalized to $EBIT1 to better relate our performance in these areas to value
creation. To view a more detailed report, please visit the Annual Report website www.syngenta.com/ar2010
Resource efficient
programs
Our programs teach
growers how to use
sustainable agriculture
techniques for managing
natural resources in
the most efficient and
responsible way,
e.g. reducing the
water needed for crop
cultivation, minimizing
soil erosion and improving
productivity for efficient
land use.
Stewardship
Syngenta aims to
maximize benefits and
minimize negative impacts
throughout the lifecycle
of its products.
We adopt strict measures
to ensure the safety of our
chemical products and
biotechnology, and we
audit suppliers to ensure
they meet our HSE and
labor standards. Training
on the safe and effective
use of our products helps
growers get the most
benefit from them.
Soil, water, biodiversity, IPM/ICM, safe use2
Total investment ($m)
EAME
NAFTA
LATAM
APAC
Active programs
2010
7.57
41.5%
20.7%
19.5%
18.3%
182
2009
7.03
29.0%
24.8%
26.8%
19.4%
177
2008
8.13
40.6%
29.0%
16.8%
13.6%
163
Read more about resource efficient programs
www.syngenta.com/ar2010
Product stewardship
Number of people trained (m)3
EAME
NAFTA
LATAM
APAC
Active training programs
Number of countries participating in adverse health incident
management system
Product stewardship – biotechnology and regulatory compliance
Number of employees completing regulatory compliance training
Number of trial locations requiring a permit
Number of trial inspections performed by Syngenta
2010
4.27
0.5%
0.1%
4.0%
95.4%
90
2009
3.94
0.4%
0.0%
8.3%
91.3%
129
84
50
1,593
435
237
1,177
471
189
2008
2.39
1.6%
0.2%
23.2%
75.0%
119
45
782
420
168
Read more about stewardship
www.syngenta.com/ar2010
1 Excluding restructuring and impairment
2 Starting 2009, reporting year October 1 to September 30
3 In 2010 1.1 million (2009: 1.7 million) from farmer contest televised training
People
Syngenta operates
around the globe,
and has a rich mix
of employees from
backgrounds that reflect
our diverse markets.
We believe this diversity
is an asset to the
Company, and we have
programs to ensure all
employees are given
an equal opportunity.
The safety of our staff
is a priority. We provide
a healthy and motivating
work environment and
offer competitive rewards,
which help attract and
retain the most talented
individuals. To help them
achieve their career
aspirations, employees
are encouraged to
fulfill their potential with
training/development
programs, and
regular discussions
with line managers.
Responding to feedback
from employees helps
us improve our business
and, in turn, ensures
they are proud to work
for Syngenta. Sites
respond to employee
feedback through local
programs and share
best practices through
our online database.
People retention
Employees as of December 311
EAME
NAFTA
LATAM
APAC
Part-time employees
Turnover rate
Turnover rate <35 years
Turnover rate 35–50 years
Turnover rate >50 years
Employees entitled to participate in Employee Share Purchase Plan (ESPP)
Entitled employees participating in ESPP
Employees participating in Long-term Incentive (LTI) plan
Diversity
Female employees
In management roles
In senior management
Proportion of senior management from each region
Number of senior managers
EAME2
NAFTA
LATAM
APAC
Number of nationalities in senior management
Employee development
Total training investment ($m)
EAME2
NAFTA
LATAM
APAC
Training investment per employee (US$)
Health and safety
Recordable injury and illness rate (IIR) per 200,000 hours3
Recordable injury rate per 200,000 hours3
EAME
NAFTA
LATAM
APAC
Recordable occupational illness rate per 200,000 hours3
EAME
NAFTA
LATAM
APAC
First aid cases
Economic value shared
Corporate community investment ($m)4
Salaries ($m)5
Read more about people
51
Syngenta
Annual Review 2010
2010
26,179
12,466
5,022
4,004
4,687
850
9.5%
3.6%
3.7%
2.2%
16,262
46%
1,031
32%
20%
11%
196
63%
19%
8%
10%
24
29.0
18.4
4.1
3.3
3.1
1,109
0.39
0.37
0.43
0.66
0.22
0.18
0.02
0.01
0.06
0
0.01
820
2009
25,925
12,565
5,214
3,782
4,364
763
9.3%
3.2%
3.2%
3.0%
15,829
48%
1,016
30%
20%
11%
196
64%
20%
7%
9%
24
24.9
16.3
2.5
3.1
3.0
962
0.42
0.38
0.47
0.58
0.19
0.19
0.03
0.05
0.06
0.03
0
712
2008
24,148
11,471
5,076
3,610
3,991
716
9.8%
3.8%
3.9%
2.0%
13,821
49%
886
28%
19%
12%
190
64%
22%
6%
9%
22
27.2
16.6
3.4
3.6
3.6
1,126
0.50
0.47
0.46
0.98
0.19
0.24
0.03
0.04
0.03
0.06
0
421
16.7
2,305
17.5
2,176
10.8
2,157
www.syngenta.com/ar2010
1 Permanent full-time equivalent (FTE)
2 Including Headquarters (Switzerland)
3 According to US OHSA definition for injuries and illness
4 $0.8 million from resource efficient programs
5 After effect of accounting policy change for post-employment benefits described in Note 2 to the Syngenta Group consolidated financial statements
in the Financial Report 2010, which is available on our website at www.syngenta.com
Syngenta
Annual Review 2010
Corporate Responsibility performance summary
52
Environment
Managing the
environmental impacts
of our operations is a
key element of our health,
safety and environment
(HSE) strategy. The
global coordination of
our program is supported
by local initiatives to
minimize the impact of
our operations on climate
change, air quality and
water resources.
We monitor energy use
to identify opportunities
to improve efficiency.
Our energy strategy
encourages local teams
to select the best ways
to reduce energy at local
sites. By 2012, we aim
to decrease global
greenhouse gas
emissions by 40 percent
relative to EBIT from the
2006 baseline.
Sites also have programs
to cut water use and
minimize generation of
effluent and waste. Local
targets aim to increase
recycling and cut the
amount of waste sent
to landfill.
The environmental
performance reporting
system was updated
in 2010. For more
information visit
www.syngenta.com/ar2010
Energy
Energy (TJ)
MJ/$EBIT
Gas (TJ)
Electricity (TJ)
Steam (TJ)
Others (TJ)
Oil (TJ)
Number of sites setting energy targets
Greenhouse gases
Total CO2e emissions (000’s tonnes)
kg /$EBIT
Within direct control:
CO2e emissions from own operations (000’s tonnes)
of which: CO2 (000’s tonnes)
CO2 emissions from company vehicles (000’s tonnes)
Within indirect control:
CO2e emissions from purchased energy (000’s tonnes)
CO2 emissions from business trips (000’s tonnes)
CO2 emissions from distribution (000’s tonnes)
Other air emissions1
Total other air emissions (tonnes)
g/$EBIT
NOx (tonnes)
Non-halogenated VOCs (tonnes)
Halogenated VOCs (tonnes)
Particulates (tonnes)
SO2 (tonnes)
NH3 (tonnes)
HCL (tonnes)
Water
Water consumption (million cubic meters)
liters/$EBIT
Cooling (million cubic meters)
Processing and washing (million cubic meters)
Others (million cubic meters)
Product ingredient (million cubic meters)
Sewage and sanitary (million cubic meters)
Read more about environment
1 Starting 2010, all ‘other air emissions’ numbers are based on measurements
2010
8,031
4.08
3,851
1,963
935
652
631
22
1,304
0.66
616
329
68
301
20
299
1,269
0.64
404
440
48
123
208
23
23
28.8
14.6
18.6
8.0
0.9
0.2
1.1
2009
8,334
4.36
3,675
2,096
1,153
775
635
19
1,452
0.76
641
426
65
418
25
303
980
0.51
416
415
49
63
20
7
10
32.0
16.7
21.0
7.1
2.0
0.2
1.7
2008
8,653
4.19
4,074
2,262
1,076
940
301
20
1,542
0.75
701
467
54
426
32
329
1,100
0.53
644
308
23
82
20
8
15
31.1
15.1
19.5
8.1
1.5
0.3
1.7
www.syngenta.com/ar2010
Syngenta
Annual Review 2010
53
2010
8.8
4.5
769
2,336
240
393
114
18.5
198.7
0.10
64.0
124.0
0.4
10.3
133.7
0.07
76.6
18.0
28.7
10.4
19
2009
10
5.2
783
2,677
234
303
123
20.8
173.9
0.09
51.4
97.1
0.7
24.7
124.0
0.06
66.4
25.2
15.5
16.9
19
2008
10.6
5.1
725
2,358
225
262
132
19.3
153.3
0.07
47.5
84.3
1.5
20.0
120.2
0.06
72.1
19.3
22.8
6.0
19
0
0
2
www.syngenta.com/ar2010
2010
78
28%
13%
5%
54%
12,395
70
6
0
2009
76
17%
26%
15%
42%
8,169
65
3
0
2008
31
19%
19%
23%
39%
2,312
59
6
0
Environment continued
Waste water effluents
Total industrial waste water discharge (million cubic meters)
liters/$EBIT
of which: total organic carbon (TOC) (tonnes)
chemical oxygen demand (COD) (tonnes)
biological oxygen demand (BOD) (tonnes)
total suspended solids (tonnes)
soluble salts discharged (000’s tonnes)
Direct discharge of uncontaminated cooling water (million cubic meters)
Waste
Hazardous waste (000’s tonnes)
kg/$EBIT
of which: recycled/re-used (000’s tonnes)
incinerated (000’s tonnes)
landfill (000’s tonnes)
other (000’s tonnes)
Non-hazardouse waste (000’s tonnes)
kg/$EBIT
of which: recycled/re-used (000’s tonnes)
incinerated (000’s tonnes)
landfill (000’s tonnes)
other (000’s tonnes)
Number of sites with reduction programs
Environmental compliance
Significant unplanned releases1
Read more about environment
Corporate conduct
Cases reported through the compliance helpline
EAME
NAFTA
LATAM
APAC
Health, safety, environment and social compliance in supply
Number of seed supply farms included in Syngenta/FLA monitoring
Number of HSEQ assessments at chemical suppliers
Animal welfare
Number of audits performed in contract laboratories
Number of instances of non-compliance found
Compliance
The Syngenta Code
of Conduct sets our
commitment to ethical,
social and environmental
responsibility, including
human rights and fair
labor practices. Employees
are encouraged to report
any suspected breaches.
Local laws and
regulations govern our
environmental behavior,
and we have stringent
HSE management
systems to ensure
compliance. We set
high standards for
animal welfare and
audit compliance.
Read more about compliance
www.syngenta.com/ar2010
1 Releases that escape beyond the site boundary and that cause either environmental impact and/or concern from neighbors, regulators, etc
Syngenta
Annual Review 2010
Shareholder information
54
Syngenta shares are listed on the SIX Swiss Exchange and
on the New York Stock Exchange, where the shares are
traded as ADS (American Depositary Shares).1
Trading symbols
Shares
Shares in issue
At December 31, 2010
Total shares in issue
of which treasury shares
SIX Swiss
Exchange
SYNN
New York Stock
Exchange
SYT
Number of shares
94,599,849
2,392,751
Share price and market capitalization2
At December 31, 2010
Share price (CHF)
Share price (USD) (ADS)
Market capitalization (CHF million)
Market capitalization (USD million)
Dividend history
2006
2007
2008
2009
20103
Total shareholder return4
2006
2007
2008
2009
2010
273.50
58.78
25,219
26,916
Dividend
CHF
3.80
4.80
6.00
6.00
7.00
%
40.7
29.4
–29.5
48.6
–3.9
Syngenta share price performance December 31, 2007 – December 31, 2010
CHF 200.40
CHF 290.70
Dec 31, 2010
CHF 273.50
30
20
10
0
–10
–20
–30
–40
–50
–60
Mar
Jun
Sep
Dec
2007
Dec Mar
2008
Jun
Sep
Dec
2009
Mar
Jun
Sep
Dec
2010
Syngenta
SMI
Eurotop 300
Syngenta ADS price performance December 31, 2007 – December 31, 2010
USD 39.14
USD 56.27
Dec 31, 2010
USD 58.78
40
30
20
10
0
–10
–20
–30
–40
–50
–60
Mar
Jun
Sep
Dec
2007
Dec Mar
2008
Jun
Sep
Dec
2009
Mar
Jun
Sep
Dec
2010
1 1 share = 5 ADS
2 For the purposes of calculating market capitalization the number of shares
stood at 92.207 million
3 To be submitted for shareholder approval at the Annual General Meeting
on April 19, 2011
4 Calculated as return on ordinary shares plus reinvested dividends
Syngenta ADS
Dow Jones
S&P 500
Reporting dates
First quarter trading statement
Annual General Meeting
Half-year results
Third quarter trading statement
April 15, 2011
April 19, 2011
July 22, 2011
October 14, 2011
A full form 20-F is accessible at: www.syngenta.com/ir
Investors can subscribe to Financial Releases via RSS at: www.syngenta.com/ir
The full-year results press release can be viewed up to six months after the event at:
www.syngenta.com/fyr2010
Syngenta
Annual Review 2010
Strategic imperatives
Group performance
i
Creating superior value
for our customers
and delivering
strong performance
Integrate
We are bringing together our world leading
Crop Protection portfolio and our broad Seeds
platform to develop a fully integrated offer on a
global crop basis.
Engagement
We aim to create shared value for
all our stakeholders through fostering
partnerships and open dialogue.
Group sales1
Crop Protection sales1,2
Seeds sales1
2010
2009
2008
11.64
10.99
11.62
2010
2009
2008
8.88
8.49
9.23
2010
2009
2008
2.80
2.56
2.44
$11.6bn +4% (CER)
$8.9bn +3% (CER)
$2.8bn +8% (CER)
Innovate
Business ethics
Earnings per share3
Free cash flow4
Dividend per share5
We will harness our knowledge of agriculture
and our understanding of growers to deliver
game-changing technologies which will drive
land productivity.
Our code of conduct commits us to maintain
high ethical standards in all business practices,
and we promote a culture of transparency.
2010
2009
2008
$16.44
16.44
16.15
16.40
+2%
2010
2009
2008
1,129
528
729
2010
2009
2008
$1,129m
+114%
CHF7.00
7.00
6.00
6.00
+17%
Outperform
Health, safety and environment
Number of farmers trained
Nationalities in senior management
Our aim is to gain market share across our
combined businesses and to create value
for our shareholders by first creating value
for our customers.
We are committed to the highest safety and
environmental standards for the production,
handling and disposal of our products, and
we support our business partners in adopting
comparable standards.
2010
2009
2008
4.3m
CO2e emissions
2010
2009
2008
4.3
3.9
2.4
0.66
0.76
0.75
2010
2009
2008
24
Illness and injury rate6
2010
2009
2008
24
24
22
0.39
0.42
0.50
Read more about our strategy in the
Chief Executive Officer’s letter on page 4
0.66
CO2e kg /$EBIT
0.39
1 Growth at constant exchange rates (CER)
2 Including inter-segment sales
3 Fully diluted excluding restructuring
and impairment
4 For a definition of free cash flow see page 48
5 Subject to shareholder approval at the Annual
General Meeting on April 19, 2011
6 Recordable injury and illness rate (IIR) per
200,000 hours according to US OHSA definition
Syngenta
Annual Review 2010
Independent Assurance Report on the
Syngenta Corporate Responsibility Reporting
To the Head of Legal and Taxes, Syngenta
International AG, Basel (‘Syngenta’):
Main Assurance Procedures
Our assurance procedures included the following work:
55
We have performed assurance procedures to provide
assurance on the following aspects of the 2010
Corporate Responsibility (CR) reporting of Syngenta.
– Evaluation of the application of group guidelines
Reviewing the application of the Syngenta internal
HSE and CCI reporting guidelines;
Subject matter
Data and information disclosed with the CR reporting
of Syngenta and its consolidated subsidiaries, for the
financial year ended December 31, 2010 on the
following aspects:
– The application of the Syngenta internal Health,
Safety and Environment (HSE) and Corporate
Community Investment (CCI) reporting guidelines to
the CR reporting;
– The internal reporting system and procedures,
including the control environment, to collect and
aggregate CR data; and
– The CR Performance Summary disclosed on pages
– Site visits
Visiting the regional site of Syngenta’s Crop
Protection and Seeds Business Units in Singapore
and two selected sites of Syngenta’s Seeds
Business Unit in Thailand. The selection was based
on quantitative and qualitative criteria;
Interviewing personnel responsible for internal
reporting and data collection at the sites we visited
and at the Group level;
– Assessment of the performance indicators
Performing tests on a sample basis of evidence
supporting the CR Performance Summary relative to
completeness, accuracy, adequacy and consistency;
50 to 53 of the Syngenta Annual Review 2010.
– Review of the documentation
Our assurance procedures do not cover the indicator
on Salaries in the Performance Summary on page 51
of the Annual Review.
Criteria
– The Syngenta internal Health, Safety and
Environment (HSE) and Corporate Community
Investment (CCI) reporting guidelines; and
– The defined procedures by which the CR data are
gathered, collated and aggregated internally.
Responsibility and Methodology
The accuracy and completeness of CR performance
indicators are subject to inherent limitations given their
nature and methods for determining, calculating and
estimating such data. Our assurance report should
therefore be read in connection with Syngenta’s
internal guidelines, definitions and procedures on
the reporting of its CR performance.
The Board of Directors of Syngenta is responsible
for both the subject matter and the criteria. Our
responsibility is to provide a conclusion on the subject
matter based on our assurance procedures in
accordance with the International Standard on
Assurance Engagements (ISAE) 3000.
Reviewing the relevant documentation on a sample
basis, including management and reporting
structures and documentation;
– Assessment of the processes and data consolidation
Reviewing the appropriateness of the management
and reporting processes for CR reporting; and
Assessing the consolidation process of data at the
Group level.
Conclusions
In our opinion
– The internal HSE and CCI guidelines are being
applied properly; and
– The internal reporting system and procedures to
collect and aggregate CR data are functioning as
designed and provide an appropriate basis for its
disclosure.
Based on our work described in this report, nothing
has come to our attention that causes us to believe
that the data and information mentioned in the subject
matter and disclosed with the Corporate Responsibility
reporting in the Syngenta Annual Review 2010 does
not give a fair picture of Syngenta’s performance in the
area of Corporate Responsibility.
PricewaterhouseCoopers AG
Zurich, February 11, 2011
Dr. Thomas Scheiwiller
David Pritchett
Annual Review 2010
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Cautionary statement regarding forward-
looking statements: This document contains
forward-looking statements, which can be
identified by terminology such as “expect”,
“would”, “will”, “potential”, “plans”, “prospects”,
“estimated”, “aiming”, “on track” and similar
expressions. Such statements may be subject
to risks and uncertainties that could cause
the actual results to differ materially from
these statements.
We refer you to Syngenta’s publicly available
filings with the US Securities and Exchange
Commission for information about these and
other risks and uncertainties. Syngenta
assumes no obligation to update forward-
looking statements to reflect actual results,
changed assumptions or other factors.
This document does not constitute, or form
part of, any offer or invitation to sell or issue,
or any solicitation of any offer, to purchase or
subscribe for any ordinary shares in Syngenta
AG, or Syngenta ADSs, nor shall it form the
basis of, or be relied on in connection with,
any contract therefor.
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
® Registered trademarks of a Syngenta
Group Company
™ Trademarks of a Syngenta Group Company
The SYNGENTA Wordmark, BRINGING
PLANT POTENTIAL TO LIFE and the Purpose
icon device are trademarks or registered
trademarks of a Syngenta Group Company.
Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016841.040
Syngenta
Annual Review 2010
Annual Review 2010
Syngenta is one of the world’s leading
companies with more than 26,000 employees
in over 90 countries dedicated to our purpose:
Bringing plant potential to life. With our innovation
in Crop Protection and Seeds, we contribute to
addressing global challenges.
Contents
Overview
Contributing to
food security
Our offer
Addressing
growers’ needs
Creating our offer
Governance
and financials
i Strategic imperatives
ii Group performance
01 Business highlights
02 Chairman’s letter
04 Chief Executive Officer’s letter
07 A global challenge
08 Sustainable production systems for agriculture
09 Grow more from less
10 Better solutions for the farmer of the future
11 Increasing resource efficiency
12 Strengthening rural economies
14
Integrated solutions for today’s farmer
17 Corn
19 Soybean
20 Cereals
21 Rice
22 Sugar cane
23 Oilseeds and sugar beet
24 Vegetables
25 Lawn and Garden
27 Research and Development
30 People
32 Operations
35 Crop Protection product line performance
37 Seeds product line performance
38 Board of Directors
40 Executive Committee
42 Financial information
50 Corporate Responsibility performance summary
54 Shareholder information
0
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Financial Report 2010
l
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y
S
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
® Registered trademarks of a Syngenta
Group Company
™ Trademarks of a Syngenta Group Company
The SYNGENTA Wordmark, BRINGING PLANT
POTENTIAL TO LIFE and the Purpose icon
device are trademarks or registered trademarks
of a Syngenta Group Company.
Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016843.040
Syngenta
Financial Report 2010
01
Table of Contents
01
Table of Contents
02 Operating and Financial Review
03
05
Financial highlights
Introduction
08 Results of operations – 2010 compared to 2009
16
16
Foreign operations and foreign currency transactions
Liquidity and capital resources
18 Research and development (R&D)
19 Contractual obligations, commitments and contingent liabilities
19 Off-balance sheet arrangements
19 Critical accounting estimates
19 Recent developments
20
Future prospects
20 Quantitative and qualitative disclosure about market risk
21
25
Appendix A
Syngenta Group Consolidated Financial Statements
25 Consolidated Income Statement
26 Consolidated Statement of Comprehensive Income
27 Consolidated Balance Sheet
28 Consolidated Cash Flow Statement
29 Consolidated Statement of Changes in Equity
31 Notes to the Syngenta Group Consolidated Financial Statements
90 Report of Syngenta Management on Internal Control over Financial Reporting
91 Report of the Group Auditors on Internal Control over Financial Reporting
92 Report of the Statutory Auditor on the Consolidated Financial Statements
93
93
Financial Statements of Syngenta AG
Income Statement
94 Balance Sheet (prior to earnings appropriation)
95 Notes to the Financial Statements of Syngenta AG
113 Appropriation of Available Earnings of Syngenta AG
114 Report of the Statutory Auditor on the Financial Statements
115 Cautionary Statement Regarding Forward-Looking Statements
Syngenta
Financial Report 2010
Operating and Financial Review
02 Syngenta has prepared the consolidated financial statements in US
dollars and in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards
Board (IASB). The basis of preparation of the consolidated financial
statements and the key accounting policies are discussed in Notes
1 and 2, respectively, to the consolidated financial statements.
The selected financial highlights information in accordance with IFRS
presented on the following page has been extracted from the
consolidated financial statements of Syngenta. Investors should read
the entire consolidated financial statements and not rely on the
summarized information. The information includes the results of
operations and the net assets of Emergent Genetics Vegetable A/S
from June 1, 2006, Conrad Fafard, Inc. from August 1, 2006, Fischer
group of companies from July 1, 2007, Zeraim Gedera Ltd. from
September 1, 2007, SPS Argentina SA from November 10, 2008,
Goldsmith Seeds, Inc. from November 19, 2008, Circle One Global
Inc. from May 15, 2009, Goldsmith Seeds Europe B.V. from
September 23, 2009, Pybas Vegetable Seed Co., Inc. from
December 16, 2009, Synergene Seed & Technology, Inc. from
December 23, 2009, Maribo Seed International ApS from
September 30, 2010 and Greenleaf Genetics LLC from November 8,
2010. For further information about these and other acquisitions, see
Note 3 to the consolidated financial statements.
Syngenta
Financial Report 2010
2010
2009 2
2008 2
2007 2
2006 2
Year ended December 31,
03
11,641
(5,866)
5,775
(3,982)
1,793
1,677
1,402
1,397
10,992
(5,572)
5,420
(3,601)
1,819
1,694
1,411
1,408
11,624
(5,706)
5,918
(4,038)
1,880
1,714
1,399
1,399
9,240
(4,669)
4,571
(3,070)
1,501
1,456
1,135
1,133
8,046
(3,982)
4,064
(3,190)
874
843
667
664
92,687,903
93,154,537
93,916,415
95,973,958
98,165,298
93,225,303
93,760,196
94,696,762
97,143,368
99,876,180
15.07
14.99
6.00
5.61
–
–
1,707
(450)
(844)
(396)
4,363
17,285
(4,483)
(9,836)
(6)
(7,439)
15.11
15.01
6.00
5.27
–
–
1,419
(880)
170
(652)
4,583
16,129
(5,331)
(9,642)
(6)
(6,473)
14.90
14.77
4.80
4.76
–
–
11.80
11.66
1.60
1.32
2.20
1.78
1,466
1,168
(608)
(457)
(444)
3,311
14,089
(4,489)
(8,798)
(6)
(5,274)
(368)
(781)
(317)
2,600
12,819
(3,305)
(7,189)
(6)
(5,611)
6.76
6.65
–
–
3.30
2.68
928
(411)
(541)
(217)
2,522
11,319
(3,136)
(6,150)
(142)
(5,141)
16.44
16.15
16.40
11.69
9.03
Financial highlights
(US$ million, except where otherwise stated)
Amounts in accordance with IFRS¹
Income statement data:
Sales
Cost of goods sold
Gross profit
Operating expenses
Operating income
Income before taxes
Net income
Net income attributable to Syngenta AG shareholders
Number of shares – basic
Number of shares – diluted
Basic earnings per share
Diluted earnings per share
Cash dividends declared:
CHF per share
US$ per share equivalent
Par value reduction:
CHF per share
US$ per share equivalent
Cash flow data:
Cash flow from operating activities
Cash flow used for investing activities
Cash flow from (used for) financing activities
Capital expenditure on tangible fixed assets
Balance sheet data:
Current assets less current liabilities
Total assets
Total non-current liabilities
Total liabilities
Share capital
Total shareholders’ equity
Other supplementary income data:
Diluted earnings per share from continuing operations,
excluding restructuring and impairment 3
All activities were in respect of continuing operations.
Syngenta
Financial Report 2010
Operating and Financial Review
04 Notes
1 Syngenta has prepared the consolidated financial statements in US
dollars and in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
The basis of preparation of the consolidated financial statements and
the key accounting policies are discussed in Notes 1 and 2,
respectively, to the consolidated financial statements.
2 In these consolidated financial statements, Syngenta has recognized
actuarial gains and losses of defined benefit post-employment plans in
OCI in the periods in which they arose (“immediate recognition in OCI
method”). Previously, Syngenta applied the corridor method of deferred
recognition, under which these gains and losses were amortized over
the average remaining employee service period to the extent that they
exceeded 10% of the higher of the defined benefit obligation or plan
assets. In the opinion of Syngenta, the immediate recognition in OCI
method presents Syngenta’s post-employment defined benefit
obligations in the consolidated balance sheet in a more understandable
way than the corridor method because the amounts presented are
closer to the underlying actuarial position of the post-employment plans.
Comparative amounts for the years ended and as at December 31,
2009, 2008, 2007 and 2006 have been adjusted to reflect the new
policy. The impacts of the change in accounting policy for 2009 and
2008 are detailed in Note 2 to the consolidated financial statements.
The impacts of the change in accounting policy for 2007 and 2006 are
as follows:
(US$ million)
(US$ million, except per share amounts)
Operating expenses
Operating income
Income before taxes
Net income
Net income attributable to Syngenta AG shareholders
Basic earnings per share (US$)
Diluted earnings per share (US$)
Current assets less current liabilities
Total assets
Total non-current liabilities
Total liabilities
Total shareholders’ equity
As reported
(3,107)
1,464
1,419
1,111
1,109
11.56
11.42
2,606
13,280
(3,361)
(7,239)
(6,022)
2007
2006
Accounting
policy change
After accounting
policy change
As reported
Accounting
policy change
After accounting
policy change
(3,070)
(3,235)
37
37
37
24
24
0.24
0.24
(6)
1,501
1,456
1,135
1,133
11.80
11.66
2,600
(461)
12,819
56
50
411
(3,305)
(7,189)
(5,611)
829
798
637
634
6.46
6.35
2,598
11,852
(3,220)
(6,158)
(5,666)
45
45
45
30
30
0.30
0.30
(76)
(533)
84
8
525
(3,190)
874
843
667
664
6.76
6.65
2,522
11,319
(3,136)
(6,150)
(5,141)
Diluted earnings per share from continuing operations,
excluding restructuring and impairment (US$)
11.45
0.24
11.69
8.73
0.30
9.03
3 Diluted earnings per share from continuing operations, excluding
restructuring and impairment, is a non-GAAP measure.
A non-GAAP measure is a numerical measure of financial performance,
financial position or cash flow that either:
impairment losses resulting from major changes in the markets in which
a reported segment operates. Further discussion on the reason for
including disclosure of this and other non-GAAP measures is included in
Appendix A at the end of the Operating and Financial Review.
– includes, or is subject to adjustments that have the effect of including,
amounts that are excluded in the most directly comparable measure
calculated and presented under IFRS as issued by the IASB, or
– excludes, or is subject to adjustments that have the effect of
excluding, amounts that are included in the most directly comparable
measure calculated and presented under IFRS as issued by the IASB.
Restructuring represents the effect on reported performance of initiating
business changes which are considered major and which, in the opinion
of management, will have a material effect on the nature and focus of
Syngenta’s operations. Restructuring includes the effects of completing
and integrating significant business combinations and divestments.
Restructuring and impairment includes the impairment costs associated
with major restructuring and also impairment losses and reversals of
Restructuring and impairment charges for 2010 and 2009 are analyzed
in Note 6 to the consolidated financial statements.
Restructuring and impairment for 2008, 2007 and 2006 mainly related
to the Operational Efficiency program announced in 2004 representing
the costs of closure of certain manufacturing and research and
development sites and refocusing of other continuing sites and, for
2008 and 2007, also to the Operational Efficiency program announced
in 2007 to drive cost savings to offset increased expenditure in research
and technology, marketing and product development in the growth
areas of Seeds, Professional Products and emerging country markets.
A detailed reconciliation of net income and earnings per share before
restructuring and impairment to net income and earnings per share
according to IFRS is presented in Appendix A at the end of the
Operating and Financial Review.
Syngenta
Financial Report 2010
Syngenta operates globally to capitalize on its technology and
marketing base. Syngenta’s largest markets are Europe, Africa and the
Middle East, and NAFTA1, which represent approximately 32 percent
and 31 percent respectively of consolidated sales in 2010 (2009:
33 percent and 34 percent). Both sales and operating profit are
seasonal and are weighted towards the first half of the calendar
year, which largely reflects the northern hemisphere planting and
growing cycle, though sales growth in Latin America is resulting in a
reduced weighting of sales and operating profit in the first half than
has previously occurred.
05
Syngenta’s most significant manufacturing and research and
development sites are located in Switzerland, the United Kingdom
(UK), the United States of America (USA or US) and India. Syngenta
has established a biotech research & technology center in Beijing,
China, to complement its biotech research activities in the USA.
References in this document to market share estimates are based
where possible on Agriservice Industry information provided by
party or on information publis
hed by major competitors and are
supplemented by Syngenta marketing staff estimates.
a third
The consolidated financial statements are presented in US dollars,
as this is the major currency in which revenues are denominated.
However, significant, but differing proportions of Syngenta’s revenues,
costs, assets and liabilities are denominated in currencies other than
US dollars. Approximately 18 percent of sales in 2010 were
denominated in Euros, while a significant proportion of costs for
research and development, administration, general overhead and
manufacturing were denominated in Swiss francs and British pounds
sterling (approximately 21 percent in total). Sales in Swiss francs and
British pounds sterling together made up approximately 3 percent of
total sales. Marketing and distribution costs are more closely linked to
the currency split of the sales. As a result, operating profit in US dollars
can be significantly affected by movements in exchange rates, in
particular movements of the Swiss franc, British pound sterling and the
Euro relative to the US dollar, and the relative impact on operating
profit may differ from that on sales. The effects of currency fluctuations
have been reduced by risk management strategies such as hedging.
For further information on these strategies please refer to Notes 27
and 29 of the consolidated financial statements.
The consolidated financial statements are based upon Syngenta’s
accounting policies and, where necessary, the results of management
estimations. Syngenta believes that the critical accounting policies and
estimations underpinning the financial statements are in the areas of
(i) impairment, (ii) adjustments to revenue and trade receivables,
(iii) environmental provisions, (iv) defined benefit post-employment
benefits, including pension asset ceiling, (v) deferred tax assets,
(vi) uncertain tax positions and (vii) foreign currency translation of
intercompany funding. These policies are described in more detail in
Note 2 to the consolidated financial statements.
1 NAFTA – North American Free Trade Association comprising the USA, Canada and Mexico
Introduction
The following discussion includes forward-looking statements subject
to risks and uncertainty. See ‘Cautionary statement regarding forward-
looking statements’ at the end of this document. This discussion also
includes non-GAAP financial data in addition to GAAP results.
See Appendix A to Operating and Financial Review and Note 2 to
the financial highlights for a reconciliation of this data and explanation
of the reasons for presenting such data.
Constant exchange rates
Approximately 59 percent of Syngenta’s sales and 67 percent of
Syngenta’s costs in 2010 were denominated in currencies other than
US dollars. Therefore, Syngenta’s results for the period covered by
the review were significantly impacted by the movements in exchange
rates. Sales in 2010 were 6 percent higher than 2009 on a reported
basis, but were 4 percent higher when calculated at constant rates
of exchange. The Company therefore provides analysis of results
calculated at constant exchange rates (CER) and also actual results to
allow an assessment of performance before and after taking account
of currency fluctuations. To present CER information, current period
results for entities reporting in currencies other than US dollars are
converted into US dollars at the prior period’s exchange rates, rather
than the exchange rates for this year. An example of this calculation is
included in Appendix A of this section.
Overview
Syngenta is a world leading agribusiness operating in the Crop
Protection and Seeds businesses. Crop Protection chemicals include
herbicides, insecticides and fungicides to control weeds, insect pests
and diseases in crops, and are essential inputs enabling growers
around the world to improve agricultural productivity and food quality.
Many of these products also have application in the professional
products and lawn and garden sectors in areas such as public health
and turf and ornamental markets. The Seeds business operates in
high value commercial sectors: seeds for field crops including corn,
soybean, other oilseeds and sugar beet as well as vegetable and
flower seeds. Syngenta also has a Business Development segment,
which is engaged in the development of enzymes and traits with the
potential to enhance agronomic, nutritional and biofuel properties of
plants. Syngenta aims to be the partner of choice for Syngenta’s
grower customers with its unparalleled product offer and innovative
marketing, creating value for customers and shareholders.
Syngenta’s results are affected, both positively and negatively,
by, among other factors: general economic conditions; weather
conditions, which can influence the demand for certain products over
the course of a season; commodity crop prices and exchange rate
fluctuations. Government measures, such as subsidies or rules
regulating the use of agricultural products, genetically modified seeds,
or areas allowed to be planted with certain crops, also can have an
impact on Syngenta’s industry. Syngenta’s results are also affected by
the growing importance of biotechnology to agriculture and the use of
genetically modified crops. In future years, climate change may have
both positive and negative impacts on Syngenta’s results. Climate
change may make growing certain crops more or less viable in
different geographic areas, but is not likely to reduce overall demand
for food and feed. Syngenta currently sells and is developing products
to improve the water productivity of plants and increase tolerance to
drought and heat. Legislation may be enacted in the future that limits
carbon dioxide emissions in the manufacture of Syngenta’s products
or increases the costs associated with such emissions. Syngenta
works actively to make its production operations more energy efficient
and to reduce the rate of carbon dioxide emissions per unit of
operating income.
Syngenta
Financial Report 2010
Operating and Financial Review
06 Summary of results
Net income in 2010 was only 1 percent lower than 2009, with strong
sales volume growth in both Crop Protection and Seeds and cost of
goods savings offsetting lower sales prices in Crop Protection. Sales in
2010 were 6 percent higher than 2009, 4 percent at constant
exchange rates. Sales growth accelerated from 1 percent in the first
half to 13 percent in the second and, at constant exchange rates, from
a first half decline of 3 percent to second half growth of 14 percent.
In Seeds, operating income as a percentage of sales improved by
2 percentage points, with a 1 percentage point improvement in gross
profit margin from a further increase in the weighting of proprietary
triple stack seed in the corn portfolio. Syngenta increased its
investment in research and development and in emerging markets.
The Crop Protection capacity expansion program to meet higher
demand particularly in AMISTAR® and ACTARA® / CRUISER® was
completed and sales volume of these products grew by more than
20 percent in 2010. Cash flow from operating activities was $288
million higher than 2009 with planned lower inventories in Crop
Protection and higher early payments from customers in NAFTA due
to strong farmer liquidity and high commodity crop prices. In this
context, and subject to shareholder approval, the Company proposes
to increase the dividend to CHF 7.00 per share from CHF 6.00 and
repurchase shares to a planned value of approximately US$200
million. It is proposed to pay the dividend as a cash distribution of
reserves arising from capital contributions (share premium account),
subject to shareholder approval. This distribution would then be paid
free of Swiss withholding tax. The payment of the dividend in 2011
would fully utilize the reserve from capital contributions.
Crop Protection sales increased by 5 percent, an increase of 3 percent
at constant exchange rate. Sales volumes were 9 percent higher,
but offset by 6 percent lower local currency sales prices, with price
reductions particularly in NAFTA and glyphosate products. Excluding
glyphosate, sales prices were 5 percent lower. Sales volumes grew
strongly in Latin America and Asia Pacific. In Eastern Europe, sales
growth was strong in US dollars, helped by the recovery of currencies
in the region, but at constant exchange rates growth was reduced by
drought, particularly in Russia.
Seeds sales increased by 9 percent, an increase of 8 percent at
constant exchange rates from higher sales volumes with local currency
sales prices unchanged. Acquisitions contributed 2 percent to the
volume growth, particularly in sunflowers within Diverse Field Crops,
where the acquisitions added 9 percent. A 2009 change in NAFTA
Corn and Soybean sales terms to align with industry standards
increased sales in 2009 but reduced reported Seeds sales growth in
2010 by approximately 6 percent.
Gross profit margin for Syngenta in 2010 increased by 0.3 percent,
with an improvement in Seeds offset by a lower margin in Crop
Protection. The improvement in the Seeds gross profit margin largely
reflected a continued increase in the weighting of proprietary triple
stack corn seeds in the portfolio. In Crop Protection, the negative
impact of the lower local currency sales prices was partly offset by
raw material cost savings.
Marketing and distribution expenses increased by 5 percent, 4 percent
at constant exchange rates, from increased spending in emerging
markets, particularly in Latin America. Research and development
expense was 8 percent higher with increases in both Crop Protection
and Seeds more than offsetting lower expenditures in Business
Development. General and administrative increased by 26 percent
including lower exchange rate hedging gains of US$30 million
compared to US$109 million in 2009. Excluding currency effects,
general and administrative increased by 12 percent with increased
expenditures in emerging markets, higher information system costs
and lower gains on disposal of property, plant and equipment than in
2009. 2009 was also net of a provision release following the favorable
outcome of a legal dispute. Restructuring and impairment expenses,
excluding those reported in cost of goods sold, were US$29 million
higher due to higher impairments and non-cash restructuring charges.
Net financial expense was US$19 million higher than 2009 mainly
due to higher net interest and bank charges from financing business
growth in Latin America and higher net foreign currency losses.
The tax rate decreased by 1 percentage point to 16 percent.
Together, these factors resulted in net income attributable to Syngenta
AG shareholders and diluted earnings per share for 2010 both being
close to the levels achieved in 2009.
Acquisitions, divestments and other significant transactions
On March 31, 2010, Syngenta acquired a field station in Chile and the
associated contract research business by making a cash payment for
the related assets. The primary reason for the acquisition was to
support development projects in Syngenta’s seeds businesses.
On June 14 and December 17, 2010, respectively, Syngenta acquired
the non-controlling interests in its Golden Harvest and Garst seed
businesses in the USA. The total cash paid was US$48 million.
On July 1, 2010, Syngenta and Dow AgroSciences, a wholly owned
subsidiary of The Dow Chemical Company, announced an exclusive
supply and distribution agreement under which Syngenta, on
September 1, 2010, assumed responsibility for the supply and
distribution of Dow AgroSciences crop protection products in the
Commonwealth of Independent States (CIS) region.
On September 30, 2010, Syngenta acquired 100% of the shares of
Maribo Seed International ApS (“Maribo Seed”) for a cash payment,
plus contingent payments if certain sales targets are achieved.
The transaction includes the seed production and sales activities of
the Maribo sugar beet business as well as the Maribo brand name.
On November 8, 2010, Syngenta acquired the 50% equity interest in
Greenleaf Genetics LLC owned by Pioneer Hi-Bred International Inc,
(“Pioneer”) a subsidiary of E.I Du Pont de Nemours and Co.
(“Du Pont”). This transaction dissolved a joint venture between
Syngenta and Pioneer and terminated certain license agreements
between Syngenta and Pioneer. The acquisition and related joint
venture dissolution enables Syngenta and Pioneer to pursue
independent licensing strategies for their respective proprietary
corn and soybean genetics and biotechnology traits.
Syngenta
Financial Report 2010
Effective January 1, 2011, Syngenta granted Pioneer a non-exclusive,
global license to its corn rootworm trait MIR604 (Agrisure®) for corn
seed. The trait provides protection from below-ground coleopteran
insects, including corn rootworm, a major corn pest in the United
States and around the world.
During 2009, Syngenta completed five small acquisitions and three
small divestitures, none of which were material either individually or in
the aggregate. In addition, on August 31, 2009, Syngenta acquired
Monsanto’s global hybrid sunflower seeds activities for a cash
payment of US$160 million, which included certain rights to receive
services during the post-acquisition transition period.
On May 1, 2009, Syngenta sold its 6.99 percent shareholding in
Sakata Seeds Corp. for approximately US$46 million.
Operational Efficiency and Integrated Business Model programs
In 2007, Syngenta began a further Operational Efficiency Restructuring
Program in addition to that announced in 2004 (described in the
following paragraph) to drive cost savings to offset increased
expenditures in research and technology, marketing and product
development in the growth areas of Seeds, Professional Products
and emerging country markets. Savings are targeted in both cost of
goods sold and other operating expenses. The cost of this program is
estimated at US$550 million in cash and US$180 million in non-cash
charges in the period up to the end of 2011, with cash outflows
continuing into 2012. Cash spent under the program in 2010 and
2009 totaled US$80 million and US$103 million, respectively.
Cumulative spending on the program to the end of 2010 totaled
US$343 million.
07
On April 1, 2009, Syngenta and Dow AgroSciences, a wholly owned
subsidiary of The Dow Chemical Company, announced an agreement
to cross license their respective corn traits for commercialization
within their branded seed businesses. Syngenta received global
non-exclusive licenses, with stacking rights, to Dow AgroSciences’
Herculex® I Insect Protection for broad lepidopteran control and to
Herculex® RW for corn rootworm control. Dow AgroSciences received
global non-exclusive licenses with stacking rights to Syngenta’s
Agrisure® GT trait for glyphosate tolerance, and to its insect control
traits Agrisure® CB/LL for corn borer and Agrisure® RW for corn
rootworm. The licenses also include access to Syngenta’s Agrisure
Viptera™ trait for broad lepidoptera and to a second generation trait
for corn rootworm control.
Acquisitions and divestments are described in Note 3 to the
consolidated financial statements.
The Operational Efficiency Cost Saving Program announced in 2004
to realize further cost savings after completion of the integration of
the former Novartis and Zeneca businesses and in response to low
underlying growth in the Crop Protection markets seen at the time,
was largely completed in 2007. Some cash spending under the
program continued thereafter, largely due to cost run-offs from
site closures. Cash spent from 2004 to the end of 2010 totaled
US$452 million and during 2008, 2009 and 2010 totaled
US$97 million.
In addition to the above programs, Syngenta announced on
February 9, 2011, a program to integrate global commercial operations
for Crop Protection and Seeds. This will enable operational synergies,
cost savings and the presentation of an integrated product offer to
grower customers. It is estimated that cash costs of approximately
US$400 million will be incurred over the period to 2014 to complete
the program. It is currently expected that the program will enable
operating cost savings from the commercial integration and will
also enable cost savings from additional procurement and supply
chain efficiencies.
Syngenta
Financial Report 2010
Operating and Financial Review
08 Results of operations
2010 compared to 2009
Sales commentary
Total Syngenta consolidated sales for 2010 were US$11,641 million, compared to US$10,992 million in 2009, a 6 percent increase year on
year. At constant exchange rates sales grew by 4 percent. The analysis by segment is as follows:
(US$ million, except growth %)
Segment
Crop Protection
Seeds
Business Development
Inter-segment elimination
Total
Sales by region were as follows:
(US$ million, except growth %)
Region
Europe, Africa and Middle East
NAFTA
Latin America
Asia Pacific
Total
2010
8,878
2,805
23
(65)
8,491
2,564
8
(71)
11,641
10,992
2009
Volume % Local price %
CER % Currency %
Actual %
Growth
+9
+8
+197
–
+9
–6
–
–
–
–5
+3
+8
+197
–
+4
Growth
+2
+1
–
–
+2
+5
+9
+197
–
+6
2010
2009
Volume % Local price %
CER % Currency %
Actual %
3,672
3,597
2,567
1,805
3,581
3,726
2,134
1,551
11,641
10,992
+5
+3
+24
+10
+9
–3
–9
–4
–
–5
+2
–6
+20
+10
+4
+1
+2
–
+6
+2
+3
–4
+20
+16
+6
Crop Protection
Crop Protection sales in 2010 increased by 5 percent to US$8,878
million, and by 3 percent at constant exchange rates. Volume growth
beginning in the second quarter was further aided by a strong Latin
American season in the second half of the year and more than offset
lower prices. Sales volume was 9 percent higher than prior year.
Following two years of price increases, the price environment in
2010 was more competitive, notably in North America, resulting in a
6 percent overall year on year decrease in local currency prices.
The rate of price decline was less in the second half of the year. Sales
in 2010 were further increased by 2 percent due to currency effects,
particularly the stronger Canadian and Australian dollars and Japanese
yen relative to the US dollar.
Sales of new products (defined as those launched since 2006)
increased by 25 percent to reach $402 million. The cereal herbicide
AXIAL® was launched in France and in Russia. The fungicide REVUS®
showed strong growth in the USA and in a number of emerging
markets. Sales of the insecticide DURIVO® /AMPLIGO® more than
doubled with a highly successful launch in Brazil on vegetables and
strong growth in emerging Asia. Sales of AVICTA® also doubled, with
launches on corn in the USA and on soybean in Brazil. Isopyrazam,
the first in a new class of next generation fungicides which work in an
advanced way to control and shut down disease, had a successful
initial launch on barley in the UK.
In Selective Herbicides, sales increased by 4 percent driven by volume
increases in Syngenta’s corn and soybean crop protection portfolio
from increased acreage and the continued benefit of its effectiveness in
.
the management of glyphosate resistant weeds. Sales of Non-
selective Herbicides decreased by 13 percent due to a significant price
reduction in glyphosate, although volumes recovered sharply in the
second half of 2010 Growth of 9 percent in Fungicides was driven by
AMISTAR®, particularly in Latin America where soybean rust pressure
increased. Total sales of the AMISTAR® family of products reached
a record level of $1.2 billion. Insecticides sales grew by 12 percent
reflecting rapid growth in emerging Asia and Latin America where
ACTARA® and DURIVO® showed strong growth on multiple crops.
Strong Seed Care growth in emerging markets more than offset
lower sales in North America resulting in sales growth of 2 percent.
Professional Products sales increased due to currency effects as
increased volume from some recovery in consumer demand in the
garden and ornamental markets was offset by price declines in the
turf market.
Volume growth was achieved in all four regions and was particularly
strong in Latin America and Asia Pacific. In Europe, Africa & the Middle
East, sales improved after a late start in the first half, which was caused
by weather and high inventories in the distribution channel, notably in
France. Eastern Europe continued to demonstrate strong growth
potential despite drought in Russia over the summer. In NAFTA, the
impact of the competitive price environment was partly offset by
volume growth. Latin America benefited from improved weather and
economic conditions as well as higher commodity prices, and
Syngenta was able further to reinforce its leading market position.
In Asia-Pacific, strong demand was sustained throughout the year
particularly in emerging markets, where growers continued to invest in
order to improve yield.
Syngenta
Financial Report 2010
Sales by product line are set out below:
09
(US$ million, except growth %)
Product line
Selective Herbicides
Non-selective Herbicides
Fungicides
Insecticides
Seed Care
Professional Products
Others
Total
2010
2009
Volume % Local price %
CER % Currency %
Actual %
Growth
2,308
987
2,662
1,475
838
470
138
2,221
1,141
2,442
1,312
821
458
96
8,878
8,491
+8
–3
+12
+14
+8
+5
+40
+9
–7
–13
–5
–3
–6
–5
+3
–6
+1
–16
+7
+11
+2
–
+43
+3
+3
+3
+2
+1
–
+3
–
+2
+4
–13
+9
+12
+2
+3
+43
+5
Herbicides are products that prevent or reduce weeds that compete
with the crop for nutrients, light and water. Herbicides can be
subdivided into (i) selective herbicides, which are crop-specific
and control weeds without harming the crop and (ii) non-selective
herbicides, which reduce or halt the growth of all vegetation with
which they come in contact.
Fungicides are products that prevent and cure fungal plant diseases
that affect crop yield and quality.
Insecticides are products that control chewing pests such as
caterpillars and sucking pests such as aphids, which reduce crop
yields and quality.
Seed care products are insecticides and fungicides used to protect
growth during the early stages.
Professional products are herbicides, insecticides and fungicides used
in markets beyond commercial agriculture, and include a broad range
of premium growing media mixes for professional flower growers.
Selective Herbicides: major brands AXIAL®, CALLISTO® family,
DUAL®/BICEP® MAGNUM, FUSILADE®MAX, TOPIK®
Sales in 2010 increased by 4 percent and 1 percent at constant
exchange rates. Volume growth of 8 percent, driven in particular
by corn herbicides, was largely offset by sales price declines.
The CALLISTO® family of products showed growth in all regions, with
the main contribution coming from the USA, where early purchases in
advance of the 2011 season affirmed Syngenta’s strong market
position there. Sales of TOPIK® decreased significantly due to reduced
acreage and increased competition in Canada. Significant volume
growth in soybean herbicides reflected their value in combating
glyphosate-resistant weeds.
Non-selective Herbicides: major brands GRAMOXONE®,
TOUCHDOWN®
Sales decreased by 13 percent from prior year mainly due to lower
prices for TOUCHDOWN®, in line with developments in the glyphosate
market. After decreasing earlier in the year, TOUCHDOWN® volumes
recovered sharply in the second half with strong demand in Latin
America, resulting in a slight overall year on year decrease.
GRAMOXONE® volumes were lower during the year, but also
improved in the second half with good growth in Asia-Pacific.
Fungicides: major brands ALTO®, AMISTAR®, BRAVO®, REVUS®,
RIDOMIL GOLD®, SCORE®, TILT®, UNIX®
The 9 percent sales growth in fungicides was driven by AMISTAR®,
which grew by 21 percent during 2010, 20 percent at constant
exchange rates. The main growth area was Latin America, where
applications against soybean rust increased owing to more moist
conditions. Syngenta’s market share in Latin America was reinforced
with the opening of new azoxystrobin capacity, which provides the
ability to satisfy growing demand. In Asia Pacific, AMISTAR® sales
exceeded $100 million for the first time as the product was introduced
in a number of emerging markets on a wide variety of crops.
Insecticides: major brands ACTARA®, DURIVO®, FORCE®, KARATE®,
PROCLAIM®, VERTIMEC®
Sales of insecticides increased by 12 percent, 11 percent at constant
exchange rates, led by the broad spectrum insecticide ACTARA®,
used on multiple crops worldwide, which increased in 2010 by
27 percent, 25 percent at constant exchange rates. Sales of the new
product DURIVO® more than doubled with a highly successful launch
in Brazil and strong growth on rice and vegetables in a number of
Asian markets.
Seed Care: major brands AVICTA®, CRUISER®, DIVIDEND®, MAXIM®
Seed Care volume grew by 8 percent, with strong growth in emerging
markets where adoption of the technology is increasing. Sales prices
were 6 percent lower than prior year due mainly to North America,
where high channel inventories of treated seed and a competitive
environment affected sales of CRUISER® and MAXIM®. This was partly
offset by the introduction of AVICTA® on corn in the USA and on
soybean in Brazil.
Professional Products: major brands FAFARD®, HERITAGE®, ICON®
Sales increased by 3 percent, but were flat at constant exchange
rates, as a recovery in the Garden and Ornamentals product area from
improving consumer demand was offset by a competitive North
American turf market. New registrations in Europe contributed to an
11 percent volume increase in the region.
Syngenta
Financial Report 2010
Operating and Financial Review
10 Commentary on regional performance
(US$ million, except growth %)
Region
Europe, Africa and Middle East
NAFTA
Latin America
Asia Pacific
Total
Growth
2010
2009
Volume % Local price %
CER % Currency %
Actual %
2,649
2,383
2,300
1,546
8,878
2,667
2,567
1,907
1,350
8,491
+3
+3
+26
+9
+9
–4
–13
–5
–1
–6
–1
–10
+21
+8
+3
–
+3
–
+7
+2
–1
–7
+21
+15
+5
Sales decreased slightly in Europe, Africa and the Middle East as
the 3 percent volume increase was more than offset by sales price
declines. In Western Europe, sales volumes recovered strongly in the
second half of the year, following a slow start to the season due to
cold weather and high channel inventories in France. Eastern Europe
showed solid volume growth for the full year driven by Ukraine, where
sales increased by almost 50 percent as the result of accelerating
investment in cereals in an improved credit environment.
In NAFTA, sales were 7 percent lower due to price pressure caused
by the high level of channel inventories at the start of the year, which
resulted in a more competitive market. This was partially offset by
volume growth and favorable currency movements. Sales prices
were lower across all product lines, particularly in Fungicides and Non-
selective Herbicides. Sales of the Non-selective Herbicide glyphosate
decreased significantly from 2009 levels due both to lower prices and
volumes, although volumes recovered during the second half of 2010.
Double digit volume growth, which was broad-based across product
lines, was recorded in the second half of the year as customers started
to respond to higher crop prices. Sales volume growth was particularly
strong in corn Fungicides, which achieved adoption close to levels
reached in the strong 2008 growing season.
The sales growth rate was double digits in all product lines in Latin
America, where an overall 26 percent volume increase, slightly offset
by a 5 percent decrease in prices, resulted in overall sales increasing
by 21 percent. Soybean acreage expanded and more favorable
weather conditions also brought increased disease pressure. A strong
soybean price resulted in greater usage by growers of technology to
improve yields. Consequently, sales volume of Syngenta’s leading
product PRIORI Xtra™, based on azoxystrobin, increased by almost
50 percent. Argentina experienced particularly strong volume growth,
with sales up by 46 percent resulting from an easing of liquidity
constraints, drought recovery and a resumption of technology
adoption, notably in Seed Care.
In Asia Pacific, sales growth was broad-based across the region as
the result of an ongoing crop yield productivity drive in many emerging
markets. Sales volume grew by 9 percent, favorable currency
movements contributed 7 percent and sales prices decreased
slightly resulting in an overall 15 percent growth in sales in the region.
The sales growth rate was double digits in China, India and Vietnam,
with the rapid expansion of AMISTAR® and strong growth of
Insecticides and Seed Care. In developed markets in the region,
sales in Australia grew in all product lines while sales in Japan
were unchanged.
Syngenta
Financial Report 2010
Seeds
Seeds sales grew by 9 percent, with all regions and all product lines
showing increased sales over prior year. Reported sales volume
growth was 8 percent despite 2009 sales having benefitted from the
implementation of new sales terms in the fourth quarter of that year in
NAFTA Corn & Soybean. The new sales terms resulted in sales that
otherwise would have been recognized in early 2010 being recognized
in 2009, and reduced reported sales volume growth in 2010 by
approximately 6 percent. Favorable currency movements increased
sales by 1 percent. Prices were flat year on year.
11
(US$ million, except growth %)
Product line
Corn & Soybean
Diverse Field Crops
Vegetables
Flowers
Total
2010
1,281
524
663
337
1,210
429
594
331
2,805
2,564
2009
Volume % Local price %
CER % Currency %
Actual %
Growth
+5
+18
+9
+1
+8
–1
–
+2
+1
–
+4
+18
+11
+2
+8
+2
+4
+1
–
+1
+6
+22
+12
+2
+9
Corn & Soybean: major brands AGRISURE®, GARST®, GOLDEN
HARVEST®, NK®
Sales grew in all regions, led by NAFTA, Asia Pacific and Eastern
Europe, resulting in an overall increase of 6 percent over prior year,
4 percent at constant exchange rates, with 5 percent volume growth
partly offset by a 1 percent reduction in local currency prices. Reported
volume growth was reduced by 12 percent due to the aforementioned
change in NAFTA sales terms. In the USA, Syngenta’s AGRISURE®
3000 GT proprietary triple stack corn seed accounted for 60 percent
of the corn portfolio compared with 25 percent in 2009. In soybean,
while reported volume decreased due to the change in NAFTA sales
terms in 2009, Syngenta estimates to have increased market share
in both NAFTA and Latin America. The 1 percent reduction in local
currency sales prices reflected the competitive market environment,
particularly in soybean.
Diverse Field Crops: major brands NK® oilseeds, HILLESHÖG®
sugar beet
Sales increased by 22 percent on strong underlying growth
supplemented by acquisitions, which added 9 percent to sales.
Growth was particularly strong in Eastern Europe, with expanded sales
in Russia and Ukraine on higher sunflower acreage and improved
credit conditions compared with 2009. This, combined with the full
year impact on sales from the third-quarter 2009 acquisition of
Monsanto’s sunflower business, resulted in overall volume growth of
18 percent.
Vegetables: major brands, DULCINEA®, ROGERS®, S&G®, Zeraim
Gedera
Sales grew by 12 percent as a strong start to the year accelerated in
the second half, with all regions except Europe, Africa and the Middle
East showing double digit growth. In Europe, Africa and the Middle
East, sales grew by 4 percent as the expansion of fresh vegetable
sales more than offset a decline in the processing market. Growth in
emerging markets was broad-based and reflected increased demand
for high quality produce.
Flowers: major brands Fischer, Goldfisch, Goldsmith Seeds, S&G®,
Yoder
Sales grew by 2 percent from both volume and price increases.
Moderate volume growth occurred in the two main Flowers regions of
Western Europe and the USA reflecting advances in genetics as well
as some improvement in the economic environment.
Commentary on regional performance
(US$ million, except growth %)
Region
Europe, Africa and Middle East
NAFTA
Latin America
Asia Pacific
Total
2010
1,047
1,234
275
249
933
1,187
243
201
2,805
2,564
2009
Volume % Local price %
CER % Currency %
Actual %
Growth
+10
+3
+12
+14
+8
–
–
+1
+4
–
+10
+3
+13
+18
+8
+2
+1
–
+6
+1
+12
+4
+13
+24
+9
Sales increased by 12 percent in Europe, Africa and the Middle East
mainly due to strong volume growth in corn and Diverse Field Crops,
including benefits from the sunflower acquisition. Volume growth was
strongest in Eastern Europe. Sales prices in local currency were flat as
price increases in Vegetables offset decreases in corn, which reflected
high industry stock levels. Currency movements increased reported
sales in the region by 2 percent.
In NAFTA, sales grew by 4 percent led by increased volume in
Vegetables and Corn & Soybean. Sales prices were flat as price
increases in Diverse Field Crops and Flowers were offset by price
decreases in Corn & Soybean. Sales growth in 2010 was impacted by
the aforementioned new sales terms in fourth quarter 2009 in NAFTA
Corn & Soybean.
Sales grew 13 percent in Latin America led by Corn & Soybean,
particularly in Brazil where corn sales increased significantly. Argentina
sales also showed strong growth, increasing over prior year due to
increased soybean volumes and the full year impact on sales from the
third quarter 2009 acquisition of Monsanto’s sunflower business.
Syngenta
Financial Report 2010
Operating and Financial Review
12 In Asia Pacific, sales grew in all product lines and most major
countries. The main contributors to the 24 percent sales growth were
Corn & Soybean, which grew by over 30 percent driven by higher
volumes and prices in emerging markets, and Vegetables which grew
by 24 percent on higher volumes in China and India.
Operating income
Variances in the tables below reflect the profit impact of changes year
on year. For example, an increase of sales or a decrease in costs is a
positive variance and a decrease in sales or increase in costs is a
negative variance.
Operating Income/(loss) (US$ million)
Crop Protection
Seeds
Business Development
Inter-segment profit elimination
Total
2010
1,738
120
(91)
26
1,793
2009
1,909
42
(127)
(5)
1,819
Actual
%
–9
+186
–
–
–1
Operating income decreased from 2009 by US$26 million, 1 percent,
as strong sales and margin growth in Seeds coupled with lower raw
material costs in Crop Protection were more than offset by a significant
decline in Crop Protection sales prices. Currency movements
increased sales by 2 percent; at constant exchange rates, sales grew
by 4 percent with higher sales volumes in both Crop Protection and
Seeds offsetting lower sales prices in Crop Protection. Overall gross
profit margin increased slightly with higher gross profit margins in
Seeds offsetting a 1 percent decline in the larger Crop Protection
business. Marketing and distribution costs increased by 5 percent,
4 percent at constant exchange rates, including increased
expenditures in emerging markets, particularly Latin America, and
higher variable costs from the 9 percent higher sales volumes.
Research and development expense increased by 8 percent, with
higher expenditures in Crop Protection and Seeds having more than
offset a reduction in Business Development.
General and administrative was 26 percent higher than in 2009.
General and administrative is reported net of the result of currency
hedging programs described below, where the net gain in 2010 was
US$79 million less than in 2009. At constant exchange rates, general
and administrative was 12 percent higher including the impact of
acquisitions in Seeds, increased information system costs and
amortization and lower gains on disposals of property, plant and
equipment, all of which more than offset savings coming from the
operational efficiency programs. Restructuring and impairment,
including the portion recorded in cost of goods sold, is described in
Note 6 to the financial statements and increased by US$29 million in
2010 to US$178 million mainly due to higher asset impairments.
Excluding the impact of hedging, the favorable impact on sales of a
weaker US dollar relative to the Australian and Canadian dollars and
overall relative to emerging market currencies was partly offset by the
adverse impact on costs, particularly from the stronger Swiss franc.
The net result of the hedging program for forecast foreign currency
transactions (“EBITDA program”) was a gain of US$30 million
compared to a gain of US$109 million in 2009. Taken together, the
overall impact of exchange rate movements on operating income was
broadly neutral.
Crop Protection operating income
(US$ million, except growth %)
Sales
Cost of goods sold
Gross profit
as a percentage of sales
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
as a percentage of sales
Total as
reported under IFRS
2010
8,878
(4,496)
4,382
49%
2009
8,491
(4,262)
4,229
50%
(1,321)
(1,255)
(555)
(667)
(101)
1,738
20%
(508)
(496)
(61)
1,909
22%
Restructuring
and impairment
2010
2009
–
–
–
–
–
–
–
–
–
–
–
–
(101)
(101)
(61)
(61)
Syngenta
Financial Report 2010
Before restructuring
and impairment¹
Growth
13
2009
Actual %
CER %
2010
8,878
8,491
(4,496)
(4,262)
4,382
49%
4,229
50%
(1,321)
(1,255)
(555)
(667)
–
1,839
21%
(508)
(496)
–
1,970
23%
+5
–5
+4
–5
–9
–35
–
–7
+3
–4
+1
–4
–8
–15
–
–6
This table does not represent an income statement prepared under IFRS. Please refer to the segmental information reported in Note 4 to the consolidated financial statements.
1 Amounts before restructuring and impairment are non-GAAP measures. Please refer to Appendix A of the Operating and Financial Review for a more detailed description
Operating income in 2010 of US$1,738 million was 9 percent lower
than 2009, due to the increased restructuring and impairment charges
and because the benefits of the increased sales volumes and lower
raw material costs were more than offset by the impact of the lower
sales prices and higher other operating costs. Operating income
margin declined by 2 percentage points with gross profit as a
percentage of sales 1 percentage point lower than in 2009.
The weaker US dollar relative to the Australian and Canadian dollars
and emerging market currencies increased reported sales by
approximately 2 percent, but this was partly offset by the adverse
impact on the cost base of the stronger Swiss franc. In addition,
hedging gains under the program to cover forecast transaction
exposures, at US$28 million, were US$75 million lower than in 2009
and were reported in general and administrative. The net effect of the
US dollar movements was to decrease the segment’s operating
income by approximately 1 percent.
Sales in 2010 increased by 5 percent, 3 percent at constant exchange
rates, with volumes 9 percent higher but local currency prices
6 percent lower. Gross profit margin decreased by approximately
1 percentage point from 2009, with the adverse impact of the lower
local currency sales prices largely offset by reductions in raw material
costs, including the full year benefit of savings achieved in 2009.
Marketing and distribution costs were higher from the 9 percent
growth in sales volumes and increased expenditures in emerging
markets, particularly Latin America, where sales were 21% higher,
partially offset by lower provisions for doubtful receivables in the region.
Research and development costs were 9 percent higher, 8 percent
at constant exchange rates, as Syngenta continued to progress
its strong development pipeline. General and administrative costs
increased by 35 percent, partly impacted by lower gains on the
currency hedging program for forecast transactions and at constant
exchange rates increased by 15 percent. In 2009 these costs were net
of the impact of the favorable outcome of a legal dispute.
Restructuring and impairment in 2010 and 2009 related primarily to the
Operational Efficiency Program announced in 2007 and in particular to
the projects to standardize and consolidate global back office services
and to further outsource information systems. The increase in costs
in 2010 was mainly the result of higher impairments and non-cash
restructuring charges, including US$12 million for the impairment of a
receivable related to a site disposal due to lower likely redevelopment
proceeds.
Syngenta
Financial Report 2010
Operating and Financial Review
14 Seeds operating income
(US$ million, except growth %)
Sales
Cost of goods sold
Gross profit
as a percentage of sales
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
as a percentage of sales
Total as
reported under IFRS
Restructuring
and impairment
Before Restructuring
and impairment¹
Growth
2009
Actual %
CER %
2010
2,805
(1,450)
1,355
48%
(559)
(410)
(217)
(49)
120
4%
2009
2,564
(1,361)
1,203
47%
(540)
(364)
(199)
(58)
42
2%
2010
–
(18)
(18)
–
–
–
(49)
(67)
2009
–
(17)
(17)
–
–
–
(58)
(75)
2010
2,805
2,564
(1,432)
(1,344)
1,373
49%
1,220
48%
(559)
(410)
(217)
–
187
7%
(540)
(364)
(199)
–
117
5%
+9
–7
+13
–4
–13
–9
–
+60
+8
–4
+12
–4
–13
–11
–
+46
This table does not represent an income statement prepared under IFRS. Please refer to the segmental information reported in Note 4 to the consolidated financial statements.
1 Amounts before restructuring and impairment are non-GAAP measures. Please refer to Appendix A of the Operating and Financial Review for a more detailed description
Seeds sales in 2010 were 9 percent higher than 2009, 8 percent at
constant exchange rates, due to higher sales volumes. Gross profit
margin increased by 1 percentage point due to higher margins on
NAFTA Corn & Soybean sales from the increased weighting of
proprietary triple stack seeds in the corn portfolio and increased royalty
income. Cost of goods sold in restructuring and impairment in 2010
related to the reversal of the purchase accounting inventory step-up
from the Goldsmith, Monsanto’s sunflower business, Pybas and
Synergene acquisitions and, in 2009, to the Goldsmith acquisition.
Marketing and distribution costs were 4 percent higher than in 2009
due to continued investment in emerging markets and acquisitions,
though partly offset by lower charges for doubtful receivables.
Research and development costs were 13 percent higher driven
by increased spending in field crops and vegetables. General and
administrative costs increased 9 percent, 11 percent at constant
exchange rates, due to additional costs resulting from the acquisitions
completed in the latter part of 2009 and, in 2010, from higher
amortization of acquired intangible assets as well as expenses and
amortization related to the implementation of a new global seeds
business system.
Business Development operating loss
Restructuring and impairment costs included the reversal of the
purchase accounting inventory step-ups noted above. In addition,
costs in 2010 included US$15 million to achieve synergies across
Flowers sites, US$17 million to integrate recently acquired businesses
and US$32 million for the continuation of the programs to standardize
and outsource back office operations across the Syngenta business
segments, of which US$14 million related to implementing a global
system across Seeds. In 2010, these costs were reported net of
divestment gains of US$19 million from the de-recognition of the
investment in the Greenleaf Genetics LLC joint venture. Syngenta
acquired the remaining 50% equity interest in Greenleaf Genetics LLC
during 2010. Costs in 2009 included US$12 million for the global
systems implementation and US$24 million to integrate and drive
synergies from the acquisitions of Goldsmith, Yoder, Fischer and
Zeraim Gedera.
The weaker average US dollar increased 2010 reported sales by
approximately 1 percent and operating income by US$16 million.
(US$ million, except growth %)
Sales
Cost of goods sold
Gross profit
as a percentage of sales
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating loss
Total as
reported under IFRS
Restructuring
and impairment
Before Restructuring
and impairment¹
Growth
2010
23
(11)
12
2009
8
(15)
(7)
52%
–88%
(12)
(67)
(15)
(9)
(91)
(10)
(80)
(19)
(11)
(127)
2010
2009
2010
2009
Actual %
CER %
–
–
–
–
–
–
–
–
–
–
–
–
(9)
(19)
(11)
(11)
23
(11)
12
8
(15)
(7)
+197
+28
–
52%
–88%
(12)
(67)
(15)
–
(82)
(10)
(80)
(19)
–
(116)
–18
+17
+23
–
+30
+197
+29
–
–17
+17
+26
–
+31
This table does not represent an income statement prepared under IFRS. Please refer to the segmental information reported in Note 4 to the consolidated financial statements.
1 Restructuring and impairment is a non-GAAP measure. Please refer to Appendix A of the Operating and Financial Review for a more detailed description
Syngenta
Financial Report 2010
Higher sales in 2010 were due to the completion of biofuel technology
sales in the year. Otherwise, sales and cost of goods sold related
largely to products used in development and marketing trials.
Research and development spending decreased 17 percent, with
lower expenditures on enzymes and biofuel projects partly offset by
increases in sugar cane. Restructuring and impairment in both years
largely related to losses on disposal and impairments of available-for-
sale financial assets.
Defined benefit pensions
Defined benefit pension expense, which now excludes amortization of
actuarial gains and losses in accordance with Syngenta’s revised
accounting policy as disclosed in the financial statements, increased to
US$77 million in 2010 from US$72 million in 2009. Syngenta estimates
that the total post-employment charge to profit or loss for 2011 will be
approximately US$10 million lower than in 2010, due mainly to the
favorable impact of 2010’s investment performance and the US$200
million accelerated pension contribution payment on the expected
return on assets component of 2011 pension expense. This outweighs
the effect of applying a lower long term expected percentage return on
those higher asset values in order to reflect lower market yields on fixed
interest investments.
15
Employer contributions to defined benefit pension plans, excluding
contributions related to restructuring, increased to US$337 million in
2010 from US$125 million in 2009, mainly due to accelerated payment
of US$200 million of employer contributions which Syngenta would
otherwise have been required to pay in 2011 and 2012. The amounts
prepaid include all the deficit recovery contributions due for Syngenta’s
UK plan up to its next statutory valuation, which will take place in 2012,
substantially all the 2011 service contributions for the Swiss plan, and
all the expected contributions to the US plan until the second half of
2012. As a result, Syngenta estimates that its contributions to defined
benefit pension plans for 2011 will be approximately US$40 million.
Restructuring and impairment
The following table analyzes restructuring and impairment charges for the years ended December 31, 2010 and 2009:
(US$ million)
Cash costs:
Operational efficiency programs
Integration and acquisition costs
Other restructuring costs
Total cash costs
Non-cash restructuring and impairment, net
Total restructuring and impairment¹
2010
2009
101
19
14
134
44
178
98
28
–
126
23
149
1 US$18 million (2009: US$17 million) is included within cost of goods sold and US$1 million (2009: US$2 million) is included within income/(loss) from associates and joint ventures
Restructuring represents the effect on reported performance of
initiating business changes which are considered major and which, in
the opinion of management, will have a material effect on the nature
and focus of Syngenta's operations, and therefore requires separate
disclosure to provide a more thorough understanding of business
performance. Restructuring includes the effects of completing and
integrating significant business combinations and divestments.
Restructuring and impairment includes the impairment costs
associated with major restructuring and also impairment losses
and reversals of impairment losses resulting from major changes
in the markets in which a reported segment operates.
2010
During 2010, charges under the operational efficiency restructuring
programs included US$54 million for the continuing standardization
and consolidation of global back office operations across Crop
Protection and Seeds and US$12 million for further outsourcing of
information systems. Further operational efficiency charges included
US$14 million largely to realize synergies across the Flowers sites
in the Seeds business, US$10 million for reorganizations in the
Crop Protection businesses in Western Europe, US$8 million for
restructuring at production and distribution sites in France and the
US, and US$3 million of other costs.
The incidence of these business changes may be periodic and the
effect on reported performance of initiating them will vary from period
to period. Because each such business change is different in nature
and scope, there will be little continuity in the detailed composition and
size of the reported amounts which affect performance in successive
periods. Separate disclosure of these amounts facilitates the
understanding of performance including and excluding items affecting
comparability. Reported performance before restructuring and
impairment is one of the measures used in Syngenta’s short term
employee incentive compensation plans. Syngenta’s definition of
restructuring and impairment may not be comparable to similarly
titled line items in financial statem
ents of other companies.
Integration and acquisition costs of US$19 million were charged in
relation to the 2010 acquisition of Maribo Seeds and for continuing
integration relating to the earlier acquisitions of Monsanto’s sunflower
business, Goldsmith, Yoder, Pybas and Synergene.
Other restructuring costs of US$14 million were charged largely
for preliminary costs relating to the project to integrate the global
commercial operations of Crop Protection and Seeds announced
in February 2011.
Syngenta
Financial Report 2010
Operating and Financial Review
16 Within non-cash restructuring and impairment, net, non-cash
restructuring costs include US$18 million of reversal of inventory step-
up relating to the acquisitions of Goldsmith in the US and Europe,
Monsanto’s sunflower business and the Pybas and Synergene lettuce
companies as well as US$3 million of other costs. Impairment costs
include US$12 million of impairment of a site disposal receivable due to
a decrease in expected proceeds from redevelopment, US$10 million
for the impairment of a Crop Protection supply agreement,
US$9 million of impairments of available-for-sale financial assets,
US$4 million of impairment in the Professional Products market of the
Crop Protection business, US$4 million of impairment of a site in the
UK and other small impairments totaling US$3 million. Offsetting
divestment gains of US$19 million were recorded upon derecognition
of the investment in the Greenleaf Genetics LLC joint venture. As
described in Note 3 to the consolidated financial statements, Syngenta
acquired the remaining 50 percent equity interest in Greenleaf Genetics
LLC during 2010.
2009
Operational efficiency cash costs of US$98 million included US$15
million for site closure costs in NAFTA, US$18 million for outsourcing
of information systems and US$55 million for the global back office
operations project across Crop Protection and Seeds.
Integration and acquisition costs of US$28 million related mainly to the
Goldsmith and Yoder acquisitions made in 2008 and to the continuing
integration and synergy program of the Fischer group, acquired
in 2007.
Non-cash restructuring and impairment, net, included US$17 million
of reversal of inventory step-up related mainly to the Goldsmith
acquisition, US$16 million of available-for-sale financial asset
impairments and US$16 million of fixed asset write-offs in addition to
various insignificant restructuring charges. Offsetting divestment and
other non-cash restructuring gains included US$9 million related
to the sale of an available-for-sale financial asset, US$10 million to
the recognition of a reimbursement receivable for a product right
impairment and US$7 million to negative goodwill realized on the
Goldsmith acquisition.
Financial expense, net
Financial expense, net increased by US$19 million compared to 2009
mainly due to higher net interest and bank charges from financing
business growth in Latin America and higher net currency losses
caused by currency gains from 2009 internal funding restructuring
not having reoccurred in 2010.
Taxes
Syngenta’s effective tax rate in 2010 was 16 percent, compared
with 17 percent in 2009. The Swiss statutory tax rate applicable to
Syngenta remained at 23 percent and the impact of income taxed at
different rates reduced the rate by 3 percent in 2010 compared to
4 percent in 2009, due to a smaller share of profit in certain lower tax
jurisdictions. The effect of other disallowed expenditures and income
not subject to tax reduced the tax rate by 1 percent in 2010, less than
the 3 percent decrease in the 2009 tax rate, mainly due to lower non-
taxable income. Recognizing previously unrecognized deferred tax
assets reduced the tax rate by 5 percent, net, in 2010 compared to a
2 percent decrease in 2009. The recognition was due to a sustained
improvement in profitability in a Latin American country, following
strong sales growth, although the benefit was partly offset by the
impact of deteriorating profitability in another country.
The tax rate on restructuring and impairment costs was 24 percent,
compared to 28 percent in 2009 due to the mix of pre-tax gains and
losses in the net charge. Future rates applicable to restructuring and
impairment will be dependent on the nature and size of the charges
and may vary from year to year.
Net income for the period and other supplementary income data
Net income attributable to Syngenta shareholders in 2010 was
US$1,397 million, 1 percent lower than the 2009 amount of
US$1,408 million primarily due to lower operating income, including
higher net restructuring and impairment charges.
After related taxation, restructuring and impairment charges in 2010
were US$136 million compared to US$107 million in 2009.
Foreign operations and foreign currency transactions
Syngenta’s subsidiaries use their local currency as their functional
currency for accounting purposes except where the use of a different
currency more fairly reflects their actual circumstances.
Syngenta operates worldwide and its business has grown significantly
in emerging markets, with a broadening of the currency effects that
need to be closely monitored. Next to the Euro, the Swiss franc and
the British pound, the Brazilian real gives rise to a major currency
exposure. The exposure arises from the operations in Brazil where the
Brazilian real is the functional currency of the subsidiaries. During 2010,
the Brazilian real experienced an appreciation of approximately
5 percent against the US dollar. To manage its exposure to risks
associated with fluctuations of the real, Syngenta has implemented
programs to protect the US dollar value of trade receivables from
customers and has hedged its balance sheet exposure using currency
derivatives. Sales to customers in Brazil must be invoiced in Brazilian
real to meet local legal requirements. Syngenta is not able to estimate
the effect of any future depreciation or appreciation of the Brazilian real
on operating income in future periods. At December 31, 2010,
approximately 80 percent of Syngenta’s cash and cash equivalents
was held in US dollars and approximately 4 percent was held in Euros.
No other individual currency made up more than 2 percent.
Liquidity and capital resources
Syngenta’s principal sources of liquidity consist of cash generated
from operations. In the period 2006 to 2010, this has been more than
sufficient to cover cash used for investment activities and, except
for any significant business acquisitions or a significant deterioration
in the rate of receivables collections from that currently expected by
management, this is also expected to be the case in 2011.
Working capital fluctuations are supported by short-term funding
available through commercial paper and committed credit facilities.
Operating in a seasonal business, Syngenta typically obtains funds
from its short-term facilities during the first half of the year to fund
operations during the northern hemisphere growing season and
repays these funds during the second half when receivables are
collected. Longer-term capital resources include unsecured non-
current bonds issued under a Euro Medium Term Note (EMTN)
program and unsecured non-current Notes issued under a Note
Purchase Agreement in the US Private Placement market. Syngenta
reported cash and cash equivalents on December 31, 2010 and 2009
of US$1,967 million and US$1,552 million, respectively.
At December 31, 2010 and 2009, Syngenta had current financial debt
of US$992 million and US$281 million, respectively, and non-current
financial debt of US$2,585 million and US$3,303 million, respectively.
Syngenta
Financial Report 2010
Capital markets and credit facilities
Funds for Syngenta’s working capital needs were available during the
year from its US$2,500 million Global Commercial Paper program
supported by a US$1,200 million committed, revolving, multi-currency,
syndicated credit facility. Syngenta entered into its Global Commercial
Paper program in 2000 and amended it in 2007. At December 31,
2010, Syngenta had no commercial paper issuances outstanding.
The US$1,200 million syndicated credit facility (the “Credit Facility”)
was signed in 2006, amended in 2007, and will mature in July 2013.
At December 31, 2010, Syngenta had no borrowings under the Credit
Facility. There are no material restrictions on dividends from
subsidiaries under this facility.
During 2009, Syngenta issued an unsecured non-current Eurobond
with principal amount of EUR 500 million with a maturity in June 2014
and a fixed interest rate of 4.00 percent.
17
Syngenta’s long term credit rating is A (Standard & Poor’s) and A2
(Moody’s) with a stable outlook and the short term credit rating is A-1
(Standard & Poor’s) and P-1 (Moody’s). Syngenta’s short- and long-
term credit facilities and outstanding bond note instruments do not
contain any significant covenants affecting its ability to pay dividends
or borrow additional funds.
The table below summarizes Syngenta’s unsecured notes in issuance at December 31, 2010:
(US$ million)
4.125% Eurobond 2011
3.500% Swiss franc domestic bond 2012
3.375% Swiss franc domestic bond 2013
4.000% Eurobond 2014
4.125% Eurobond 2015
5.110% US private placement 2020
5.350% US private placement 2025
5.590% US private placement 2035
Total
Carrying
amount
Value
at issue
667
399
531
673
669
95
75
100
3,209
636
316
484
700
641
75
75
100
3,027
Management is of the opinion that, absent a major business
acquisition or a very significant deterioration in working capital or the
rate of receivables collections from that currently expected, the funding
available from these sources will be sufficient to satisfy its working
capital, capital expenditures and debt service requirements for the
foreseeable future, including cash expenditures relating to restructuring
programs. In the event of a major business acquisition, Syngenta
would seek additional funding from capital markets and other sources.
Syngenta regards as sufficiently remote the likelihood that a very
significant deterioration in working capital or unexpected decline in
the rate of receivables collections will occur so as not to require the
development of a detailed contingency funding plan.
Commitments for capital expenditures of US$50 million at December
31, 2010 relate mainly to the current capital investment program.
Cash flow
The following table sets out certain information about cash flow for each of the periods indicated:
(US$ million)
Cash flow from operating activities
Cash flow used for investing activities
Cash flow from (used for) financing activities
Year ended December 31,
2010
1,707
(450)
(844)
2009
1,419
(880)
170
Cash flow from operating activities
Cash flow from operating activities of US$1,707 million in 2010 was
US$288 million higher than in 2009. Income before taxes was broadly
flat, but this was after a higher level of non-cash charges compared to
2009, including increased depreciation and amortization. Net cash
paid for financial expenses was US$120 million lower in 2010 as a
result of higher cash outflows related to greater timing differences in
2009 between derivative settlements and realization of the underlying
exposures. Working capital contributed US$281 million more cash
inflows in 2010 compared to 2009 with a planned 2010 inventory
reduction of US$108 million compared to an increase in 2009 of
US$178 million and trade payables and other current liabilities
providing US$146 million of inflows in 2010 compared to
US$33 million of outflows in 2009 due to higher customer advance
payments. Trade and other receivables resulted in US$129 million of
outflows in 2010 compared to US$55 million of inflows in 2009 due to
an increase in other receivables during 2010. These increased inflows
were offset by a US$103 million increase in tax payments and a
US$183 million increase in spending on provisions, including the
accelerated defined benefit pension contributions of US$200 million
paid during 2010.
Cash flow used for investing activities
Cash used for investing activities decreased to US$450 million in
2010 from US$880 million in 2009. Additions to property, plant and
equipment of US$396 million were US$256 million lower in 2010 than
in 2009 as the capital expansion program announced in July 2008
Syngenta
Financial Report 2010
Operating and Financial Review
18 reached completion. Proceeds from disposals of financial assets in
2009 included the sale of Syngenta’s shareholding in Sakata Seeds
Corp. Net disposals of US$31 million of marketable securities in 2010
contrasted with net purchases in 2009 of US$41 million, due to excess
cash on hand at the end of 2009 having been invested for the short
term. Cash spent on acquisitions decreased by US$178 million in
2010 to US$10 million mainly due to the acquisition in 2009 of
Monsanto’s sunflower business.
With both Seeds and Crop Protection R&D functions, Syngenta R&D
is in a position to provide farmers with complete solutions to meet
their daily challenges. This is done by leveraging the breadth of
Syngenta’s scientific expertise and optimizing the interaction of
biology, chemistry and the environment to realize the full potential of
plants. Interconnectivity between areas of expertise in seeds and crop
protection chemicals is key to driving continuous innovation and
bringing the right products to market.
Cash flow used for financing activities
Cash flow used for financing activities was US$844 million in 2010
compared to cash from financing activities of US$170 million in 2009.
Net borrowings were US$769 million lower in 2010 than in 2009,
which included the issuance of the EUR500 million Eurobond noted
above. Net cash expenditures on sales and purchases of treasury
shares were US$167 million higher as share repurchases in 2009 were
limited to those required to meet the future needs of share based
payment plans, while in 2010 approximately US$200 million of shares
were repurchased under a repurchase program. Distributions paid to
shareholders in 2010 of US$524 million were US$30 million higher
than in 2009. Financing activities in 2010 also includes US$48 million
of outflows from the acquisitions of non-controlling interests.
Research and development (R&D)
Syngenta employs approximately 5,000 people at research and
development centers and field stations around the world. Syngenta’s
scientists are dedicated to meeting growers’ needs by raising crop
yields and improving quality in a sustainable way. Main global R&D
sites are in: Greensboro and Research Triangle Park, NC, USA;
Jealott’s Hill, UK; Stein, Switzerland; Goa, India; Beijing, China;
Enkhuizen, Netherlands and Toulouse, France.
There are two principal elements to ensuring strong and continuous
revenues for Syngenta. The first is to develop new products and
technologies and bring them successfully to the market. The second
is to support existing products, extending their uses and improving
their performance. To accomplish these elements, Syngenta R&D is
organized into three main R&D functions: Seeds, Crop Protection and
Lawn & Garden. These functions work closely with the business to
ensure the overall R&D strategy is delivered, while meeting the needs
of the individual businesses. Global platforms, such as the Global
Product Safety Group or the Global Regulatory Leadership Team,
have been established that support the entire R&D community and
show Syngenta’s commitment to becoming a single integrated
R&D organization.
Syngenta R&D is dedicated to developing customer-focused solutions
that improve crop yield and quality in a sustainable way. Product safety
is essential to this goal and the close working relationship of the Global
Product Safety Group and the Global Regulatory Leadership Team
worldwide ensure that Syngenta develops and is able to register safe
and effective plant varieties and crop protection products.
Collaborations and working with top specialists around the world
are essential to bringing in ideas and talent to Syngenta. Syngenta
has several strategic partnerships in China, including the Hubei
Biopesticide Engineering Research Center for advancing knowledge
about the potential of natural products, the Shanghai Institute of
Organic Chemistry for crop protection innovations, and the Institute for
Genetics and Developmental Biology for innovation in biotechnology.
In the US, Syngenta invested in 2009 in Metabolon, a US biotech
company, to gain access to its metabolomics technology.
This approach provides insight into the biochemical processes
happening within a cell to accelerate the development of new
chemicals and native and genetically modified traits. Syngenta is also
exploring how it can improve agronomic practices. This work includes
collaborations in the UK with Manchester University on the use of
sensors in agriculture, as well as with London’s Imperial College on
building predictive models for biological systems.
The total spent on research and development was US$1,032 million
in 2010 and US$952 million in 2009. Attribution of research and
development costs for 2010 was US$555 million for Crop Protection,
US$410 million for Seeds and US$67 million in Business Development.
In 2009, the attribution was US$508 million for Crop Protection,
US$364 million for Seeds and US$80 million in Business Development.
There are no off-balance sheet financing transactions associated with
research and development activity.
Syngenta
Financial Report 2010
Contractual obligations, commitments and contingent liabilities
At December 31, 2010 Syngenta had the following contractual obligations to make future payments in the following periods:
19
(US$ million)
Financial debt
Interest on financial debt
Other non-current liabilities
Capital lease payments
Operating lease payments
Unconditional purchase obligations
Long-term research agreements and other long-term
commitments
Total
Notes to the
financial
statements
reference
16, 18
27
18
25
25
25
25
Total
3,529
538
9
48
119
1,412
492
6,147
Less than
1 year
984
120
–
8
22
746
1–3
years
933
172
9
27
37
3–5
years
1,342
76
–
13
39
454
212
119
1,999
171
1,803
132
1,814
5–10
years
More than
10 years
95
67
–
–
21
–
70
253
175
103
–
–
–
–
–
278
Of the total financial debt, floating rate financial debt is US$320 million
(mainly local bank loans and overdraft facilities), US$317 million of
which is due within one year. No interest obligation in respect of this
debt is included in the table above. There is no contractual obligation
to renew this debt. The debt amount, and the interest payments
associated with it, will vary over time according to Syngenta’s funding
requirements and future interest rates.
Fixed rate debt of US$3,209 million is comprised primarily of the
outstanding Eurobonds, Swiss franc domestic bonds and US private
placement notes. Fixed rate interest payments of US$538 million on
these are included above. At December 31, 2010, US$1,064 million
of this long-term debt is converted to floating rate debt through
derivatives. The impact of these derivatives on the interest cash flows
has not been included in the above table as they can result in cash
payments or receipts depending on the market position at any
given time.
Other non-current liabilities arise from license agreements signed
during 2010, 2009 and 2008 with several counterparties where the
related cash flows are payable over several years.
US$884 million of provisions for long-term liabilities shown in
Syngenta’s consolidated balance sheet have not been included in the
above table because the timing of their payment is not contractually
fixed and cannot be estimated with sufficient certainty within the
context of the time periods in the table. This applies particularly to
those amounts which are not expected to be paid during 2011.
Note 19 to the consolidated financial statements presents the
components of the estimated US$228 million of provisions that are
expected to be paid during 2011.
The supply agreements for materials which give rise to the
unconditional purchase obligations are entered into by Syngenta to
ensure availability of materials which meet the specifications required
by Syngenta. Where suppliers have made significant capital
investment, these agreements generally provide for Syngenta to pay
penalties in the event that it terminates the agreements before their
expiry dates.
The above table excludes pension contributions. The rules of
Syngenta’s main Swiss defined benefit pension fund commit Syngenta
to contributing a fixed percentage of employees’ pensionable pay
to the fund. Syngenta’s 2011 contributions to the Swiss fund were
largely prepaid in December 2010. Syngenta is committed to pay
contributions to its UK defined benefit pension fund according to a
schedule, which it agrees in advance with the plan Trustee following
each statutory valuation, which normally takes place every three years.
In addition to paying a fixed percentage of pensionable pay for
employees’ current service, the schedule requires payment of a
fixed amount over a fixed number of years to eliminate the past
service deficit in the fund. Under the schedule of contributions in
force at December 31, 2010, Syngenta is committed to pay deficit
contributions of approximately US$31 million per year to the UK fund
over the agreed 10 year deficit recovery period, which ends in March
2019. A further US$16 million per year may be payable at three
year intervals over this period if the actual return on plan assets falls
below a specified level. Syngenta prepaid US$100 million of deficit
contributions to the fund in December 2010. As a result, no
further deficit contributions are expected to be payable before the
next valuation which is due in 2012, when a revised schedule of
contributions will be agreed based on the fund’s actuarial position
at that time. Because of this, the future contributions payable in
accordance with the existing schedule have not been included in the
above table. As disclosed in Note 22 to the consolidated financial
statements, Syngenta expects to pay $40 million of contributions
to its defined benefit pension plans in 2011.
The above table excludes liabilities of US$225 million in respect of
uncertain tax positions because it is not possible to make a reasonably
reliable estimate of the period of cash settlement with the respective
taxing authorities.
Off-balance sheet arrangements
Syngenta had no off-balance sheet arrangements as at December 31,
2010, other than the above contractual obligations, commitments and
contingent liabilities. Syngenta has no unconsolidated special purpose
entities that are likely to create material contingent obligations.
Critical accounting estimates
Critical accounting estimates and new accounting pronouncements
are discussed in Note 2 to the consolidated financial statements.
Recent developments
Note 30 to the consolidated financial statements provides details of
events which occurred between the balance sheet date and the date
on which the consolidated financial statements were approved by the
Board of Directors (February 8, 2011) that would require adjustment to
or disclosure in the consolidated financial statements.
Syngenta
Financial Report 2010
Operating and Financial Review
20 Future prospects
Prices of key crops such as corn, wheat and soybean increased
significantly in the second half of 2010 and by the end of the year were
30 percent to 50 percent higher than at the start. These increases
largely came after the Northern hemisphere sales season for Syngenta,
but if sustained are likely to support sales volume growth in 2011.
Sales volumes of Crop Protection products were 9 percent higher in
2010 than in 2009, and in the second half of the year were 18 percent
higher. Conversely due to competitive markets, particularly in NAFTA,
local currency sales prices were 6 percent lower than 2009 in the year,
5 percent lower excluding glyphosate products. Syngenta expects
local currency sales prices, including that of glyphosate, to stabilize in
2011 compared to 2010, but volume growth is not currently foreseen
at the levels seen in the second half of 2010. Following completion of
the capacity expansion program in 2010, with increased supply
particularly of AMISTAR® and ACTARA®, sales volumes of both of
these products increased by more than 20 percent in the year and
further volume increases are expected in 2011. Drought conditions in
Eastern Europe, particularly Russia, reduced sales growth in 2010 and
while seasonal weather and disease patterns are uncertain, volume
growth is currently anticipated in 2011. More generally, sales volume
growth is expected to again be strong in the emerging markets of
Eastern Europe, Latin America and Asia.
In Seeds, sales volumes grew by 8 percent in 2010, with local currency
prices flat overall. Volume growth in the second half of the year was
16 percent. Sales growth in the first half and full year were both
impacted by the alignment in the second half of 2009 of NAFTA Corn
& Soybean sales terms with industry practice, which increased 2009
full year Seeds sales and reduced reported 2010 sales growth by
approximately 6 percent. Volume growth in 2011 is expected to
moderate from the level seen in the second half of 2010. Corn &
Soybean sales are expected to drive volume growth as Syngenta
continues to benefit from an improved and competitive product offer
and a first full year of control of Greenleaf Genetics. Sales growth
in Diverse Field Crops in 2010 benefited from the inclusion of the
acquisition in 2009 of Monsanto’s sunflower business, which
increased Diverse Field Crop volumes by approximately 9 percent.
Syngenta has a long position in Euros due to sales in the large Western
European markets, particularly in the first half of the year, but has a
short position in Swiss francs due to significant manufacturing,
research and headquarters facilities located in Switzerland. Syngenta
hedges forecast transaction exposures under a rolling 12 month
program to cover approximately an overall 75 percent of the notional
exposure in the major currencies. The program for 2011 is therefore
fully in place only at the start of the year. While it is not possible to
predict the impact of currency exchange movements in 2011, if the
exchange rates seen at the start of the year continue, the impact on
reported sales will be positive, largely due to net long positions in
Australia, Canada and Japan. However, at the operating income level
this would be more than offset by the adverse impact on the cost base
of a stronger Swiss franc. Based on these same exchange rates,
the net negative position would be partly offset by hedging gains on
forecast transactions higher than the US$30 million realized in 2010.
The net hedging result is reported within general and administrative.
Significant savings in Crop Protection raw material costs were
achieved in 2009 and 2010, and in 2010 this partly offset the adverse
impact on gross profit margin from lower sales prices. Barring a
significant further escalation in the oil price in the first half of 2011,
the impact of raw material costs is expected to be broadly neutral.
Cost increases or decreases in the second half of 2011 mainly impact
on gross profit margins in 2012 due to the Crop Protection inventory
carry period. Seeds gross profit margins improved in 2010
compared to 2009 excluding the impact of purchase accounting
inventory adjustments. The margin increase was partly due to the
increased weighting of higher margin triple stack seeds containing
Syngenta proprietary traits. Further portfolio mix improvement is
currently expected in 2011, but the impact on gross profit margin will
be partly offset by the impact of lower production yields in the US in
the summer 2010 growing season and higher crop commodity prices,
which have an adverse impact on seed product costs.
In 2011, Syngenta will continue to increase its investment in sales,
marketing and administrative resources in emerging markets and
increase expenditures on research and development. While these
increases will be offset by cost savings from the restructuring
programs described in the above Operational Efficiency and Integrated
Business Model programs section, when combined with costs
associated with the higher sales volumes and an expected return of
staff incentives to the level reflecting achievement of profit targets,
operating costs excluding cost of goods sold and restructuring are
currently expected to increase by more than the rate of inflation.
While it is not possible to predict reliably currency exchange gains and
losses in 2011, based on interest and forward exchange rates
prevailing at the start of the year it is currently expected that financial
expense, net, in 2011 will be at a similar level to 2010.
Net income in 2011 will be impacted by restructuring and impairment
charges related both to the Operational Efficiency program approved
by the Syngenta Board on February 7, 2007 and to the further
Integrated Business Model program announced on February 9, 2011,
to achieve both cost and operational synergies from integrating Crop
Protection and Seeds sales and marketing. The level of restructuring
and impairment charges is dependent on the timing of irrevocable
restructuring commitments and is difficult to forecast accurately in any
one calendar year but, excluding financial asset and other impairment
losses, may in 2011 be of the order of twice the level of 2010.
Subject to approval by the shareholders at the Annual General Meeting
on April 19, 2011, the Board is recommending to increase the dividend
to CHF 7.00 per share paid by way of a cash distribution out of
reserves arising from capital contributions. Syngenta also expects to
repurchase shares in 2011 to a planned value of approximately
US$200 million.
Quantitative and qualitative disclosure about market risk
For quantitative and qualitative disclosure about market risk, see
Notes 27, 28 and 29 to the consolidated financial statements.
Syngenta
Financial Report 2010
21
Syngenta presents non-GAAP measures on operating income before
restructuring and impairment at both the segmental and group levels.
Restructuring and impairment charges have had a material effect on
operating income in the period covered by the review. In the opinion of
management, reporting operating performance excluding restructuring
and impairment in addition to the GAAP measures provides a more
thorough understanding of business performance. Together with
disclosure of the material elements within restructuring and impairment
and of the overall anticipated size and timeframe of restructuring
programs, these measures may assist investors in forecasting future
operating performance. In addition to GAAP measures, Syngenta
uses measures of operating performance excluding restructuring and
impairment in internal reporting to management and the Board of
Directors, and these measures are used in the incentive plans for
Syngenta management and other employees. Restructuring and
impairment charges have been incurred in all the periods covered by
the review and are expected to continue to arise and have a material
effect on operating performance in future periods. Consequently,
non-GAAP measures of operating income before restructuring
and impairment do not present a complete picture of operating
performance and these measures should be seen only as
supplementary to the GAAP measure.
Syngenta presents non-GAAP information on income before taxes
excluding restructuring and impairment together with income tax
expense before restructuring and impairment to assist investors to
calculate the Group tax rate both including and excluding the impact
of restructuring and impairment charges. The tax rate on restructuring
and impairment charges has been volatile and different from the tax
rate on income before taxes excluding restructuring and impairment,
due in part to many categories of restructuring or impairment charges
not being deductible for tax purposes. In addition to GAAP measures,
measures of income before taxes excluding restructuring and
impairment and income tax expense excluding restructuring and
impairment are used in internal reporting to management and the
Board of Directors. Restructuring and impairment charges have been
incurred in all the periods covered by the review and are expected to
continue to arise and have a material effect on operating performance
in future periods. Consequently, non-GAAP measures of income
before taxes excluding restructuring and impairment and income
tax expense before restructuring and impairment do not present a
complete picture of financial performance and these measures should
be seen only as supplementary to the GAAP measure.
Appendix A
Reconciliation of non-GAAP measures to equivalent GAAP
measures
A non-GAAP measure is a numerical measure of financial
performance, financial position or cash flows that either:
– includes, or is subject to adjustments that have the effect of
including, amounts that are excluded in the most directly
comparable measure calculated and presented under IFRS
as issued by the IASB; and
– excludes, or is subject to adjustments that have the effect of
excluding, amounts that are included in the most directly
comparable measure calculated and presented under IFRS
as issued by the IASB.
Syngenta uses non-GAAP measures in this report where they are
regarded by management as important for the investor to fully
understand Syngenta’s performance. The non-GAAP measures
presented in this report are measures adjusted for exchange rate
movements and to exclude restructuring gains and losses and
impairment losses. The Company presents these measures because:
– movements in exchange rates historically have had, and in the future
are expected to have, a significant impact on sales and operating
income from period-to-period; and
– restructuring and impairment charges historically have fluctuated,
and in the future are expected to fluctuate, significantly from period-
to-period and thereby have a volatile impact on results.
Syngenta has been engaged in significant restructuring activities,
including the integration of business combinations, since the formation
of the Company in November 2000. In the period following the
formation of the Company, restructuring programs were initiated to
integrate and extract synergies from the now combined operations
of the Zeneca agrochemicals business and the Novartis agribusiness.
Subsequently, further restructuring programs have been initiated in
response to low underlying growth in Crop Protection markets seen
at the time these programs were announced. The incidence of
restructuring charges is periodic and volatile, reflecting the timing of
irrevocable commitments related to specific sites and operations.
Therefore the impact on reported performance varies from period to
period and there is limited continuity in the specific composition or size
of such charges. Internal financial reporting and management and
employee incentive plans are substantially based on financial measures
excluding the charges for restructuring and impairment so that
management is incentivized to deliver the benefits of the associated
restructuring and not to achieve short term financial targets by
deferring implementation of restructuring plans. Restructuring
programs typically deliver benefits with a payback over several years,
similar to capital investments, and control over restructuring
expenditures is performed on a similar project basis to that applied
with capital investments.
Syngenta
Financial Report 2010
Operating and Financial Review
22 Syngenta presents non-GAAP information on net income and earnings
per share before restructuring and impairment and, where relevant, on
net income and earnings per share from continuing operations before
restructuring and impairment. As above, restructuring and impairment
charges have had a material effect on operating income in the period
covered by the review. In the opinion of management, reporting net
income and earnings per share excluding restructuring and impairment
in addition to the GAAP measures provides a more thorough
understanding of business performance. Together with disclosure of
the material elements within restructuring and impairment and of the
overall anticipated size and timeframe of restructuring programs, this
disclosure may assist investors in forecasting future performance.
In addition to net income and earnings per share prepared in
accordance with GAAP, Syngenta uses net income and earnings per
share excluding restructuring and impairment in internal reporting to
management and the Board of Directors, and the measure is used in
the incentive plans for Syngenta management and other employees.
Restructuring and impairment charges have been incurred in all the
periods covered by the review and are expected to continue to arise
and have a material effect on financial performance in future periods.
Consequently, the non-GAAP measures of net income and earnings
per share before restructuring and impairment do not present a
complete picture of financial performance and these measures
should be seen only as supplementary to the GAAP measures.
For improved clarity, the definitions of these non-GAAP measures
and reconciliations of non-GAAP measures to the appropriate GAAP
measure are provided below. The tables below are included to show
the reconciliation of the GAAP measures to the non-GAAP measures
used in the report and do not represent income statements prepared
under IFRS as issued by the IASB.
Reconciliation of net income excluding Restructuring and impairment (non-GAAP measure) to profit for the period (GAAP measure)
(US$ million)
2010
Operating income
Income/(loss) from associates and joint ventures
Financial expense, net
Income before taxes
Income tax expense
Net income
Attributable to minority interests
Net income attributable to Syngenta AG shareholders
Tax rate
Number of shares – basic (millions)
Number of shares – diluted (millions)
Basic earnings per share
Diluted earnings per share
(US$ million)
2009
Operating income
Income/(loss) from associates and joint ventures
Financial expense, net
Income before taxes
Income tax expense
Net income
Attributable to minority interests
Net income attributable to Syngenta AG shareholders
Tax rate
Number of shares – basic (millions)
Number of shares – diluted (millions)
Basic earnings per share
Diluted earnings per share
Restructuring and
impairment
Total
Before
Restructuring and
impairment
1,793
25
(141)
1,677
(275)
1,402
(5)
1,397
16%
93
93
15.07
14.99
(177)
(1)
–
(178)
42
(136)
–
(136)
24%
(1.47)
(1.45)
1,970
26
(141)
1,855
(317)
1,538
(5)
1,533
17%
93
93
16.54
16.44
Total
Restructuring and
impairment
Before Restructuring
and impairment
1,819
(3)
(122)
1,694
(283)
1,411
(3)
1,408
17%
93
94
15.11
15.01
(147)
(2)
–
(149)
42
(107)
–
(107)
28%
(1.15)
(1.14)
1,966
(1)
(122)
1,843
(325)
1,518
(3)
1,515
18%
93
94
16.26
16.15
(US$ million)
2008
Operating income
Income/(loss) from associates and joint ventures
Financial expense, net
Income before taxes
Income tax expense
Net income
Attributable to minority interests
Net income attributable to Syngenta AG shareholders
Tax rate
Number of shares – basic (millions)
Number of shares – diluted (millions)
Basic earnings per share
Diluted earnings per share
(US$ million)
2007
Operating income
Income/(loss) from associates and joint ventures
Financial expense, net
Income before taxes
Income tax expense
Net income
Attributable to minority interests
Net income attributable to Syngenta AG shareholders
Tax rate
Number of shares – basic (millions)
Number of shares – diluted (millions)
Basic earnings per share
Diluted earnings per share
Syngenta
Financial Report 2010
Total
Restructuring and
impairment
Before Restructuring
and impairment
23
1,880
3
(169)
1,714
(315)
1,399
–
1,399
18%
94
95
14.90
14.77
(205)
–
–
(205)
50
(155)
–
(155)
24%
(1.65)
(1.63)
2,085
3
(169)
1,919
(365)
1,554
–
1,554
19%
94
95
16.55
16.40
Total
Restructuring and
impairment
Before Restructuring
and impairment
1,501
(3)
(42)
1,456
(321)
1,135
(2)
1,133
22%
96
97
11.80
11.66
(40)
–
–
(40)
38
(2)
–
(2)
95%
(0.03)
(0.03)
1,541
(3)
(42)
1,496
(359)
1,137
(2)
1,135
24%
96
97
11.83
11.69
Syngenta
Financial Report 2010
Operating and Financial Review
24
(US$ million)
2006
Operating income
Income/(loss) from associates and joint ventures
Financial expense, net
Income before taxes
Income tax expense
Net income
Attributable to minority interests
Net income attributable to Syngenta AG shareholders
Tax rates
Number of shares – basic (millions)
Number of shares – diluted (millions)
Basic earnings per share
Diluted earnings per share
Total
Restructuring and
impairment
Before Restructuring
and impairment
874
(11)
(20)
843
(176)
667
(3)
664
21%
98
100
6.76
6.65
(321)
1,195
–
–
(321)
87
(234)
–
(234)
27%
(2.42)
(2.38)
(11)
(20)
1,164
(263)
901
(3)
898
23%
98
100
9.18
9.03
Constant exchange rates
Syngenta compares results from one period to another period in this
report using variances calculated at constant exchange rates (“CER”).
To present that information, current period results for entities reporting
in currencies other than US dollars are converted into US dollars at the
prior period’s exchange rates, rather than the exchange rates for the
current year. See Note 26 to the consolidated financial statements
for information on average exchange rates in 2010 and 2009.
For example, if a European entity reporting in Euro sold €100 million
of products in 2010 and 2009, Syngenta’s financial statements would
report US$133 million of revenues in 2010 (using 0.75 as the rate,
which was the average exchange rate in 2010) and US$139 million
in revenues in 2009 (using 0.72 as the rate, which was the average
exchange rate in 2009). The CER presentation would translate
the 2010 results using the 2009 exchange rates and indicate that
underlying revenues were flat. Syngenta presents this CER variance
information in order to assess how its underlying business performed
before taking into account currency exchange fluctuations. Syngenta
also presents its actual reported results in order to provide the most
directly comparable data under GAAP.
Syngenta Group Consolidated Financial Statements
Consolidated Income Statement
(for the years ended December 31, 2010 and 2009)
(US$ million, except share and per share amounts)
Sales
Cost of goods sold
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
Income/(loss) from associates and joint ventures
Interest income
Interest expense
Other financial expense
Currency gains/(losses), net
Financial expense, net
Income before taxes
Income tax expense
Net income
Attributable to:
Syngenta AG shareholders
Non-controlling interests
Net income
Earnings per share (US$):
Basic earnings per share
Diluted earnings per share
Weighted average number of shares:
Basic
Diluted
a After effect of accounting policy change for post-employment benefits described in Note 2 below
The accompanying notes form an integral part of the consolidated financial statements.
All activities were in respect of continuing operations.
Syngenta
Financial Report 2010
Notes
4, 5
6
28
28
28
7
8
8
8
2010
11,641
(5,866)
5,775
(1,892)
(1,032)
(899)
(159)
1,793
25
90
(172)
(22)
(37)
(141)
1,677
(275)
1,402
1,397
5
1,402
15.07
14.99
25
2009a
10,992
(5,572)
5,420
(1,805)
(952)
(714)
(130)
1,819
(3)
88
(163)
(17)
(30)
(122)
1,694
(283)
1,411
1,408
3
1,411
15.11
15.01
92,687,903
93,154,537
93,225,303
93,760,196
Syngenta
Financial Report 2010
Syngenta Group Consolidated Financial Statements
26 Consolidated Statement of Comprehensive Income
(for the years ended December 31, 2010 and 2009)
(US$ million)
Net income
Components of other comprehensive income (OCI):
Actuarial gains/(losses) of defined benefit post-employment plans
Unrealized gains/(losses) on available-for-sale financial assets
Unrealized gains on derivatives designated as cash flow and net investment hedges
Currency translation effects
Income tax relating to OCI
Total comprehensive income
Attributable to:
Syngenta AG shareholders
Non-controlling interests
Total comprehensive income
a After effect of accounting policy change for post-employment benefits described in Note 2 below
The accompanying notes form an integral part of the consolidated financial statements.
Notes
22
28
29
7
2010
1,402
2009a
1, 411
50
4
120
146
(37)
(98)
(18)
72
260
66
1,685
1,693
1,679
6
1,685
1,691
2
1,693
Syngenta
Financial Report 2010
Notes
2010
2009a
2008a
27
9
9
11
28
10
12
13
7
28
14
15
16
27, 28
17
19
1,967
2,554
626
3,844
502
223
1,552
2,506
558
3,922
156
200
803
2,311
479
3,456
381
190
9,716
8,894
7,620
2,964
3,087
824
176
518
2,738
3,102
747
248
400
7,569
7,235
17,285
16,129
2,188
3,083
621
152
425
6,469
14,089
(2,590)
(2,468)
(2,240)
(992)
(406)
(291)
(846)
(228)
(281)
(376)
(145)
(827)
(214)
(211)
(322)
(457)
(834)
(245)
(5,353)
(4,311)
(4,309)
Consolidated Balance Sheet
(at December 31, 2010, 2009 and 2008)
(US$ million, except share amounts)
Assets
Current assets:
Cash and cash equivalents
Trade receivables
Other accounts receivable
Inventories
Derivative and other financial assets
Other current assets
Total current assets
Non-current assets:
Property, plant and equipment
Intangible assets
Deferred tax assets
Derivative financial assets
Other non-current financial assets
Total non-current assets
Total assets
Liabilities and equity
Current liabilities:
Trade accounts payable
Current financial debt
Income taxes payable
Derivative financial liabilities
Other current liabilities
Provisions
Total current liabilities
Non-current liabilities:
Financial debt and other non-current liabilities
18, 27
(2,786)
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Issued share capital: 2010: 94,599,849 ordinary shares (2009: 94,599,849 ordinary shares;
2008: 96,914,857 ordinary shares)
Retained earnings
Reserves
Treasury shares: 2010: 2,392,751 ordinary shares (2009: 1,617,901 ordinary shares;
2008: 3,953,617 ordinary shares)
Total shareholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
a After effect of accounting policy change for post-employment benefits described in Note 2 below
The accompanying notes form an integral part of the consolidated financial statements.
7
19
20
(813)
(884)
(4,483)
(9,836)
(3,527)
(688)
(1,116)
(5,331)
(9,642)
(6)
(3,809)
(4,113)
(6)
(2,820)
(3, 864)
(2,869)
(508)
(1,112)
(4,489)
(8,798)
(6)
(2,412)
(3,601)
20
489
217
745
(7,439)
(6,473)
(5,274)
(10)
(14)
(17)
(7,449)
(6,487)
(5,291)
(17,285)
(16,129)
(14,089)
Syngenta
Financial Report 2010
Syngenta Group Consolidated Financial Statements
28 Consolidated Cash Flow Statement
(for the years ended December 31, 2010 and 2009)
(US$ million)
Income before taxes
Reversal of non-cash items
Cash (paid)/received in respect of:
Interest received
Interest paid
Other financial receipts
Other financial payments
Income taxes
Restructuring costs
Contributions to pension plans, excluding restructuring costs
Other provisions
Cash flow before change in net working capital
Change in net working capital:
Change in inventories
Change in trade and other accounts receivable and other current assets
Change in trade and other accounts payable
Cash flow from operating activities
Additions to property, plant and equipment
Proceeds from disposals of property, plant and equipment
Purchases of intangible assets
Purchases of investments in associates and other financial assets
Proceeds from disposals of financial assets
Net cash flows from (purchases)/disposals of marketable securities
Business acquisitions (net of cash acquired)
Cash flow used for investing activities
Increases in third party interest-bearing debt
Repayments of third party interest-bearing debt
Sales of treasury shares and options over own shares
Acquisitions of non-controlling interests
Purchases of treasury shares
Distributions paid to shareholders
Cash flow from/(used for) financing activities
Net effect of currency translation on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Notes
21
2010
1,677
805
2009a
1,694
615
19
19
19
12
13
3
3
89
(175)
55
(133)
(268)
(38)
(335)
(95)
88
(153)
8
(227)
(165)
(79)
(125)
(81)
1,582
1,575
108
(129)
146
1,707
(396)
13
(118)
(12)
42
31
(10)
(450)
139
(165)
49
(48)
(295)
(524)
(844)
2
415
1,552
1,967
(178)
55
(33)
1,419
(652)
33
(97)
(22)
87
(41)
(188)
(880)
926
(183)
46
–
(125)
(494)
170
40
749
803
1,552
a After effect of accounting policy change for post-employment benefits described in Note 2 below
At December 31, 2010, cash equivalents totalled US$1,471 million (2009: US$1,089 million) and consisted of bank and money market
fund deposits.
The accompanying notes form an integral part of the consolidated financial statements.
Syngenta
Financial Report 2010
29
Retained
earnings
3,165
Total
shareholders’
equity
Non-
controlling
interests
Total
equity
5,884
17
5,901
(638)
(115)
(610)
–
2,412
1,408
(66)
5,274
1,408
283
1,342
1,691
83
(493)
(540)
16
2,820
1,397
33
110
(493)
(125)
–
16
6,473
1,397
282
1,430
1,679
81
(523)
–
1
104
(523)
(295)
1
(610)
–
5,291
1,411
282
1,693
110
(494)
(125)
–
12
6,487
1,402
283
1,685
104
(524)
(295)
(8)
7,449
17
3
(1)
2
(1)
(4)
14
5
1
6
(1)
(9)
10
Consolidated Statement of Changes in Equity
(for the years ended December 31, 2010 and 2009)
(US$ million)
January 1, 2009
Accounting policy change for post-employment
benefits
Reclassification of income taxes in OCI
January 1, 2009 after accounting change and
reclassification (see Note 2)
Attributable to Syngenta AG shareholders
Par value of
ordinary
shares
Additional
paid-in
capital
Treasury
shares,
at cost
Fair
value
reserves
Cumulative
translation
adjustment
6
3,577
(745)
(213)
61
94
28
54
6
3,577
(745)
(152)
176
Net incomea
OCIa b
Total comprehensive income
Share based compensation
Dividends paid
Share repurchases
Cancellation of treasury shares
Other and income taxes on share based
compensation
December 31, 2009a b
Net income
OCI
Total comprehensive income
Share based compensation
Dividends paid
Share repurchases
Other and income taxes on share based
compensation
39
39
310
310
–
–
(86)
–
27
(125)
626
6
3,491
(217)
(113)
486
77
77
172
172
–
–
–
23
(295)
December 31, 2010
6
3,491
(489)
(36)
658
3,809
7,439
a After effect of accounting policy change for post-employment benefits described in Note 2 below
b After reclassification of income taxes in OCI described in Note 2 below
The accompanying notes form an integral part of the consolidated financial statements.
Syngenta
Financial Report 2010
Syngenta Group Consolidated Financial Statements
30 The amount available for dividend distribution is based on Syngenta
AG’s shareholders’ equity determined in accordance with the legal
provisions of the Swiss Code of Obligations.
In 2009, a dividend of CHF 6.00 (US$5.27) per share was paid in
respect of 2008. In 2010, a dividend of CHF 6.00 (US$5.61) per share
was paid in respect of 2009.
The Board of Directors recommends a dividend payment by means of
a cash distribution out of reserves arising from capital contributions of
CHF 7.00 per share (equivalent to US$7.47 per share translated at the
December 31, 2010 exchange rate) subject to shareholder approval at
the Annual General Meeting (AGM) on April 19, 2011.
Included within the fair value reserves are (i) cash flow hedge reserves,
which comprise the effective portion of the cumulative net change in
the fair value of cash flow hedging instruments related to hedged items
that have not yet been recognized in profit or loss, and (ii) fair value
reserves, which comprise the cumulative net change in the fair value of
available-for-sale financial assets until the investments are
derecognized or impaired. Movements in the cash flow hedge reserves
are shown in Note 29. Neither the fair value reserves for available-for-
sale financial assets nor any components of the movements in the fair
value reserves for available-for-sale financial assets during the periods
presented were material.
The cumulative translation adjustment comprises all foreign currency
differences arising from the translation of the financial statements of
foreign operations, as well as from the translation of long-term
monetary items which are part of net investments in foreign
subsidiaries.
Notes to the Syngenta Group
Consolidated Financial Statements
1. Basis of preparation of the consolidated financial
statements
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs) as
issued by the International Accounting Standards Board (IASB). The
consolidated financial statements have been prepared on an historical
cost basis, except for items which IFRSs require to be measured at fair
value, principally derivative financial instruments, available-for-sale
financial assets and biological assets, which are valued at fair value less
costs to sell.
The consolidated financial statements incorporate the financial
statements of Syngenta AG, a company domiciled and incorporated
in Switzerland, and all of its subsidiaries (together referred to as
“Syngenta”) and Syngenta’s interests in associates and joint ventures.
Syngenta AG’s principal executive offices are at Schwarzwaldallee
215, 4058 Basel, Switzerland.
The consolidated financial statements are presented in United States
dollars (“US$”) as this is the major currency in which revenues are
denominated. The functional currency of Syngenta AG is the Swiss
franc (“CHF”).
Syngenta has global, integrated risk management processes. Within
the scope of these processes, the Board of Directors of Syngenta AG
evaluates the risks once a year in accordance with article 663b
paragraph 12 of the Swiss Code of Obligations and discusses if any
corresponding actions are necessary.
The preparation of financial statements requires management to
exercise judgment when applying accounting policies and to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimated. Note 2 below includes further discussion of
certain critical accounting estimates.
Syngenta
Financial Report 2010
2. Accounting policies
31
Adoption of new IFRSs and changes in accounting policies
Syngenta adopts new IFRSs by following the transitional requirements
of each new standard or, if there are no transitional requirements
specified, by using the full retrospective application method, as
required by IAS 8. Other changes in accounting policies are also
implemented using the full retrospective application method. If full
retrospective application of a change is impracticable, it is applied from
the earliest period which is practicable. Retrospective application
requires that the results of comparative periods and the opening
balances of the earliest period shown be restated as if the new
accounting policy had always been applied.
Syngenta has combined line items in certain tables in the Notes to the
consolidated financial statements where one or more lines that were
previously disclosed separately have become immaterial.
Syngenta has adopted the following new or revised IFRSs in these
consolidated financial statements, with the following effect:
IFRS 3 (revised January 2008) and IAS 27 (revised January 2008)
introduced changes to the accounting for business combinations and
transactions with non-controlling shareholders. Consequential
amendments to IAS 21 prohibit reclassification of currency translation
gains and losses from other comprehensive income (OCI) to profit or
loss for partial disposals or capital repayments of the group’s net
investments in a subsidiary which do not result in Syngenta losing
control of the subsidiary. These revised IFRSs apply to transactions
Syngenta completes after January 1, 2010, which are disclosed in
Note 3. The accounting for transactions completed in prior years is
not affected.
The following IFRSs adopted in 2010 had no impact on Syngenta’s
consolidated financial statements, other than as noted below:
– “Improvements to IFRSs”, issued April 2009. Disclosure of assets
by reportable segment is now required only if that information is
provided to the chief operating decision maker. As Syngenta does
not provide assets by reportable segment to its chief operating
decision maker, assets by reportable segment are not disclosed in
the consolidated financial statements.
– Amendments to IAS 39, “Eligible Hedged Items”, issued July 2008.
– IFRIC 17, “Distributions of Non-Cash Assets to Owners”, issued
November 2008.
– Syngenta has early adopted the amendment to IAS 1 “Presentation
of Financial Statements” contained in “Improvements to IFRSs”,
issued May 2010 and has therefore shown net income and OCI as
separate line items in the statement of changes in equity, where the
equity components are presented.
– Syngenta has early adopted the amendments to IFRIC 14,
“Prepayments of a Minimum Funding Requirement”. This adoption
had no material impact on the consolidated financial statements.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
32 2. Accounting policies continued
The following new or revised IFRSs relevant to the Syngenta Group
have not yet been adopted by Syngenta:
– “Improvements to IFRSs” issued in April 2010 amends various
IFRSs pursuant to the IASB’s annual improvements process.
The amendments are mandatory for Syngenta with effect from
January 1, 2011. Except for the amendment to IAS 1 mentioned
above, Syngenta has not yet adopted these amendments, which
include revised disclosure requirements for interim financial reporting
and for financial instruments in annual financial statements.
– Amendments to IAS 32, “Classification of Rights Issues”, were
issued in October 2009, and clarify that rights, options or warrants
to acquire a fixed number of an entity’s own equity instruments for
a fixed amount of any currency are equity instruments if they are
offered pro rata to existing holders of the same class of equity.
The amendment will be mandatory for Syngenta with effect from
January 1, 2011. The effect of the amendment is that in the event of
Syngenta issuing rights, options or warrants pro rata to existing
shareholders, these would be accounted for as equity instruments
regardless of the currency of the offer.
– IAS 24 (revised), “Related Party Disclosures”, was issued in
November 2009, and clarifies that commitments to related parties
should be disclosed as related party transactions. It also clarifies
related party status and disclosures for subsidiaries of the reporting
entity’s associates and joint ventures and for governments and
government-related entities. The revised IFRS will be mandatory for
Syngenta with effect from January 1, 2011. Syngenta is assessing
the impact of IAS 24 (revised) on the disclosures which will be given
in its 2011 consolidated financial statements.
– IFRS 9, “Financial Instruments”, was issued in November 2009
and October 2010. It contains new measurement and classification
rules for financial assets. Under IFRS 9, assets which are debt
instruments and according to Syngenta’s business model are held
to collect contractual cash flows consisting of payments of principal
and/or interest on defined dates would be measured at amortized
cost, and all other financial assets would be measured at fair value.
Gains and losses on remeasuring assets which Syngenta classifies
as available-for-sale under IAS 39 would be recognized in profit or
loss under IFRS 9, except for equity instruments which are not held
for trading, for which Syngenta may make an irrevocable election on
their initial recognition to present all gains and losses within OCI.
Gains and losses on equity instruments for which this election is
made would no longer be reclassified from OCI into profit or loss
on disposal or on a significant or prolonged decline in value.
For financial liabilities which are measured at fair value in accordance
with the fair value option, changes in fair value which are due to
changes in own credit risk will be reported in OCI, instead of in profit
or loss. Syngenta currently does not apply the fair value option to
any of its financial liabilities. IFRS 9 will be mandatory for Syngenta
with effect from January 1, 2013. Syngenta has not decided
whether it will adopt IFRS 9 early due to the phased publication of
the IASB’s revised financial instruments requirements. On the basis
of the financial assets and liabilities it has at December 31, 2010,
Syngenta does not believe that IFRS 9 will have a material impact
on its consolidated financial statements.
– IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”
was issued in November 2009, and provides guidance on the
accounting for debt for equity swaps. IFRIC 19 requires the equity
instruments issued to be measured at their fair value at issuance
or if that value cannot be reliably measured, at the fair value of the
liability extinguished and requires any difference between the value
assigned to the equity issued and the carrying amount of the liability
extinguished to be recorded in profit or loss. IFRIC 19 will be
mandatory for Syngenta effective January 1, 2011, and would
impact the consolidated financial statements only if such a
transaction were to occur.
– “Disclosures – Transfers of Financial Assets, Amendments to
IFRS 7” was issued in October 2010, and will be mandatory for
Syngenta’s consolidated financial statements for years ended
December 31, 2012 onwards. It requires additional disclosures
where an entity transfers part of a financial asset or transfers a
financial asset but retains a continuing involvement in the asset.
Trade receivable factoring which Syngenta may enter into in the
future may be within the scope of this disclosure requirement.
Future changes in IFRS
IFRSs are undergoing a process of revision with a view to increasing
harmonization of accounting rules internationally. Proposals to issue
new or revised IFRSs, as yet unpublished, on financial instruments,
provisions, employee benefits, revenue recognition, leases, and other
topics may change existing standards, and may therefore affect the
accounting policies applied by Syngenta in future periods. Transition
rules for these potential future changes may require Syngenta to apply
them retrospectively to periods before the date of adoption of the new
standards.
Changes in Accounting Policies
Actuarial gains and losses
In these consolidated financial statements, Syngenta has recognized
actuarial gains and losses of defined benefit post-employment plans
in OCI in the periods in which they arose (“immediate recognition in
OCI method”). Previously, Syngenta applied the corridor method of
deferred recognition, under which these gains and losses were
amortized over the average remaining employee service period to the
extent that they exceeded 10% of the higher of the defined benefit
obligation or plan assets. In the opinion of Syngenta, the immediate
recognition in OCI method presents Syngenta’s post-employment
defined benefit obligations in the consolidated balance sheet in a more
understandable way than the corridor method because the amounts
presented are closer to the underlying actuarial position of the post-
employment plans. For the year ended December 31, 2010, defined
benefit post-employment expense recognized within operating income
was US$84 million and actuarial gains recognized directly in retained
earnings were US$50 million. Related income tax amounts were
credits of US$25 million and charges of US$17 million respectively
excluding the effect of changes in tax rates. Had Syngenta still applied
the corridor method, an additional US$47 million of post-employment
benefit expense would have been recognized within operating income,
and no amounts would have been recognized directly in retained
earnings. The opening balance of retained earnings at January 1,
2008, and comparative amounts for the years ended and as at
December 31, 2009 and 2008, have been adjusted to reflect the
new policy.
Syngenta
Financial Report 2010
Reclassifications of income taxes within equity
Income tax charged directly to accumulated OCI has been reclassified in the statement of changes in equity in order to present it as part of the
same component of equity as the pre-tax items to which it relates. This change in presentation has no effect on total equity.
33
The effect of adopting the immediate recognition in OCI method described above, together with the reclassifications of income taxes within
equity, on each financial statement line item is set out in the following tables:
Adjustments to the consolidated income statement and statement of comprehensive income for the year ended December 31, 2009
2009 (US$ million, except per share amounts)
Sales
Cost of goods sold
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
Income before taxes
Income tax expense
Net income
Attributable to:
Syngenta AG shareholders
Non-controlling interests
Net income
Basic earnings per share (US$)
Diluted earnings per share (US$)
Total comprehensive income
Actuarial losses of defined benefit post-employment plans
Currency translation effects
Income tax relating to OCI
Total comprehensive income
Attributable to:
Syngenta AG shareholders
Non-controlling interests
Total comprehensive income
As reported
10,992
(5,586)
5,406
(1,812)
(960)
(738)
(130)
1,766
1,641
(267)
1,374
1,371
3
1,374
14.72
14.62
–
289
34
1,751
1,749
2
1,751
Accounting
policy change
After accounting
policy change
–
14
14
7
8
24
–
53
53
(16)
37
37
–
37
0.39
0.39
(98)
(29)
32
(58)
(58)
–
(58)
10,992
(5,572)
5,420
(1,805)
(952)
(714)
(130)
1,819
1,694
(283)
1,411
1,408
3
1,411
15.11
15.01
(98)
260
66
1,693
1,691
2
1,693
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
34 2. Accounting policies continued
Adjustments to the consolidated balance sheet at December 31, 2009
2009 (US$ million)
Non-current assets:
Deferred tax assets
Defined benefit pension asset
Total non-current assets
Total assets
Current liabilities:
Provisions
Total current liabilities
Non-current liabilities:
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Retained earnings
Reserves
Total shareholders’ equity
Total equity
Total liabilities and equity
As reported
Accounting policy
change
Reclassification of
income tax
in OCI
After accounting
policy changes
660
679
7,802
16,696
(154)
(4,251)
(884)
(879)
(5,290)
(9,541)
(3,640)
(3,712)
(7,141)
(7,155)
(16,696)
87
(654)
(567)
(567)
(60)
(60)
196
(237)
(41)
(101)
667
1
668
668
567
–
–
–
–
–
–
–
–
–
–
153
(153)
–
–
–
747
25
7,235
16,129
(214)
(4,311)
(688)
(1,116)
(5,331)
(9,642)
(2,820)
(3,864)
(6,473)
(6,487)
(16,129)
Adjustments to the consolidated cash flow statement for the year ended December 31, 2009
2009 (US$ million)
Income before taxes
Reversal of non-cash items
As reported
Accounting policy
change
1,641
668
53
(53)
After accounting
policy change
1,694
615
Syngenta
Financial Report 2010
Adjustments to the consolidated income statement and statement of comprehensive income for the year ended December 31, 2008
35
2008 (US$ million, except per share amounts)
Sales
Cost of goods sold
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income
Income before taxes
Income tax expense
Net income
Attributable to:
Syngenta AG shareholders
Non-controlling interests
Net income
Basic earnings per share (US$)
Diluted earnings per share (US$)
Total comprehensive income
Actuarial losses of defined benefit post-employment plans
Currency translation effects
Income tax relating to OCI
Total comprehensive income
Attributable to:
Syngenta AG shareholders
Non-controlling interests
Total comprehensive income
As reported
11,624
(5,713)
5,911
(2,039)
(969)
(849)
(196)
1,858
1,692
(307)
1,385
1,385
–
1,385
14.75
14.63
–
(443)
(26)
891
890
1
891
Accounting policy
change
After accounting
policy change
–
7
7
6
5
4
–
22
22
(8)
14
14
–
14
0.15
0.14
(335)
28
94
(199)
(199)
–
(199)
11,624
(5,706)
5,918
(2,033)
(964)
(845)
(196)
1,880
1,714
(315)
1,399
1,399
–
1,399
14.90
14.77
(335)
(415)
68
692
691
1
692
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
36 2. Accounting policies continued
Adjustments to the consolidated balance sheet for the year ended December 31, 2008
2008 (US$ million)
Non-current assets:
Deferred tax assets
Defined benefit pension asset
Total non-current assets
Total assets
Current liabilities:
Provisions
Total current liabilities
Non-current liabilities:
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Shareholders’ equity:
Retained earnings
Reserves
Total shareholders’ equity
Total equity
Total liabilities and equity
As reported
Accounting policy
change
Reclassification of
income tax in OCI
After accounting
policy changes
514
628
6,964
14,584
(170)
(4,234)
(659)
(921)
(4,449)
(8,683)
(3,165)
(3,458)
(5,884)
(5,901)
(14,584)
107
(602)
(495)
(495)
(75)
(75)
151
(191)
(40)
(115)
638
(28)
610
610
495
–
–
–
–
–
–
–
–
–
–
115
(115)
–
–
–
621
26
6,469
14,089
(245)
(4,309)
(508)
(1,112)
(4,489)
(8,798)
(2,412)
(3,601)
(5,274)
(5,291)
(14,089)
Adjustments to the consolidated cash flow statement for the year ended December 31, 2008
2008 (US$ million)
Income before taxes
Reversal of non-cash items
Principles of consolidation
Subsidiaries
Subsidiaries are those entities in which Syngenta has an interest of
more than one half of the voting rights or otherwise has power to
exercise control. Control exists when Syngenta has the power,
indirectly or directly, to govern the financial and operating policies of
an enterprise so as to obtain benefits from its activities. The income,
expenses, assets, liabilities and cash flows of companies acquired or
disposed of during the period are included in the consolidated financial
statements from the date of acquisition or up to the date of disposal,
respectively.
As reported
Accounting policy
change
1,692
973
22
(22)
After accounting
policy change
1,714
951
Associates and joint ventures
Associates are those entities in which Syngenta has significant
influence, but not control, over the financial and operating policies and
in which Syngenta generally has between 20% and 50% of voting
rights. Joint ventures are those enterprises over whose activities
Syngenta has joint control, established by contractual agreement.
Syngenta accounts for both associates and joint ventures using
the equity method. Under this method, the consolidated financial
statements show Syngenta’s investment in and its share of the total
recognized gains and losses and transactions with shareholders of
associates and joint ventures, from the date that significant influence
or joint control commences until the date they cease. Any premium
over net asset value paid to acquire an interest in an associate or
joint venture is recognized as goodwill, within the same line as the
underlying investment. When Syngenta’s share of accumulated losses
reduces the carrying amount of an associate or joint venture to nil, no
further losses are recognized unless Syngenta has an obligation to
meet those losses.
Syngenta
Financial Report 2010
Transactions eliminated on consolidation
Intercompany income and expenses, including profits from internal
Syngenta transactions, and intercompany receivables and payables
have been eliminated upon consolidation. Profits on transactions
between Syngenta and its associates and joint ventures are eliminated
in proportion to Syngenta’s ownership share in the associate or joint
venture, but losses are eliminated only if no impairment has occurred.
Business combinations
Syngenta accounts for business combinations in accordance with
IFRS 3, (revised January 2008), using the acquisition method. At the
date it acquires control of another business, Syngenta records the fair
value of the agreed consideration payable, including the estimated fair
value of any contingent consideration, and of any existing ownership
interest it holds in the acquired entity, but excluding any amounts
which are not part of the business combination, such as amounts
which settle pre-existing relationships or relate to services Syngenta
will receive post-acquisition. Any gain or loss arising on revaluing an
existing interest in the acquired entity is recognized in profit or loss.
Direct acquisition transaction costs are expensed as incurred.
The assets and liabilities of acquired businesses are identified, and are
recorded in the consolidated financial statements at their acquisition
date fair values, with certain exceptions as set out in IFRS 3.
Acquired intangible assets are valued based on the income approach.
Generally the relief from royalty method is used for brand names and
product technology rights, and the residual income method for
customer relationships. Acquired land and buildings are valued based
on the market approach and specialized plant and equipment based
on the cost approach. Non-controlling interests, which represent a
proportionate ownership interest, are recorded at their proportionate
share of the fair value of the acquired business’s net assets. Non-
controlling interests which do not represent a proportionate ownership
interest in the acquired business are recorded at their fair value.
If the sum of the amounts paid or payable upon acquisition of a
controlling interest plus the fair value of any existing Syngenta
ownership interest in the acquiree exceeds the fair value of the
acquiree’s net assets, the excess is recognized as goodwill. If the fair
value of Syngenta’s proportionate share of the acquiree’s net assets
exceeds the total sum of those amounts, the excess is immediately
recognized as a gain in profit or loss at the acquisition date.
Once Syngenta has acquired control of a business, any further
transaction that changes Syngenta’s ownership interest but does not
result in Syngenta losing control is accounted for as a transaction
between shareholders. Any difference between the amount paid for
the change in ownership interest and the corresponding share of the
carrying amount of the net assets is charged or credited to
shareholders’ equity.
Disposal or loss of Syngenta control of a business or of a controlling
interest in a subsidiary is accounted for by derecognizing the
underlying assets and liabilities disposed of and any related goodwill
and third party non-controlling interests, at their carrying amounts.
If Syngenta retains a non-controlling ownership interest, this is
recognized at fair value. The difference between those carrying
amounts and the total fair value of the disposal proceeds and of
any retained Syngenta interest is recognized in profit or loss
together with related currency translation gains and losses
(see “Foreign Currencies” below).
Business combinations completed before January 1, 2010 have been
accounted for in accordance with the IFRSs which applied at the date
they were completed. The successive changes which have been
made over time to the IFRSs for business combinations have not been
required to be applied retrospectively to business combinations
completed before those changes were introduced.
37
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are
translated into the functional currency at the rate prevailing at the
balance sheet date. Non-monetary assets and liabilities denominated
in foreign currencies, stated at historical cost or fair value, are
translated into functional currency at the foreign exchange rate
prevailing at the date of the transaction or the date the fair value was
determined, respectively. Foreign currency transactions are translated
to the relevant functional currency at the exchange rate prevailing at
the date of the transaction. With exceptions for certain regional supply
centre, holding and finance subsidiaries, each Syngenta subsidiary
uses the local currency of its country of operations as its functional
currency. Unrealized gains or losses related to equity loans, designated
cash flow and net investment hedging arrangements and gains and
losses on retranslating equity instruments that are available-for-sale
financial assets are recognized in OCI. All other resulting foreign
exchange transaction gains and losses are recognized in profit or loss.
Equity loans are intercompany loans to subsidiaries that are not
expected to be repaid in the foreseeable future and therefore
considered part of Syngenta’s net investment in the subsidiary.
Income, expense and cash flows of foreign operations are translated
into US dollars using average exchange rates prevailing during the
period. Assets and liabilities of foreign operations are translated to
US dollars using exchange rates prevailing at the balance sheet date.
Foreign exchange differences arising on these translations are
recognized directly in OCI. Upon disposal or loss of control of a foreign
subsidiary, the cumulative currency translation difference relating to the
subsidiary is reclassified from equity to profit or loss as part of the gain
or loss on disposal.
Revenue
Revenue is measured as the fair value of the consideration received or
receivable. Revenue from sales of goods is recognized in the income
statement when the significant risks and rewards of ownership have
been transferred to the buyer, which is usually upon delivery, at a fixed
or determinable price, and when collectability is reasonably assured.
Delivery is defined based on the terms of the sale contract. Revenue is
reported net of sales taxes, returns, discounts and rebates. Rebates to
customers are provided for in the same period that the related sales
are recorded based on the contract terms.
In certain markets, sales terms allow customers to exchange
purchased products at a later date for other Syngenta products of their
choice, to the same value. Revenue is recognized upon delivery of the
original products, and is reduced by a provision for products expected
to be exchanged. This provision is released, and the corresponding
revenue is recorded, when the substitute products are delivered or the
period available to exchange the products expires, whichever is earlier.
In certain markets, sales terms allow customers the option of a one-
time, non-repeatable extension of credit, for a defined additional
period, in respect of a defined proportion of purchases made during a
defined period, if the customers still have the inventories on hand upon
expiration of the initial agreed credit period. Customers have no right to
return these inventories, and must pay unconditionally when the
additional credit period expires. In accordance with IAS 18, revenue
for these sales is recognized upon product delivery.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
Research and development
Research expenses are charged to the consolidated income
statement when incurred. Internal development costs are capitalized
as intangible assets only when there is an identifiable asset that can be
completed and is expected to generate future economic benefits and
when the cost of such an asset can be measured reliably. Due to
regulatory and other uncertainties inherent in the development of its
key new products, Syngenta currently has no development costs that
meet the criteria for recognition.
Costs of purchasing distribution rights, patent rights and licenses to
use or sell products, or technology or registration data are capitalized
as intangible assets. Costs of applying for patents for internally
developed products, costs of defending existing patents and costs of
challenging patents held by third parties where these are considered
invalid, are considered part of development expense and expensed
as incurred.
Restructuring and impairment
Restructuring represents the effect on reported performance of
initiating business changes that are considered major and that, in the
opinion of management, will have a material effect on the nature and
focus of Syngenta’s operations, and therefore require separate
disclosure to provide a more thorough understanding of business
performance. Restructuring includes the effects of completing and
integrating significant business combinations and divestments.
Restructuring and impairment includes impairment costs associated
with major restructuring and also impairment losses and reversals of
impairment losses resulting from major changes in the markets in
which a reported segment operates.
Income taxes
Income taxes for the year comprise current and deferred taxes,
calculated using rates enacted or substantively enacted at the balance
sheet date.
Current tax is the expected tax payable on taxable income for the year
and any adjustments to tax payable in respect of previous years.
Deferred tax is recognized using the liability method and thus is
calculated on temporary differences between the tax bases of assets
and liabilities and their respective carrying amounts in the consolidated
balance sheet. Deferred tax assets, including those related to unused
tax losses, are recognized to the extent that it is probable that future
taxable profit will be available against which the assets can be utilized.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries, associates and joint ventures, except
where the timing of the reversal of the temporary difference can be
controlled and it is probable that the difference will not reverse in the
foreseeable future. Deferred tax liabilities are not recognized on the
initial recognition of goodwill if the carrying amount of goodwill exceeds
its tax base.
38 2. Accounting policies continued
Where a right of return exists, revenue is recognized when a
reasonable estimate of returns can be made, or when the right of
return expires, whichever is earlier. Where Syngenta’s distributors hold
inventories and have the right of return, or Syngenta’s commercial
practice is to accept returns from distributors, and it is not possible to
make a reasonable estimate of returns, Syngenta recognizes revenue
when its distributors sell the inventories to their customers.
Where third parties hold Syngenta inventories on a consignment basis,
revenue is recognized in the period that inventories are withdrawn from
consignment and delivered to customers.
Syngenta periodically enters into prepayment contracts with
customers whereby it receives advance payments for product to be
delivered in a future period. These advance payments are recorded as
liabilities and presented as part of trade accounts payable. Advance
payment liabilities are released and revenues associated with such
advance payment transactions are recognized upon delivery of and
transfer of title, ownership, and risk of loss of the related products to
the customer.
Royalty income is recognized when earned. If the license agreement
contains performance obligations for Syngenta, the related income is
considered earned when Syngenta has performed the obligations.
Amounts received in advance of performance are deferred in the
consolidated balance sheet. If the license agreement provides for
royalties based on sales made by the licensee, income is considered
earned in the period that the related sales occur.
Cash rebates and discounts granted to customers are classified as
a reduction of revenue. Awards of free or discounted products or
services supplied by Syngenta in connection with customer loyalty
programs are recognized as revenue when the customer redeems the
credits. Awards supplied by a third party are recognized as revenue
when the third party becomes obliged to supply the awards if
Syngenta is an agent for the third party, and when Syngenta has
performed its obligations to the customer if Syngenta is a principal.
Net profit from programs where Syngenta is an agent is shown as part
of sales. Revenue related to programs where Syngenta is a principal is
presented as part of sales, and associated costs are presented within
cost of goods sold or marketing and distribution expense as
appropriate. Syngenta determines whether it is a principal or an
agent according to whether it is exposed to the risks and rewards of
supplying the third party products or services. Liabilities associated
with customer loyalty programs are classified within trade
accounts payable.
Barter transactions
For certain customers in certain markets, either settlement of trade
receivables is secured with proceeds from agricultural commodities
sold by Syngenta customers, or customers settle trade receivables
directly by delivering commodities to Syngenta. For these
arrangements, Syngenta recognizes revenue when it has a legally
enforceable receivable, the amount of which is reliably measurable
based on an agreed price for the Syngenta products. Where Syngenta
has a contract with the customer for physical delivery of a commodity
at a fixed price, an embedded derivative is recognized for the fair value
of the contract until physical delivery. When it subsequently sells the
commodity, Syngenta classifies additional revenue as sales only to
the extent that the original contract for the sale of Syngenta products
included revenue that was contingent upon the commodity sales
proceeds. Any remaining gains or losses on the commodity sale
are recorded in marketing and distribution in the consolidated
income statement.
Syngenta
Financial Report 2010
Income tax expense, current and deferred, is recognized in profit or
loss unless it relates to items recognized in OCI or in equity in which
case the tax expense is also recognized in OCI or equity respectively.
Syngenta’s policy is to comply fully with applicable tax regulations in
all jurisdictions in which Syngenta’s operations are subject to income
taxes. Syngenta’s estimates of current income tax expense and
liabilities are calculated assuming that all tax computations filed by
Syngenta’s subsidiaries will be subject to review or audit by the
relevant tax authorities. Syngenta and the relevant tax authorities may
have different interpretations of how regulations should be applied to
actual transactions. Syngenta records provisions for taxes it estimates
will ultimately be payable when the reviews or audits have been
completed, including allowances for any interest and penalties which
may become payable.
Syngenta releases these provisions when the tax audit of the
applicable year is completed or an Advance Pricing Agreement (APA)
settlement is reached that impacts previous years’ tax payments, or
otherwise when the statute of limitations for the applicable year expires,
unless there is evident reason for earlier release. Deferred tax on share
based compensation awards is based on the tax deduction, if any,
that would be obtained if the Syngenta AG share price at the period
end was the tax base for the award. Deferred tax on unvested awards
is recognized ratably over the vesting period. Deferred tax on awards
already vested is recognized immediately. Any income tax benefits
recorded in the income statement are limited to the tax effect of
the related cumulative pre-tax compensation expense recorded.
The total tax benefit on an award may exceed this amount in some
circumstances. The excess tax benefit is considered by IFRS to be the
result of a transaction with shareholders rather than with employees,
and is recorded within shareholders’ equity.
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments that are
readily convertible to known amounts of cash and are subject to only
an insignificant risk of changes in value.
Trade and other accounts receivable
Trade and other accounts receivable include invoiced amounts less
adjustments for doubtful receivables which are calculated by taking
into account whether receivables are past due based on contractual
terms, payment history and other available evidence of collectability.
Receivable balances are written off only when there is no realistic
prospect of their being collected.
Factoring arrangements transferring substantially all economic
risks and rewards associated with accounts receivable to a third
party are accounted for by derecognizing the accounts receivable
upon receiving the cash proceeds of the factoring arrangement.
Factoring arrangements that transfer to a third party some, but not
all economic risks and rewards are accounted for by continuing to
recognize Syngenta’s continuing rights over the receivable and by
recognizing any related obligation to the third party factor.
39
In certain foreign currency sales transactions, Syngenta offers to its
customers a written exchange rate option embedded into the sales
contract. The resulting trade receivable/option contract is designated
as an asset which is measured at fair value through profit or loss as the
embedded option derivative meets the conditions of paragraph 11A of
IAS 39. The fair value of these trade receivables is determined after:
(a)
remeasuring the embedded exchange rate option at fair value;
(b)
retranslating the underlying account receivable into the selling
entity’s functional currency using closing spot exchange rates at
the balance sheet date; and
(c) adjusting the resulting carrying amount of the combined
receivable contract to reflect changes in customer credit risk.
Syngenta includes this adjustment in the provision for
doubtful receivables.
Financial and other current assets
Financial and other current assets include financial instruments with
positive fair values and remaining contractual maturities of less than
12 months at the balance sheet date. Debt investments are classified
as available-for-sale assets in accordance with IAS 39, and are
revalued to fair value at each reporting date. Fair value is the quoted
market price of the specific investments held. Unrealized revaluation
gains are recorded in OCI except to the extent that they reverse
impairment losses recorded on debt investments in prior periods.
When an investment is sold, revaluation gains and losses are
transferred from OCI and recognized in profit or loss. Regular way
purchases and sales of marketable securities are recognized at
settlement date.
Derivative financial instruments and hedge accounting
Derivative financial instruments are recorded initially at their fair value
when Syngenta becomes a party to the instrument. They are revalued
to fair value at each reporting date and presented as financial assets
when the fair value is positive and as financial liabilities when the fair
value is negative.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
40 2. Accounting policies continued
Fair values of publicly traded derivatives are based on quoted market
prices of the specific instruments held at the balance sheet date.
Fair values of non-publicly traded derivatives are valued using
accepted economic methodologies for pricing these financial
instruments, such as discounted cash flow analysis or option pricing
models. The valuation models seek to make maximum use of market
inputs existing at the balance sheet date. The methods used to
determine the fair value of specific types of non-publicly traded
derivatives are as follows:
– Interest rate and cross-currency swaps are calculated as the
present value of the estimated future cash flows. The future cash
flows are determined using relevant market forward interest rates at
the balance sheet date and are discounted using the zero-coupon
rates with equivalent maturities for AA rated entities at the balance
sheet date, as adjusted for the counterparty’s credit risk. These
discount rates incorporate the impact of net credit risk present in
those derivative instruments;
– Forward contracts are determined using relevant market exchange
rates at the balance sheet date;
– Currency options are valued using the Black-Scholes-Merton
es spot exchange rates, zero
option pricing model, which incorporat
coupon rates with equivalent maturities for entities with credit ratings
which approximate Syngenta’s counterparty credit risk, and implied
volatility in the market forward exchange rates at the balance sheet
date;
– Commodity options are valued using the Black-Scholes-Merton
option pricing model, which incorporates future commodity price
curves with equivalent maturities and implied volatilities in the
commodities markets at the balance sheet date, adjusted for
counterparty credit risk.
Realized gains and losses, unrealized revaluation gains and losses on
derivatives not designated as accounting hedges and the ineffective
portion of derivatives designated as accounting hedges are recorded
in profit or loss as they arise.
Syngenta applies hedge accounting as follows:
Fair value hedges
Both the designated hedging instruments and the underlying hedged
items are remeasured to fair value and the resulting remeasured gains
or losses are recognized in profit or loss as they occur.
Cash flow hedges
For the effective portion of the hedge, gains and losses on remeasuring
designated hedging instruments to fair value are recognized in OCI as
part of the cash flow hedge reserve, and are reclassified into profit or
loss in the period (or periods) during which the underlying hedged cash
flows affect profit or loss.
When a hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for cash flow hedge accounting, any
cumulative unrealized gain or loss on the hedging instrument remains
in equity until the underlying hedged item affects profit or loss.
However, if a hedged forecasted transaction is no longer expected
to occur, the cumulative unrealized gain or loss on the hedging
instrument is immediately reclassified into profit or loss.
Net investment hedges
Hedges of net investments in foreign operations, including hedges of
monetary items that are accounted for as part of a net investment, are
accounted for similarly to cash flow hedges. The accumulated gain or
loss arising from such a hedge is reclassified from equity into profit or
loss upon disposal of the net investment.
Inventories
Purchased products are recorded at acquisition cost while own-
manufactured products are recorded at manufacturing cost including
a share of production overheads based on normal capacity.
Cost is determined on a first-in-first-out basis. Allowances are made
for inventories with a net realizable value less than cost, or which are
slow moving. Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated costs of completion
and costs to sell. Costs to sell include direct marketing, selling and
distribution costs. Unsalable inventories are fully written off.
Biological assets
Biological assets represent growing plants and cuttings in Syngenta’s
Flowers business and sugar cane seedlings within its Sugar cane
business. They are measured at fair value less costs to sell where fair
value is reliably measurable, and at cost less impairment where fair
value is not reliably measurable due to the nature of the asset not
corresponding to traded assets or products in the market. Syngenta
classifies gains and losses from remeasuring biological assets to fair
value within cost of goods sold.
Property, plant and equipment
Property, plant and equipment are recorded at acquisition or
production cost, less accumulated depreciation and any impairment
losses. Eligible borrowing costs are capitalized as part of the asset
cost. Depreciation is charged on a straight-line basis to the income
statement, over the following estimated useful lives:
Buildings
Machinery and equipment
Furniture and vehicles
Computer hardware
20 to 40 years
10 to 20 years
5 to 10 years
3 to 7 years
Land is recorded at acquisition cost and is not subject to depreciation.
Expenditures made for existing property, plant and equipment that will
provide future economic benefit are capitalized and depreciated over
the revised remaining useful life of the asset. Components of an asset
are accounted for as separate assets if their useful lives differ from that
of the larger asset of which they are a part. When a component of an
asset is replaced, a disposal of the replaced component is accounted
for and the new component is capitalized and depreciated over the
shorter of its own useful life and that of the asset of which it is a
component.
Leases
Property, plant and equipment financed by leases giving rights to use
the leased assets as if they were owned by Syngenta are capitalized
at the lower of fair value and the present value of minimum lease
payments at the inception of the lease. Such leases are also
embedded in contracts for goods or services provided by suppliers to
Syngenta when the supplier can fulfil their obligations only by using a
specific asset to supply Syngenta and the contract price is neither fixed
per unit of output nor represents a market price. Finance lease assets
and liabilities are recognized at the commencement of the lease, which
is when the leased asset is ready for use and Syngenta has the right to
use it. Finance lease assets are depreciated over the lesser of the
remaining lease term and the estimated useful life of the leased asset.
Syngenta
Financial Report 2010
Sale and leaseback transactions
Property, plant and equipment is generally recorded as having been
sold, and profit on disposal recognized, when legal title passes to the
purchaser. If Syngenta leases back the sold assets under operating
leases, profits on sales are recognized when legal title passes if the
leases have at-market rental terms. If the leasebacks are finance
leases, profits on sales are recognized over the terms of the
leaseback agreements.
Intangible assets other than goodwill
Intangible assets, other than goodwill, are recorded at cost less
accumulated amortization and any impairment losses. Currently,
all such intangible assets are assigned a finite estimated useful life.
The cost of acquired intangible assets other than goodwill consists of
the purchase price including transaction costs. The cost of internally
generated intangible assets consists of direct internal and external
design, development, and testing costs incurred to make the asset
ready for use in the manner intended by management. Borrowing
costs associated with internal software development projects are
capitalized if the project is expected to take more than one year to
complete. Capitalization ceases when the software is ready for its
intended use.
Intangible assets are amortized starting from the date the asset is
ready for use. In respect of product rights, this is when regulatory
approval has been obtained. Asset lives are reviewed annually.
The straight-line method of amortization is used except where another
systematic basis better reflects the pattern of consumption of the
economic benefits represented by the asset. Amortization is charged
within the consolidated income statement to the function responsible
for the asset, or to general and administrative.
Useful lives assigned to acquired product rights are based on the
period over which Syngenta expects economic benefit from the
product rights. Estimated lives assigned to most product rights upon
acquisition are between 10 and 20 years and do not exceed 20 years
for any asset.
Patents and trademarks are amortized over their estimated economic
or legal life, whichever is shorter. Lives assigned are between 3 and
20 years for patents and between 10 and 15 years for trademarks.
Business combinations give Syngenta access to the distribution
channels and customer relationships of the acquired business.
These relationships normally continue to generate economic benefit
to Syngenta following the acquisition. The useful lives of customer
relationships are determined from management estimates of customer
attrition rates. Estimated lives assigned are between 5 and 30 years.
Acquired In-Process Research & Development (IPR&D), is valued at fair
value at acquisition. It is assessed for impairment annually until it has
been successfully developed and is available for use at which time it
begins being amortized over its estimated useful life. Lives assigned
are between 10 and 20 years.
Assets attributable to long-term supply agreements are amortized as
part of cost of goods sold over the period of the supply agreements,
which are between 5 and 12 years.
Purchased software licenses are amortized over their remaining license
terms. Internally developed software is amortized from the date it is
ready for use until the sooner of its expected replacement date or the
date significant costs are expected to be incurred to upgrade it.
Lives assigned are between 3 and 5 years.
Goodwill
Goodwill is the excess of the fair value of an acquired business over
the fair value of its identifiable net assets at the acquisition date.
Goodwill is recognized as an asset and presented within intangible
assets. Goodwill is not amortized, but is tested annually for impairment
and reduced by any impairment losses.
41
Impairment
Property, plant and equipment, intangible assets and investments in
associates and joint ventures are tested for impairment (“tested”) in
accordance with IAS 36 unless classified as held for sale. Goodwill and
intangible assets not yet ready for use are tested annually and are also
reviewed at each interim and annual reporting date to determine
whether conditions changed since the most recent review or annual
test. Individual other non-current assets are reviewed at each reporting
date to determine whether events or changes in conditions indicate
that the carrying amount of each asset may not be recoverable. If any
such indication exists, the asset is tested for impairment. Syngenta
estimates an asset’s recoverable amount as the higher of the asset’s
fair value less selling costs and value in use, which is the present value
of the cash flows expected from the asset’s use and eventual disposal.
An impairment loss is recorded in the consolidated income statement
to the extent that the carrying amount of the tested asset exceeds its
recoverable amount. Impairment losses are not reversed for goodwill,
but are reversed for other assets if their recoverable amounts
subsequently increase.
Other non-current financial assets
Debt investments maturing in more than twelve months and equity
investments in other entities which are not subsidiaries, associates
or joint ventures of Syngenta are classified as available-for-sale in
accordance with IAS 39. They are accounted for as described above
under “Financial and other current assets”. An impairment loss is
recorded in the consolidated income statement if there is a significant
or prolonged decline in the value of an equity security that is an
available-for-sale financial asset below its original cost, as reduced
where applicable by cumulative impairment losses recorded in prior
periods. Impairment losses on equity securities are not reversed if their
fair value increases after an impairment loss is recorded. Loans and
receivables are recorded at amortized cost, less impairment losses.
Non-current assets held for sale
Non-current assets and groups of assets are reclassified as held for
sale when the assets are available for immediate sale in their present
condition and a sale within one year is highly probable. Property, plant
and equipment and intangible assets held for sale are remeasured at
the lower of fair value less costs to sell or carrying amount at the date
they meet the held for sale criteria at which time depreciation and
amortization also ceases. Any resulting impairment loss is recognized
in profit or loss.
Financial debt
Financial debt is recognized initially at its fair value less transaction
costs, which represents the net proceeds from issuing the debt.
Subsequently, financial debt is stated at amortized cost using the
effective interest method, except where subject to a fair value hedge
relationship. Financial debt is classified as current if the debt agreement
terms in force at the balance sheet date require repayment within one
year of that date. Otherwise, it is classified as non-current.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
42 2. Accounting policies continued
Provisions
A provision is recognized in the balance sheet when Syngenta has a
legal or constructive obligation to a third party or parties as a result of
a past event the amount of which can be reliably estimated and it is
probable that an outflow of economic benefits will be required to settle
the obligation. The amount recognized as a provision is the best
estimate of the expenditure required to settle the obligation at the
balance sheet date. If the effect of discounting is material, provisions
are discounted to the expected present value of their future cash flows
using a pre-tax rate that reflects current market assessments of the
time value of money and the risks specific to the liability. Where some
or all of the expenditures required to settle a provision are expected
to be reimbursed by another party, the expected reimbursement
is recognized as a separate asset only when virtually certain.
Where Syngenta has a joint and several liability for a matter with one
or more other parties, no provision is recognized by Syngenta for those
parts of the obligation expected to be settled by another party.
Syngenta self-insures or uses a combination of insurance and self-
insurance for certain risks. Provisions for these risks are estimated
in part by considering historical claims experience and other actuarial
assumptions and, where necessary, counterparty risk.
Environmental provisions
Provisions for remediation costs are made when there is a present
obligation, it is probable that expenditures for remediation work will be
required within ten years (or a longer period if specified by a legal
obligation) and the cost can be estimated within a reasonable range of
possible outcomes. The costs are based on currently available facts;
technology expected to be available at the time of the clean up, laws
and regulations presently or virtually certain to be enacted and prior
experience in remediation of contaminated sites. Environmental
liabilities are recorded at the estimated amount at which the liability
could be settled at the balance sheet date, and are discounted if the
impact is material and if cost estimates and timing are considered
reasonably certain.
Syngenta’s restructuring programs have involved closure of several
sites to date. Remediation liabilities recognized when site closures
are announced are accounted for as restructuring provisions. In the
opinion of Syngenta, it is not possible to estimate reliably the additional
costs that would be incurred upon eventual closure of its continuing
sites that have no present obligation to remediate because it is neither
possible to determine a time limit beyond which the sites will no longer
be operated, nor what remediation costs may be required upon their
eventual closure.
Legal and product liability settlements
For claims for which, according to Syngenta’s assessment, it is not
probable that a liability exists or that there will be a future cash outflow
or other sacrifice of economic benefits, Syngenta has provided for the
costs of defense only. For claims where an outcome unfavorable to
Syngenta is assessed as more likely than not, provision has been
made for the estimated amount of damages and settlement, including
legal costs. No provision is made where the legal procedures are at
too early a stage to estimate the outcome with any reliability.
Restructuring provisions and costs
Restructuring costs are accrued (charged to provisions) when
Syngenta has approved a detailed and formal restructuring plan and
the restructuring has either commenced or been announced publicly
and they qualify for recognition in accordance with IAS 37.
Provisions for severance payments and related employment
termination costs are made in full when employees are given details
of the restructuring plan and the termination benefits that will apply to
individual employees should their contracts be terminated.
Restructuring costs relating to ongoing activities, such as relocation,
training and information systems, do not qualify for provisioning under
IAS 37 and are expensed when incurred.
Post-employment benefits
For defined benefit plans, plan assets are measured at fair value
and obligations are measured at the present value of future benefit
payments attributable to employee service rendered up to the balance
sheet date. A surplus of plan assets over the benefit obligation is
recognized as an asset only to the extent of the economic benefit
Syngenta can obtain from the surplus through refunds from, or
reductions in the present value of future contributions to, the plan.
Benefit expense charged to profit or loss is the cost to Syngenta of the
increase in benefits in the period. The benefit obligation and cost are
attributed to periods using the projected unit credit actuarial method.
The expected return on plan assets in externally funded plans is
deducted from the benefit cost. Both the benefit cost and expected
asset return are based on long-term economic assumptions.
The benefit cost is also based on long-term assumptions about
employee service, pay and longevity, and for healthcare plans, medical
costs. Assumptions are reviewed annually. Gains and losses arising
from variances between assumptions and actual outcomes, and from
changes to assumptions, are recognized in OCI in the period in which
they arise. Past service cost arising when plan rules are amended
is amortized over the vesting period for the revised benefits, or over
the remaining expected service period if the benefits do not vest
until retirement. If the revised benefits vest immediately the related
past service cost is recognized immediately in profit or loss. If plan
membership or benefits are significantly reduced by a restructuring, or
an event or transaction results in Syngenta’s benefit obligations being
settled, the effects are recorded in profit or loss when the restructuring
or settlement occurs.
Contributions to defined contribution pension plans are recognized as
an expense in profit or loss when they are due.
Share based payments
The fair value of equity-settled share and share option awards to
employees is recognized as compensation expense, and as a
corresponding increase in equity, over the period in which the shares
or options vest. An award is granted when it has been approved by
the Compensation Committee of Syngenta AG’s Board of Directors
and its terms have been communicated to share plan members.
Grants of Syngenta AG ordinary shares are measured at market value
on the grant date, less any cash amount payable by the employee.
The fair value of grants of share awards and unvested shares that do
not carry dividend rights until vesting, is reduced by the present value
of the expected dividends to which the holder will not be entitled.
No discount is applied to grant-date market value to reflect vesting
conditions. The fair value of grants of options over Syngenta AG
ordinary shares is measured using the Black-Scholes-Merton formula.
Compensation expense is measured using Syngenta’s best estimate
of the shares and options expected to vest. Compensation expense is
adjusted subsequently, so that final expense is based on the number
of shares and options that actually vest. Grants with a cash or equity
alternative for plan members are accounted for as liabilities until the
members’ choice is known. The incremental fair value of members’
equity options is zero. A member’s choice to receive equity
instruments is accounted for by transferring the fair value of the
liability to shareholders’ equity when the choice is made.
The fair value of equity settled and cash settled share grants awarded
to customers in cash rebate sacrifice arrangements is recognized as a
reduction in sales in the same way as the cash rebate.
Syngenta
Financial Report 2010
Dividends and capital distributions
Dividends payable to shareholders of Syngenta AG are recorded as
liabilities and as a reduction in shareholders’ equity in the period in
which they are approved by the shareholders of Syngenta AG.
Treasury shares
Share capital includes the par value of treasury shares held by
Syngenta that have not been canceled. Treasury shares are shown
as a separate component of shareholders’ equity and stated at the
amount paid to acquire them. Differences between this amount and
the amount received upon their disposal are recorded as a movement
in consolidated shareholders’ equity.
Derivative instruments over Syngenta AG shares
Forward contracts and purchased and written call options over
Syngenta AG ordinary shares, other than those related to share based
compensation plans, are accounted for as equity instruments if they
involve the exchange of a fixed number of Syngenta ordinary shares for
a fixed cash amount and gross physical settlement is required by the
option contract. Equity instruments are recognized in shareholders’
equity at fair value at the date the instruments are issued or acquired,
and are not subsequently revalued. Any difference between the value
recognized at issue or acquisition and the value at settlement is
recognized as an increase or decrease in shareholders’ equity.
Application of critical accounting policies
Impairment
For the purposes of assessing impairment, assets are grouped at the
lowest level at which there are independent cash inflows. This level is
described as a cash generating unit (CGU). Each CGU contains
tangible assets such as plant and equipment as well as intangible
assets such as product and patent rights. The way in which assets are
grouped to form CGU’s and are related to cash flows may in certain
circumstances affect whether an impairment loss is recorded.
Generally, the higher the level at which independent cash flows are
identified, the less likely it is that an impairment loss will be recorded, as
reductions in one cash inflow are more likely to be offset by increases
in other cash inflows within the same CGU. If a CGU is impaired, the
impairment loss is allocated first to any goodwill in the CGU, and then
to reduce the CGU’s other assets pro rata.
In the Crop Protection segment, a CGU is generally defined by
Syngenta at the product active ingredient level. However, where
one active ingredient is sold in mixture with other active ingredients
to a significant extent, the active ingredients concerned are grouped
together into a single CGU because independent cash inflows only
exist at this higher level. Each CGU is generally defined on a global
basis reflecting the international nature of the business. Goodwill on
major acquisitions, principally Zeneca agrochemicals business goodwill
of US$549 million, is held at segment level and tested for impairment
by relating it to total segment cash flows.
In the Seeds segment, a CGU is generally defined at the global crop
level to reflect the fact that seed germplasm originating in one country
can be used in other countries except where licence agreements are
more geographically restrictive.
43
Pension asset ceiling
IFRSs require Syngenta to estimate the economic benefit it can obtain
from a pension surplus if a surplus currently exists or will arise when
Syngenta meets an existing minimum funding obligation. Syngenta
believes a refund of any surplus in its UK pension plan will be available
to it after liabilities are gradually settled over time. The surplus in its
US plan is supported by the economic benefit of future contribution
savings. Syngenta cannot derive economic benefit from its main Swiss
pension surplus because there is no refund right and the required
future service contributions exceed future service cost. Syngenta has
restricted the asset carrying amount accordingly.
Foreign currency translation
Syngenta has to make judgements on whether loans between
subsidiaries are likely to be repaid in the foreseeable future in order to
allocate foreign currency differences on those items to profit or loss if
the loan will be repaid or to OCI if the loan is effectively part of the net
investment in the borrowing subsidiary. Until December 31, 2009,
further judgement was required on how to determine Syngenta’s net
investment in a borrowing subsidiary repaying part or all of a loan or
of its share capital, because IFRS applicable until that date required a
proportionate reclassification of currency translations gains and losses
from OCI into profit or loss. Gains of US$40 million and US$66 million
were reclassified for 2009 and 2008 respectively. From January 1,
2010 such a reclassification would occur only when Syngenta divests
or loses control of a subsidiary. There were no such events in 2010.
Critical accounting estimates
Impairment review
The recoverable amount for goodwill has been determined based
on value in use of the relevant CGU or group of CGU’s to which the
goodwill is allocated. The recoverable amounts of all material intangible
assets and property, plant and equipment have also been based on
their value in use.
The discount rates used to discount the estimated future cash flows
included in the value in use calculations are based on Syngenta’s
estimated weighted average cost of capital (WACC). This is considered
to include market estimates of industry sector risk premium, as
Syngenta’s Crop Protection and Seeds businesses both operate
mainly in the agricultural sector and its non-agricultural Professional
Products business is not considered a separate CGU. Because
Syngenta’s CGU’s generally either reflect the global nature of its Crop
Protection and Seeds businesses or are located in low risk countries,
it is also generally not considered necessary to apply a country risk
premium. The pre-tax discount rates used were 7.0% to 8.5% except
for one CGU that has been discounted at 14.8% (2009: 7.5% to 10%).
The outcomes of the impairment tests were not sensitive to reasonably
likely changes in the discount rate in the periods presented for any
CGU or group of CGUs for which the carrying amount of goodwill was
significant except as described below.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
44 2. Accounting policies continued
In determining value in use it is necessary to make a series of
assumptions to estimate future cash flows. The main assumptions in
respect of Crop Protection include future sales prices and volumes,
future development expenditures required to maintain products’
marketability and registration in the relevant jurisdictions and
products’ lives. These assumptions are reviewed annually as part
of management’s budgeting and strategic planning cycles.
These assumptions can be subject to significant adjustment from such
factors as changes in crop growing patterns in major markets (for
example, as a result of movements in crop prices), changes in product
registration, or pressure from competitor products. Estimated cash
flows are based on Syngenta management forecasts over a five year
horizon and a terminal value, which assumes a 2% long-term growth
rate. Management believes, based on recent growth in agricultural
markets, that there are long-term prospects for continued growth.
US$703 million of goodwill is tested at the Crop Protection total
segment level (2009: US$702 million). In the opinion of Syngenta, the
recoverable amount is not sensitive to reasonably possible changes
in any of the assumptions underlying the cash flow projections used
for the impairment test. A reduction in forecasted sales within
management’s five year forecast horizon compared to the previous
year’s five year forecast cycle combined with a reduction in latest
forecasts of current year sales compared to the current year budget,
is considered an indicator of market related impairment for CGU’s to
which no goodwill is allocated, resulting in the performance of detailed
impairment tests. Syngenta also performs detailed impairment tests
when there are asset specific indicators of impairment such as
withdrawal of, or restrictions placed upon, product registrations, plans
to divest products or, for property, plant and equipment, plans to
restructure or close a site. Higher discount rates are used to test
property, plant and equipment for impairment in the case of
restructuring because of the higher risk associated with remaining
cash flows when operations are being physically relocated. The value
in use calculation takes account of cash flows from the remaining
period of operations and decommissioning costs. Property, plant and
equipment and intangible asset impairments of US$15 million and
US$17 million were recorded because of restructuring in 2010 and
2009 respectively.
In Crop Protection in 2009, one CGU which contains US$46 million of
property, plant and equipment and US$36 million of intangible assets,
excluding goodwill, and to which US$16 million of goodwill was
allocated, had a recoverable amount equal to its carrying amount.
In 2010, forecast future cash flows for this CGU have declined
because of competitive price reductions in response to depressed
market conditions, combined with increased distribution costs.
This caused a US$4 million impairment loss to be recognized.
Syngenta believes that the market sector in which this CGU operates
will continue to grow faster than the Crop Protection market as a
whole. The recoverable amount has been calculated assuming an
8.4% discount rate, a 5% compound annual sales growth rate
(CAGR) over the five year horizon and a 3% long-term annual growth
rate thereafter.
The sensitivity of the recoverable amount to these assumptions,
expressed as additional impairment losses, is as follows:
1% increase in post tax discount rate
Long-term growth rate reduced to 2%
Both the above changes together
US$34 million
US$23 million
US$47 million
Another Crop Protection CGU, which had a carrying amount at
December 31, 2010 of US$22 million, would have a recoverable
amount equal to US$22 million if sales prices declined by 7%
and operating expenses increased by 5% of sales compared to
Syngenta’s five year forecast.
Goodwill of US$315 million has been allocated to the Seeds NAFTA
Corn and Soybean CGU. The value in use of the CGU has been
calculated based on 15 year cash flow forecasts in order to reflect
the economic benefits of the full commercialization of new products.
Over that period Syngenta’s forecasts assume that new trait
introductions by seed companies will increase total market value
in both corn and soybean, and that Syngenta’s traits will obtain an
increased share of those markets. A 2% long-term annual growth rate
has been assumed after the end of this period. At the 7.0% (2009:
8.1%) pre-tax discount rate used, value in use significantly exceeds
the CGU’s carrying amount. The carrying amount would be sensitive
only to significant reductions in income or unidentified product related
regulatory, technical or intellectual property issues which Syngenta
does not consider reasonably possible at this time.
Adjustments to revenue and trade receivables
Syngenta’s products are consumed mainly by growers. The timing
and amount of cash inflows received by growers is impacted by a
broad range of economic and political risks, including crop yields and
prices, the availability of credit, and the cost of agricultural inputs such
as the products sold by Syngenta and its competitors. The cash
flows of distributors that supply Syngenta’s products to growers and
represent the majority of Syngenta’s customers are also impacted by
these factors. These distributors vary in size and nature from large
publicly owned entities to small or medium sized owner-managed
businesses. Syngenta’s customer base reflects the geographical
diversity of its operations, which encompass more than 50 countries
and all significant agriculture areas. Considerable management effort
and judgement is applied to actively manage and mitigate the risks
to Syngenta from these factors and to determine the accounting
estimates associated with them, which include:
– the estimated cost of incentive programs that provide rebates and
discounts dependent upon achievement of sales targets, as well as
cash discounts for punctual payment of accounts receivable.
Syngenta records the estimated cost of these programs when the
related sales are made, based on the programs’ terms, market
conditions and historical experience. At December 31, 2010,
trade accounts payable includes US$982 million (2009:
US$1,130 million) of accruals for rebates and returns.
– accruals for estimated product returns, which are based on historical
experience of actual returns. Syngenta considers these to be reliable
estimates of future returns, except in the case of US$269 million
(2009: US$206 million) of sales invoiced to customers. These sales
have not been recognized as revenue or as trade receivables,
because past experience in those specific markets shows that
actual returns can vary significantly as a result of weather conditions
after the reporting date, which are unknown.
– allowances for doubtful receivables, which are estimated by critically
analyzing individual receivable account balances, taking into account
historical levels of recovery, the economic condition of individual
customers, and the overall economic and political environment in
relevant countries. As shown in Note 9 below, the provision for
doubtful receivables at December 31, 2010 amounted to
US$260 million, or 9% (2009: US$351 million or 12%) of total trade
receivables. Syngenta’s strong collection performance over the last
ten years now represents a sufficient basis for estimating future
write-offs, leading to a reduction in the provision. In 2010 a
US$43 million credit (2009: US$12 million charge) of bad debt
expense was recorded in profit or loss.
Syngenta
Financial Report 2010
Syngenta records these estimates as separate allowances, but its
estimation process recognizes their interdependency, as the level
of credits to accounts receivable for discounts and product returns
may affect the probability of receiving full payment of the net
receivable balances.
Environmental provisions
Remediation of environmental damage at sites with which Syngenta
is associated typically takes a long time to complete due to the
substantial amount of planning and regulatory approvals normally
required before remediation activities can begin. The assumptions
used by Syngenta to estimate its environmental provisions may
change significantly before or during the remediation period
due to changes in the extent of remediation required or the method
used to remediate the damage. In addition, increases in or releases
of environmental provisions may be necessary whenever new
developments occur or additional information becomes available.
The major uncertainties which impact the outcome of remediation are:
– the extent of the contaminated land area, which is not always limited
to land occupied by the Syngenta site. Ongoing monitoring or
remediation work may identify changes in the area believed to be
contaminated.
– the nature of the work Syngenta will be obliged to perform or
pay for. This depends upon the current or proposed use of
contaminated land, substantively enacted legislation, and land
zoning by and negotiation with the relevant regulatory authorities.
In Switzerland, proposed remediation plans at certain sites may be
subject to public referenda.
– sharing of costs with other past and present occupiers of
Syngenta’s sites. At certain shared sites, Syngenta is responsible
for an agreed proportion of remediation costs, which may change
following discussions with authorities and the affected third parties.
At other sites, third parties have agreed to reimburse Syngenta for
some or all of the costs it incurs.
Consequently, environmental provisions can change significantly.
Because of the inherent uncertainties in estimating such long-term
future obligations, Syngenta periodically supplements its
internal expertise with external expertise when determining
environmental provisions.
IAS 37 requires reimbursements of provisions to be recognized only
when they are virtually certain to be received. No reimbursements are
recognized if the third parties are disputing the reimbursement. Details
of reimbursements recorded by Syngenta are given in Note 19 below.
The litigation associated with reimbursements claimed by Syngenta
in relation to environmental costs incurred at its Greens Bayou
site was settled during 2008. As a result, Syngenta has recorded a
reimbursement asset of US$26 million at December 31, 2010 (2009:
US$50 million). The movements in environmental provisions are set out
in Note 19 below.
45
In 2010, the total additional charge to environmental provisions
was US$37 million (2009: US$14 million and 2008: US$34 million).
US$30 million (2009: US$20 million and 2008: US$11 million) of
unutilized provisions were released, including US$nil (2009:
US$5 million and 2008: US$nil) on settlement of litigation related to
a closed site and US$nil (2009: US$11 million and 2008: US$2 million)
because expenditures at one site were met directly by a joint
venture. In 2010, the most significant changes were caused by
clarification from the regulator of the remedial work it requires at one
site and a reduction in Syngenta’s share of the total estimated costs at
another site. Recent proposals have been made suggesting
remediation of the existing contamination on certain shared sites in
preference to monitoring and containment. Syngenta will negotiate
the proposals with the relevant authorities but the final adopted
solution is subject to regulatory uncertainty and the ultimate liability
may be higher or lower than the amount provided. Taken together,
the provisions at December 31, 2010, for these shared sites
comprise approximately 20% of total environmental provisions of
US$394 million (2009: US$405 million and 2008: US$440 million).
The top ten exposures at the end of 2010 which cover sites in the
USA, Switzerland and the UK where most of Syngenta’s significant
exposures are located, comprise approximately 80% of the total
environmental provisions. In the opinion of management, reasonably
possible increases in the provisions related to these top 10 exposures
would not exceed 50% of the total environmental provision recognized
at December 31, 2010.
At Syngenta’s Monthey, Switzerland, production site, planning has
commenced for the activities needed to remediate groundwater and
soil contamination that exists under and around the site, including
control and monitoring activities. The responsibility for these activities
lies with Syngenta and one other chemical enterprise.
In management’s opinion, based on the current plans, Syngenta’s
environmental provisions are adequate to cover Syngenta’s share of
the expected costs to perform this remediation.
Defined benefit post-employment benefits
Key assumptions required to measure post-employment benefit
expense for a period and the benefit obligation at the period end for
defined benefit plans are:
– Selection of the discount rate
– Probable long-term rate of increase in pensionable pay
– Probable average future service lives of employees
– Probable life expectancy of employees
– Expected future rates of return on the investments in funded
pension plans.
Significant judgment is used by management when selecting these key
assumptions. The specific assumptions used are disclosed in Note 22
below, along with the experience variances between actual and
assumed results for the past five years. These variances were caused
principally by external financial market movements in corporate bond
yields used to benchmark the discount rate, and in asset prices
affecting the actual return on assets. These factors are outside
Syngenta’s direct control, and it is reasonably possible that future
variances will be at least as great as past variances.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
46 2. Accounting policies continued
The following information illustrates the sensitivity to a change in certain
assumptions, leaving all other assumptions constant, for the three
major defined benefit pension plans shown in Note 22 to the financial
statements, at December 31, 2010. It should be noted that
economic factors and conditions often affect multiple assumptions
simultaneously and the effects of changes in key assumptions are not
necessarily linear.
(US$ million)
25 basis point decrease in
discount rate
25 basis point increase in
discount rate
25 basis point decrease in
expected return on assets
25 basis point increase in
expected return on assets
Increase/(reduction)
in 2011
pre-tax pension
expense
Increase/(reduction) in
December 31, 2010
projected benefit
obligation
3
(2)
12
(12)
184
(181)
–
–
During 2010, Syngenta’s benefit obligation in accordance with IAS 19
increased because corporate bond yields fell in the countries in which
its principal pension plans are located. This was offset by strong
investment performance in Syngenta’s funded plans as financial
markets continued their recovery from the 2008 crisis. In 2010,
Syngenta also decided to accelerate already planned contributions
to its UK, Swiss and US pension plans through special contribution
payments totalling US$200 million. In the UK, this represents
accelerated payment of part of the deficit recovery contributions
agreed with the plan Trustee following the March 2009 statutory
valuation. In Switzerland and the USA, it represents advance payment
of Syngenta’s contributions for future employee service in 2011 and
2012. These factors resulted in a funded position greater than 100%
in all three plans at December 31, 2010 (2009: UK 89%, Switzerland
102%, USA 102%; 2008: UK100%, Switzerland 88%, USA 97%).
To select the discount rate, Syngenta uses yields in AA rated corporate
bonds in all major markets. The relevant yield is determined either
by analyzing a population of bonds whose cash flows collectively
approximate the estimated cash flow profile of benefit payments by a
Syngenta plan (USA), or by using the yield of a published bond index
and adjusting it in line with the relevant market yield curve to the extent
that the average maturity of the bonds in the index is different from that
of the relevant Syngenta benefits (UK and Switzerland). In 2010 and
2009, it was not necessary to adjust any indices to remove bonds
which were no longer considered to be of high quality. In 2008, the UK
discount rate was adjusted by 25 basis points to remove the impact of
such bonds, reflecting the financial crisis.
Limited price indexation of pensions in payment and deferred pension
rights is required both by the Syngenta UK pension plan rules and by
UK pension regulations. The UK government announced in 2010 that
future statutory pension increases would be based on a consumer
price index (CPI) instead of the retail price index (RPI) previously used.
Most Syngenta UK pension plan members have benefits specifically
linked to RPI in accordance with the plan rules, but some members will
now see increases linked to CPI. A US$20 million actuarial gain and
reduction in benefit obligation was recognized in 2010 because of this
change. The Syngenta plan rules and statutory regulations applicable
to Syngenta’s Swiss and US plans contain no inflation linkage.
In valuing the benefit obligation at December 31, 2010, the long-term
rate of RPI is assumed to be 3.5% (2009: 3.5%), CPI is assumed to be
50 basis points below RPI.
Actual returns for the UK, Swiss and US pension plan assets were
above the expected long-term return assumptions used to calculate
2010 and 2009 pension expense. Expected return is a weighted
average of the various asset classes held by the plans, which are
disclosed in Note 22 below.
In recent years longevity has increased in all major countries in which
Syngenta sponsors pension plans. Syngenta’s mortality assumptions
are set after considering the most recent statistics practicable, and
whether any trends apparent from these statistics are likely to continue
into the future. In 2010, Syngenta’s mortality assumptions for its UK,
Swiss and US plans were determined on a consistent basis with those
in 2009.
For the UK and US plans, Syngenta uses generational mortality tables.
These assume that the recent trend of increasing longevity will
continue into the future, so that the pension which will become payable
to younger members upon their retirement will be paid for longer than
older members’ pensions. In Switzerland, generational tables were
published for the first time in December 2010, and will be considered
by Syngenta for its IAS 19 valuation at the end of 2011. In 2009,
Syngenta updated the mortality assumptions for its UK pension
liabilities. This update did not cause a significant change in the
amount of the benefit obligation. A one year increase in UK pension
fund members’ assumed life expectancy would increase the benefit
obligation by US$60 million (2.6%). As new evidence becomes
available in the future, further adjustments to the benefit obligation may
be required. No significant changes to mortality assumptions were
made in 2010 compared to those used in 2009.
Certain of Syngenta’s pension plans, including its US plan, give
members lump sum or annuity benefit payment options. Syngenta has
valued its pension liabilities on the assumption that the choices made
by members who will retire in the future will be consistent with choices
made by members who have retired recently. For the US plan,
Syngenta has assumed that all current active members will take the
lump sum option at retirement date as, under current conditions, this
results in a higher liability than the annuity option. A one year increase
in US pension fund members’ life expectancy together with a
corresponding change to the US Internal Revenue Service (IRS)
Mortality table used to determine lump sums would increase the
benefit obligation by US$12 million (2.2%).
Syngenta
Financial Report 2010
47
Uncertain tax positions
Syngenta’s Crop Protection supply chain, and to a lesser extent its
Seeds supply chain, are international, and intellectual property rights
owned by Syngenta are used internationally within the Group.
Transfer prices and charges for products and services by one
Syngenta subsidiary to another, and arrangements to share research
and development costs, may be subject to challenge by the national
tax authorities in any of the countries in which Syngenta operates.
Interpretation of taxation rules relating to financing arrangements
between Syngenta entities and to foreign currency translation
differences may also give rise to uncertain tax positions.
Several prior years’ tax computations are generally still open for review
or audit for most Syngenta subsidiaries at the balance sheet date.
Syngenta estimates and accrues taxes that will ultimately be payable
when reviews or audits by tax authorities of tax returns are completed.
These estimates include significant management judgments about the
eventual outcome of the reviews and audits of all open years based
on the latest information available about the positions expected to be
taken by each tax authority. Actual outcomes and settlements may
differ significantly from the estimates recorded in these consolidated
financial statements. This may affect income tax expense reported in
future years’ consolidated income statements. At December 31, 2010,
Syngenta’s balance sheet included assets of US$70 million (2009:
US$80 million) included within Other accounts receivable, and liabilities
of US$406 million (2009: US$376 million) shown separately on the face
of the balance sheet, for current income taxes. These liabilities include
US$225 million in respect of the uncertain tax positions described
above (2009: US$222 million). The liability for uncertain income tax
positions which Syngenta expects to be resolved in 2011 is less than
10% of total recognized current income tax liabilities.
a after effect of accounting policy change for post-employment benefits
Deferred tax assets
At December 31, 2010, Syngenta’s deferred tax assets were
US$824 million (2009: US$747a million). Included in this balance are
deferred tax assets for unused tax losses of US$46 million (2009:
US$42 million). The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible or
in which tax losses can be utilized. The tax effect of unused tax losses
is recognized as a deferred tax asset when it becomes probable that
the tax losses will be utilized. In making assessments regarding
deferred tax assets, management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and tax
planning strategies. At December 31, 2010, based upon the level of
historical taxable income and projections for future taxable income
over the periods in which deferred tax assets are deductible,
management believes that it is more likely than not that Syngenta will
realize the benefits of these deductible differences. The amount of
deferred tax assets considered realizable could however be reduced
in subsequent years if estimates of future taxable income during their
carry forward periods are reduced, or rulings by the tax authorities
are unfavorable. Estimates are therefore subject to change due to
both market related and government related uncertainties, as well
as Syngenta’s own future decisions on restructuring and other
matters. Syngenta is unable to accurately quantify the future
adjustments to deferred income tax expense that may occur as a
result of these uncertainties.
The principal jurisdictions where deferred tax assets have not been
recognized are Brazil, Argentina, Ukraine and Russia. For Argentina,
Ukraine and Russia, no net deferred tax assets have been recognized
at December 31, 2010 (2009: Argentina US$20 million; Ukraine and
Russia: US$nil). In Brazil, at December 31, 2010 the carrying amount
of deferred tax assets recognized in the consolidated balance sheet
was US$84 million (2009: US$20 million). Syngenta has restricted the
amount of deferred tax asset recognized for this subsidiary to the
amount recoverable from the forecast taxable profits in the three years
following the balance sheet date. In 2009, only the forecast profits in
the year immediately following the balance sheet date were taken into
account. The longer forecast profit horizon used for the December 31,
2010 estimate results from the continued generation of actual taxable
profits by this subsidiary. In the longer term, the likely introduction of a
revised transfer pricing model, and additional forecast capital
investment in the sugar cane business create uncertainty. In the
opinion of Syngenta, continued taxable profits in this entity after more
than three years are not sufficiently probable for a further increase in
the deferred tax asset to be recognized.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
48 3. Acquisitions, divestments and other significant
transactions
The following significant transactions occurred during 2010 and 2009.
Acquisitions for the year ended December 31, 2010
On March 31, 2010, Syngenta acquired a field station in Chile and the
associated contract research business by making a cash payment for
the related assets. The primary reason for the acquisition was to
support development projects in Syngenta’s seeds businesses.
On September 30, 2010, Syngenta acquired 100% of the shares of
Maribo Seed International ApS and its five European subsidiaries for a
cash payment, plus contingent payments if certain sales targets are
achieved. Because of the timing of the acquisition, Syngenta is still
finalizing the initial accounting in respect of fair values of inventories and
intangible assets, and of income taxes. Syngenta expects to claim a
tax deduction for amortization of goodwill, the amount being subject to
finalization. The primary reason for the acquisition was to consolidate
Syngenta’s position in the European sugar beet market.
On November 8, 2010, pursuant to legal agreements signed on that
date, Syngenta acquired the 50% equity interest in Greenleaf Genetics
LLC (‘Greenleaf’) owned by Pioneer Hi-Bred International Inc.,
(“Pioneer”) a subsidiary of E.I Du Pont de Nemours and Co.
(“Du Pont”). This transaction dissolved a joint venture and terminated
certain license agreements between Syngenta and Pioneer.
US$16 million of assets related to these licenses have been included
in the fair value of the consideration for the acquisition.
Syngenta’s existing 50% equity interest in Greenleaf has been
provisionally valued at US$39 million at November 8, 2010, resulting in
a US$19 million net gain from remeasuring this to fair value, terminating
existing licence rights and re-acquiring rights Syngenta had licensed
exclusively to the joint venture. This gain is presented in Restructuring
and impairment. The primary reason for the business combination
was to allow Syngenta and Pioneer to pursue independent licensing
strategies for their respective proprietary corn and soybean genetics
and biotechnology traits. Because of the timing of the transaction, initial
accounting in respect of fair values of Greenleaf’s net assets, which are
principally intangible assets, is still provisional at December 31, 2010.
Syngenta expects to claim a tax deduction for the 50% share of the
assets, including goodwill, which it has acquired.
The assets, liabilities and acquisition-date fair value of consideration provisionally recognized for these 2010 business combinations at
December 31, 2010 were as follows:
(US$ million)
Cash and cash equivalents
Trade receivables and other current assets
Inventories
Property, plant and equipment
Intangible assets
Deferred tax and other liabilities
Net assets acquired
Fair value of consideration
Fair value of interest already held by Syngenta
Unallocated purchase price
Fair values
51
41
17
11
42
(45)
117
89
39
11
Fair value of consideration comprises US$68 million cash paid, US$16 million other assets and US$5 million acquisition date fair value of
contingent future cash payments.
Cash flow from these 2010 acquisitions was as follows:
(US$ million)
Cash paid:
Asset purchases
Share purchases
Total cash paid
Net cash acquired
Net cash outflow
On June 14 and December 17, 2010 respectively, Syngenta acquired
the non-controlling interests in its Golden Harvest and Garst seed
businesses in the USA. The total cash paid was US$48 million,
presented within cash flow used for financing activities, which was
substantially equal to the total of the equity attributable to the non-
controlling interests and the liability recognized for the options granted
over those interests in the various acquisition agreements in 2004.
7
61
68
(51)
17
The gross contractual amounts receivable were not significantly
different from the fair value of the acquired receivables.
Syngenta
Financial Report 2010
Acquisitions for the year ended December 31, 2009
On August 31, 2009, Syngenta acquired from Monsanto its global
hybrid sunflower seeds activities for a cash payment of US$160 million,
which included certain rights to receive services during the post-
acquisition transition period. Direct acquisition costs were not material.
Goodwill of US$61 million has been recognized after taking into
account measurement period adjustments of US$37 million, mainly
related to acquired inventories for which information as of the
acquisition date became available to Syngenta too late to be taken
into account in the 2009 consolidated financial statements.
These adjustments do not affect the reported 2009 consolidated
income statement and in the opinion of Syngenta, are not material to
the 2009 consolidated balance sheet which has consequently not
been retrospectively adjusted. The most important factor contributing
to the recognition of this goodwill is the expected value of revenue and
cost synergies and other benefits from combining the acquired
businesses with those of Syngenta. Syngenta has agreed to divest
certain assets, the carrying amount of which is not material, in
connection with the European Commission’s approval of
this acquisition.
49
During 2009, Syngenta also acquired: the 32% remaining minority
equity interest in Koipesol Semillas S.A.; 100% of the shares of Circle
One Global Inc., a US-based biological crop protection technology
business; the remaining 50% of the shares of Goldsmith Seeds
Europe B.V., the Netherlands-based business in which Goldsmith
Seeds International Inc., acquired in November 2008, had a 50%
equity interest; and 100% of the shares of Synergene Seed &
Technology, Inc. and Pybas Vegetable Seed Co., Inc., two US-based
lettuce seed companies. In aggregate, for the 2009 acquisitions
excluding the Monsanto sunflower business, cash paid totaled
US$37 million, goodwill was US$11 million and direct acquisition costs
were not material.
The assets and liabilities recognized in these 2009 business combinations and acquisitions of minority interest were as follows:
Monsanto sunflower
Other acquisitions
Total
Carrying
amount
Fair value
adjustments
Carrying
amount
Fair value
adjustments
4
41
4
–
–
49
–
(24)
(1)
69
(1)
43
5
5
3
–
(6)
7
–
8
1
24
(11)
22
Fair
values
9
30
7
93
(18)
121
(7)
4
118
190
72
(US$ million)
Trade receivables and other current assets
Inventories
Property, plant and equipment
Intangible assets
Deferred tax and other liabilities
Net assets acquired
Less share of acquired entity already owned by Syngenta
Minority interest acquired
Syngenta AG shareholders’ interest
Purchase price
Goodwill
Cash flow from these 2009 acquisitions was as follows:
(US$ million)
Cash paid:
Direct acquisition costs
Asset purchases
Share purchases
Total cash paid
Net cash acquired
Net cash outflow
3
150
38
191
(3)
188
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
50 4. Segmental breakdown of key figures for the years
ended December 31, 2010 and 2009
Syngenta is organized on a worldwide basis into three reporting
segments, which are reflected in internal management reporting.
Crop Protection
The Crop Protection segment principally manufactures, distributes and
sells herbicides, insecticides and fungicides to both agricultural and
non-agricultural customers.
Seeds
The Seeds segment sells seeds for growing corn, soybeans,
sunflower, sugarbeet, other diverse field crops and oilseeds,
vegetables and flowers.
Business Development
Syngenta’s Business Development segment is an incubator of several
development stage activities which may meet the criteria to be
reported as separate segments in the future. These activities include
development of technology based on research into enzymes and traits
with the potential to enhance the agronomic, nutritional or biofuel
properties of plants. Syngenta has not generated material on-going
revenues from these activities to date and the route to market for
certain of these technologies is not yet clear. The Syngenta Executive
Committee reviews aggregated financial information relating to
these activities.
General
Syngenta manages its three segments separately because their
current or future sources of income derive from distinct types of
products or technologies requiring different manufacturing, distribution
and marketing strategies. Segment performance is managed based
on segment operating income, which is the measure of segment profit
or loss presented, and is based on the same accounting policies as
consolidated operating income, except that inter-segment sales and
inter-segment unrealized profit in inventories are eliminated only at the
consolidated level.
Transactions between segments are generally priced based on the
third party selling prices achieved by the purchasing segment less an
allowance for selling and distribution profit margins for the purchasing
segment.
2010 (US$ million)
Product sales – to third parties
Royalty income – from third parties
Product sales – other segments
Total segment sales
Cost of goods sold
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income/(loss) – continuing operations
Included in the above operating income from continuing operations are:
Personnel costs
Depreciation of property, plant and equipment
Amortization of intangible assets
Impairment of property, plant and equipment, intangible and financial assets
Other non-cash items including charges in respect of provisions
Gains on hedges reported in operating income
Crop
Protection
8,779
34
65
8,878
(4,496)
4,382
(1,321)
(555)
(667)
(101)
1,738
Seeds
2,667
138
–
2,805
(1,450)
1,355
(559)
(410)
(217)
(49)
120
(1,562)
(718)
(194)
(154)
(31)
(134)
18
(74)
(76)
(1)
(40)
5
1 Intersegment elimination
Segment operating income/(loss) reconciles to consolidated profit before tax as follows:
(US$ million)
Segment operating income after inter-segment elimination
Income from associates and joint ventures
Financial expense, net
Income before taxes
Business
Development
Elimination1
11
12
–
23
(11)
12
(12)
(67)
(15)
(9)
(91)
(25)
(5)
(5)
(9)
11
–
Total
11,457
184
–
11,641
(5,866)
5,775
(1,892)
(1,032)
(899)
(159)
–
–
(65)
(65)
91
26
–
–
–
–
26
1,793
–
–
–
–
–
–
(2,305)
(273)
(235)
(41)
(163)
23
1,793
25
(141)
1,677
Syngenta
Financial Report 2010
Crop
Protection
8,415
5
71
8,491
(4,262)
4,229
(1,255)
(508)
(496)
(61)
1,909
Seeds
2,471
93
–
2,564
(1,361)
1,203
(540)
(364)
(199)
(58)
42
Business
Development
Elimination1
7
1
–
8
(15)
(7)
(10)
(80)
(19)
(11)
–
–
(71)
(71)
66
(5)
–
–
–
–
51
Total
10,893
99
–
10,992
(5,572)
5,420
(1,805)
(952)
(714)
(130)
(127)
(5)
1,819
(1,447)
(703)
(26)
(168)
(152)
(7)
(112)
111
(71)
(61)
(10)
27
(30)
(4)
(5)
(8)
1
–
–
–
–
–
–
–
(2,176)
(243)
(218)
(25)
(84)
81
1,819
(3)
(122)
1,694
2009a
1,996
116
64
2010
2,130
109
66
2,305
2,176
273
5
235
15
243
6
218
11
2009a (US$ million)
Product sales – to third parties
Royalty income – from third parties
Product sales – other segments
Total segment sales
Cost of goods sold
Gross profit
Marketing and distribution
Research and development
General and administrative
Restructuring and impairment
Operating income/(loss) – continuing operations
Included in the above operating income from continuing operations are:
Personnel costs
Depreciation of property, plant and equipment
Amortization of intangible assets
Impairment of property, plant and equipment, intangible and financial assets
Other non-cash items including charges in respect of provisions
Gains/(losses) on hedges reported in operating income
1 Intersegment elimination
Segment operating income/(loss) reconciles to consolidated profit before tax as follows:
(US$ million)
Segment operating income after inter-segment eliminationa
Loss from associates and joint ventures
Financial expense, net
Income before taxes
a After effect of accounting policy change for post-employment benefits described in Note 2
Summarized additional information on the nature of expenses for the years ended December 31, 2010 and 2009 is as follows:
(US$ million)
Salaries, short-term employee benefits and other personnel expense
Pension and other post-employment benefit expense
Share based payment expense
Total personnel costs
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Amortization of intangible assets
Impairment of intangible assets
a After effect of accounting policy change for post-employment benefits described in Note 2
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
52 5. Regional breakdown of key figures for the years ended December 31, 2010, 2009 and 2008
2010 (US$ million)
Sales1
Total non-current assets3
2009 (US$ million)
Sales1
Total non-current assets3
2008 (US$ million)
Total non-current assets3
NAFTA
3,597
1,712
NAFTA
3,726
1,758
NAFTA
1,716
Europe
& AME2
3,672
3,874
Europe
& AME2
3,581
3,745
Europe
& AME2
3,397
Latin
America
2,567
325
Latin
America
2,134
255
Latin
America
151
Asia
Pacific
1,805
511
Asia
Pacific
1,551
457
Asia
Pacific
406
Total
11,641
6,422
Total
10,992
6,215
Total
5,670
1 Sales by location of third party customer
2 AME – Africa and the Middle East
3 Excluding deferred tax assets, defined benefit pension assets and derivative financial assets
The following countries individually accounted for more than 5% of one or more of the respective Syngenta totals for the years ended
December 31, 2010 and 2009 or at December 31, 2010, 2009 and 2008.
(US$ million, except %)
Sales1
Total non-current assets2
Country
Brazil
France
Germany
Switzerland
UK
USA
Others
Total
2010
1,778
585
484
100
189
2,802
5,703
11,641
%
15
5
4
1
2
24
49
2009
1,551
666
492
66
183
2,993
5,041
100
10,992
%
14
6
4
1
2
27
46
100
2010
223
144
23
2,902
503
1,622
1,005
6,422
%
4
2
–
45
8
25
16
100
2009
187
145
26
2,753
514
1,658
932
6,215
%
3
2
–
44
8
27
16
100
2008
91
133
22
2,580
376
1,638
830
5,670
%
2
2
–
46
7
29
14
100
1 Sales by location of third party customer
2 Excluding deferred tax assets, defined benefit pension assets and derivative financial assets
No single customer accounted for 10% or more of Syngenta’s total sales.
Syngenta
Financial Report 2010
2009
Operational efficiency cash costs of US$98 million included
US$15 million for site closure costs in NAFTA, US$18 million for
further outsourcing of information systems and US$55 million for
the global back office operations project across Crop Protection
and Seeds.
53
Integration and acquisition costs of US$28 million related mainly to the
Goldsmith and Yoder acquisitions made in 2008 and to the continued
integration and synergy program of the Fischer group.
Non-cash restructuring and impairment costs included US$17 million
of reversal of inventory step-up related mainly to the Goldsmith
acquisition, US$16 million of available-for-sale financial asset
impairments and US$16 million of fixed asset write-offs. Divestment
and other non-cash restructuring gains included US$9 million related
to the sale of an available-for-sale financial asset, US$10 million from
the recognition of a reimbursement receivable for a product right
impairment and US$7 million of negative goodwill realized on the
Goldsmith acquisition.
7. Income taxes
Income before taxes from continuing operations for the years ended
December 31, 2010 and 2009 consists of the following:
(US$ million)
Switzerland
Foreign
Total income before taxes and non-
controlling interests
2010
587
1,090
2009a
1,113
581
1,677
1,694
Income tax (expense)/benefit on income from continuing operations
for the years ended December 31, 2010 and 2009 consists of
the following:
(US$ million)
Current income tax (expense)
Switzerland
Foreign
Total current income tax (expense)
Deferred income tax (expense)/benefit
Switzerland
Foreign
Total deferred income tax (expense)/benefit
Total income tax (expense)
Switzerland
Foreign
Total income tax (expense)
2010
2009a
(87)
(200)
(287)
(38)
50
12
(125)
(150)
(275)
(32)
(160)
(192)
(173)
82
(91)
(205)
(78)
(283)
a After effect of accounting policy change for post-employment benefits described in Note 2
6. Restructuring and impairment
Restructuring and impairment for the years ended December 31, 2010
and 2009 consists of the following:
(US$ million)
Cash costs
Operational efficiency programs:
Charged to provisions
Expensed as incurred
Integration and acquisition costs:
Charged to provisions
Expensed as incurred
Other restructuring programs:
Charged to provisions
Expensed as incurred
Non-cash restructuring and impairment costs
2010
2009
48
53
–
19
3
11
63
22
76
3
25
–
–
49
Divestment and other non-cash
restructuring gains
Total restructuring and impairment1
(19)
178
(26)
149
1 US$18 million (2009: US$17 million) is included within cost of goods sold and US$1 million (2009:
US$2 million) is included within income/(loss) from associates and joint ventures
2010
During 2010, charges under the Operational Efficiency restructuring
projects included US$54 million for the continuing standardization and
consolidation of global back office operations across Crop Protection
and Seeds and US$12 million for further outsourcing of information
systems. Further operational efficiency charges included US$14 million
largely to recognize synergies across the Flowers sites in the Seeds
business, US$10 million for reorganizations in the Crop Protection
businesses in Western Europe, US$8 million for restructuring at
production and distribution sites in France and the US and
US$3 million of other costs. Integration and acquisition costs of
US$19 million were charged in relation to the 2010 acquisition of
Maribo Seeds and for continuing integration relating to the earlier
acquisitions of the Monsanto sunflower business, Goldsmith, Yoder
and Pybas and Synergene.
Other restructuring costs of US$14 million were charged largely
for preliminary costs relating to the project to integrate the global
commercial operations of Crop Protection and Seeds.
Non-cash restructuring costs include US$18 million of reversal of
inventory step-up relating to the acquisitions of Goldsmith in the US
and Europe, the Monsanto sunflower business and the Pybas and
Synergene lettuce companies, as well as US$3 million of other costs.
Impairment costs include US$12 million of impairment of a site
disposal receivable due to a decrease in expected proceeds from
redevelopment, US$10 million for the impairment of a Crop Protection
supply agreement, US$9 million of impairments of available-for-sale
financial assets, US$4 million of impairment in the Professional
Products market of the Crop Protection business, US$4 million of
impairment of a site in the UK and other small impairments totaling
US$3 million.
Divestment gains of US$19 million were recognized on derecognition
of the investment in the Greenleaf joint venture. As described in Note 3,
Syngenta acquired the remaining 50% equity interest in Greenleaf
during 2010.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
54 7. Income taxes continued
The components of current income tax (expense) on income from
continuing operations for the years ended December 31, 2010 and
2009 are:
(US$ million)
The components of deferred income tax (expense)/benefit on income
from continuing operations for the years ended December 31, 2010
and 2009 are:
(US$ million)
Current tax (expense) relating to current years
Adjustments to current tax for prior periods
Benefit of previously unrecognized tax losses
Total current income tax (expense)
2010
(275)
(19)
7
(287)
Origination and reversal of temporary differences
2009
(209)
3
14
Changes in tax rates or legislation
Benefit of previously unrecognized deferred
tax assets
Non recognition of deferred tax assets
(192)
Total deferred income tax (expense)/benefit
2010
(67)
20
88
(29)
12
2009a
(137)
2
44
–
(91)
Income tax relating to OCI for the years ended December 31, 2010 and 2009 is as follows:
a After effect of accounting policy change for post-employment benefits described in Note 2
(US$ million)
Actuarial gains/(losses)
Available-for-sale financial assets
Cash flow and net investment hedges
Foreign currency translation effects
Total
Pre-tax
50
4
120
146
320
2010
Tax
(17)
(1)
(46)
27
(37)
Post-tax
Pre-tax
33
3
74
173
283
(98)
(18)
72
260
216
The following tax was (charged)/credited to shareholders’ equity for the years ended December 31, 2010 and 2009:
(US$ million)
Current tax 1
Deferred tax 1
Total income tax (charged)/credited to equity
1 Current and deferred tax related to share based payments
2009a b
Tax
32
1
(16)
49
66
Post-tax
(66)
(17)
56
309
282
2010
2009
–
(1)
(1)
6
10
16
Analysis of tax rate
The table below represents the main elements causing Syngenta’s effective tax rate to differ from the statutory tax rate. Syngenta’s statutory rate
consists of the domestic Swiss tax rate. Syngenta applies the domestic Swiss tax rate as it is more meaningful than using the weighted average
tax rate.
The main elements contributing to the difference between Syngenta’s applicable statutory tax rate and the effective tax rate on income from
continuing operations for the years ended December 31, 2010 and 2009 are:
Statutory tax rate
Effect of income taxed at different rates
Tax on share based payments
Effect of other disallowed expenditures and income not subject to tax
Effect of changes in tax rates and laws on previously recognized deferred tax assets
Effect of recognition of previously unrecognized deferred tax assets on tax losses
Effect of recognition of previously unrecognized deferred tax assets
Effect of non-recognition of deferred tax assets
Changes in prior year estimates and other items
Effective tax rate
a After effect of accounting policy change for post-employment benefits described in Note 2
b After reclassification of income taxes in OCI described in Note 2
2010
%
23
(3)
1
(1)
(1)
(1)
(5)
1
2
16
2009
%
23
(4)
1
(3)
–
(3)
–
1
2
17
Syngenta
Financial Report 2010
The movements in deferred tax assets and liabilities during the year ended December 31, 2010 were as follows:
55
2010 (US$ million)
Assets associated with:
Inventories
Accounts receivable
Pensions and employee costs
Provisions
Unused tax losses
Financial instruments, including derivatives
Other
Deferred tax assets
Liabilities associated with:
Property, plant and equipment
Intangible assets
Inventories
Financial instruments, including derivatives
Other provisions and accruals
Other
Deferred tax liabilities
Net deferred tax asset/(liability)
January 1
Recognized
in net
income
Recognized
in equity & OCI
Currency
translation effects
Other movements
& acquisitions
December 31
375
107
202
221
42
33
59
1,039
(284)
(262)
(141)
(64)
(188)
(41)
(980)
59
45
(10)
(55)
(13)
(7)
(7)
7
(40)
(13)
(8)
18
17
(13)
51
52
12
2
–
(15)
–
–
(12)
–
(25)
–
–
–
(3)
–
13
10
(15)
–
5
(5)
2
3
–
3
8
(4)
(11)
(9)
(2)
(16)
–
(42)
(34)
27
44
–
24
8
5
5
449
146
127
234
46
19
74
113
1,095
(1)
15
(1)
(4)
(38)
(95)
(124)
(11)
(302)
(266)
(133)
(56)
(255)
(72)
(1,084)
11
The movements in deferred tax assets and liabilities during the year ended December 31, 2009 were as follows:
2009 (US$ million)a
Assets associated with:
Inventories
Accounts receivable
Pensions and employee costs
Provisions
Unused tax losses
Financial instruments, including derivatives
Other
Deferred tax assets
Liabilities associated with:
Property, plant and equipment
Intangible assets
Inventories
Financial instruments, including derivatives
Other provisions and accruals
Other
Deferred tax liabilities
Net deferred tax asset/(liability)
January 1
Recognized
in net
income
Recognized
in equity & OCI
Currency translation
effects
Other movements &
acquisitions
December 31
342
74
179
219
30
46
57
947
(236)
(327)
(66)
(53)
(111)
(41)
(834)
113
(7)
17
(20)
–
–
(4)
5
(9)
(33)
82
(56)
(8)
(82)
15
(82)
(91)
37
–
42
–
–
(7)
–
72
–
–
–
(3)
–
–
(3)
69
2
16
1
2
12
–
2
35
(10)
(2)
(10)
–
5
(12)
(29)
6
1
–
–
–
–
(2)
(5)
(6)
(5)
(15)
(9)
–
–
(3)
(32)
(38)
375
107
202
221
42
33
59
1,039
(284)
(262)
(141)
(64)
(188)
(41)
(980)
59
a After effect of accounting policy change for post-employment benefits described in Note 2
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
56 7. Income taxes continued
The deferred tax assets and liabilities at December 31, 2010, 2009 and 2008 reconcile to the amounts presented in the consolidated balance
sheet as follows:
(US$ million)
Deferred tax assets
Adjustment to offset deferred tax assets and liabilities1
Adjusted deferred tax assets
(US$ million)
Deferred tax liabilities
Adjustment to offset deferred tax assets and liabilities1
Adjusted deferred tax liabilities
2010
1,095
(271)
824
2010
(1,084)
271
(813)
2009a
1,039
(292)
747
2009a
(980)
292
(688)
2008a
947
(326)
621
2008a
(834)
326
(508)
1 Deferred tax assets and liabilities relating to income taxes levied by the same taxation authority on the same taxable entity or on entities which intend to settle current tax assets and liabilities on a net basis
or to realize the assets and settle the liabilities simultaneously are offset for presentation on the face of the consolidated balance sheet where a legal right of set-off exists
a After effect of accounting policy change for post-employment benefits described in Note 2
The gross value at December 31, 2010, 2009 and 2008 of unused
tax loss carry forwards for which no deferred tax asset has been
recognized, by expiration date, is as follows:
(US$ million)
One year
Two years
Three years
Four years
Five years
More than five years
No expiry
Total
2010
2009
2008
7
–
2
14
23
407
8
461
24
9
20
13
19
694
41
820
7
7
23
4
18
537
61
657
The above losses consist mainly of US state tax loss carry forwards.
The applicable tax rate for these US state tax carry forwards is 5% of
the gross amounts.
Deferred tax assets, other than those related to unused tax losses, are
not subject to expiry.
A deferred tax asset or liability has not been recognized at December
31, 2010, 2009 and 2008 on the following items:
8. Earnings per share
Basic earnings per share amounts are calculated by dividing net
income for the year attributable to ordinary shareholders of Syngenta
AG by the weighted average number of ordinary shares outstanding
during the year.
Diluted earnings per share amounts are calculated by dividing the net
income attributable to ordinary shareholders of Syngenta AG by the
sum of the weighted average number of ordinary shares outstanding
during the year plus the weighted average number of ordinary shares
that would be issued on the conversion of all the dilutive potential
ordinary shares into ordinary shares.
Treasury shares are deducted from total shares in issue for the
purposes of calculating earnings per share.
The calculation of diluted earnings per share for the year ended
December 31, 2010 excluded 373,365 (2009: 226,897) of Syngenta
AG shares and options granted to employees, as their inclusion would
have been antidilutive.
(US$ million, except number of shares)
2010
2009a
Net income attributable to Syngenta AG
shareholders
1,397
1,408
2010
2009
2008
Weighted average number of shares
Weighted average number of shares – basic
92,687,903 93,154,537
238
508
524
Adjustments for dilutive potential
ordinary shares:
(US$ million)
Temporary differences for which no
deferred tax assets have been
recognized
Temporary differences associated
with investments in subsidiaries for
which deferred tax liabilities have
not been recognized
There are no income tax consequences for Syngenta of paying a
dividend to its shareholders.
620
516
158
Grants of options over Syngenta AG shares
under employee share participation plans
417,807
478,964
Grants of Syngenta AG shares under
employee share participation plans
Weighted average number of shares –
diluted
119,593
126,695
93,225,303 93,760,196
a After effect of accounting policy change for post-employment benefits described in Note 2
Syngenta
Financial Report 2010
9. Trade and other accounts receivable
Trade and other accounts receivable at December 31, 2010, 2009 and 2008 are as follows:
(US$ million)
Trade accounts receivable, gross
Provision for doubtful receivables
Total trade receivables, net
2010
2,814
(260)
2,554
2009
2,857
(351)
2,506
Movements in provisions for doubtful trade receivables for the years ended December 31, 2010, 2009 and 2008 were as follows:
(US$ million)
January 1
Amounts credited/(charged) to income
Amounts written off
Currency translation effects and other
December 31
2010
(351)
43
54
(6)
(260)
2009
(357)
(12)
58
(40)
(351)
57
2008
2,668
(357)
2,311
2008
(343)
(90)
30
46
(357)
The ages of trade and other receivables that were past due at December 31, 2010, 2009 and 2008 but not impaired, were as follows:
2010 (US$ million)
Trade accounts receivable, gross
Other receivables
Provision for doubtful receivables
Total
2009 (US$ million)
Trade accounts receivable, gross
Other receivables
Provision for doubtful receivables
Total
2008 (US$ million)
Trade accounts receivable, gross
Other receivables
Provision for doubtful receivables
Total
Total
past due
405
230
(194)
441
Total
past due
502
162
(224)
440
Total
past due
559
258
(222)
595
0–90
days
149
91
(17)
223
0–90
days
228
73
(14)
287
0–90
days
319
189
(32)
476
90–180
days
More than
180 days
43
46
(14)
75
213
93
(163)
143
90–180
days
More than
180 days
41
23
(14)
50
233
66
(196)
103
90–180
days
More than
180 days
52
33
(20)
65
188
36
(170)
54
At the reporting date there are no indications that debtors whose
accounts are neither overdue nor impaired will not meet their
payment obligations. At December 31, 2010, original credit terms
on US$127 million (2009: US$71 million; 2008: US$98 million) of
receivables had been rescheduled.
The amount of trade receivables transferred in full recourse factoring
arrangements, but not derecognized is US$98 million (2009:
US$102 million; 2008: US$76 million). The related liabilities are
disclosed in Note 16.
loss at December 31, 2010 was US$57 million (2009: US$72 million;
2008: US$103 million). These amounts represent Syngenta’s
maximum exposure to credit risk relating to these types of trade
receivables. Amounts charged to profit or loss in relation to these trade
receivables for the years ended December 31, 2010, 2009 and 2008
were not material.
Other accounts receivable of US$626 million (2009: US$558 million;
2008: US$479 million) include income taxes recoverable of
US$70 million (2009: US$80 million; 2008: US$33 million).
The fair value of trade receivables containing embedded exchange rate
options that Syngenta has designated as at fair value through profit or
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
58 10. Other current assets
Other current assets at December 31, 2010, 2009 and 2008 are as
follows:
(US$ million)
Prepaid expenses
Other
Total
2010
175
48
223
2009
167
33
200
2008
156
34
190
Reversals of inventory provisions arise in the normal course of business
when actual outcomes are more favorable than assumptions made in
prior periods about Syngenta’s future ability to sell inventories subject
to risks of degradation and obsolescence, such as germination of
seeds.
Movements in biological assets for the years ended December 31,
2010, 2009 and 2008 were as follows. These include amounts
classified as other non-current assets.
(US$ million)
January 1
Changes in fair value
2008
Sales
Currency translation effects
and other
December 31
2010
36
180
(178)
(1)
37
2009
28
138
(134)
4
36
2008
25
126
(127)
4
28
Quantities of biological assets in inventories at December 31, 2010,
2009 and 2008 are:
(millions of plants)
Plants
Cuttings
(hectares cultivated)
Growing crops
2010
2009
2008
84
591
95
82
481
12
90
364
–
11. Inventories
Inventories at December 31, 2010, 2009 and 2008 are as follows:
(US$ million)
Raw materials and consumables1
Biological assets
Work in progress1
Finished products1
Total
2010
710
34
828
2,272
3,844
2009
841
36
809
2,236
3,922
1,003
28
536
1,889
3,456
1 The classification of inventories between raw materials and consumables, work in progress and
finished products has been changed from prior years to improve consistency in the use of the
classifications globally. Corresponding amounts have been reclassified to conform to the current
year presentation
(US$ million)
2010
2009
2008
Cost of inventories against which
provisions have been made
Inventories carried at fair value less
costs to sell
718
408
526
264
449
206
Movements in provisions for inventories for the years ended December
31, 2010, 2009 and 2008 were as follows:
(US$ million)
January 1
Additions charged to income
Reversals of inventory provisions
Amounts utilized on disposal of
related inventories
Currency translation effects and
other
December 31
2010
(298)
(245)
30
2009
(271)
(220)
30
105
98
64
(344)
65
(298)
2008
(261)
(140)
31
90
9
(271)
Syngenta
Financial Report 2010
12. Property, plant and equipment
Movements in property, plant and equipment for the year ended December 31, 2010 were as follows:
59
2010 (US$ million)
Cost
January 1
Additions
Disposals
Transfers between categories
Currency translation effects and other
December 31
Accumulated depreciation and impairment losses
January 1
Depreciation charge
Impairment losses
Depreciation on disposals
Currency translation effects and other
December 31
Net book value – December 31
Insured value – December 31
Land
Buildings
Machinery
and equipment
Assets
under construction
133
3
–
11
6
153
–
–
–
–
–
–
153
1,646
3,532
30
(24)
50
38
202
(70)
332
61
1,740
4,057
(871)
(57)
(4)
20
(20)
(932)
808
(2,179)
(216)
(1)
60
(27)
(2,363)
1,694
477
212
–
(393)
13
309
–
–
–
–
–
–
309
Total
5,788
447
(94)
–
118
6,259
(3,050)
(273)
(5)
80
(47)
(3,295)
2,964
7,530
Additions to property, plant and equipment of US$447 million (2009:
US$709 million) comprise US$396 million (2009: US$652 million)
of cash purchases, US$11 million (2009: US$28 million; 2008:
US$14 million) due to business combinations and US$40 million
(2009: US$29 million) of other additions, including initial recognition
of finance leases and capitalized borrowing costs.
The net book value of property, plant and equipment accounted for
as finance lease assets at December 31, 2010 was US$160 million
(2009: US$101 million; 2008: US$47 million) of which US$50 million
(2009: US$60 million; 2008: US$47 million) is classified as
Machinery and equipment and US$110 million (2009: US$41 million;
2008: US$nil) is classified as Assets under construction.
Movements in property, plant and equipment for the year ended December 31, 2009 were as follows:
2009 (US$ million)
Cost
January 1
Additions
Disposals
Transfers between categories
Currency translation effects and other
December 31
Accumulated depreciation and impairment losses
January 1
Depreciation charge
Impairment losses
Depreciation on disposals
Currency translation effects and other
December 31
Net book value – December 31
Insured value – December 31
Land
Buildings
Machinery
and equipment
Assets under
construction
105
21
(1)
9
(1)
1,478
3,213
42
(19)
55
90
212
(154)
133
128
133
1,646
3,532
–
–
–
–
–
–
133
(781)
(2,048)
(55)
(4)
14
(45)
(871)
775
(188)
(2)
145
(86)
(2,179)
1,353
221
434
–
(197)
19
477
–
–
–
–
–
–
477
Total
5,017
709
(174)
–
236
5,788
(2,829)
(243)
(6)
159
(131)
(3,050)
2,738
6,585
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
60 13. Intangible assets
Movements in intangible assets for the year ended December 31, 2010 were as follows:
2010 (US$ million)
Cost
January 1
Additions from business combinations
Other additions
Disposals
Currency translation effects
December 31
Accumulated amortization and impairment losses
January 1
Amortization charge
Impairment losses
Disposals
Currency translation effects
December 31
Net book value, December 31
Goodwill
Product
rights
Trademarks
Patents
Software
Other
intangibles
1,617
3,082
51
–
(4)
13
–
44
(29)
100
1,677
3,197
(322)
–
(5)
2
(4)
(1,730)
(160)
1
23
(67)
(329)
1,348
(1,933)
1,264
82
11
–
–
3
96
(27)
(5)
–
–
(1)
(33)
63
84
–
2
–
5
91
(43)
(4)
–
–
(3)
(50)
41
313
–
39
–
32
384
(187)
(34)
(1)
–
(18)
(240)
144
Total
5,675
91
89
(135)
163
5,883
497
29
4
(102)
10
438
(264)
(2,573)
(32)
(10)
99
(4)
(211)
227
(235)
(15)
124
(97)
(2,796)
3,087
Other additions in 2010 and 2009 include intangible assets arising
from license agreements involving non-monetary exchanges or where
the cash flows related to the acquisition of the asset are payable
over several years. Cash paid to acquire intangible assets was
US$118 million (2009: US$97 million).
Amortization is included partly within cost of goods sold and partly
within general and administrative expenses. Other intangibles consist
principally of values assigned to leases, supply contracts and customer
relationships acquired in business combinations.
Movements in intangible assets for the year ended December 31, 2009 were as follows:
2009 (US$ million)
Cost
January 1
Additions from business combinations
Other additions
Currency translation effects and reclassifications
December 31
Accumulated amortization and impairment losses
January 1
Amortization charge
Impairment losses
Currency translation effects and reclassifications
December 31
Net book value, December 31
Goodwill
Product
rights
Trademarks
Patents
Software
Other
intangibles
1,559
2,956
44
–
14
32
55
39
1,617
3,082
(318)
–
–
(4)
(322)
1,295
(1,552)
(152)
(11)
(15)
(1,730)
1,352
58
16
–
8
82
(21)
(5)
–
(1)
(27)
55
70
(11)
–
25
84
(37)
(7)
–
1
(43)
41
266
–
37
10
313
(154)
(27)
–
(6)
(187)
126
486
30
5
(24)
497
(230)
(27)
–
(7)
(264)
233
Total
5,395
111
97
72
5,675
(2,312)
(218)
(11)
(32)
(2,573)
3,102
Syngenta
Financial Report 2010
14. Other non-current financial assets
Other non-current financial assets at December 31, 2010, 2009 and
2008 are as follows:
(US$ million)
Equity securities available-for-sale
Other non-current receivables
Defined benefit pension asset
Investments in associates and
joint ventures
Total
2010
43
204
147
124
518
2009
51
209
25
115
400
2008
117
148
26
134
425
None of Syngenta’s investments in associates and joint ventures are
publicly quoted. At December 31, 2010, these investments consist
mainly of US$59 million (2009: US$49 million; 2008: US$66 million)
for a 50% ownership of CIMO Compagnie Industrielle de Monthey SA,
Switzerland, US$35 million (2009: US$35 million; 2008: US$36 million)
for the 49% ownership of Sanbei Seeds Co. Ltd., China and
US$25 million (2009: US$26 million; 2008: US$23 million) for a 40%
ownership of Maisadour Semences SA, France. Income statement
effects are not significant for the above associates and joint ventures.
Syngenta’s 2010 share of income from associates and joint ventures
relates mainly to Greenleaf Genetics LLC, which became a Syngenta
subsidiary on November 8, 2010.
Changes in equity securities classified as available-for-sale for the years
ended December 31, 2010, 2009 and 2008 were as follows:
61
(US$ million)
January 1
Changes in fair value
Disposals
Impairments
Additions and currency translation
effects
December 31
2010
51
4
(11)
(9)
8
43
2009
117
(18)
(50)
(7)
9
51
2008
131
9
(4)
(37)
18
117
15. Trade accounts payable
The contractual maturities of trade accounts payable at December 31,
2010, 2009 and 2008 are as follows:
(US$ million)
2010
2009
2008
Total
2,590
2,468
2,240
0–90
days
1,645
1,476
1,612
90–180
days
180 days–
1 year
274
174
59
671
818
569
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
62 16. Current financial debt
Current financial debt at December 31, 2010, 2009 and 2008 is as follows:
(US$ million)
Bank and other financial debt
Receivables factored with recourse
Current portion of financial debt (Note 18)
Total
The table below shows additional information related to short-term borrowing at December 31, 2010:
2010
218
98
676
992
2009
176
102
3
281
2008
112
76
23
211
2010 (US$ million)
Bank and other financial debt
Receivables factored with recourse
Current portion of financial debt (Note 18)
Total
2009
2008
Amount
outstanding at
December 31,
2010
Weighted
average
interest on
outstanding
balance
Average
outstanding
amount for the
year
Weighted
average
interest on
average
outstanding
amount
Maximum
month-end
amount during
the year
218
98
676
992
2.1%
6.8%
4.1%
3.9%
1.8%
4.4%
231
83
233
547
1.2%
6.8%
4.1%
3.3%
514
111
698
Syngenta has a committed, revolving, multi-currency, syndicated
credit facility of US$1,200 million (the “Credit Facility”), which matures
in 2013.
17. Other current liabilities
Other current liabilities at December 31, 2010, 2009 and 2008 consist
of the following:
As of December 31, 2010, Syngenta has no borrowings outstanding
under this facility. The Credit Facility provides that the interest rate is
based on either LIBOR or EURIBOR, depending upon the currency
of the underlying borrowing, plus a margin and mandatory costs.
In addition to interest payments, Syngenta is obligated to pay certain
variable commitment fees based upon its long-term credit rating
ranging from 0.03% to 0.06% per annum of the unused amount
throughout the term of the facility.
The contractual maturities of current financial debt at December 31,
2010, 2009 and 2008 are as follows:
(US$ million)
Accrued short-term employee
benefits
Taxes other than income taxes
Accrued interest payable
Accrued utility costs
Social security and pension
contributions
Other payables
(US$ million)
2010
2009
2008
Total
992
281
211
0–90
days
207
130
69
Total
11
12
12
774
139
130
90–180
days
180 days–
1 year
Other accrued expenses
2010
288
72
55
48
57
165
161
846
2009
263
88
57
51
61
123
184
827
2008
322
72
41
42
46
146
165
834
The maturities of other current liabilities are as follows. For liabilities
without a contractual maturity date, the analysis represents estimated
timing of cash outflow.
(US$ million)
2010
2009
2008
Total
846
827
834
0–90
days
589
484
505
90–180
days
180 days–
1 year
157
180
246
100
163
83
Syngenta
Financial Report 2010
19. Provisions
Provisions at December 31, 2010, 2009 and 2008 are as follows:
63
18. Financial debt and other non-current liabilities
Financial debt and other non-current liabilities at December 31, 2010,
2009 and 2008 are as follows:
(US$ million)
4.125% Eurobond 2011
4.000% Eurobond 2014
4.125% Eurobond 2015
US private placement notes
3.375% CHF domestic bond
2013
3.500% CHF domestic bond
2012
2010
667
673
669
270
531
399
2009
719
714
718
261
482
361
2008
702
–
699
274
469
352
Unsecured bond issues and US
private placement notes
3,209
3,255
2,496
Liabilities to banks and other
financial institutions
Finance lease obligations
Total financial debt (including
current portion)
Less: current portion of financial
debt (Note 16)
Non-current derivative financial
liabilities
Other non-current liabilities and
deferred income
Total
4
48
16
35
14
37
3,261
3,306
2,547
(676)
76
(3)
65
(23)
125
(US$ million)
Restructuring provisions
Employee benefits:
Pensions (Note 22)
Other post-retirement benefits
(Note 22)
Other long-term employee
benefits
Environmental provisions (Note 25)
Provisions for legal and product
liability settlements (Note 25)
Other provisions
Total
Current portion of:
Restructuring provisions
Employee benefits
Environmental provisions
Provisions for legal and product
liability settlements
Other provisions
2010
57
203
97
60
393
193
109
2009a
44
414
83
59
405
196
129
2008a
102
351
94
50
432
199
129
1,112
1,330
1,357
40
24
63
25
76
26
76
48
14
50
228
884
1,112
214
1,116
1,330
70
91
59
15
10
245
1,112
1,357
125
2,786
159
3,527
220
Total current provisions
2,869
Total non-current provisions
Total
Other non-current liabilities and deferred income relate to license
agreements with several counterparties. Related cash flows of
US$9 million (2009: US$45 million; 2008: US$76 million) are payable
between one and four years and US$116 million of deferred income at
December 31, 2010 (2009: US$114 million; 2008: US$144 million) will
be recognized in income as related licensed product sales occur.
The weighted average interest rate on non-current bank and other
financial debt was 4.1% per annum (2009: 4.9% per annum; 2008:
5.3% per annum).
The weighted average interest rate on the combined current and
non-current bank and other financial debt was 4.0% per annum
(2009: 4.2% per annum; 2008: 5.1% per annum). The weighted
average interest rate includes the cost of financing emerging
market borrowings.
Interest paid on non-current financial debt was US$121 million
(2009: US$98 million). All non-current debt ranks equally.
During 2009, Syngenta issued a Euro denominated bond with principal
amount of EUR 500 million. The bond has a maturity of June 2014 and
a coupon rate of 4.00%.
a After effect of accounting policy change for post-employment benefits described in Note 2
The timing of payment in respect of non-current provisions is, with
few exceptions, not contractually fixed and cannot be estimated with
certainty. Key assumptions and sources of estimation uncertainty
are discussed in Note 2.
In some cases Syngenta will seek reimbursement, most commonly in
relation to environmental issues where contamination may have been
caused when a manufacturing site was under previous ownership.
Syngenta has recognized a receivable for the reimbursement when
recovery is judged to be virtually certain. At December 31, 2010,
Syngenta recognized US$38 million (2009: US$41 million; 2008:
US$40 million) in “Other non-current financial assets” in respect of
expected reimbursements.
Significant legal proceedings are discussed in Note 25 below.
With regards to those proceedings other than those settled in 2010,
and where Syngenta is defendant in the case and subject to potential
financial damages, there has been no material change in Syngenta’s
view of the probable outcome during 2010. There can, however, be
no guarantee that the ultimate outcome will be in line with Syngenta’s
current view.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
64 19. Provisions continued
Movements in provisions during the year ended December 31, 2010 were as follows:
(US$ million)
Restructuring provisions:
Employee termination costs
Other third party costs
Employee benefits:
Pensions
Other post-retirement benefits
Other long-term employee benefits
Environmental provisions
Provisions for legal and product liability settlements
Other provisions
Total
January 1
Charged to
income
Release of
provisions
credited to
income
Payments
Reclassi-
fications
Actuarial
(gains)/losses
Currency
translation
effects December 31
28
16
414
83
59
405
196
129
45
9
82
9
6
36
59
27
(3)
–
(7)
–
(1)
(30)
(42)
(37)
(31)
(7)
–
–
(335)
109
(12)
(8)
(38)
(26)
(11)
1
3
–
3
(1)
115
–
–
(66)
16
–
–
–
–
(50)
–
–
6
–
1
20
3
2
32
39
18
203
97
60
393
193
109
1,112
1,330
273
(120)
(468)
Provisions for employee termination costs include severance, pension and other costs directly related to these employees.
Provisions for other third party costs principally include payments for early termination of contracts with third parties related to
redundant activities.
Other provisions mainly comprise provisions for long-term contractual obligations under license agreements.
20. Share capital
Each Syngenta ordinary share carries one vote at the shareholders’ meetings of Syngenta. Voting rights may be exercised only after a
shareholder has been registered in Syngenta’s share register. Registration as a shareholder with voting rights is subject to certain declarations on
the ownership of Syngenta shares. The number of ordinary shares of par value CHF 0.10 that were authorized, issued and outstanding at, and
the movements during the years ended December 31, 2010, 2009 and 2008, were as follows. The Board of Directors of Syngenta AG is
authorized to increase the share capital through issuance of a maximum of 9,459,985 ordinary shares. This authority expires on April 20, 2012.
(Millions of shares)
January 1
Cancellation of treasury shares
Share repurchases
Issue of ordinary shares under employee share purchase and option plans
December 31
2010
2009
Shares in
issue
Treasury
shares held
Shares in
issue
Treasury shares
held
94.6
–
–
–
94.6
(1.6)
–
(1.3)
0.5
(2.4)
97.0
(2.4)
–
–
94.6
(4.0)
2.4
(0.6)
0.6
(1.6)
At December 31, 2010 and 2009 Syngenta had no open options accounted for as equity instruments.
Syngenta
Financial Report 2010
65
21. Non-cash items included in income before taxes
The following table analyzes non-cash items included in income before
taxes for the years ended December 31, 2010 and 2009:
(US$ million)
2010
2009a
Depreciation, amortization and impairment of:
Property, plant and equipment (Note 12)
Intangible assets (Note 13)
Financial assets
Deferred revenue and gains
Gains on disposal of non-current assets
Charges in respect of share based compensation
Charges in respect of provisions (Note 19)
Income in respect of reimbursements of provisions
Net financial expenses
Gains on hedges reported in operating income
Share of net loss/(gain) from associates
Total
278
250
21
(36)
(20)
66
153
–
141
(23)
(25)
805
249
229
8
(47)
(23)
64
106
(15)
122
(81)
3
615
a After effect of accounting policy change for post-employment benefits
22. Post-employment benefits
Syngenta has, apart from legally required social security arrangements,
numerous independent pension plans, which are either “defined
contribution” plans where the company contribution and resulting
benefit costs are a set percentage of employees’ pay or “defined
benefit” plans where benefits are based on employees’ length of
service and pensionable pay. Syngenta’s contributions to defined
contribution plans were US$26 million for the year ended December
31, 2010 (2009: US$33 million; 2008: US$25 million). A receivable of
US$20 million (2009: US$16 million; 2008: nil) has been recognized,
representing Syngenta’s share of excess contributions paid in prior
years to its defined contribution plan in Brazil, following regulatory
changes in 2009 that confirmed Syngenta’s right to reduce its future
contributions to the plan by this amount. Approximately 43% of
employees are members of defined benefit plans and a significant
proportion of these are members of both defined benefit and defined
contribution plans. All of the major plans are funded through legally
separate trustee administered funds. The cash funding of the plans,
which may from time to time involve special payments, is designed to
ensure that present and future contributions should be sufficient to
meet future liabilities. Syngenta’s main defined benefit pension plans
are in the UK, Switzerland and the USA.
The defined benefit section of Syngenta’s UK pension fund was
closed to new members effective January 1, 2002, but the majority
of members still have defined benefit rights based on their final
pensionable pay. At retirement date, members have the right to take
up to 25% of the value of their benefits as a lump sum. The balance is
paid as an annuity. The trustee of the fund is required by UK law and
the fund rules to increase pensions in payment and accrued deferred
pension rights each year by the lower of 5% and price inflation, as
measured by the UK Retail Price Index (RPI) or Consumer Price Index
(CPI), as applicable. Employer contributions must be agreed between
Syngenta and the trustee at each statutory valuation date, which
is at least every three years, and remain binding until re-assessed
in the following valuation. The solvency of the fund, defined as its
ability to pay benefits as they fall due, is guaranteed by the
sponsoring subsidiary, Syngenta Ltd. Syngenta AG has
irrevocably and unconditionally undertaken to ensure Syngenta Ltd.
will honor that guarantee.
Syngenta’s Swiss pension plan contains a cash balance benefit
formula, accounted for as a defined benefit plan. Employer
contributions are defined in the pension fund rules in terms of an age
related sliding scale of percentages of pay. Under Swiss law, Syngenta
AG guarantees the vested benefit amount as confirmed annually to
members. Interest may be added to member balances at the trustees’
discretion. At retirement date, members have the right to take their
retirement benefit as a lump sum, an annuity or part as a lump sum
with the balance converted to a fixed annuity at the rates defined in the
fund rules. The trustees may increase the annuity at their discretion
subject to the plan’s funded status including sufficient free funds as
determined according to Swiss statutory valuation rules.
Syngenta’s main US defined benefit pension plan was closed to new
members with effect from January 1, 2009. Employees joining after
that date join a defined contribution pension plan. The defined benefits
of existing members were not affected by this change. The defined
benefit plan offers members the choice of taking all their retirement
benefits, which are based on the average pay of the final ten years’
service, as a lump sum or as a fixed annuity at retirement date.
Employer contributions are made based on US pension funding
regulations, in the form of lump sums. In these financial statements, the
benefit obligation has been valued assuming that current employees
will take the lump sum option at normal retirement or leaving date.
Under current market conditions, this values the benefit obligation at a
higher amount than would result assuming the annuity option is taken.
The status of Syngenta’s defined benefit plans at December 31, 2010,
2009 and 2008 using actuarial assumptions determined in accordance
with IAS 19 is summarized below.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
66 22. Post-employment benefits continued
The following tables provide reconciliations of benefit obligations, plan assets and funded status of the defined benefit pension plans to the
amounts recognized in the consolidated balance sheet at December 31, 2010, 2009 and 2008:
(US$ million)
Benefit obligations
January 1
Current service cost
Employee contributions
Interest cost
Actuarial (gain)/loss
Benefit payments
Currency translation effects and other
December 31
Of which arising from:
Funded plans
Wholly unfunded plans
(US$ million)
Plan assets at fair value
At January 1
Actual return on plan assets
Employer contributions
Employee contributions
Benefit payments
Currency translation effects and other
December 31
Actual return on plan assets can be analyzed as follows:
(US$ million)
Expected return on plan assets
Actuarial gain/(loss)
Total
(US$ million)
Funded status
Unrecognized past service gain
Limitation on recognition of surplus due to uncertainty of obtaining future benefits
Net accrued benefit liability
Amounts recognized in the balance sheet:
Prepaid benefit costs (Note 14)
Accrued benefit liability
Net amount recognized
2010
2009
2008
4,714
3,882
4,713
87
32
211
191
(201)
82
5,116
4,969
147
73
35
211
469
(180)
224
93
26
195
(354)
(193)
(598)
4,714
3,882
4,565
149
3,742
140
2010
2009
2008
4,340
3,556
4,669
513
342
32
(201)
87
5,113
2010
221
292
513
2010
(3)
(21)
(38)
(62)
2010
147
(209)
(62)
570
148
35
(180)
211
(456)
140
26
(193)
(630)
4,340
3,556
2009
212
358
570
2009a
(374)
(24)
–
(398)
2009a
25
(423)
(398)
2008
222
(678)
(456)
2008a
(326)
(27)
–
(353)
2008a
26
(379)
353
Of the accrued benefit liability for pensions of US$209 million at December 31, 2010, US$203 million is included in Note 19 as pension
provisions and US$6 million as restructuring provisions (2009: US$414a million as pension and US$9 million as restructuring;
2008: US$351a million as pension and US$28 million as restructuring).
a After effect of accounting policy change for post-employment benefits described in Note 2
Syngenta
Financial Report 2010
Syngenta’s estimate of the benefit payments to be made in future
periods is given in the table below. Actual payments may differ from
those shown, because of future events, including members’ choice of
benefit options as described above.
(US$ million)
2011
2012
2013
2014
2015
Years 2016–2020
Total 2011–2020
234
238
260
272
284
1,592
2,880
Syngenta determines the expected long-term rate of return on pension
plan assets separately for each asset category held within each of the
major defined benefit pension funds that it sponsors. The rate of return
assumption for each fund is determined after taking into account the
investment performance benchmarks set by the governing body of the
pension fund. Both historical rates of return and future investment
outlook are considered.
67
Syngenta’s estimate of employer contributions to be paid to defined
benefit plans in 2011 is US$40 million. Actual payments could differ
materially from the above estimate if any new funding regulations
or laws are enacted or due to business and market conditions
during 2011.
In accordance with UK pension regulations, deficit recovery
contributions were agreed with the UK pension plan Trustee in the
March 2009 valuation at US$31 million per year to 2019. At the
balance sheet date US$100 million of these contributions have been
prepaid. Additional contingent contributions of up to US$16 million per
year will also be paid at three yearly intervals during this period if the
actual percentage return on the plan assets is less than the agreed
assumption. Actual percentage return on plan assets (in 2009 and
2010) has exceeded that contained within the agreement. The deficit
recovery contributions are due to be reviewed by the Trustees upon full
actuarial valuation in March 2012.
The expected long-term rates of return on the assets and the fair values of the assets and liabilities of the major defined benefit pension plans,
together with aggregated data for other defined benefit plans are as follows.
Expected rate of return used for
income statement (%)
Fair value at December 31,
(US$ million)
USA Switzerland
USA Other plans
Total
2010
Equities
Real estate
Bonds
Other assets
Cash and cash equivalents
Fair value of assets
Benefit obligation
Discount rate (%)
Funded status
2009
Equities
Real estate
Bonds
Other assets
Cash and cash equivalents
Fair value of assets
Benefit obligation
Discount rate (%)
Funded status
Switzerland
6.0
3.5
2.5
5.5
0.3
3.8
UK
7.1
–
5.3
6.2
0.5
6.3
Switzerland
6.0
3.5
2.5
5.5
1.8
4.0
UK
7.1
–
5.6
6.4
1.0
6.4
8.5
8.0
6.0
7.0
3.0
7.0
8.5
–
6.0
7.0
3.5
7.0
343
174
886
386
47
297
120
669
356
40
UK
833
–
632
714
167
UK
744
–
631
559
106
1,836
2,346
225
5,113
100
(1,736)
(2,328)
(666)
(386)
(5,116)
2.8
100
5.4
18
5.3
40
(161)
4.4
(3)
Expected rate of return used for
income statement (%)
Fair value at December 31,
(US$ million)
USA Switzerland
USA Other plans
Total
44
–
42
137
2
1,417
174
1,836
1,415
271
55
–
140
13
2
1,252
120
1,702
1,089
177
197
–
276
178
55
706
156
–
262
161
29
608
%
28
3
36
28
5
%
29
3
39
25
4
1,482
2,040
210
4,340
100
(1,458)
(2,284)
(596)
(376)
(4,714)
3.3
24
5.6
(244)
5.9
12
4.9
(374)
(166)
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
68 22. Post-employment benefits continued
Fair value at December 31,
(US$ million)
2008
Equities
Real estate
Bonds
Other assets
Cash and cash equivalents
Fair value of assets
Benefit obligation
Discount rate
Funded status
Switzerland
248
90
476
349
57
UK
589
–
459
552
31
1,220
1,631
USA Other plans
95
–
250
147
26
518
Total
973
90
1,318
1,059
116
%
27
3
37
30
3
41
–
133
11
2
187
3,556
100
(1,384)
(1,633)
(535)
(330)
(3,882)
3.5
(164)
6.2
(2)
6.1
(17)
(143)
5.2
(326)
The following table provides an analysis of the benefit costs recorded in the consolidated income statement for the defined benefit pension plans
for the years ended December 31, 2010 and 2009.
(US$ million)
Current service cost
Interest cost
Expected return on plan assets
Net periodic benefit cost
Amounts recognized in OCI were as follows for the years ended December 31, 2010 and 2009:
(US$ million)
Amounts recognized during the period:
Actuarial (gains)/losses
Funded surplus not recognized/(recognized) as an asset
Cumulative actuarial (gains)/losses recognized at December 31
2010
87
211
(221)
77
2009a
73
211
(212)
72
2010
2009a
(101)
35
111
–
1,019
1,103
The defined benefit obligation, plan assets, funded status, changes in actuarial assumptions, and experience adjustments compared to the
actuarial assumptions for the years ended December 31, 2006 to 2010 for pensions are as follows:
(US$ million)
Benefit obligation
Plan assets
Funded deficit
Changes in actuarial assumptions
Experience adjustments (increasing)/reducing plan liabilities
Experience adjustments on plan assets: actual returns greater/(less) than expected
Total
2010
(5,116)
5,113
(3)
(201)
11
292
102
2009
(4,714)
4,340
(374)
(537)
68
358
(111)
2008
(3,882)
3,556
(326)
412
(58)
(678)
(324)
2007
(4,713)
4,669
(44)
200
(82)
64
182
2006
(4,548)
4,249
(299)
22
(5)
49
66
The following tables give the weighted-average assumptions used to calculate the benefit cost and benefit obligation for defined benefit plans:
Weighted-average assumptions: benefit cost for the year ended December 31
Discount rate
Rate of increase in pensionable pay
Expected return on plan assets
Weighted-average assumptions: benefit obligation as at December 31
Discount rate
Rate of compensation increase
Mortality assumptions are discussed in Note 2 under “critical accounting estimates”.
a After effect of accounting policy change for post-employment benefits described in Note 2
2010
%
4.8
2.8
5.4
2009
%
4.9
2.8
2009
%
5.1
2.8
5.6
2008
%
5.2
2.8
2010
%
4.4
3.0
Syngenta
Financial Report 2010
23. Employee share participation plans
Employee and management share participation plans exist as follows.
All plans are equity-settled except where stated.
69
Syngenta Long-Term Incentive Plan (LTI)
The Syngenta Long-Term Incentive Plan provides selected executives
and key employees of Syngenta with the opportunity to obtain the right
to purchase shares of Syngenta. The grant of options for Syngenta
shares is at the discretion of the Compensation Committee, whose
members are appointed by the Board of Directors of Syngenta.
Other post-retirement benefits
Syngenta’s net liability for other post-retirement benefits at
December 31, 2010 was US$97 million (December 31, 2009:
US$83a million December 31, 2008: US$94a million), which comprised
a defined benefit obligation of US$211 million (2009: US$187 million;
2008: US$186 million), plan assets of US$114 million (2009:
US$102 million; 2008: US$87 million) and immaterial amounts of
unrecognized past service cost. Cumulative actuarial losses
recognized in OCI were US$117 million (2009: US$101a million; 2008:
US$114a million) and amounts recognized in OCI for the period were
losses of US$16 million (2009: US$13a million gain). Expense
recognized in the consolidated income statement, contributions to the
plan and benefit payments by the plan were not material for 2010
and 2009.
The assumed healthcare cost trend rate at December 31, 2010 was
7.5%, decreasing in each successive year from 2010 onwards, to
reach an ultimate rate of 5.0% in 2017 (December 31, 2009: 8.0%
decreasing to 5.0% in 2016; December 31, 2008: 8.0% decreasing
to 5.0% in 2015).
a After effect of accounting policy change for post-employment benefits
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
70 23. Employee share participation plans continued
The following table sets out share option activity under this plan during 2009 and 2010, including the equivalent American Depositary Shares
(ADS) that are offered to Syngenta employees in the USA, and summarizes information about share options outstanding at December 31, 2010
and 2009.
Outstanding at
January 1
Exercise price
(CHF)
Granted
Exercised
Forfeited
(thousands of options)
Outstanding at
December 31
Exercisable
Remaining
contractual life
(years)
Year ended December 31, 2009
Awarded in 2001
Awarded in 2002
Awarded in 2002
Awarded in 2002
Awarded in 2003
Awarded in 2003
Awarded in 2004
Awarded in 2004
Awarded in 2005
Awarded in 2006
Awarded in 2007
Awarded in 2008
Awarded in 2009
76.5
83.7
98.0
98.0
59.7
59.7
89.3
89.3
127.4
185.0
226.7
301.5
233.4
17.9
11.0
42.5
19.5
70.0
56.5
153.5
84.2
207.0
254.2
227.3
231.3
–
Total for year ended December 31, 2009
1,374.9
Year ended December 31, 2010
Awarded in 2001
Awarded in 2002
Awarded in 2002
Awarded in 2002
Awarded in 2003
Awarded in 2003
Awarded in 2004
Awarded in 2004
Awarded in 2005
Awarded in 2006
Awarded in 2007
Awarded in 2008
Awarded in 2009
Awarded in 2010
76.5
83.7
98.0
98.0
59.7
59.7
89.3
89.3
127.4
185.0
226.7
301.5
233.4
283.7
9.2
2.2
23.6
17.5
54.5
41.1
110.7
58.1
135.2
180.5
215.3
224.8
377.4
–
Total for year ended December 31, 2010
1,450.1
–
–
–
–
–
–
–
–
–
–
–
–
382.5
382.5
–
–
–
–
–
–
–
–
–
–
–
–
–
167.3
167.3
(8.7)
(8.8)
(18.9)
(2.0)
(15.5)
(15.4)
(41.4)
(26.1)
(71.2)
(73.0)
(5.2)
–
–
–
–
–
–
–
–
(1.4)
–
(0.6)
(0.7)
(6.8)
(6.5)
(5.1)
9.2
2.2
23.6
17.5
54.5
41.1
110.7
58.1
135.2
180.5
215.3
224.8
377.4
9.2
2.2
23.6
17.5
54.5
41.1
110.7
58.1
135.2
180.5
14.8
13.3
6.0
(286.2)
(21.1)
1,450.1
666.9
(9.2)
(0.8)
(7.8)
(8.2)
(16.4)
(13.4)
(26.9)
(8.5)
(43.6)
(54.5)
(66.3)
(1.2)
(3.1)
–
(259.9)
–
–
–
–
(0.5)
–
(0.9)
–
(0.8)
(1.0)
(2.4)
(16.6)
(21.0)
(2.7)
(45.9)
–
1.4
15.8
9.3
37.6
27.7
82.9
49.6
90.8
125.0
146.6
207.0
353.3
164.6
–
1.4
15.8
9.3
37.6
27.7
82.9
49.6
90.8
125.0
146.6
12.9
11.4
2.2
1,311.6
613.2
1.00
1.25
2.25
3.25
3.25
4.25
4.25
5.25
5.25
6.25
7.25
8.25
9.25
–
0.25
1.25
2.25
2.25
3.25
3.25
4.25
4.25
5.25
6.25
7.25
8.25
9.25
All fully vested options are exercisable.
The exercise prices are equal to either the weighted average share
price on the SIX Swiss Exchange for the five business days preceding
the grant date, or the share price on the SIX at the grant date.
The Compensation Committee determines which of the two exercise
prices are used for each grant year. Options over ADSs are priced at
one-fifth of the exercise price of a Swiss option, converted to US
dollars at the exchange rate at the grant date, which may vary from the
exchange rate at the exercise date. Standard options vest in full and
are exercisable after completion of three years service and terminate
after 10 or 11 years from the grant date. Vesting can occur after less
than three years in particular circumstances including redundancy and
retirement. None of the options vest on a pro rata basis during the
vesting period.
The Long-Term Incentive Plan also grants selected executives and key
employees of Syngenta restricted share units (RSUs) (or equivalent
restricted ADSs for relevant Syngenta employees in the USA). RSUs
(or equivalent restricted ADSs) are rights to receive the equivalent
number of Syngenta AG shares for no payment at the end of a three-
year vesting period. RSUs do not carry rights to dividends. None of
the RSUs or equivalent ADSs vest on a pro rata basis during the
vesting period.
Syngenta
Financial Report 2010
The following table sets out RSU activity under this plan during 2010 and 2009 (including the equivalent restricted ADS for relevant Syngenta
employees in the USA), and summarizes information about RSUs outstanding at December 31, 2010 and 2009.
71
RSUs
Year ended December 31, 2009
Awarded in 2006
Awarded in 2007
Awarded in 2008
Awarded in 2009
Total for year ended December 31, 2009
Year ended December 31, 2010
Awarded in 2007
Awarded in 2008
Awarded in 2009
Awarded in 2010
Total for year ended December 31, 2010
Grant date
fair value
Outstanding at
January 1
Granted
Distributed
Canceled
(thousands of shares)
Outstanding at
December 31
Remaining
life
(CHF)
174.8
211.1
283.9
218.1
211.1
283.9
218.1
265.0
55.7
52.9
55.0
–
163.6
48.8
52.2
86.1
–
187.1
–
–
–
88.5
88.5
–
–
–
106.2
106.2
(55.7)
(2.0)
(1.8)
(1.2)
(60.7)
(48.8)
(1.7)
(2.5)
(3.1)
–
(2.1)
(1.0)
(1.2)
(4.3)
–
(3.0)
(4.8)
(3.3)
–
48.8
52.2
86.1
187.1
–
47.5
78.8
99.8
(56.1)
(11.1)
226.1
(years)
–
0.25
1.25
2.25
–
0.25
1.25
2.25
Syngenta Deferred Share Plan
The Syngenta Deferred Share Plan provides selected senior executives
with an opportunity to obtain shares of Syngenta. The plan entitles
participants to defer part of their annual short-term incentive awards in
favor of Syngenta shares and to receive matching shares according
to the rules of the plan. The value of a deferred share and the
corresponding matching share, at the time of grant, is the Syngenta
share price at the time of grant adjusted for the absence of dividend
entitlement during the deferral period. Shares are deferred for a period
of three years starting on the grant date. At the end of the deferral
period, Syngenta matches the deferred shares on a one-for-one basis.
A mandatory part of the short-term incentive is allocated as Deferred
Shares. Additional voluntary deferrals within the limits of the plan can
be made at the discretion of the participants. Vesting can occur after
less than three years in particular circumstances including redundancy
and retirement. None of the shares vest on a pro rata basis during the
vesting period.
Share option valuation assumptions
The fair value of options granted was measured using the Black-
Scholes-Merton formula. The effect of early exercise has been
incorporated into the model by using an estimate of the option’s
expected life rather than its contractual life. The measurement of fair
value was not adjusted for any other feature of the option grant and
no option grant was subject to a market condition.
The weighted average assumptions used in determining the fair value
of options granted were as follows:
Dividend yield
Volatility
Risk-free interest rate
Expected life
Exercise price (CHF per share)
2010
2.2%
23.6%
2.0%
7 years
283.7
2009
2.2%
23.8%
2.1%
7 years
233.4
The dividend yield and volatility are management estimates for the life
of the option, as no warrants or options over Syngenta shares for this
period are widely traded. Both actual dividend yield and volatility may
vary from the assumptions used above. The estimate of volatility takes
into account the historical volatility of the Syngenta share price, and the
implied volatilities of such longer dated warrants that have been traded
in the market. The volatility assumption for 2010, as measured at the
time of grant, was based on the 120-month historical volatility of
Syngenta AG shares on the SIX Swiss Exchange.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
72
23. Employee share participation plans continued
The following table sets out activity under this plan during 2010 and 2009 including the equivalent ADSs that are offered to Syngenta employees
in the USA:
Year ended December 31, 2009
Awarded in 2006
Awarded in 2007
Awarded in 2008
Awarded in 2009
Total for year ended December 31, 2009
Year ended December 31, 2010
Awarded in 2007
Awarded in 2008
Awarded in 2009
Awarded in 2010
Total for year ended December 31, 2010
Outstanding at
January 1
Granted
Distributed
(thousands of shares)
Outstanding at
December 31
Remaining
life
(years)
28.4
25.1
31.2
–
84.7
23.0
29.0
57.5
–
109.5
–
–
–
59.0
59.0
–
–
–
22.4
22.4
(28.4)
(2.1)
(2.2)
(1.5)
–
23.0
29.0
57.5
(34.2)
109.5
(23.0)
(2.6)
(4.0)
(0.7)
–
26.4
53.5
21.7
(30.3)
101.6
–
0.25
1.25
2.25
–
0.25
1.25
2.25
At the end of the deferral period, employees would be entitled to the
following additional shares:
Other information regarding the plans is as follows:
Grant date
fair value
(CHF)
Thousands of
shares
Weighted average fair value of options granted
in year (CHF per option)
Weighted average share price at exercise date
for options exercised during year
(CHF per option)
Fair value of shares granted in year:
Deferred Share Plan (CHF per unit) –
combined value of basic and matching share
award
Employee Share Purchase Plans
(CHF per share)
Employee Share Purchase Plan
(US$ per ADS)
2010
2009
59.8
52.6
274.2
249.3
530.0
436.2
138.1
123.2
19.0
17.0
Cash received from exercise of options and
subscription for shares (US$ million)
49
45
Syngenta has a policy of utilizing treasury shares to satisfy share option
exercises and to meet share subscriptions and entitlements.
Awarded in 2008
Awarded in 2009
Awarded in 2010
Total
283.9
218.1
265.0
26.4
53.5
21.7
101.6
None of these shares are vested as at December 31, 2010.
Employee Share Purchase Plans
Syngenta has Employee Share Purchase Plans in various countries,
which entitle employees to subscribe for shares in Syngenta AG, at
discounts from market value varying between 25% and 50%. Shares
issued under the plans vest immediately and are subject to blocking
periods of between two and three years, with the exception of the UK
and Singapore plans, for which completion of three years service is
required before vesting. Maximum annual subscription amounts per
employee vary between US$600 and US$5,000. In 2010, a total of
88,995 (2009: 95,601; 2008: 108,141) shares were subscribed under
these plans and settled through a release of treasury shares.
Compensation expense
The compensation expense associated with employee share
participation plans, which is measured indirectly by reference to the
fair value of the equity instruments granted, is as follows for the years
ended December 31, 2010 and 2009:
(US$ million)
Long-Term Incentive Plan
Deferred Share Plan
Employee Share Purchase Plans
Total
2010
2009
36
19
11
66
26
27
11
64
Syngenta
Financial Report 2010
24. Transactions and agreements with related
parties
Key management personnel are defined as the members of the
Syngenta Executive Committee and the Board of Directors.
Their compensation was as follows for the years ended
December 31, 2010 and 2009:
(US$ million)
Fees, salaries and other short-term benefits
Post-employment benefits
Share based compensation
Total
2010
10
2
9
21
2009
11
2
11
24
The amount disclosed for share based compensation is the expense
for the period calculated in accordance with IFRS 2, “Share Based
Payment” and as described in Note 2, relating to key management
personnel. The cost of a share based compensation award is spread
over the vesting period of the award. Therefore the charge for each
year comprises parts of that year’s awards and those of preceding
years that had not already vested at the start of the year.
Members of the Board, excluding the Chairman, are eligible for
the share plan for non-executive Directors. The Directors define a
percentage of their annual fee for compensation in shares and, in
addition, choose between blocked shares or freely tradable shares.
The Chairman receives a fixed part of his compensation in the form
of blocked shares. The grant price of a share equals the weighted
average market price of the Syngenta share on the five business
days prior to the grant. Under these plans, members of the Board of
Directors were allocated a total of 5,036 shares in lieu of fees.
These shares vest immediately and had a combined fair value at grant
of US$1 million (2009: US$1 million).
Transactions and balances between Syngenta and its employee post-
retirement benefit plans are disclosed in Note 22.
73
Transactions between Syngenta and its associates and joint ventures
during the year ended December 31, 2010 were as follows:
Goods and services provided by Syngenta to its associates and joint
ventures US$11 million (2009: US$10 million).
Goods and services provided by the associates and joint ventures to
Syngenta US$55 million (2009: US$83 million).
A bank overdraft guarantee of US$15 million (2009: US$13 million) has
been provided to an associate.
Syngenta had accounts receivable and accrued income from
associates and joint ventures of US$29 million at December 31, 2010
(2009: US$25 million; 2008: US$21 million).
25. Commitments and contingencies
Minimum future lease payments at December 31, 2010 for finance
leases are US$48 million (2009: US$36 million), of which US$8 million
is due within one year (2009: US$3 million; 2008: US$22 million), and
US$40 million after more than one but less than five years (2009:
US$33 million).
Fixed-term, non-cancellable operating lease commitments total
US$119 million at December 31, 2010 (2009: US$117 million;
2008: US$79 million) of which US$22 million is due within one year
(2009: US$22 million; 2008: US$14 million), US$76 million after
more than one and less than five years (2009: US$64 million; 2008:
US$39 million) and US$21 million thereafter (2009: US$31 million;
2008: US$26 million). Operating lease payments relate to leases
of buildings and office equipment. Operating lease expense in 2010
was US$35 million (2009: US$37 million).
Detailed disclosures regarding executive remuneration required by
Swiss Company Law are included in the Syngenta AG statutory
financial statements.
Commitments for the purchase of property, plant and equipment at
December 31, 2010 are US$50 million (2009: US$65 million; 2008:
US$172 million).
At December 31, 2010, 2009 and 2008, Syngenta has entered into long-term commitments to purchase minimum quantities of certain raw
materials, long-term research agreements with various institutions to fund various research projects, and other commitments. The estimated
timing of minimum future committed payments is as follows:
(US$ million)
Within one year
From one to two years
From two to three years
From three to four years
From four to five years
After more than five years
Total
Syngenta has no material contingent liabilities related to associates and
joint ventures.
Syngenta’s sales are made subject to normal warranties, which
cover product technical specifications and, in some cases, products’
performance effect on grower crop yields. Certain license agreements
indemnify the other party against liabilities arising from claims related
to the intellectual property licensed to or by Syngenta. Leases may
require indemnification for liabilities Syngenta’s actions may create
for the lessor or lessee. Syngenta has also issued warranties to
purchasers of businesses or product lines relating to events that arose
2010
Materials
purchases
746
304
150
125
87
–
2009
Materials
purchases
867
585
320
106
80
80
Other
119
104
67
66
66
70
2008
Materials
purchases
742
527
392
295
122
–
Other
100
82
38
25
25
37
Other
97
85
73
60
47
–
1,412
492
2,038
307
2,078
362
before the sales. It is not possible to predict the maximum future
payments possible under these or similar provisions because it is not
possible to predict whether any of these contingencies will occur.
Syngenta has obtained licenses from others for the rights to sell
certain products, or products containing certain technology, under
agreements which require Syngenta to pay royalties based on its
future sales of those products or that technology.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
74 25. Commitments and contingencies continued
Contingencies
In addition to the legal proceedings described below, Syngenta is
involved from time to time in a number of legal proceedings incidental
to the normal conduct of its business, including proceedings involving
product liability claims, commercial claims, employment and wrongful
termination claims, patent infringement claims, competition law claims,
tax assessment claims, waste disposal claims and tort claims relating
to the release of chemicals into the environment. Syngenta maintains
general liability insurance, including product liability insurance, covering
claims on a worldwide basis with coverage limits and retention
amounts which management believes to be adequate and appropriate
in relation to Syngenta’s businesses and the risks to which it is subject.
Holiday Shores. The Holiday Shores Sanitary District in Madison
County, Illinois filed a class action complaint against Syngenta Crop
Protection, Inc. (“SCPI”) and its distributor Growmark, Inc. in July 2004
purportedly on behalf of a class consisting of all Illinois community
water systems (“CWS”) who have, allegedly, suffered contamination
of their water sources on account of the presence at any measurable
level of the product atrazine, a herbicide manufactured since the
late 1950s by SCPI and its predecessors in interest, Novartis Crop
Protection, Inc., Ciba-Geigy and Geigy Chemical Corporation.
The name of SCPI is now Syngenta Crop Protection, LLC, but the
former name of the company continues to be used in this litigation and
in other proceedings referred to herein. The Holiday Shores Complaint
alleges that the product atrazine and/or its degradant chemicals are
harmful to humans as consumed through dietary water, and that run-
off from the soil where atrazine has been applied has damaged the
CWS’ property and contaminated its surface waters, used as a source
of drinking water for Illinois. It alleges claims of trespass, nuisance,
negligence, strict liability and violation of the Illinois Environmental
Protection Act and seeks monetary damages, including the cost of
purchase, installation, maintenance and operation of charcoal filtration
systems, alleged diminution in property value and remediation, punitive
damages and attorneys’ fees. The Complaint was served on SCPI on
August 27, 2004. SCPI succeeded in having the lawsuit removed from
state to federal court but, on Plaintiff’s Motion, the federal court on
March 28, 2005, remanded the lawsuit back to state court. SCPI filed
a Motion to Dismiss which was argued on October 25, 2005, and on
July 7, 2008 was denied by the court (except as regards those parts
of the Motion which sought dismissal of the punitive damage and
remediation claims – those claims have been dismissed although
plaintiff may attempt to re-assert the punitive damage claim at a later
date). Since the denial of that Motion, Holiday Shores amended its
Complaint to add seven additional CWS as named plaintiffs and has
stipulated that its purported class will consist of no more than ninety-
nine CWS.
Shortly before the hearing on February 23, 2010 of SCPI’s Motion to
Transfer the claims of those plaintiffs not located in Madison County to
their home counties, plaintiffs’ counsel filed a voluntary dismissal of all
of plaintiffs’ property damage-related claims, and based primarily on
this action the judge on April 14, 2010 entered an Order denying the
Motion to Transfer. The hearing was held on June 10, 2010, of a
further Motion to Dismiss filed by SCPI, as well as a Motion to have the
lawsuit stayed or dismissed without prejudice in the light of the filing
of the parallel federal City of Greenville lawsuit described below.
On August 31, 2010, the judge issued an Order denying both of those
Motions. The Plaintiffs filed a series of subpoenas against third parties,
including growers’ associations, academic institutions and external
advisers to SCPI, and SCPI, and a number of the recipients filed
Motions to Quash those subpoenas. On September 22, 2010, the
judge issued an Order denying in part the Motions to Quash and ruling
that information concerning SCPI and its relationship to those third
parties, and communications between SCPI and those third parties
are relevant and discoverable. An application for leave to appeal
against this Order was filed with the judge, and on October 29, 2010,
the judge entered a further Order certifying certain questions for
interlocutory appeal to the Illinois Fifth District Appellate Court and
staying discovery on the issues which were the subject of the
September 22, 2010 Order pending resolution of any appeal.
The application for leave to appeal was denied by the Appellate
Court on January 13, 2011. The case is now in the discovery phase
and SCPI has filed answers to interrogatories as well as produced
the first of many pages of documents; depositions are sought to be
scheduled by plaintiff’s counsel with eleven current or former SCPI
employees and three corporate designees.
City of Greenville. On March 8, 2010 plaintiffs’ counsel in Holiday
Shores filed a new federal lawsuit in the US District Court for the
Southern District of Illinois (City of Greenville et al. v Syngenta Crop
Protection, Inc. and Syngenta AG) on behalf of seventeen CWS
located in six mid-Western states; an Amended Complaint filed
on March 23, 2010 adds seven new plaintiffs, five of which are
subsidiaries of American Water Company, a large private utility, in five
of the six states implicated in the litigation. The claims in this lawsuit
essentially repeat those causes of action which have survived motion
practice in Holiday Shores and seek compensatory and punitive
damages for all past and future costs incurred by the plaintiffs in the
removal of atrazine from raw water supplies, and certification of a class
of all public water providers in the six states which have had or will
have detectable levels of atrazine in their raw drinking water. SCPI on
May 18, 2010 filed a Motion to Dismiss the lawsuit on grounds
including lack of standing and of cause of action and Syngenta AG
on May 18, 2010 filed a Motion to Dismiss plaintiffs’ claims for lack of
personal jurisdiction, in response to which plaintiffs on June 8, 2010
filed a Motion for Leave to Conduct Jurisdictional Discovery to which
the Court by an Order issued on June 29, 2010 agreed. At a hearing
held on July 27, 2010 this Order was modified, the period for limited
discovery was extended to October 26, 2010 and the deadline for
plaintiffs’ responses to Syngenta AG’s Motion to Dismiss for lack of
jurisdiction set to November 15, 2010. On September 16, 2010 the
Magistrate Judge issued an Order further amending the scope of
jurisdictional discovery. On November 18, 2010, the federal court
judge issued a Memorandum and Order denying the Motion to
Dismiss filed by SCPI save as to the claims in the Complaint of strict
liability for manufacturing, marketing and selling an unreasonably
dangerous product to the extent that those claims were asserted by
two Indiana-based plaintiffs. On December 17, 2010, plaintiffs filed
their Opposition to Syngenta AG’s Motion to Dismiss for Lack of
Personal Jurisdiction and a Motion to Strike parts of the Affidavits filed
by Syngenta AG in support of its Motion, to which Syngenta AG filed
its Reply on January 17, 2011. The Magistrate Judge has ordered the
parties to the lawsuit to take part in a settlement conference scheduled
for April 11, 2011. Trial of the lawsuit is currently set to commence on
June 18, 2012.
As the plaintiffs in the above cases have not quantified their claims,
nor has the number of plaintiffs in the actions been determined, it is not
possible to estimate individually or in total the amounts in dispute nor to
quantify the likely outcome. However, Syngenta intends to vigorously
defend these cases. Atrazine is a long-standing successful product of
the Company and its predecessors, which has been repeatedly
scrutinized for safety over the years by government agencies.
No amounts have been provided for a settlement.
In a related lawsuit (Syngenta Crop Protection, Inc. v Insurance
Company of North America et al.) filed by SCPI on September 30,
2008, in the Superior Court of the State of New Jersey, and amended
on November 10, 2008, July 24, 2009 and April 21, 2010, SCPI is
Syngenta
Financial Report 2010
seeking a declaratory judgment under the Ciba-Geigy legacy insurance
policies that the defense costs and potential damages in the Holiday
Shores case and the City of Greenville case, as well as any other
products liability claims against SCPI alleging harm in connection with
the use of or exposure to atrazine or atrazine-containing products,
are covered under said policies and that the insurers are obligated
to defend SCPI. Certain of the insurer defendants in the litigation,
comprising the Insurance Company of North America, Century
Indemnity Company and ACE Property & Casualty Insurance
Company (the “INA Claimants”) initiated an arbitration proceeding
against SCPI, Novartis Corporation and Ciba Corporation (the
“Respondents”) under the commercial arbitration rules of the American
Arbitration Association, seeking a determination as to whether
insurance claims that SCPI is pursuing against them in the litigation
were previously released pursuant to a Settlement Agreement dated
January 13, 1999 between the INA Claimants, on the one hand, and
Novartis Corporation and Ciba Specialty Chemicals Corporation (now
Ciba Corporation) on the other hand (the “INA Settlement Agreement”).
The arbitration proceeding, purportedly brought pursuant to
the arbitration provision of the INA Settlement Agreement, was
commenced by the INA Claimants’ Demand for Arbitration dated
March 25, 2009 and the hearing of the arbitration is scheduled to
begin on June 13, 2011. The INA Claimants filed a Motion for Entry of
an Award on February 4, 2011, to which the Respondents have thirty
days to respond. Discovery is proceeding in both the declaratory
action lawsuit and the arbitration.
While SCPI intends to pursue its claims vigorously against the insurers
for any losses associated with the Holiday Shores or City of Greenville
litigation or any other atrazine-related claims, the amount that is or may
ultimately be recoverable from the insurers with respect to such claims
cannot be predicted with certainty at this time.
Sprague. On June 11, 2010 a lawsuit was filed in the United States
District Court for the Southern District of Illinois against Syngenta, Ted
Sprague v Syngenta Crop Protection Inc., Syngenta AG and Syngenta
Corporation (collectively “Syngenta”). In this lawsuit, the plaintiff has
filed a legal action called a “qui tam action” as an individual based on
“false patent marking” against Syngenta under a U.S. federal statute.
The plaintiff alleges that Syngenta has falsely marked 41 pesticide
products with at least one expired patent with the intent to deceive
competitors and the public into believing that the products are covered
by the expired patent(s). In a December 2009 ruling, the US Court of
Appeals for the Federal Circuit in The Forest Group, Inc. v Bon Tool
Company et al, held that the fine must be levied on a “per article”
basis and the statutory fine is “up to US$500 for every such offense”.
An important issue in these types of cases is whether or not the
defendant falsely marked the products for the purpose of deceiving the
public. On August 19, 2010 SCPI filed a Motion to Dismiss for failure to
state a claim and failure to allege injury-in-fact, and Syngenta AG and
Syngenta Corporation filed a Motion to Dismiss for Lack of Personal
Jurisdiction. On October 6, 2010 the plaintiff in Sprague filed a Motion
for a Pretrial Conference which was granted on October 20, 2010.
On November 19, 2010, the plaintiff filed his Opposition to SCPI‘s
Motion to Dismiss and on December 3, 2010, SCPI filed its Reply.
The plaintiff’s responses to the Motion to Dismiss for Lack of Personal
Jurisdiction are due by March 17, 2011, and the replies by Syngenta
AG and Syngenta Corporation by March 31, 2011. Jury trial has been
set to commence on June 18, 2012.
Tax Litigation
Syngenta is also subject to certain tax claims pending before the
judiciary. Significant cases are described below.
75
Atrazine. In 1996, the Brazilian Federal Revenue drew Novartis’ legal
entity in Brazil, now Syngenta Proteção de Cultivos Ltda (“SPCL”) into
administrative proceedings, regarding the import tax classification of
the active ingredient atrazine. The issue is whether, under applicable
law, atrazine is to be qualified as raw material (SPCL’s position) or as
intermediate chemicals (Federal Revenue’s position). So far, there have
been 19 administrative rulings against SPCL which have given rise to a
corresponding number of lawsuits. Of these, 14 are awaiting first level
court decision, 4 are awaiting second level court decision and 1 has
given rise to a decision favorable to SPCL, which it is uncertain if the
Federal Revenue will appeal. Syngenta issued a letter of guarantee for
part of the amount involved, BRL16 million (equaling approximately
US$10 million at a rate of BRL1.66 per US$). In the aggregate, the
maximum contingency in the event of an unfavorable outcome for
Syngenta could amount to approximately BRL33 million (equaling
approximately US$20 million at a rate of BRL1.66 per US$) consisting
of BRL22 million plus interest.
Litigation is subject to many uncertainties, and the outcome of
individual matters cannot be predicted with certainty. Syngenta
believes that its provisions for legal and product liability matters are
adequate based on currently available information, but it is reasonably
possible that the final resolution of some of these matters could require
Syngenta to make expenditures, in excess of established reserves,
over an extended period of time and in a range of amounts that cannot
be reasonably estimated. Such expenditures in excess of established
reserves could have a material effect on Syngenta’s consolidated
operating results and cash flows for a particular reporting period, but
management does not believe they will have a materially adverse effect
on Syngenta’s consolidated financial position or liquidity, although
there can be no assurances in this regard.
Environmental matters
Syngenta has recorded provisions for environmental liabilities at some
currently or formerly owned, leased and third party sites throughout the
world. These provisions are estimates of amounts payable or expected
to become payable and take into consideration the number of other
potentially responsible parties (“PRP”) at each site and the identity and
financial positions of such parties in light of the joint and several nature
of certain of the liabilities.
In the USA, Syngenta and/or its indemnitors or indemnitees,
have been named under federal legislation (the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended) as a PRP in respect of several sites. Syngenta expects to
be indemnified against a proportion of the liabilities associated with a
number of these sites by the sellers of the businesses associated with
such sites and, where appropriate, actively participates in or monitors
the clean-up activities at the sites in respect of which it is a PRP.
The material components of Syngenta’s environmental provisions
consist of a risk assessment based on investigation of the various sites.
The nature and timing of future remediation expenditures are affected
by a number of uncertainties which include, but are not limited to,
the method and extent of remediation, the percentage of material
attributable to Syngenta at the remediation sites relative to that
attributable to other parties, and the financial capabilities of the other
PRPs. As a result, it is inherently difficult to estimate the amount of
environmental liabilities that will ultimately become payable. It is also
often not possible to estimate the amounts expected to be recovered
via reimbursement, indemnification or insurance due to the uncertainty
inherent in this area.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
76 25. Commitments and contingencies continued
Syngenta believes that its provisions are adequate based upon
currently available information. However, given the inherent difficulties in
estimating liabilities in this area, due to uncertainty concerning both the
amount and timing of future expenditures, it cannot be guaranteed that
additional costs will not be incurred materially beyond the amounts
accrued.
26. Principal currency translation rates
Year end rates used for the consolidated balance sheets at
December 31, to translate the following currencies into US$, are:
Swiss franc
British pound sterling
Euro
Brazilian real
2010
per US$
2009
per US$
2008
per US$
0.94
0.65
0.75
1.66
1.03
0.62
0.69
1.74
1.06
0.69
0.71
2.33
Average rates during the years ended December 31, used for the
consolidated income and cash flow statements ended December 31,
to translate the following currencies into US$, are:
Swiss franc
British pound sterling
Euro
Brazilian real
2010
per US$
2009
per US$
1.05
0.65
0.75
1.77
1.09
0.65
0.72
2.04
27. Risk management of financial risks
27.1 Risk management framework
The nature of Syngenta’s business and its global presence exposes it
to a range of financial risks. These risks include (i) market risks, which
include potential unfavorable changes in foreign exchange rates,
interest rates, commodity prices and other market prices (equities,
credit spreads etc.), (ii) counterparty risk and (iii) liquidity and
refinancing risk.
A financial risk management framework is in place in the form of a
Treasury policy, approved by the Board of Directors. This policy
provides guidance over all Treasury and finance related matters, is
underpinned by delegated authority guidelines and is additionally
supported by detailed procedures in place across Syngenta.
In accordance with its Treasury policy, Syngenta actively monitors
and manages financial risk with the objectives of reducing fluctuations
in reported earnings and cash flows from these risks and providing
economic protection against cost increases. These objectives are
achieved through (a) monthly assessment of the impact of market risks
against defined risk limits (see section 27.2), which take into account
the risk appetite of Syngenta and (b) the use of a variety of derivative
and non-derivative financial instruments.
Financial instruments available for use to mitigate these risks are
selected by Syngenta according to the nature of the underlying risk.
These instruments are designed to economically hedge underlying
risks arising from operational activities and from funding and
investment positions. Syngenta does not enter into any speculative
financial transactions.
Syngenta seeks to apply, wherever possible, hedge accounting to
present its financial statements in accordance with the economic
purpose of the hedging activity. Derivative financial instruments for
which hedge accounting is not adopted either (a) do not meet the
requirements for hedge accounting treatment under IFRS or (b) when
combined with the accounting for the underlying hedged items, impact
the financial statements in a manner aligned with the economic
purpose of the hedging transaction, without the need to adopt hedge
accounting treatment.
27.2 Assessment of the impact of market risks
The impact of market risks is assessed using a variety of Value-at-Risk (VaR) methods, including Earnings-at-Risk (EaR) methods. The exact
method selected depends on the nature of the underlying risk. The specific methods used to assess the impact of financial risks are
described below:
Risk
Foreign exchange risk
Transaction – committed
Transaction – uncommitted
Translation
Interest rate risk
Commodity price risk
Method
VaR
EaR
VaR
EaR
EaR
Exposure (financial statement item)
Time horizon (months)
Monetary asset and liability carrying amounts
Operating income
Cumulative translation adjustment in OCI
Interest expense
Operating income
1
12
1
12
12
To achieve consistency with the methods used for the other types of
market risks, in 2009 Syngenta changed its method of assessing the
impact of interest rate risk from duration analysis to the EaR method.
VaR and EaR calculations are risk management tools designed to
statistically estimate with a pre-set probability the maximum amount of
potential losses in value (VaR) or earnings (EaR) over a specific (holding)
time period given current positions and possible movements in market
prices. The VaR and EaR methods used by Syngenta estimate the
gross impact on the consolidated financial statements if the underlying
items were not hedged and the net impact of the combined underlying
hedged items and the related hedging instruments.
VaR and EaR calculations attempt to recognize that holding different
assets and liabilities or incurring different future cash flow exposures
may reduce portfolio risk through diversification. Such diversification
effects are captured within the calculations, which aim to present the
risk to the whole portfolio of the individual market risks. Using historical
data, the VaR and EaR calculations are designed to predict possible
Syngenta
Financial Report 2010
changes in the markets in the future at a 99% confidence level, with a
1% probability that actual results will be worse than calculated.
Due to increased volatility in the financial markets observed in recent
years, Syngenta has in 2010 increased the confidence level used in the
VaR (EaR) calculations from 95% to 99%. The comparative numbers
for the year ending December 31, 2009 presented in the financial
statements were recalculated using the 99% confidence level.
The assessment of the impact of market risks is performed monthly
and the results are compared against annually defined risk limits.
In cases where the net impact is higher than a risk limit, Syngenta
enters into derivative financial instrument transactions to be in line
with the risk limits. Breaches of risk limits, should they occur, are
immediately reported to senior management.
Syngenta cannot accurately predict future movements in risk variables,
therefore calculations of the impact of market risks neither represent
actual losses nor consider the effects of potential favorable movements
in underlying risk variables. Accordingly, these calculations may only be
an indication of future movements to the extent the historic market
patterns repeat in the future.
27.3 Foreign exchange risk
Operating worldwide in over 80 countries exposes Syngenta to foreign
exchange transaction and translation risk at both the Group and
subsidiary level. Syngenta’s policy is to not hedge foreign exchange
translation risk. However, certain exceptions to this policy have been
approved in the past by senior management.
77
Foreign exchange transaction risk – committed
Syngenta’s individual subsidiaries predominantly transact their
operational activities in their respective functional currencies.
However, the globally integrated nature of Syngenta’s business results
in its subsidiaries bearing some amount of transactional balance sheet
risk, because some monetary items (including financial liabilities) are
denominated in foreign currencies.
Such committed foreign currency exposures are largely generated by
the routing of products from Syngenta’s central manufacturing sites to
its foreign locations. These committed exposures are normally fully
hedged, unless otherwise approved by Group Treasury, for example
where not deemed cost-effective or where there is no forward market
for a specific currency. The committed exposures are hedged using
foreign exchange forward contracts and cross-currency swaps.
Net committed transactional currency exposures are identified and
reported on a monthly basis by business units. VaR calculations for
committed exposures relate to the revaluation of exposures relative to
spot rates over a monthly period. The impact of interest differentials
and other factors is not included in these calculations.
(US$ million)
December 31, 2010
Value-at-Risk
December 31, 2009
Value-at-Risk
Underlying currency (1-month holding period)
Gross
impact
Net
impact
Risk
reduction
Gross
impact
Swiss franc
Euro
British pound sterling
Other core currencies1
Rest of world
Total undiversified
Diversification
Net VaR
72
25
9
12
44
162
(106)
56
7
–
6
–
14
27
(18)
9
90%
100%
33%
100%
68%
83%
83%
84%
58
45
20
22
59
204
(164)
40
Net
impact
19
7
6
3
15
50
(40)
10
Risk
reduction
67%
84%
70%
86%
75%
75%
76%
75%
1 Other core currencies include the Canadian dollar, Australian dollar and Japanese yen
At December 31, 2010, the total 30-day Value-at-Risk, after hedges,
at a 99% confidence level was US$9 million (December 31, 2009:
US$10 million). The decrease in Value-at-Risk as at December 31,
2010 compared to December 31, 2009 is mainly due to a higher
hedge coverage across various currencies.
cash flows from expected future transactions for which Syngenta
does not yet have a contractual right or obligation. The objective is to
minimize the impact of changes in foreign exchange rates on the cash
flows and operating income forecasted to result from these
transactions.
The average Value-at-Risk, after hedges, at a 99% confidence level, for
the year ending December 31, 2010 was US$6 million (before hedges:
US$69 million).
The largest gross exposures arise in the Swiss franc, the British pound
sterling and the Euro. Switzerland and Great Britain house large
research and manufacturing sites, whereas the Euro zone represents a
large sales market.
Foreign exchange transaction risk – uncommitted
Syngenta also manages transactional risk by protecting future
uncommitted cash flows with foreign exchange forward and currency
option contracts. Uncommitted cash flows are highly probable future
The US dollar represents the biggest single currency for both sales and
costs. However, currency mismatches arise from Syngenta having
a centralized cost base, denominated mainly in Swiss francs, British
pounds and US dollars, against a local selling base, denominated
mainly in US dollars, Euros and various other currencies, including
those in emerging markets. In addition, due to the seasonality of
Syngenta’s business, the majority of sales occur during the first half
of the year whereas costs tend to occur more linearly throughout the
year. Syngenta collects information about anticipated cash flows over
a twelve-month future period for major currencies at Group level and
hedges significant mismatches in currency flows within clearly defined
risk limits.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
78 27. Risk management of financial risks continued
The Earnings-at-Risk calculation is performed for anticipated net transactional currency flows for the following year taking into account related
currency hedges.
(US$ million)
Underlying currency (12-month holding period)
Swiss franc
Euro
British pound sterling
Other core currencies1
Rest of world
Total undiversified
Diversification
Net EaR
December 31, 2010
Earnings-at-Risk
December 31, 2009
Earnings-at-Risk
Gross
impact
285
62
52
53
183
635
(309)
326
Net
impact
72
80
9
11
151
323
(191)
132
Risk
reduction
75%
(29)%
83%
79%
18%
49%
38%
60%
Gross
impact
159
34
38
73
201
505
(293)
212
Net
impact
114
28
21
32
168
363
(195)
168
Risk
reduction
28%
18%
45%
56%
16%
28%
33%
21%
1 Other core currencies include the Canadian dollar, Australian dollar and Japanese yen
At December 31, 2010, the total potential adverse movement for 2011
net transactional flows after hedges relative to year-end at spot levels,
at a 99% confidence level, was US$132 million (December 31, 2009:
US$168 million). In line with the objective of the hedging program,
Syngenta aims to minimize the potential adverse movement for the
whole portfolio of the net transactional flows, rather than looking at the
individual currencies. This could lead to a negative risk reduction for a
single currency – as is the case for the Euro currency in 2010.
The decrease in Earnings-at-Risk as at December 31, 2010 compared
to December 31, 2009 is mainly due to a higher hedge coverage.
The decrease is partially offset by increased volatilities in the core
currencies.
From the Earnings-at-Risk table above, the Swiss franc stands out as
a major exposure. This risk arises from having a significant cost base in
Switzerland with no material offsetting sales.
The table below presents the 1-month translation Value-at-Risk:
Foreign exchange translation risk
Translation exposure arises from consolidation of foreign currency
denominated financial statements of Syngenta’s subsidiaries.
This is reported as the currency translation effects in OCI.
Translation risk can be significant, however, Syngenta’s equity base is
deemed to be of sufficient magnitude to absorb the short- to medium-
term impact of exchange rate movements.
Syngenta uses both foreign currency denominated debt and also net
investment hedging to manage this exposure. The latter incorporates
specific actions to protect the value of temporary excess foreign
currency denominated cash positions. At December 31, 2010, there
were no positions requiring the use of hedges and no hedges were
in place.
(US$ million)
Currency of net investment in subsidiary (1-month holding
period)
Swiss franc
Euro
British pound sterling
Other core currencies1
Rest of world
Total undiversified
Diversification
Net VaR
December 31, 2010
Value-at-Risk
December 31, 2009
Value-at-Risk
Gross
impact
124
32
23
28
171
378
(123)
255
Net
impact
124
32
23
28
171
378
(123)
255
Risk
reduction
Gross
impact
Net
impact
Risk
reduction
–
–
–
–
–
–
–
–
84
27
54
32
222
419
(98)
321
84
27
54
32
222
419
(98)
321
–
–
–
–
–
–
–
–
1 Other core currencies include the Canadian dollar, Australian dollar and Japanese yen
The large investments and operations in Switzerland lead to the most
significant risk. The decrease in Value-at-Risk as at December 31,
2010 compared to December 31, 2009 is primarily due to decreased
volatilities in Emerging Market currencies. There are no translation risk
hedges in place as at December 31, 2010.
The average Value-at-Risk after hedges, at a 99% confidence level,
for the year ending December 31, 2010 was US$276 million (before
hedges: US$276 million).
27.4 Interest rate risk
Syngenta is exposed to fluctuations in interest rates on its borrowings
(including forecasted borrowings) and excess cash. While the majority
of Syngenta’s borrowings have fixed interest rates, portions of
Syngenta’s net borrowings, including its short-term commercial paper
program and local borrowings, are subject to changes in short-term
interest rates. The main objective of managing interest rate risk is to
optimize interest expense within clearly stated risk limits.
Syngenta
Financial Report 2010
Syngenta monitors its interest rate exposures, analyzes the potential
impact of interest rate movements on net interest expense and
enters into derivative transactions to manage its interest rate risk.
At December 31, 2010, the net amount of Earnings-at-Risk on floating
rate debt due to potential changes in interest rates (a parallel shift of
100 bps was applied) was US$14 million (2009: US$11 million).
The net amounts of Earnings-at-Risk on the net debt, as defined in
Note 27.7, due to potential changes in interest rates were immaterial
at December 31, 2010 and 2009.
27.5 Commodity price risks
Operating in the agribusiness sector, changes in certain commodity
prices affect Syngenta’s reported operating results. On a limited basis,
Syngenta enters into derivative transactions to hedge the exposure of
its cost base to commodity prices. This comprises oil and natural gas
hedging in the UK and USA, as well as soft commodity hedging for
corn and soybean purchases by the Seeds business in the USA,
Canada, Brazil and Argentina, where Syngenta contracts to purchase
various seed crops from growers and hedges the cost of the crops.
In barter arrangements where Syngenta sells products in exchange for
receiving a certain amount of a commodity crop, Syngenta hedges the
value of the crop.
79
Syngenta has indirect exposure to oil price fluctuations mainly through
the impact of oil prices on the cost of both raw materials, especially
chemical intermediates in the Crop Protection business, and
distribution activities. Natural gas exposure occurs in Syngenta’s
primary manufacturing sites.
The main objective of managing commodity price risk is to reduce the
impact of commodity price changes on operating income and to
provide economic protection against future cost increases. Syngenta
uses fixed price contracts and derivatives (both Over-the-Counter
(OTC) and exchange traded instruments, including commodity option
and futures contracts) to achieve this objective.
At December 31, 2010, there was 1.0 million barrels of hedge
protection (December 31, 2009: no protection) in place for oil for 2011.
As the exposure to oil is indirect, Syngenta does not calculate the
Earnings-at-Risk due to potential changes in oil prices.
Earnings-at-Risk due to potential changes in natural gas and soft commodity prices assuming a 12-month holding period are presented below.
Natural gas (US$ million)
Total undiversified
Diversification
Net EaR
Soft commodities (US$ million)
Total undiversified
Diversification
Net EaR
December 31, 2010
Earnings-at-Risk
December 31, 2009
Earnings-at-Risk
Gross
impact
12
(4)
8
Gross
impact
76
(13)
63
Net
impact
Risk
reduction
5
(1)
4
58%
75%
50%
December 31, 2010
Earnings-at-Risk
Net
impact
Risk
reduction
55
(2)
53
28%
85%
16%
Gross
impact
11
(3)
8
Gross
impact
99
(7)
92
Net
impact
3
(1)
2
December 31, 2009
Earnings-at-Risk
Net
impact
61
(3)
58
Risk
reduction
73%
67%
75%
Risk
reduction
38%
(50)%
37%
The Earnings-at-Risk of soft commodities is driven by their high price
volatility compared to other asset classes. The hedging program
reduces overall 12-month Earnings–at-Risk at December 31, 2010
to US$53 million (December 31, 2009: US$58 million).
27.6 Credit risk
Credit risk arises from the possibility that counterparties involved in
transactions with Syngenta may default on their obligation, resulting in
financial losses to Syngenta. Credit risk relates both to financial assets
(including derivatives, marketable securities and money market
contracts) as well as to operational assets managed by Syngenta’s
businesses (such as trade receivables).
Syngenta’s maximum exposure to credit risk is the carrying values of
its financial assets and receivables, including derivatives with positive
market values. These amounts are disclosed in Note 28.
Syngenta has policies and operating guidelines in place to ensure that
financial instrument transactions are only entered into with high credit
quality banks and financial institutions. These include limits in respect of
counterparties to ensure that there are no significant concentrations of
credit risk. Syngenta continuously monitors the creditworthiness of its
counterparties based on credit ratings and credit default swap data.
At December 31, 2010, Syngenta had no treasury or derivative
transactions representing a significant concentration of credit risk.
No credit losses have been incurred from investments in derivative
financial instruments during the years ended December 31, 2010
and 2009.
To minimize its exposure to derivative positions, Syngenta enters into
netting agreements under an International Swaps and Derivatives
Association (ISDA) master agreement with its respective
counterparties. In addition, for certain derivative positions, Syngenta
has entered into Credit Support Annex contracts (CSAs) under
which, when the combined market value of the derivatives exceeds
US$15 million, cash is exchanged as collateral. Each CSA effectively
limits either Syngenta’s or the counterparty’s aggregate credit risk
exposure to no more than US$15 million. At December 31, 2010 an
asset amounting to US$64 million (2009: US$ nil) was recorded
representing cash paid by Syngenta as collateral under these CSAs.
The impact of credit risk on the fair value of derivatives is considered
through market observable credit default swap spreads for Syngenta
and its counterparties. The impact on the fair value of Syngenta’s
derivative positions at December 31, 2010 and 2009 of the risk of
default by financial counterparties was not material.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
80 27. Risk management of financial risks continued
The credit risk to operational assets is partially mitigated through
commercial activities, which include barter operations and cash sales
incentives.
27.7 Liquidity risk and refinancing risk
Within Syngenta’s risk management framework, liquidity risk is defined
as the potential inability to meet all financial obligations on time and
refinancing risk is defined as the potential inability to partially or fully
refinance maturing debts.
Syngenta’s liquidity risk policy is to maintain at all times sufficient
liquidity reserves both at Group and subsidiary level in order to meet
payment obligations as they become due and also to maintain an
adequate liquidity margin. The planning and supervision of liquidity is
the responsibility of the subsidiaries and Group Treasury. Liquidity
requirements are forecasted on a weekly basis. Syngenta operates
regional or country cash pools to allow efficient use of its liquidity
reserves.
The maturities of short term derivative liabilities are as follows:
Short-term liquidity
Although Syngenta operates globally, its two largest markets are
Europe, Africa and the Middle East (EAME) and NAFTA. Both sales
and operating profit in these two regions are seasonal and are
weighted towards the first half of the calendar year, reflecting the
northern hemisphere planting and growing cycle. This results in a
seasonal working capital requirement.
Syngenta’s principal source of liquidity consists of cash generated
from operations. Working capital fluctuations due to the seasonality
of the business are supported by short-term funding available from a
US$2.5 billion Global Commercial Paper program supported by a
US$1.2 billion committed, revolving, multi-currency, syndicated credit
facility with high credit quality banks expiring in July 2013.
The maturity analyses for Syngenta’s current financial liabilities other
than short-term derivative liabilities are presented in Notes 15 to 17.
(US$ million)
2010
2009
2008
Total
291
145
457
0–90
days
210
104
329
90–180
days
180 days–
1 year
35
25
57
46
16
71
Syngenta
Financial Report 2010
Long-term financing
Long-term capital employed is currently partly financed through five unsecured bonds and through unsecured notes issued under the Note
Purchase Agreement in the US Private Placement market.
81
The following table shows Syngenta’s contractually agreed (undiscounted) interest and principal repayments on long-term financing-related
non-derivative financial liabilities and the related derivatives held at December 31, 2010, 2009 and 2008. The table also shows the total carrying
amount of Syngenta’s financial debt adjusted for the effect, if any, of applying fair value hedge accounting. Non-derivative financial liabilities are
recorded at amortized cost (less related issuance costs). Derivative financial liabilities are recorded at fair value.
2010 (US$ million)
Less than 1 year
1-3 years
3-5 years
5-10 years
More than 10 years
Total payments
Net carrying amount
Non-derivative financial liabilities
(Unsecured bonds and notes)
Derivative financial liabilities
(Interest rate and cross-currency swaps)
Fixed rate interest
Principal
repayment
Total Fixed rate interest
Repayment
Total
120
172
76
67
103
538
668
934
1,336
75
175
3,188
788
1,106
1,412
142
278
3,726
3,209
46
28
4
–
–
78
–
–
5
–
–
5
1 The repayments above (and the net carrying amount of the derivative financial liabilities) do not include the amounts paid as collateral, as described in Note 27.6
2009 (US$ million)
Less than 1 year
1-3 years
3-5 years
5-10 years
More than 10 years
Total payments
Net carrying amount
2008 (US$ million)
Less than 1 year
1-3 years
3-5 years
5-10 years
More than 10 years
Total payments
Net carrying amount
Non-derivative financial liabilities
(Unsecured bonds and notes)
Fixed rate interest
Principal
repayment
Derivative financial liabilities
(Interest rate and cross-currency swaps)
Variable rate interest
Total
Fixed rate interest
Repayment
131
223
134
76
117
681
–
1,084
1,205
720
250
3,259
131
1,307
1,339
796
367
3,940
3,255
30
43
15
–
–
88
–
–
(21)
–
–
(21)
–
–
9
4
–
13
Non-derivative financial liabilities
(Unsecured bonds and notes)
Derivative financial liabilities
(Interest rate and cross-currency swaps)
Fixed rate interest
Principal
repayment
Total
Fixed rate interest
Repayment
100
192
117
105
130
644
–
705
828
705
250
2,488
100
897
945
810
380
3,132
2,496
28
75
21
(6)
–
118
–
–
10
(64)
–
(54)
Forecast data for liabilities that may be incurred in the future is not
included in the table above. Amounts in foreign currency were
translated to US dollars at the closing rate at the reporting date.
Variable payments at each year end arising from financial instruments
were calculated based on the forward interest rate yield curve at
December 31, 2010 and 2009, respectively. Non-derivative financial
liabilities that can be repaid at any time have been assigned to the
earliest possible time period.
46
28
9
–
–
83
1071
Total
30
43
3
4
–
80
62
Total
28
75
31
(70)
–
64
114
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
82 27. Risk management of financial risks continued
Capital structure
Syngenta is committed to maintaining a low single A rating, which
provides an optimal balance between financial flexibility and the cost of
capital. Syngenta manages capital by monitoring levels of net debt, as
calculated below, and equity against targets. The dividend payout
target range is 25% to 40% of distributable earnings and the net debt
to equity target range is 25% to 35%. The net debt to equity ratio was
20% at December 31, 2010 (28% at December 31, 2009a; 36% at
December 31, 2008a).
The components of net debt at December 31, 2010, 2009 and 2008 are as follows:
(US$ million)
Current financial debt
Non-current financial debt
Cash and cash equivalents
Marketable securities1
Financing-related derivatives2
Net debt at December 31
2010
992
2,585
(1,967)
(16)
(121)
1,473
2009
281
3,303
(1,552)
(48)
(182)
1,802
2008
211
2,524
(803)
(7)
(39)
1,886
a After effect of accounting policy change for post-employment benefits described in Note 2
1 Included within ‘Derivative and other financial assets’ and ‘Derivative financial liabilities’ and ‘Derivative and other financial assets’ or ‘Other non-current financial assets’
2 Included within ‘Derivative and other financial assets’ and ‘Derivative financial assets’ or ‘Derivative financial liabilities’ and ‘Financial debt and other non-current liabilities’
Syngenta
Financial Report 2010
28. Financial assets and liabilities
28.1 The following tables show the carrying amounts and fair values of financial assets and liabilities by category of financial instrument and
reconciliation to where they are presented in the balance sheet at December 31, 2010, 2009 and 2008. The fair value hierarchy level is shown
for those financial assets and liabilities that are carried at fair value in the balance sheet.
83
2010 (US$ million)
Trade receivables, net:
Loans and receivables
Designated as at fair value through profit or loss
Total
Derivative and other financial assets:
Derivative financial assets
Loans and receivables
Available-for-sale financial assets
Total
Derivative financial assets – non-current
Other non-current financial assets:
Loans and receivables
Available-for-sale financial assets
Other, not carried at fair value
Total
Trade accounts payable:
Measured at amortized cost
Current financial debt:
Measured at amortized cost
Derivative financial liabilities – current
Financial debt and other non-current liabilities:
Measured at amortized cost
Derivative financial liabilities – non-current
Non-financial liabilities
Total
Carrying amount (based on measurement basis)
Amortized
cost
Fair value
level 1
Fair value
level 2
Total
Comparison
fair Value
2,497
–
–
64
–
175
–
–
2,590
992
–
2,590
–
–
–
–
8
–
–
–
–
–
–
–
–
–
–
–
–
57
417
–
13
176
–
43
–
–
–
291
–
76
–
2,497
57
2,554
425
64
13
502
176
175
43
300
518
2,497
57
2,554
425
64
13
502
176
175
43
–2
2,590
2,5901
992
291
2,590
76
120
2,786
1,0071
291
2,744
76
–2
1 The carrying amounts approximate the estimated fair value due to the short-term nature of these financial instruments
2 Fair value is not required to be disclosed for non-financial assets and non-financial liabilities, including investments in associates and joint ventures and defined benefit pension assets
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
84 28. Financial assets and liabilities continued
2009 (US$ million)
Trade receivables, net:
Loans and receivables
Designated as at fair value through profit or loss
Total
Derivative and other financial assets:
Derivative financial assets
Available-for-sale financial assets
Total
Derivative financial assets – non-current
Other non-current financial assets:
Loans and receivables
Available-for-sale financial assets
Other, not carried at fair valuea
Total
Trade accounts payable:
Measured at amortized cost
Current financial debt:
Measured at amortized cost
Derivative financial liabilities – current
Financial debt and other non-current liabilities:
Measured at amortized cost
Derivative financial liabilities – non-current
Non-financial liabilities
Total
Carrying amount (based on measurement basis)
Amortized
cost
Fair value
level 1
Fair value
level 2
2,434
–
–
–
191
–
–
2,468
281
–
3,348
–
–
–
–
7
–
–
–
–
–
–
–
–
–
–
–
72
103
46
248
–
51
–
–
–
145
–
65
–
Comparison
fair value
2,4341
72
2,506
110
46
156
248
191
51
–2
Total
2,434
72
2,506
110
46
156
248
191
51
158
400
2,468
2,4681
281
145
3,348
65
114
3,527
2811
145
3,514
65
–2
a After effect of accounting policy change for post-employment benefits described in Note 2
1 The carrying amounts approximate the estimated fair value due to the short-term nature of these financial instruments
2 Fair value is not required to be disclosed for non-financial assets and non-financial liabilities, including investments in associates and joint ventures and defined benefit pension assets
Syngenta
Financial Report 2010
85
Comparison
fair value
2,2081
103
2,311
376
5
381
152
148
117
–2
Total
2,208
103
2,311
376
5
381
152
148
117
160
425
2,240
2,2401
211
457
2,600
125
144
2,869
2111
457
2,690
125
–2
Carrying amount (based on measurement basis)
Amortized
cost
Fair value
level 1
Fair value
level 2
2,208
–
–
–
–
148
–
–
2,240
211
–
2,600
–
–
–
–
15
–
–
–
–
–
–
6
–
–
–
–
103
361
5
152
–
117
–
–
–
451
–
125
–
2008 (US$ million)
Trade receivables, net:
Loans and receivables
Designated as at fair value through profit or loss
Total
Derivative and other financial assets:
Derivative financial assets
Available-for-sale financial assets
Total
Derivative financial assets – non-current
Other non-current financial assets:
Loans and receivables
Available-for-sale financial assets
Other, not carried at fair valuea
Total
Trade accounts payable:
Measured at amortized cost
Current financial debt:
Measured at amortized cost
Derivative financial liabilities – current
Financial debt and other non-current liabilities:
Measured at amortized cost
Derivative financial liabilities – non-current
Non-financial liabilities
Total
a After effect of accounting policy change for post-employment benefits described in Note 2
1 The carrying amounts approximate the estimated fair value due to the short-term nature of these financial instruments
2 Fair value is not required to be disclosed for non-financial assets and non-financial liabilities, including investments in associates and joint ventures and defined benefit pension assets
The levels of fair value hierarchy used above are defined as follows:
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 fair value measurements are those derived from inputs other
than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not
based on observable market data.
The fair value of unquoted equity securities is not material. There were
no transfers during the years ended December 31, 2010, 2009 and
2008 between level 1 and level 2 of the fair value hierarchy or between
the fair value and amortized cost categories. There were no transfers
during the years ended December 31, 2010, 2009 and 2008 into or
out of level 3 of the fair value hierarchy.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
86 28. Financial assets and liabilities continued
28.2 Income, expense, gains and losses relating to financial instruments recognized in profit or loss during the years ended December 31, 2010
and 2009 are as follows:
2010 (US$ million)
Interest income
Interest expense
Currency gains/(losses), net
Impairment charges
Reversal of impairment charges
Total
2009 (US$ million)
Interest income
Interest expense
Currency gains/(losses), net
Impairment charges
Reclassification from OCI
Reversal of impairment charges
Total
Loans and
receivables1
Available-for-sale
financial assets
Derivative assets
and liabilities held
for trading
Liabilities carried at
amortized cost
90
(5)
–
(12)
43
116
–
–
–
(9)
–
(9)
–
–
(37)
–
–
(37)
–
(167)
–
–
–
(167)
Loans and
receivables1
Available-for-sale
financial assets
Derivative assets and
liabilities held
for trading
Liabilities carried at
amortized cost
88
(20)
–
(16)
–
4
56
–
–
–
(16)
9
–
(7)
–
(17)
(30)
–
–
–
–
(126)
–
–
–
–
Total
90
(172)
(37)
(21)
43
(97)
Total
88
(163)
(30)
(32)
9
4
1 Includes immaterial amounts relating to financial assets designated as at fair value through profit or loss
28.3 Reported gains and losses on revaluation of available-for-sale financial assets for the years ended December 31, 2010 and 2009 were
as follows:
(US$ million)
Impairment losses reported in profit or loss
Unrealized gains/(losses) reported in OCI
2010
(9)
4
2009
(7)
(18)
(47)
(126)
(124)
Syngenta
Financial Report 2010
29. Derivatives and hedge accounting
The following table shows fair values, notional amounts and maturities of Syngenta’s derivative financial instruments held at December 31, 2010,
2009 and 2008, classified by the individual risks being hedged and the applied accounting treatment:
87
2010 (US$ million)
Foreign exchange and interest rate risk:
Cash flow hedges
Fair value hedges
Undesignated
Total foreign exchange and interest rate risk
Commodity price risk:
Cash flow hedges
Undesignated
Total commodity price risk
2009 (US$ million)
Foreign exchange and interest rate risk:
Cash flow hedges
Fair value hedges
Undesignated
Total foreign exchange and interest rate risk
Commodity price risk:
Cash flow hedges
Undesignated
Total commodity price risk
2008 (US$ million)
Foreign exchange and interest rate risk:
Cash flow hedges
Fair value hedges
Net investment hedges
Undesignated
Total foreign exchange and interest rate risk
Commodity price risk:
Cash flow hedges
Undesignated
Total commodity price risk
Fair value
Notional amounts
Positive
Negative
<90 days
90 – 180
days
180 days –
1 year
1 – 5
Years
More than
5 years
Total
318
52
190
560
1
40
41
(74)
(73)
(219)
(366)
(1)
–
(1)
544
–
6,993
7,537
8
185
193
610
3,168
–
845
–
251
1,141
2,000
–
1,455
3,419
3,141
1
16
17
15
46
61
1
–
1
–
–
–
–
–
–
–
5,463
2,000
8,089
15,552
25
247
272
Fair value
Notional amounts
Positive
Negative
<90 days
90 – 180
days
180 days –
1 year
1 – 5
Years
More than
5 years
Total
238
53
60
351
4
3
7
(98)
(8)
(93)
(199)
–
(11)
(11)
643
–
5,067
5,710
8
33
41
405
–
929
1,334
20
15
35
686
2,518
–
1,400
126
278
803
–
4,530
2,203
6,263
141
827
11
30
41
4,044
1,081
12,996
28
7
35
–
–
–
67
85
152
Fair value
Notional amounts
Positive
Negative
<90 days
90 – 180
days
180 days –
1 year
1 – 5
Years
More than
5 years
Total
199
31
3
279
512
11
5
16
(167)
(1)
(22)
(313)
(503)
(12)
(67)
(79)
620
–
359
5,087
6,066
52
56
108
366
796
2,975
–
–
–
–
787
255
–
–
90
578
203
–
–
5,335
203
359
6,219
1,153
1,051
3,065
781
12,116
4
22
26
46
49
95
–
–
–
–
–
–
102
127
229
For cash flow hedges, the periods when the cash flows for the underlying hedged items are expected to occur and affect profit or loss are not
significantly different from those of the hedging instruments as presented in the table above.
Syngenta
Financial Report 2010
Notes to the Syngenta Group Consolidated Financial Statements
Syngenta maintained the following derivatives that qualified as hedges
of net investment in foreign operations:
– During 2010, in line with the risk management strategy, no new
positions were taken to hedge any of the existing or new net
investments in foreign operations. Gains/(losses) relating to hedges
entered into during previous reporting periods continue to be
presented in OCI.
– During 2009, Syngenta designated forward contracts and net
purchased currency options as hedges of net investments in foreign
operations including monetary items that are accounted for as part
of the net investment.
Hedge effectiveness for these hedges is measured on a quarterly or
semi-annual basis. Syngenta uses the forward rate methodology to
measure the effectiveness of the foreign exchange or commodity
forward contracts. Hedge effectiveness for the swaps is measured by
comparing the movement in the present value of future coupon bond
payments to the movement in the present value of forecast future cash
flows of the associated swaps. The option hedge designation and
effectiveness tests excluded the time value element of US$5 million
(2009: US$5 million) which was recorded in profit or loss as incurred.
There was an immaterial amount of hedge ineffectiveness related to
these hedges.
88 29. Derivatives and hedge accounting continued
29.1 Fair value hedges
Syngenta maintains a combination of interest rate swaps and cross
currency swaps that qualify for hedge accounting as designated fair
value hedges relating to bond liabilities.
Hedge effectiveness for these hedges is measured on a quarterly
basis by comparing the movement in the period of the present value
of future coupon bond payments to the movement in the value of the
associated swaps. There is an immaterial amount of hedge
ineffectiveness on these swaps.
Gains/(losses) on fair value hedges recognized in profit or loss for the
years ended December 31, 2010 and 2009 were as follows:
(US$ million)
Hedging instruments:
Interest rate swaps
Cross currency swaps
Total gains/(losses) from
hedging instruments
Underlying hedged items
2010
2009
54
(32)
22
(22)
–
(9)
(9)
9
29.2 Cash flow hedges and hedges of net investment in foreign
operations
Syngenta maintains the following derivatives that qualify for cash flow
hedge accounting:
– Cross currency swaps (or a combination of cross currency swaps
and interest rate swaps) designated as hedges of foreign exchange
risk (or both foreign exchange risk and interest rate risk) of future
interest and principal payments on bond liabilities.
– Interest rate swaps designated as hedges of interest rate risk of
future interest payments on forecasted bond liabilities.
– Foreign exchange forward contracts and net purchased currency
options designated as hedges of foreign exchange risk of forecast
foreign currency cash flows (uncommitted foreign exchange
transaction risk) arising from (i) forecast sales and purchases
between Syngenta subsidiaries and (ii) forecast transactions with
third parties.
– Commodity forwards, futures and purchased options designated as
hedges of commodity price risks of anticipated and committed
future purchases.
Syngenta
Financial Report 2010
Gains/(losses) on derivative instruments recognized as cash flow hedges and hedges of net investments in foreign operations during the years
ended December 31, 2010 and 2009 were as follows:
89
2010 (US$ million)
Opening balance of gains/(losses) recognized in OCI
Income taxes
Gains/(losses) recognized in OCI
(Gains)/losses removed from OCI and recognized in profit or loss
Cost of goods sold
General and administrative
Financial expense, net
Closing balance of gains/(losses) recognized in OCI
2010
2009
Foreign
exchange and
interest rate
risk
Commodity
risk
Net investment
hedges
Foreign
exchange and
interest rate risk Commodity risk
Net investment
hedges
(38)
(50)
113
–
(26)
22
21
(10)
4
1
15
–
–
10
(67)
–
(5)
–
–
–
(72)
(90)
(6)
227
–
(107)
(62)
(38)
(24)
(10)
(6)
30
–
–
(10)
(57)
–
(19)
–
–
9
(67)
30. Subsequent events
On February 8, 2011, the Board of Directors approved a new
restructuring program under which Syngenta will build on the
combined strength of its Crop Protection and Seeds businesses to
fully integrate global commercial operations, driving efficiencies in cost
of goods sold and operating expenses, in order to increase customer
and shareholder value. Significant cash costs will be charged to
expense over the next four years. Annual operating income savings are
targeted by 2015, consisting of savings resulting from commercial
integration and from procurement and supply chain efficiencies.
Approval of the Consolidated Financial Statements
These consolidated financial statements were approved by the Board
of Directors on February 8, 2011.
During 2009, some equity loans between Syngenta affiliates were
repaid. As a result, US$9 million of net investment hedging losses were
removed from OCI and recognized in profit or loss.
29.3 Undesignated hedges
Gains and losses on hedging instruments that were not designated for
hedge accounting purposes were as follows:
– Foreign currency forward contracts that are effective economic
hedges of balance sheet exposures as part of Syngenta’s
committed exposure program. The fair value movements of the
hedges and the retranslation of the underlying exposures are
recorded in profit or loss and largely offset.
– Foreign currency forward contracts that are effective economic
hedges of forecast cash flows arising from anticipated sales and
purchases between Syngenta affiliates and third party transactions.
The amount recorded in profit or loss in 2010 was a gain of US$3
million (2009: gain of US$3 million). Similar currency forward
contracts that were not designated for hedge accounting were not
used prior to 2009.
– Purchased foreign currency options are effective economic hedges
of the exposure arising from written foreign currency options offered
to customers as part of a sales contract. The fair values of both the
purchased and written foreign currency options are recorded in
profit or loss and largely offset.
– Commodity derivative contracts that are effective economic hedges
of the anticipated purchases of raw materials or purchases and
sales of crops in barter arrangements. The amount recorded in profit
or loss in respect of these derivatives in 2010 was a gain of US$7
million (2009: gain of US$3 million). The corresponding forecasted
transactions offsetting the above amounts in profit or loss may occur
in the following periods.
Syngenta
Financial Report 2010
Report of Syngenta Management on Internal Control
over Financial Reporting
90 Syngenta’s Board of Directors and management are responsible
for establishing and maintaining adequate internal control over
financial reporting. Syngenta’s internal control system was designed
to provide reasonable assurance to Syngenta’s management and
Board of Directors regarding the reliability of financial reporting and
the preparation and fair presentation of its published consolidated
financial statements.
All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be
effective may not prevent or detect misstatements and can provide
only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Syngenta’s management assessed the effectiveness of the Group’s
internal control over financial reporting as of December 31, 2010.
In making this assessment, it used the criteria established in
Internal Control – Integrated Framework issued by the Committee
of Sponsoring Organsizations of the Treadway Commission (COSO).
Based on this assessment, management has concluded that, as
of December 31, 2010, Syngenta’s internal control over financial
reporting was effective based on those criteria.
Ernst & Young AG, Switzerland, an independent registered public
accounting firm, has issued an opinion on the effectiveness of the
Group’s internal control over financial reporting which is included in
this financial report.
/s/ Michael Mack
Chief Executive Officer
Basel, February 8, 2011
/s/ John Ramsay
Chief Financial Officer
Syngenta
Financial Report 2010
Report of the Group Auditors on Internal Control
over Financial Reporting
To the Board of Directors and Shareholders of
Syngenta AG, Basel
Basel, February 8, 2011
We have audited Syngenta AG and subsidiaries’ (the “Group”) internal
control over financial reporting as of December 31, 2010, based on
criteria established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (the COSO criteria). Syngenta AG’s Board of Directors
and management are responsible for maintaining effective internal
control over financial reporting, and management is responsible for
its assessment of the effectiveness of internal control over financial
reporting, which is included in the Report of Syngenta Management on
Internal Control over Financial Reporting (page 90). Our responsibility
is to express an opinion on the Group’s internal control over financial
reporting based on our audit.
We conducted our audit of the Group’s internal control over financial
reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
91
A company's internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting
includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our opinion, the Group maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2010,
based on the COSO criteria.
We also have audited, in accordance with Swiss law, Swiss Auditing
Standards, International Standards on Auditing and the standards of
the Public Company Accounting Oversight Board (United States), the
2010 consolidated financial statements of the Group and our report
dated February 8, 2011 expressed an unqualified opinion thereon.
Ernst & Young AG
/s/ Nigel Jones
Licensed audit expert
(Auditor in charge)
/s/ Stuart A. Reid
Licensed audit expert
Syngenta
Financial Report 2010
Report of the Statutory Auditor on the Consolidated
Financial Statements
92 To the General Meeting of
Syngenta AG, Basel
Basel, February 8, 2011
As statutory auditor, we have audited the consolidated financial
statements of Syngenta AG and subsidiaries (the “Group”), which
comprise the consolidated balance sheet and the related consolidated
statements of income, comprehensive income, changes in equity and
cash flows, and notes thereto (pages 25 to 89), for the year ended
December 31, 2010.
Board of Directors’ Responsibility
The Board of Directors is responsible for the preparation and fair
presentation of the consolidated financial statements in accordance
with International Financial Reporting Standards as issued by the
International Accounting Standards Board and the requirements of
Swiss law. This responsibility includes designing, implementing and
maintaining an internal control system relevant to the preparation and
fair presentation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error. The Board of
Directors is further responsible for selecting and applying appropriate
accounting policies and making accounting estimates that are
reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated
financial statements based on our audit. We conducted our audit in
accordance with Swiss law, Swiss Auditing Standards, International
Standards on Auditing and the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance
whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
Ernst & Young AG
considers the internal control system relevant to the entity’s
preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating
the appropriateness of the accounting policies used and the
reasonableness of accounting estimates made, as well as evaluating
the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements for the year ended
December 31, 2010, give a true and fair view of the financial position,
the results of operations and the cash flows in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board, and comply with Swiss law.
Report on Other Legal or Regulatory Requirements
We confirm that we meet the legal requirements on licensing
according to the Auditor Oversight Act (AOA) and independence
(Art. 728 Code of Obligations (CO) and Art. 11 AOA) and that there
are no circumstances incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss
Auditing Standard 890, we confirm that an internal control system
exists, which has been designed for the preparation of the
consolidated financial statements according to the instructions of the
Board of Directors.
We recommend that the consolidated financial statements submitted
to you be approved.
We also have audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the Group’s
internal control over financial reporting as of December 31, 2010,
based on criteria established in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO), and our report dated February 8,
2011 expressed an unqualified opinion on the effectiveness of the
Group’s internal control over financial reporting.
/s/ Nigel Jones
Licensed audit expert
(Auditor in charge)
/s/ Stuart A. Reid
Licensed audit expert
Financial Statements of Syngenta AG
Income Statement
(for the years ended December 31, 2010 and 2009)
(CHF million)
Income:
Dividend income
Income from financial assets
Total income
Expenses:
Financial expenses
Administrative expenses
Revaluation of marketable securities
Taxes
Total expenses
Net income
Syngenta
Financial Report 2010
93
2010
2009
725
121
846
(13)
(10)
–
(9)
(32)
610
115
725
(11)
(10)
26
(10)
(5)
814
720
Syngenta
Financial Report 2010
Financial Statements of Syngenta AG
94 Balance Sheet (prior to earnings appropriation)
(at December 31, 2010 and 2009)
(CHF million)
Assets
Non-current financial assets:
Investments
Loans to subsidiaries
Total non-current financial assets
Current assets:
Cash and cash equivalents
Receivables from subsidiaries
Marketable securities, including treasury shares
Total current assets
Total assets
Equity and liabilities
Equity
Share capital
Legal reserves:
General legal reserve:
Reserve from capital contributions
Other general legal reserve
Reserve for treasury shares
Free reserves
Total reserves
Earnings brought forward
Net income of the period
Total available earnings
Total equity
Liabilities
Accounts payable to subsidiaries
Accounts payable and accrued liabilities to others
Total liabilities
Notes
2010
2009
3, 7
4
5
6
6
6
6
6
4,098
36
4,134
1
29
559
589
4,098
40
4,138
–
32
279
311
4,723
4,449
(9)
(9)
(674)
(2)
(558)
(537)
(263)
–
(279)
(928)
(1,771)
(1,470)
(1,870)
(814)
(2,684)
(4,464)
(248)
(11)
(259)
(2,009)
(720)
(2,729)
(4,208)
(227)
(14)
(241)
Total equity and liabilities
(4,723)
(4,449)
Notes to the Financial Statements of Syngenta AG
Syngenta
Financial Report 2010
1. Introduction
The financial statements of Syngenta AG (the “Company” or
“Syngenta”) have been prepared in accordance with the requirements
of the Swiss law for companies, the Code of Obligations (“CO”).
Syngenta AG was incorporated on November 12, 1999 and is
registered with the commercial register in the canton of Basel Stadt.
2. Accounting policies
95
Exchange rate differences
Except for investments in subsidiaries, associates and joint ventures,
which are translated at historical rates, all assets and liabilities
denominated in foreign currencies are translated into Swiss francs
(CHF) using year-end rates of exchange. Realized exchange gains
and losses arising from these as well as those from business
transactions denominated in foreign currencies are recorded in the
income statement. Net unrealized exchange losses are recorded in the
income statement; net unrealized gains, however, are deferred within
accrued liabilities.
Non-current financial assets
Financial assets are recorded at acquisition cost less any impairment
losses.
Marketable securities
Marketable securities are valued at the lower of cost or market value.
3. Significant investments in subsidiaries, associates and joint ventures
The following are the significant legal entities in the Syngenta group of companies (the “Group”). Please refer to Note 2, “Accounting Policies” to
the consolidated financial statements for the appropriate consolidation method applied to each type of entity.
Country
Argentina
Syngenta Agro S.A.
Bermuda
Syngenta Reinsurance Ltd.
Brazil
Percentage owned
by Syngenta
Local
currency
Share capital in
local currency
Function of company
100%
100%
ARS
USD
411,462,898
Sales/Production
120,000
Insurance
Syngenta Proteção de Cultivos Ltda.
100%
BRL
1,172,924,609
Sales/Production/Research
Canada
Syngenta Crop Protection Canada, Inc.
100%
CAD
–
Sales/Research
France
Syngenta Seeds S.A.S.
Syngenta Agro S.A.S.
Germany
Syngenta Agro GmbH
Italy
Syngenta Crop Protection S.p.A.
Japan
Syngenta Japan K.K.
100%
100%
100%
100%
100%
EUR
EUR
EUR
EUR
JPY
50,745,240
22,543,903
2,100,000
Sales/Production/Development
Sales/Production
Sales
5,200,000
Sales/Production/Development
–
Sales/Production/Research
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
96
3. Significant investments in subsidiaries, associates and joint ventures continued
Share capital in
local currency
Percentage owned
by Syngenta
Local
currency
Country
Function of company
Liechtenstein
Syntonia Insurance AG
Mexico
Syngenta Agro, S.A. de C.V.
Netherlands
Syngenta Seeds B.V.
Syngenta Finance N.V.
Syngenta Treasury N.V.
Panama
Syngenta S.A.
Russian Federation
OOO Syngenta
Singapore
100%
100%
100%
100%
100%
100%
100%
USD
MXN
EUR
EUR
EUR
USD
RUB
14,500,000
Insurance
157,580,000
Sales/Production/Development
488,721 Holding/Sales/Production/Research
45,000
45,001
10,000
675,000
Finance
Holding/Finance
Sales
Sales
Syngenta Asia Pacific Pte. Ltd.
100%
SGD
1,588,023,595
Holding/Sales
Switzerland
Syngenta Supply AG
Syngenta Crop Protection AG1
Syngenta Agro AG
Syngenta Finance AG1
Syngenta Participations AG1
United Kingdom
Syngenta Limited
USA
Syngenta Crop Protection, LLC
Syngenta Seeds, Inc.
Syngenta Corporation
1 Direct holding of Syngenta AG
100%
100%
100%
100%
100%
100%
100%
100%
100%
CHF
CHF
CHF
CHF
CHF
GBP
USD
USD
USD
250,000
Sales
257,000 Holding/Sales/Production/Research
2,100,000
10,000,000
25,000,020
Sales/Production/Research
Finance
Holding
85,000,000
Holding/Production/Research
1
–
100
Sales/Production/Research
Sales/Production/Research
Holding/Finance
The main changes from 2009 in the list of significant legal entities are the removal of Garst Seed Company and Golden Harvest Seeds Inc.
because during 2010, following the purchase of the 10% non-controlling interests, the entities merged into Syngenta Seeds, Inc. In addition, the
legal form of Syngenta Crop Protection, Inc. changed to Syngenta Crop Protection, LLC.
4. Treasury shares
The number of treasury shares held by the Company and subsidiaries qualifying under article 659 item b (CO) and their movements are as
follows:
Total treasury registered shares held by Syngenta AG at January 1
Sold in the year under various Employee/Management Share Plans
Average sale price per share, CHF
Purchased during the year
Cancelled on July 8, 2009
Average book value per cancelled share, CHF
Total treasury registered shares held by Syngenta AG at December 31
Average purchase price per share, CHF
2010
2009
1,617,901
3,953,617
(492,100)
(570,708)
285.67
1,266,950
243.44
550,000
–
–
(2,315,008)
272.25
2,392,751
1,617,901
233.29
172.33
Syngenta
Financial Report 2010
5. Share capital
Total Syngenta AG registered shares
Nominal value per share (CHF)
Total share capital (CHF million)
97
December 31,
2010
94,599,849
0.10
9.46
Movement
in period
–
–
–
December 31,
2009
94,599,849
0.10
9.46
On April 20, 2010, the Annual General Meeting (AGM) agreed to the creation of authorized capital in the maximum amount of CHF 945,998.50,
anytime until April 20, 2012, through issuance of a maximum of 9,459,985 fully paid-in registered shares with a par value of CHF 0.10 each.
6. Equity
(CHF million)
Balance at December 31, 2008
Appropriation of available earnings
Adjustment of reserve for treasury shares
Cancellation of shares
Purchase of own shares
Dividend payment
Profit of the year
Balance at December 31, 2009
Appropriation of available earnings
Adjustment of reserve for treasury shares
Purchase of own shares
Dividend payment
Transfer to the reserve from capital contributions
Adjustment of reserves after transfer for capital
contributions
Profit of the year
General legal
reserve
Reserve for
treasury shares
Free
reserves
Share
capital
10
(1)
9
263
263
–
–
–
–
–
–
–
–
–
411
2
–
676
819
–
(41)
(629)
130
–
–
279
(34)
313
–
(52)
52
–
558
317
700
41
–
(130)
–
–
928
300
35
(313)
–
(359)
(54)
–
537
Available
earnings
3,268
(700)
–
–
–
(559)
720
2,729
(300)
–
–
Total
4,677
–
–
(630)
–
(559)
720
4,208
–
1
–
(559)
(559)
–
–
814
2,684
–
–
814
4,464
Balance at December 31, 2010
9
The general legal reserve is split into the reserve from capital contributions of CHF 674 million and other general legal reserves of CHF 2 million.
As a consequence of the new Corporate Tax Law Reform II, reserves arising from capital contributions of CHF 52 million and CHF 359 million
have been transferred to general legal reserves from the reserve for treasury shares and from free reserves, respectively. The transfers out of the
reserve for treasury shares have been matched by a transfer in from free reserves.
7. Contingent liabilities
The Company has guaranteed various borrowings and credit facilities. As at December 31, 2010 and 2009 the maximum amounts guaranteed
and the amounts in effect were as follows:
(CHF million)
Euro medium-term notes
Private placement notes
Commercial paper
Credit facilities
Group treasury lending activities
Total
Maximum amount
December 31,
Amount in effect at
December 31,
2010
2,753
234
2,342
1,124
8,591
2009
3,103
258
2,578
1,238
9,142
15,044
16,319
2010
2,753
234
–
–
3,724
6,711
2009
3,103
258
–
–
4,390
7,751
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
98
7. Contingent liabilities continued
Acquisitions
In connection with the acquisition by Syngenta of Golden Harvest in
2004, Syngenta AG guarantees, as a primary obligor, the full discharge
of all the covenants, agreements, obligations and liabilities of Syngenta
Crop Protection AG and the Golden Harvest Companies under the
Transaction Agreement.
In connection with the acquisition by Syngenta of Advanta from
AstraZeneca and Cosun in 2004, Syngenta AG guarantees the
due and punctual discharge by Syngenta Crop Protection AG of
its obligations of whatever nature under the Sale and Purchase
Agreement and the Tax Deed.
In connection with the sale of parts of Advanta to Fox Paine & Co in
2004, Syngenta AG guarantees the due and punctual discharge by
Syngenta Crop Protection AG, Syngenta Alpha B.V. and former
Advanta Group companies under the Sale and Purchase Agreement
and the Tax Deed.
Contingent liabilities
At the request of the Dutch authorities, Syngenta AG has guaranteed
to Syngenta Treasury N.V., a limited liability company organized under
the laws of the Netherlands and an indirectly wholly owned subsidiary,
all liabilities from other Group companies resulting from Syngenta
Treasury N.V.’s lending activities, subject to a threshold of EUR 5
million (corresponding to Syngenta Treasury N.V.’s share capital).
Other
In a letter dated August 12, 2008, Syngenta AG confirmed that it will
ensure that Syngenta Limited will honor its obligation to guarantee the
solvency and due payment of benefits of its pension plan.
Syngenta AG is part of a group of Swiss entities of Syngenta which are
jointly and severally liable for the whole Swiss VAT amount due to the
Swiss Tax authorities by this group.
8. Financial instruments
International Swap and Derivatives Association (ISDA) contracts were put into place under which Syngenta Treasury N.V. is the contractual party
on behalf of other Group companies. Syngenta AG guarantees transactions entered into under these ISDA contracts. Details of the nature of
these transactions are disclosed in Notes 27, 28 and 29 to the consolidated financial statements. The total amounts entered into under these
ISDA contracts and in respect of which Syngenta AG has provided a guarantee are outlined in the table below:
(CHF million)
Financial instruments
Notional amount
Positive fair value
Negative fair value
2010
13,717
2009
12,224
2010
512
2009
350
2010
(340)
2009
(195)
9. Accomplishment of a risk assessment
Syngenta AG participates in the global, integrated risk management
processes of the Syngenta Group. Within the scope of these
processes, the Board of Directors evaluates the risks once a year in
accordance with article 663b paragraph 12 (CO) and discusses if any
corresponding actions are necessary.
10. Significant shareholders
At December 31, 2010, to the knowledge of Syngenta AG, there was
one (2009: one) shareholder exceeding the threshold of 5% voting
rights in Syngenta’s share capital.
At December 31, 2010, Syngenta itself held 2,392,751 (2009:
1,617,901) shares in treasury corresponding to 2.53% (2009: 1.71%)
of the share capital, as outlined in Note 4.
11. Compensation, shareholdings and loans
Overview
The Compensation Report describes Syngenta’s approach to
compensation, its principles and elements in general as well as its
governance. It also provides detailed information on the compensation
of the Board of Directors and the Executive Committee for 2010.
This is in accordance with Appendix 1 of the Swiss Code of Best
Practice for Corporate Governance and in line with Swiss law and
the relevant reporting standards.
Compensation System
Compensation principles
Syngenta’s compensation principles are centered on the need
to provide simple, transparent, performance-oriented and market
competitive compensation for all employees, including senior
executives. In particular, the compensation policy and system are
designed to:
– attract and retain highly qualified successful employees to deliver
the strategic plans and objectives of the Company
– encourage and reward personal contribution and individual
performance in accordance with our Company values
– align reward with sustainable performance and recognize excellence
– align the interests of employees, shareholders, and other
stakeholders
All employees, including senior executives, are subject to a formalized
performance management process. This process is built on a number
of guiding principles with the aim of aligning individual, team and
organizational objectives, stretching performance, and supporting
individual development.
The Syngenta remuneration structure supports both individual and
organizational performance by linking individual performance and the
financial success of the Company to compensation. The link to
compensation is one of the key elements by which Syngenta
differentiates and recognizes individual performance and leadership.
Annual performance ratings of individuals influence both the annual
base pay and variable compensation. Changes to annual base pay
are influenced by individual performance and salary budgets that
are based on the economic situation of Syngenta.
Syngenta
Financial Report 2010
The compensation of all employees is reviewed on a regular basis and
is designed with reference to total compensation levels for comparable
positions at relevant benchmark companies. For example, an individual
who achieves his or her performance objectives is generally awarded
compensation comparable to the median level of compensation
provided by benchmark companies. Each country regularly conducts
market research and participates in the Hay Group, Hewitt, Mercer
and Towers Watson salary surveys plus any appropriate local surveys.
Where possible, employee salaries for each role are benchmarked
against two groups within their country:
– Related industry group – examples would include BASF, Bayer,
Dow Chemical, Du Pont, Monsanto
– General industry group – especially for functional roles such as
Finance and Legal, comparisons to a range of industries are used,
including chemical, pharmaceutical, industrial, oil and gas, and
consumer goods
Compensation of members of the Executive Committee is also
reviewed on a regular basis. It is benchmarked against a set of relevant
comparable companies and markets that are evaluated and selected
to provide the best representation of the labor markets in which
Syngenta competes for top talent. For 2010, this included the following
two groups of comparable companies:
– Swiss Group: Twelve comparable multinational companies
headquartered in Switzerland, which included ten relevant SMI
companies and two SMIM companies. Financial institutions and
Insurance companies were excluded.
Global Head of Human Resources and Global Head of Compensation
and Benefits.
99
Compensation elements
Three elements of compensation are relevant for Syngenta:
– fixed compensation – base salary/pay
– variable compensation – short-term incentive plans and, for selected
senior executives, long-term incentive plans
– benefits
Fixed compensation
Fixed compensation is typically paid in cash on a monthly basis as
base salary, which is set by reference to the:
– size and scope of the job
– skills, experience and performance of the individual
– level or grade to which the job is assigned
– external market value of the job
Base salaries also serve as the basis for variable compensation.
In order to ensure accuracy, base salaries are subject to review
every year by considering such factors as benchmark data, market
movement, economic considerations, and the performance
management process.
In addition, certain employees may receive customary cash allowances
for expenses and, if applicable, housing, relocation or transition
assistance as part of an international transfer.
– Pan-European Group: Twenty companies selected from the FT Euro
500 list. The companies are in the chemical, pharmaceutical,
industrial, oil and gas, and consumer goods sectors, and all have
significant R&D operations. These comparable companies are larger
or smaller than Syngenta, and are based in Belgium, Germany,
England, France, Ireland, the Netherlands and Switzerland.
In addition, the Compensation Committee reviews data from selected
agribusiness, pharmaceutical, and chemical companies headquartered
in the US and Canada.
Variable compensation
Variable compensation consists of short-term and, for certain senior
executives, long-term incentives, and is linked to performance.
The variable compensation is determined by the size and scope of
the role, location, skills and experience of the individual, business
performance and individual performance, as well as the external
market value of the respective role. Depending on the applicable
plans, variable compensation can be granted in cash, shares,
restricted stock units and/or stock options.
Taking into account all of this data, the performance of the business
and individuals, and the recommendation of the external advisor,
the Compensation Committee uses its judgment to determine the
appropriate compensation levels of the Executive Committee.
Every year, the Syngenta Compensation Committee reviews with the
external advisor the sets of comparable companies and industries for
appropriateness and comparability. Pension and insurance information
are reviewed periodically.
The compensation of members of the Board of Directors is compared
to the same Swiss companies that are relevant for compensation of
the members of the Executive Committee.
The market data for each role in the Executive Committee is supplied
by the external compensation advisor (Hay Group), which also
provides market information and advice on compensation for the
Chairman and other non-executive Directors.
The Board of Directors and the Compensation Committee currently
consult with the Hay Group on compensation policy matters and other
relevant market information. Syngenta collaborates with the Hay Group
only in compensation related areas. As necessary, other independent
compensation advisors are consulted. In addition, support and
expertise are provided by internal compensation experts, including the
A significant portion of the short-term and long-term incentive
programs for members of the Executive Committee and senior
managers is equity based and subject to a vesting period. The
purpose of equity-based compensation is to encourage the Executive
Committee and senior managers to focus on the long-lasting success
and growth of the Company, and to align their compensation with
shareholders’ interests.
Both short-term and long-term awards are determined solely on the
basis of pre-defined performance measures. They are only awarded
if the employee or executive fully meets the performance objectives.
Details of the various short-term and long-term incentive plans are
provided in the following sections.
Benefits
Benefits relate mainly to pension, insurance and healthcare plans
with the purpose to establish a reasonable level of security for all
employees and their dependants with respect to retirement, health,
disability and death. The level of benefits is subject to country-specific
laws, regulations and market practices. Other benefits that may be
paid according to local market practice include long-service awards
and perquisites. Employees at all levels who have been transferred
onto an international assignment may also receive benefits in line with
the Syngenta International Assignee Policy.
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
100
11. Compensation, shareholdings and loans continued
Table 1. Fixed and variable compensation
Chairman of
the Board
Members
of the Board
Executive
Committee
Senior
Management
All
employees
•
•
Fixed compensation
Fixed pay
Variable compensation
Short-Term Incentive (STI)
Deferred Share Plan (DSP)
Long-Term Incentive Plan (LTI)
Sales Incentive Plan (SIP)
Employee Share Purchase Plan
(ESPP)
•
•
•
•
•
•
•
•
•
•
•
•
Description
Cash – all employees
Members of the Board
may opt for cash
and/or shares
•
Cash – all employees
For senior management
and Executive
Committee, cash
and/or equity
For senior management
and Executive
Committee, blocked
shares (or share awards)
and matching shares
For senior management
and Executive
Committee, stock
options and Restricted
Stock Units
Linkage to
compensation principles
Attract and retain
high quality
employees; reference
to relevant markets
and comparable
companies
Performance-based
compensation
Equity-based
compensation with
focus on sustainable
business performance
Equity-based
compensation focusing
on sustainable business
performance
• Cash – sales employees
only
Performance-based
compensation
•
Plan for all Switzerland
based Syngenta
employees: Share
purchase up to CHF
5,000.– p.a. at 50%
discount rate
Identification with
and commitment
towards Company
Short-Term Incentive (STI)
The Short-Term Incentive (STI) is an annual discretionary bonus in cash
for eligible employees throughout Syngenta. The amount of STI paid
is based on the achievement of fi
performance. The target value for STI is defined as a percentage of the
annual base salary and is reviewed periodically.
nancial results and individual
For employees below Executive Committee, both the financial results
and the individual performance are weighted equally at 50 percent for
the STI calculation. This variable compensation component allows
employees to participate in the Company’s success and also to be
rewarded for their individual performance. On an annual basis, specific
financial targets are set for each business unit. They are determined for
the various functions in different business units and may comprise
measures such as group net income, divisional results of business
value added, earnings before interest, tax and amortization, etc.
The personal targets are set as part of the performance management
process. Depending on the percentage achieved against the relevant
targets, both the financial and individual awards can range from 0
percent to 200 percent of the target.
measures such as group net income, earnings per share, return on
invested capital, business value added, all based on the respective
annual results.
Deferred Share Plan (DSP)
The DSP is an enhancement to the STI for members of the
Executive Committee and selected senior managers, and is designed
to reward leadership, innovation and performance. It aims to provide
an opportunity for greater share ownership among the Company’s key
senior management to align reward with sustainable business
performance. Under the DSP a fixed percentage of the STI is
mandatorily delivered in either deferred shares or deferred share
awards instead of cash. Deferred shares are blocked from trading for
three years, and share awards convert to tradable shares after the
deferral period. In addition, a participant may elect to allocate a further
portion of the STI in deferred shares or share awards on a voluntary
basis. At the end of the three year deferral period, Syngenta matches
on a one-for-one basis every deferred share or share award delivered
through the DSP, which doubles the total number of shares ultimately
received by the employee.
For Executive Committee members, a greater emphasis is placed on
the achievement of financial results, with the weighting of the STI
elements being 70 percent on Group financial measures and 30
percent on individual performance. The achieved financial results are
The Compensation Committee determines the value of a deferred
share at grant date by reference to the market price of the Syngenta
share. The value of such a deferred share may rise and fall in line with
the Syngenta share price.
Syngenta
Financial Report 2010
The determination of the number of deferred shares is based on the
share price at grant date and the amount of STI eligible for deferral
(mandatory and any voluntary amount). The calculation is made by
applying the following formula:
Number of deferred shares =
(Mandatory Deferral % + Voluntary Deferral %) x STI award
Grant Value
RSU: Syngenta restricted stock units represent the right to receive
Syngenta shares free of charge at the end of the three-year vesting
period. To calculate the number of RSU awarded, half of the LTI award
is divided by the share value at the date of grant. The value of an RSU
is set equal to the share price determined for deferred shares
under the DSP (see paragraph on DSP). After a three-year vesting
period, each RSU converts automatically into one free tradable
Syngenta share.
101
The matching of the deferred shares or share awards is subject
to continued employment with Syngenta until after the expiration
of the three-year deferral period. If retirement age is reached prior
to expiration of the deferral period, the matching is accelerated.
Both the vesting of stock options and RSU are subject to continued
employment with Syngenta until after the expiration of the three-year
vesting period. If retirement age is reached prior to expiration of the
vesting period, vesting is accelerated.
Long-Term Incentive (LTI)
The LTI is a long-term element of the compensation of members of the
Executive Committee and selected senior managers, and is designed
to reward leadership, innovation and performance. It provides
participants with stock-based incentives that link the potential amount
of total compensation to Syngenta’s market value (share price). It also
helps them to align their business contribution more closely with the
interests of our shareholders. Participants are granted an LTI award
as a percentage of their base salary, based on the achievement of
individual performance objectives. They receive 50 percent as stock
options and 50 percent as restricted stock units (RSU), subject to a
three-year blocking period. The grants of stock options and RSU in
equal parts balance the advantages and risks of each instrument.
Stock options and RSU allow participants to benefit from increases in
the stock price. At vesting, RSU convert to shares regardless of the
market price of Syngenta shares. For options to have any value, the
market price of Syngenta’s shares must exceed the defined exercise
price during the exercise period.
Stock options: Syngenta stock options represent the right to purchase
Syngenta shares at a fixed price for a fixed period of time. To calculate
the number of options awarded, half of the value of the LTI award is
divided by the option value at the grant date. The fair value of an option
is measured using the Black-Scholes-Merton formula, a commonly
accepted stock option pricing method. The exercise price of the
options is set equal to the share price determined for deferred shares
under the DSP at the day of grant (see paragraph on DSP). Stock
options have a term of 10 or 11 years and cannot be exercised during
a three-year vesting period following the date of grant. After the three
year vesting period, each option gives the right to purchase one share
at a fixed price. There is a period of (usually) seven years to decide
when to exercise, after which time the options would lapse.
Sales Incentive Plans (SIP)
The SIP is a sales bonus measurement and payment instrument
designed for employees in sales functions. It offers these employees
the chance to be compensated for their personal and team success,
based on the performance achieved against sales targets.
The SIP does not apply to members of the Executive Committee.
Employee Share Purchase Plan (Switzerland)
The Employee Share Purchase Plan (ESPP) is an instrument that
allows Swiss employees to become Syngenta shareholders by
purchasing shares at a preferential price. All employees in Switzerland,
including members of the Executive Committee, are eligible to
participate in the ESPP. Shares purchased under the ESPP are
subject to a blocking period of three years. Under the Swiss ESPP,
participants can purchase shares for 50 percent of the share value at
the date of grant up to a maximum share value of CHF 5,000.
Where reasonably possible, similar all-employee share plans are
in operation in other countries, taking into account local practices, tax
and legal requirements.
Compensation structure
The compensation elements described in the Compensation Report
refer primarily to the practice in Switzerland. Although many of the
elements are operated consistently on a global basis, local market
variations apply.
Correlation between fixed and variable, and between cash and
equity-based compensation for members of Executive
Committee (including CEO)
According to the Syngenta compensation plans, the correlation
between variable and fixed compensation for the members of the
Executive Committee is as follows:
Table 2. Fixed and variable compensation
Fixed compensation
Variable compensation
Total
Members of the Executive Committee
Chief Executive Officer
Target incentive
%
Maximum incentive
%
Target incentive
%
Maximum incentive
%
100
150
250
100
270
370
100
244
344
100
438
538
Table 2 shows that variable compensation at both target and maximum level forms a higher proportion of total compensation than fixed
compensation.
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
102
11. Compensation, shareholdings and loans continued
The split of total compensation between cash and equity-based components is as follows:
Table 3. Cash and equity-based compensation
Cash payments
Equity-based awards
Total
100% in table 3 are equal to 250/370/344/538 respectively in table 2
Members of the Executive Committee
Chief Executive Officer
Target incentive
%
Maximum incentive
%
Target incentive
%
Maximum incentive
%
44
56
100
32
68
100
34
66
100
25
75
100
Table 3 shows that equity-based compensation at both target and
maximum level is higher than cash compensation. Members of
the Executive Committee are therefore highly exposed to share
price movements in order to focus them on the long-term success
of Syngenta and to align their interests with those of the Syngenta
shareholders.
Compensation governance
The Compensation Committee of the Board of Directors is the
supervisory and governing body for the Syngenta compensation policy
and practices for senior executives and members of the Board of
Directors. It has the responsibility to determine, review and propose
compensation and benefits in accordance with the authorization levels
set out below. The Committee consists of four independent non-
executive Directors. No Committee member is cross-linked with any of
the non-executive Directors of the Board or members of the Executive
Committee. The CEO is a guest at the meetings of the Committee
except when his own compensation is reviewed. The Chairman and
the Vice Chairman do not attend the meeting when the Committee
agrees on proposals to the Board of Directors with regard to their
own compensation.
Authorities for compensation-related decisions are governed as follows:
Table 4. Authorization levels
Topic
Compensation of the Chairman
Compensation of non-executive Directors
Compensation of the CEO
Recommendation
Decision-making authority
Compensation Committee
Compensation Committee
Compensation Committee
Board of Directors
Board of Directors
Board of Directors
Compensation of other members of the Executive Committee
–
Compensation Committee
STI and LTI awards for the CEO
STI and LTI awards for other members of the
Executive Committee
Compensation Committee
Board of Directors
–
Compensation Committee
The Committee reviews annually the compensation policies and
systems applicable to members of the Executive Committee as
well as non-executive Directors of the Company, and makes
recommendations to the Board of Directors. The Compensation
Committee also has the responsibility for any decision affecting
pension, insurance, and other benefit policies and systems for
members of the Executive Committee (excluding the CEO, for which
the Board of Directors has responsibility). Furthermore, it has authority
to make decisions with regard to any material pension or insurance
plans of the Company, and any shareholding and compensation
program that involves the use of equity.
For all employees, the authorization of any amendments to their
compensation would, as a minimum, be by their line manager and the
next level of management. If the proposed change could impact
others, then a decision would be made by the appropriate level of
management at country, regional or Group level.
Compensation of the Board of Directors and the Executive
Committee
Compensation of non-executive Directors
Non-executive Directors receive an annual fee (cash or shares,
or a combination of both). This consists of a basic fee for services
to the Board and an additional fee for individual assignments to
committees of the Board. No variable compensation is paid to
non-executive Directors.
Table 5. Annual fees for non-executive Directors
Function
Base fees:
Chairman of the Board
Vice-Chairman of the Board
Member of the Board
Additional fees1:
Member of the Chairman’s Committee
Head of the Audit Committee
Member of the Audit Committee
Head of the Compensation Committee
Member of the Compensation Committee
Member of the Corporate Responsibility Committee
Chairman of the Science and Technology Advisory Board
1 No additional fees are payable to the Chairman and the Vice-Chairman
Syngenta
Financial Report 2010
103
Annual fee (CHF)
2,350,000
360,000
205,000
100,000
110,000
30,000
70,000
20,000
20,000
20,000
Non-executive Directors have the option of receiving part of their
annual fee in the form of shares that are either freely tradable or
blocked from trading for five years. This option exists in order to
maintain their focus on Syngenta’s long-term, sustainable success
and align their interests with shareholder’s interests.
Shares are granted once a year. The grant value of a Syngenta share
at grant date is the market price.
Compensation of the Chairman
The non-executive Chairman of the Board receives a predefined
annual fee but no variable compensation. The annual fee is paid partly
in cash and partly in a mandatory portion of restricted shares.
The value of the fixed share portion is equal to one-third of the net fee
(after tax and social security charges). The grant value of a Syngenta
share at grant date is the market price. The shares are blocked from
trading for a period of three years. In addition, the Chairman receives
certain benefits such as assistance with housing, commuting, and tax
services (see Table 6a for details).
Subject to his re-election at the AGM 2011, and
reduction of his time commitment, the base fee for the Chairman (cash
and shares) will be adjusted from CHF 2,350,000 to CHF 1,600,000.
anticipating
a
Compensation of the CEO
The Chief Executive Officer (CEO) is a member of the Board
of Directors and a member of the Executive Committee.
His compensation is disclosed as part of 2010 compensation
for members of the Executive Committee.
2010 Compensation of the Board of Directors
Table 6a. Compensation of non-executive Directors in 2010
Non-executive Directors
Martin Taylor
Stefan Borgas
Peggy Bruzelius
Pierre Landolt2
David Lawrence
Peter Thompson
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Total
Fee in
cash
1,948,253
70,500
315,000
Fee in
free
shares
–
–
–
11,468
213,540
122,500
117,500
122,666
117,633
56,255
168,766
Fee in
restricted
shares
401,747
164,527
–
–
–
–
–
152,500
275,000
360,000
–
–
–
152,604
–
–
Number
free
shares
–
–
–
806
463
444
637
–
–
–
Number
restricted
shares
1,489
621
–
–
–
–
–
576
–
–
Total
number
shares
Benefits
in kind/
cash1
Total annual
fee/benefits
received
Company
social
security
cost
Total
annual
cost
1,489 234,024 2,584,024
– 2,584,024
621
–
806
463
444
637
576
–
–
–
–
–
–
–
–
–
–
–
235,027 12,409
247,436
315,000 79,979
394,979
225,008 14,417
239,425
245,166 32,773
277,939
235,133
225,021
–
–
235,133
225,021
305,104 17,058
322,162
275,000 17,597
292,597
360,000 23,003
383,003
3,428,976
622,605
718,878
2,350
2,686
5,036 234,024 5,004,483 197,236 5,201,719
1 Housing, commuting and tax services, including refund of relevant tax (cash)
2 According to Pierre Landolt and the Sandoz Family Foundation, the Foundation is the economic beneficiary of the fee
All values in Swiss francs
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
104
11. Compensation, shareholdings and loans continued
Table 6b. Compensation of non-executive Directors in 2009 (Table 3a in the report 2009)
Non-executive Directors
Martin Taylor
Stefan Borgas2
Peggy Bruzelius
Peter Doyle3
Rupert Gasser3
Pierre Landolt4
David Lawrence5
Peter Thompson
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Total
Fee in
cash
1,890,586
47,000
295,000
81,667
120,000
Fee in
free
shares
–
–
–
–
–
11,980
223,166
98,000
65,361
117,500
117,703
56,247
168,742
Fee in
restricted
shares
459,414
109,890
–
–
–
–
–
–
–
169,000
55,000
341,667
–
–
–
112,755
220,041
–
Number
free
shares
–
–
–
–
–
857
251
452
648
–
–
–
Number
restricted
shares
1,833
422
–
–
–
–
–
–
–
433
845
–
Total
number
shares
Benefits
in kind/
cash1
1,833 176,370 2,526,370
Total annual
fee/benefits
received
Company
cost social
security
Total
annual
cost
– 2,526,370
422
–
–
–
857
251
452
648
433
845
–
–
–
–
–
–
–
–
–
–
–
–
156,890
8,318
165,208
295,000 70,594
365,594
81,667
–
81,667
120,000
7,544
127,544
235,146 15,062
250,208
163,361
235,203
224,989
–
–
–
163,361
235,203
224,989
281,755 16,214
297,969
275,041 14,062
289,103
341,667 21,837
363,504
3,283,647
574,972
902,100
2,208
3,533
5,741 176,370 4,937,089 153,631 5,090,720
1 Housing, commuting and tax services, including refund of relevant tax (cash)
2 Stefan Borgas was elected to the Board of Directors at the AGM 2009
3 Rupert Gasser’s and Peter Doyle’s term of office ended at the AGM 2009
4 According to Pierre Landolt and the Sandoz Family Foundation, the Foundation is the economic beneficiary of the fee
5 David Lawrence was elected to the Board of Directors at the AGM 2009
All values in Swiss francs
2010 Compensation of former Directors
In 2010, no compensation was paid to any former non-executive
or executive Director.
2010 Compensation of members of the Executive Committee
In 2010, the members of the Executive Committee, including the CEO,
received salaries, incentives and other elements, including benefits in
kind, in line with the compensation policy and as detailed in Table 7
below.
In 2010, the CEO received the highest total compensation; his
compensation is reported in Table 8.
Tables 7 and 8 show in the column “compensation 2009” the number
of shares, RSU and options that were granted on February 22, 2010,
for the year 2009 (excluding the shares purchased under the
Employee Share Purchase Plan). The numbers of units granted were
determined after the preparation of the 2009 report and are therefore
disclosed retroactively in this 2010 report. The actual values of the
granted shares, options and RSU differ slightly from the values
reported in 2009. This is the result of the practice that the numbers
of shares, options and RSU at grant are rounded to the next whole
numbers of units.
David Lawrence and other former members of the Executive
Committee received contractual but immaterial benefits in kind in
relation to their international transfer to their home country. Services
from tax advisors relating to years 2008 and 2009 were provided and
paid in 2010. These benefits are set out in Table 9.
Syngenta
Financial Report 2010
105
Table 7. Compensation for members of the Executive Committee (a total of 8 people in 2010)
Compensation elements
Fixed compensation in cash
Allowances in cash
STI compensation in cash1
Total compensation in cash
DSP deferred shares2, 3, 4
DSP matching shares2, 3, 5
LTI options6
LTI RSU7
ESPP shares
Insurance, pension costs
Benefits in kind8
Total compensation
Company social security cost9
Compensation related to earlier years
DSP matching shares10
Company social security cost
Number of units
2010
2009
Values
2010
2009
6,302,082
6,235,425
341,020
898,916
446,676
456,145
7,542,018
7,138,246
–
–
–
–
119
4,978
4,978
2,623,024
2,623,024
38,671
2,920,771
8,799
152
2,920,771
16,672
1,412,259
1,412,259
2,495,511
2,496,276
19,608
1,622,657
1,649,371
199,506
337,446
20,468,443
16,960,976
767,235
685,060
5,754
8,223
1,614,572
1,924,182
220,718
256,072
Notes refer to 2010 unless other years are indicated.
1 Short-term incentive in cash, payable in 2011 for 2010
2 The numbers of deferred shares, matching shares, options and RSU for 2009 were granted on February 22, 2010, after the preparation of the 2009 report
3 The numbers of shares, options and RSUs at grant for 2009 were rounded to the next whole number, the values actually granted therefore differ slightly from the values disclosed in the 2009 report
4 Short-term incentive in deferred shares or share awards, will be granted in 2011 for 2010 (the number of shares is not determined at the time of preparing this report)
5 Actual value of DSP matching, shares will be granted in 2014 (the number of shares is not determined at the time of preparing this report)
6 Long-term incentive in options, will be granted in 2011 for 2010 (the number of options is not determined at the time of preparing this report)
7 Long-term incentive in RSU, will be granted in 2011 for 2010 (the number of RSU is not determined at the time of preparing this report)
8 Value of housing, commuting, relocation, education and tax services including refund of relevant tax
9 Due to the rounding of allocated units and the relevant values (see footnote 3), the cost differs slightly from the value disclosed in the 2009 report
10 Matching shares, granted in 2010 for 2006
All values in Swiss francs
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
106
11. Compensation, shareholdings and loans continued
Table 8. Highest compensation for a member of the Executive Committee
Compensation elements
Fixed compensation in cash
Allowances in cash
STI compensation in cash1
Total compensation in cash
DSP deferred shares2, 3, 4
DSP matching shares2, 3, 5
LTI options6
LTI RSU7
ESPP shares
Insurance, pension costs
Benefits in kind8
Total compensation
Company social security cost9
Compensation related to earlier years
DSP matching shares10
Company social security cost
Number of units
2010
2009
Values
2010
2009
–
–
–
–
17
1,684
1,684
12,398
2,820
19
1,315,008
1,307,508
109,138
216,883
107,580
119,398
1,641,029
1,534,486
867,533
867,533
960,000
960,000
2,382
399,584
24,522
477,751
477,594
800,043
800,034
2,451
383,546
25,642
5,722,583
4,501,547
198,652
153,533
1,404
2,298
393,962
119,279
537,732
45,555
Notes refer to 2010 unless other years are indicated.
1 Short-term incentive in cash, payable in 2011 for 2010
2 The numbers of deferred shares, matching shares, options and RSU for 2009 were granted on February 22, 2010, after the preparation of the 2009 report
3 The numbers of shares, options and RSUs at grant for 2009 were rounded to the next whole number; the values actually granted therefore differ slightly from the values disclosed in the 2009 report
4 Short-term incentive in deferred shares or share awards, will be granted in 2011 for 2010 (the number of shares is not determined at the time of preparing this report)
5 Actual value of DSP matching, shares will be granted in 2014 (the number of shares is not determined at the time of preparing this report)
6 Long-term incentive in options, will be granted in 2011 for 2010 (the number of options is not determined at the time of preparing this report)
7 Long-term incentive in RSU, will be granted in 2011 for 2010 (the number of RSU is not determined at the time of preparing this report)
8 Value of housing, commuting, relocation, education and tax services including refund of relevant tax
9 Due to the rounding of allocated units and the related values (see footnote 3), the cost differs slightly from the value disclosed in the 2009 report
10 Matching shares, granted in 2010 for 2006
All values in Swiss francs
Table 9. Compensation to former members of the Executive Committee
Compensation elements
Fixed compensation in cash1
STI/LTI compensation in cash2
Total compensation
Pension, insurance, benefits in kind3
Company social security cost
Compensation related to earlier years
DSP matching shares4
Company social security cost
Number of units
Values
2010
2009
2010
2009
40,443
3,035
2,121
208,690
277,027
485,717
28,990
63,267
490,158
62,740
Notes refer to 2010 unless other years are indicated.
1 David Lawrence, January 1 – April 17, 2009
2 STI/LTI awards 2009 paid prorated in cash due to retirement
3 Benefits in kind are post employment tax and other services to executives that retired from work, including the refund of relevant tax
4 Matching shares, granted in 2009 for 2005, 2006 and 2007 due to retirement in 2009
All values in Swiss francs
Syngenta
Financial Report 2010
2010 Holding of shares and options
Members of the Board of Directors (shares)
Table 10. Holding of shares of non-executive Directors* at December 31, 2010
107
Non-executive Directors
Martin Taylor
Stefan Borgas
Peggy Bruzelius
Pierre Landolt1
David Lawrence
Peter Thompson2
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Total free/restricted shares
Total shares
Peter Thompson ADS2
Total ADS 2010
Number of free shares
Number of restricted shares
% voting rights
2010
6,622
–
2,464
7,525
11,226
1,298
3,456
1,857
23
3,000
37,471
48,078
2009
2,744
–
2,464
4,219
9,651
854
2,819
2,177
23
2,300
27,251
36,987
2010
4,998
1,043
–
509
24
–
–
2,077
1,407
549
10,607
2009
5,324
422
–
509
24
–
–
1,501
1,407
549
9,736
2010
2009
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
Number of free ADS
Number of restricted ADS
% voting rights
2010
7,000
7,000
2009
7,000
7,000
2010
2009
2010
2009
–
–
–
–
< 0.1%
< 0.1%
< 0.1%
< 0.1%
1 According to Pierre Landolt and the Sandoz Family Foundation, of the total amounts 7,184 shares were held by the Foundation at December 31, 2010, and 3,878 were held at December 31, 2009
2 Peter Thompson holds shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Members of the Executive Committee (shares)
Table 11a. Holding of shares by members of the Executive Committee* as of December 31, 2010
Members of the Executive Committee
Michael Mack
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Total shares 2010
Number of vested shares
Number of unvested shares
Free
shares
10,448
2,000
18,869
1,184
3,949
42
4,020
2,561
Restricted
shares
10,046
522
3,724
1,257
2,583
60
3,007
3,656
%
voting rights
Unconverted
share awards
Unmatched
shares
Unconverted
RSU
<0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
–
1,918
1,958
1,031
–
3,418
–
–
9,986
2,380
5,622
2,269
2,523
3,418
2,966
3,596
7,689
3,327
3,998
2,717
2,304
2,388
2,264
2,476
Total
Vested/
unvested
38,169
10,147
34,171
8,458
11,359
9,326
12,257
12,289
43,073
24,855
< 0.1%
8,325
32,760
27,163
136,176
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
108
11. Compensation, shareholdings and loans continued
Table 11b. Holding of shares by members of the Executive Committee* at December 31, 2009 (Table 8a in the report 2009)
Members of the Executive Committee
Active members
Michael Mack1
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Total shares 2009
Michael Mack ADS1
Total ADS 2009
Number of vested shares
Number of unvested shares
Free
shares
Restricted
shares
%
voting rights
Unconverted
share awards
Unmatched
shares
Unconverted
RSU
6,211
2,000
21,182
35
3,915
58
3,025
2,672
39,098
34,463
34,463
9,768
43
3,008
971
2,979
62
2,493
3,746
23,070
–
–
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
–
–
–
1,918
3,760
1,321
–
3,413
488
–
9,706
1,918
6,706
2,254
2,917
3,413
2,938
3,684
6,279
4,544
4,439
2,450
2,479
2,113
1,961
2,182
10,900
33,536
26,447
133,051
–
–
–
–
–
–
34,463
34,463
Total
Vested/
unvested
31,964
10,423
39,095
7,031
12,290
9,059
10,905
12,284
1 Michael Mack held shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
The number of vested shares of each individual includes free shares and blocked shares to which voting rights are attached. The unvested
shares are shown separately by category including unconverted share awards, unmatched shares and restricted share units (RSU).
Members of the Board of Directors (options)
Table 12a. Holding of options by non-executive Directors* at December 31, 2010
Year of allocation
Underlying equity
Term (years)
Exercise period (years)
Option: share/ADS ratio
Exercise price CHF
Exercise price USD
Vesting status
Options held at December 31, 2010:
Martin Taylor
Stefan Borgas
Peggy Bruzelius
Pierre Landolt1
David Lawrence2
Peter Thompson3
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Totals by grant year
Total options on ADS
Total options on shares
2008
Share
2005
Share
10
7
1:1
10
7
1:1
301.50
127.38
2004
ADS
11
8
1:1
14.53
–
–
–
–
–
2004
Share
2003
Share
2002
Share
11
8
1:1
11
8
1:1
11
8
1:1
89.30
59.70
98.00
All vested
–
–
–
–
–
–
–
–
–
4,484
2,652
1,713
–
–
–
–
–
–
2,652
1,713
–
–
–
–
2,050
2,121
3,425
–
–
–
–
–
–
3,532
–
1,363
6,560
–
1,682
1,615
–
–
–
–
–
8,192
6,560
6,534
7,425
6,851
–
–
–
–
3,225
–
–
–
–
–
3,225
6,560
32,227
After 2005 no options were granted to non-executive Directors
1 According to Pierre Landolt and the Sandoz Family Foundation, all options are held by the Foundation
2 David Lawrence received options as a former member of the Executive Committee
3 Peter Thompson holds options on shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Financial Report 2010
Table 12b. Holding of options by non-executive Directors* at December 31, 2009 (Table 9a in the report 2009)
109
Options on shares
Year of allocation
Underlying equity
Term (years)
Exercise period (years)
Option: share ratio
Exercise price CHF
Vesting status
Options held at December 31, 2009:
Martin Taylor
Stefan Borgas1
Peggy Bruzelius
Pierre Landolt2
David Lawrence1, 3
Peter Thompson4
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Totals by grant year
Total options on shares
Options on ADS
Year of allocation
Underlying equity
Term (years)
Exercise period (years)
Option: ADS ratio
Exercise price USD
Vesting status
2008
Share
10
7
1:1
2007
Share
10
7
1:1
2006
Share
2005
Share
10
7
1:1
10
7
1:1
2004
Share
11
8
1:1
2003
Share
11
8
1:1
2002
Share
2000
Share
11
8
1:1
10
7
1:1
301.50
226.70
185.00
127.38
89.30
59.70
98.00
76.50
All vested
–
–
–
–
–
–
–
–
–
–
–
–
1,312
1,281
1,061
685
–
–
–
–
–
–
–
–
–
–
–
3,532
4,484
2,652
1,713
2,500
3,225
3,213
4,214
–
–
–
–
–
–
–
–
–
–
–
1,363
–
1,682
1,615
–
–
–
–
–
–
–
2,652
1,713
–
–
–
–
2,050
2,121
3,425
–
–
–
–
–
–
–
–
–
3,213
4,214
9,504
7,815
8,486
7,536
2,500
2004
ADS
11
8
1:1
14.53
6,560
2000
ADS
10
7
1:1
8.68
12,500
All vested
–
–
–
–
–
3,225
46,493
Options held at December 31, 2009:
Peter Thompson4
Total options on ADS
19,060
After 2005 no options were granted to non-executive Directors
1 Stefan Borgas and David Lawrence were elected to members of the Board of Directors at the AGM 2009
2 According to Pierre Landolt and the Sandoz Family Foundation, all options were held by the Foundation
3 David Lawrence received the options in 2006 – 2008 while he was an executive of Syngenta
4 Peter Thompson held options on shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
110
11. Compensation, shareholdings and loans continued
Members of the Executive Committee (options)
Table 13a. Holding of options by members of the Executive Committee* as of December 31, 2010
Year of allocation1
2010
2008
2009
2007
Underlying equity
Term (years)
Exercise period (years)
Option: share/ADS ratio
Exercise price CHF
Vesting status
Options held as of December 31, 2010:
Members of the Executive Committee
Michael Mack
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Totals by grant year
Total unvested options
Total vested options
Total options on shares
Share
Share
Share
Share
10
7
1:1
10
7
1:1
283.70
233.43
unvested
10
7
1:1
10
7
1:1
2006
Share
2005
Share
2004
Share
10
7
1:1
10
7
1:1
11
8
1:1
301.50
226.70
185.00
127.38
89.30
vested
12,398
16,426
4,669
6,075
7,077
3,440
5,127
3,589
3,304
3,276
3,739
3,798
2,381
6,843
4,790
3,920
4,055
4,435
4,506
–
5,292
3,362
2,739
2,988
1,666
2,431
–
–
2,369
3,993
2,023
2,360
2,453
–
–
2,959
4,915
2,212
2,031
3,059
38,671
47,356
23,147
19,273
22,253
–
–
–
–
–
–
4,138
4,048
–
–
–
986
5,124
–
–
–
–
4,048
109,174
50,698
159,872
1 All options granted in 2003 and earlier years under the Company option plan are exercised
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Financial Report 2010
Table 13b. Holding of options by members of the Executive Committee* at December 31, 2009 (Table 10a in the report 2009)
Year of allocation1
2007
2009
2008
2006
2005
2005
Underlying equity
Term (years)
Exercise period (years)
Option: share/ADS ratio
Exercise price
Vesting status
Options held as of December 31, 2009:
Members of the Executive Committee
Michael Mack2
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
111
2004
Share
11
8
1:1
Share
Share
Share
Share
ADS
Share
10
7
1:1
10
7
1:1
10
7
1:1
10
7
1:1
10
7
1:1
10
7
1:1
CHF
233.43
CHF
301.50
Unvested
CHF
226.70
CHF
185.00
USD
21.30
CHF
127.38
CHF
89.30
Vested
16,426
4,669
6,075
7,077
47,319
2,381
6,843
4,790
3,920
4,055
4,435
4,506
–
5,292
3,362
2,739
2,988
1,666
2,431
–
6,930
2,369
3,993
2,023
2,360
2,453
–
–
2,959
4,915
2,212
2,031
3,059
–
–
–
–
–
–
–
–
–
–
4,138
5,920
–
3,502
986
–
–
–
4,048
–
–
–
–
Totals by grant year
47,356
23,147
26,203
22,253
47,319
14,546
4,048
Total vested options on shares
Total unvested options on shares
Total options on shares (vested and unvested)
Total options on ADS (all vested)
40,847
96,706
137,553
47,319
1 All options granted in 2003 and earlier years under the Company option plan are exercised
2 Michael Mack held options on shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Financial Report 2010
Notes to the Financial Statements of Syngenta AG
112
11. Compensation, shareholdings and loans continued
Contractual provisions, loans, additional benefits
The notice periods for members of the Executive Committee and
the Chief Executive Officer are in accordance with market practice.
All employment agreements with members of the Executive
Committee and the CEO are subject to notice periods of 12 months.
The agreements with the non-executive Directors are not subject to
notice periods. They end on expiry of the Directors’ term of office.
The employment agreements with members of the Executive
Committee, including the CEO, and the agreements with the
members of the Board of Directors, including the Chairman, do not
have any change of control clauses. The agreements with members
of the Executive Committee or the Board of Directors do not contain
any provisions for termination payments (“golden parachute” or
“handshake” or similar arrangements) with regard to severance or
other events of termination. In case the Chairman is removed from
office by the Board of Directors prior to expiry of his term of office,
he is entitled to a payment of one fourth of the annual fee.
In 2010, no severance payments were made to former Directors or
members of the Executive Committee and there were also no loans
or credits granted to active or former Directors or members of the
Executive Committee, or parties related to them and, at December 31,
2010, there were no such loans or credits outstanding.
In 2010, no guarantees, pledges, collateral, promises or other forms
of liabilities were entered into with third parties to the benefit of non-
executive Directors or members of the Executive Committee, or parties
related to them, and, at December 31, 2010, there were no such
liabilities outstanding.
In 2010, no claims, receivables, or debts of non-executive Directors
or members of the Executive Committee, or parties related to them,
were waived or cancelled, and, at December 31, 2010, no such items
were outstanding.
In 2010, no compensation was paid to any active Director or member
of the Executive Committee for other services provided, and, as of
December 31, 2010, no such payment was outstanding.
Valuation and accrual principle
The “accrual basis” is applied to all elements of compensation
including STI and LTI awards. They are disclosed in accordance with
the year for which they are paid. The STI and LTI awards in this 2010
report relate to performance and results in 2010, and will be paid in
2011 or later. This is in line with the accrual principle as requested by
relevant guidelines. The number of equity units to be granted for 2010
will be determined after the editorial deadline of this report. As a result,
while the compensation amount is known and included, the numbers
of shares, RSU and options to be issued for this amount is not
determined and not included in this report.
The number of equity units that were granted for 2009 had been
determined after the editorial deadline of the relevant report. For that
reason, the actual numbers of shares, RSU, and options awarded for
2009 are included in this 2010 report (see Tables 7 and 8).
The shares for the incentive year 2010 that will be allocated to the DSP
in 2011 will be matched in 2014 if the vesting condition is met. In this
report, the same value as determined for the deferral of shares in 2011
was used to state the value of the expected matching of shares
in 2014.
Some exceptions to the “accrual principle” apply to personal tax
services, which the Company has paid for some members of the
Executive Committee and the Chairman of the Board of Directors.
Tax compliance services typically lag behind the year of compensation
by one or more years. The amounts payable for services that relate
to employment income 2010 cannot be determined at this time.
In Notes 2 and 24 to the Syngenta Group consolidated financial
statements included in the Financial Report, the amounts disclosed
for equity-settled awards is the expense recognized for the period
calculated in accordance with IFRS 2 “Share Based Payment”. In this
report, the same equity-settled awards are disclosed as the values at
grant date and consequently differ. Cash-settled awards are disclosed
in accordance with the year for which they are paid.
Appropriation of Available Earnings of Syngenta AG
(CHF million)
Available earnings:
Balance brought forward from previous year
Net profit of the year
Total available earnings
Appropriation of available earnings:
Payment of a dividend
Transfer to free reserves
Total available earnings after appropriation
Dividend waived for treasury shares held by the Company
To be carried forward on this account
Syngenta
Financial Report 2010
2010
2009
113
1,870
814
2,684
–
(500)
2,184
–
2,184
2,009
720
2,729
(568)
(300)
1,861
9
1,870
In 2009, the AGM approved a dividend payment of CHF 6.00. For 2010, the Board of Directors proposes to the Annual General Meeting,
instead of a dividend distribution out of the available earnings, a dividend out of reserves from capital contributions (legal reserves) of CHF 7.00
per share. Shares held in 2010 by Syngenta for cancellation are not included in the dividend calculation. The dividend attributable to the treasury
shares under the control of the Company at the date of the dividend payment will be waived, and therefore reduce the total dividend payment
made, but not the amount of the dividend per share.
Syngenta
Financial Report 2010
Report of the Statutory Auditor on the Financial Statements
114
To the General Meeting of
Syngenta AG, Basel
Basel, February 8, 2011
As statutory auditor, we have audited the financial statements of
Syngenta AG, which comprise the income statement, balance sheet
and notes (pages 93 to 112) for the year ended December 31, 2010.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial
statements in accordance with the requirements of Swiss law and the
company’s articles of incorporation. This responsibility includes
designing, implementing and maintaining an internal control system
relevant to the preparation of financial statements that are free from
material misstatement, whether due to fraud or error. The Board of
Directors is further responsible for selecting and applying appropriate
accounting policies and making accounting estimates that are
reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with Swiss law and Swiss Auditing Standards. Those
standards require that we plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal control system relevant
to the entity’s preparation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the
entity’s internal control system. An audit also includes evaluating the
appropriateness of the accounting policies used and the
reasonableness of accounting estimates made, as well as evaluating
the overall presentation of the financial statements. We believe that the
audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements for the year ended December
31, 2010 comply with Swiss law and the company’s articles of
incorporation.
Report on other legal requirements
We confirm that we meet the legal requirements on licensing
according to the Auditor Oversight Act (AOA) and independence
(Art. 728 Code of Obligations (CO) and Art. 11 AOA) and that there
are no circumstances incompatible with our independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss
Auditing Standard 890, we confirm that an internal control system
exists, which has been designed for the preparation of financial
statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available
earnings complies with Swiss law and the company’s articles of
incorporation. We recommend that the financial statements submitted
to you be approved.
Ernst & Young AG
/s/ Nigel Jones
Licensed audit expert
(Auditor in charge)
/s/ Stuart A. Reid
Licensed audit expert
Syngenta
Financial Report 2010
115
Cautionary Statement Regarding
Forward-Looking Statements
This Annual Review contains forward-looking statements, which
can be identified by terminology such as “expert”, “would”, “will”,
“potential”, “plans”, “prospects”, “estimated”, “aiming”, “on track”,
and similar expressions. Such statements may be subject to risks
and uncertainties that could cause actual results to differ materially
from these statements.
We refer you to Syngenta’s publicly available filings with the US
Securities and Exchange Commission for information about these
and other risks and uncertainties. Syngenta assumes no obligation to
update forward-looking statements to reflect actual results, changed
assumptions or other factors. This document does not constitute, or
form part of, any offer or invitation to sell or issue, or any solicitation of
any offer, to purchase or subscribe for any ordinary shares in Syngenta
AG, or Syngenta ADSs, nor shall it form the basis of, or be relied on in
connection with, any contract therefore.
For the business year 2010, Syngenta has published three reports:
Annual Review (incorporating the Corporate Responsibility Report),
Financial Report, and the Corporate Governance and
Compensation Report.
These publications are also available on the Internet site
www.syngenta.com
All documents were originally published in English.
The Annual Review 2010 and the Corporate Governance Report 2010
are also available in German.
Syngenta International AG, Basel, Switzerland.
All rights reserved. Editorial completion: February 2011.
Syngenta
Financial Report 2010
116
0
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e
R
Financial Report 2010
l
i
i
a
c
n
a
n
F
a
t
n
e
g
n
y
S
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
® Registered trademarks of a Syngenta
Group Company
™ Trademarks of a Syngenta Group Company
The SYNGENTA Wordmark, BRINGING PLANT
POTENTIAL TO LIFE and the Purpose icon
device are trademarks or registered trademarks
of a Syngenta Group Company.
Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016843.040
Corporate Governance and
Compensation Report 2010
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
® Registered trademarks of a Syngenta
Group Company
™ Trademarks of a Syngenta Group Company
The SYNGENTA Wordmark, BRINGING PLANT
POTENTIAL TO LIFE and the Purpose icon
device are trademarks or registered trademarks
of a Syngenta Group Company.
Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016842.040
Corporate Governance Report 2009
Syngenta
Corporate Governance and Compensation Report 2010
Contents
Corporate Governance Report
01
Introduction
01 Organizational structure
02 Capital structure and shareholders
05
11
13
14
Board of Directors
Executive Committee
External auditor
Information policy
Compensation Report
15 Overview
15 Compensation system
18 Compensation governance
19 Compensation of the Board of Directors and the Executive Committee
19
20
23
2010 Compensation of the Board of Directors
2010 Compensation of members of the Executive Committee
2010 Holding of shares and options
28 Contractual provisions, loans and additional benefits
28
Valuation and accrual principle
Syngenta
Corporate Governance and Compensation Report 2010
Appropriate measures are in place to ensure full compliance with all
Corporate Governance related legal requirements, regulations and
internal documents.
01
More information can be obtained on the Syngenta website
www.syngenta.com or by writing to: Syngenta AG, FAO: Company
Secretary, PO Box, CH-4002 Basel, Switzerland.
1 See section “Information policy”
2 The Form 20-F Annual Report is expected to be available by end of February 2011 on
www.syngenta.com, section “Investor Relations”
Corporate Governance Report
Introduction
Corporate Governance at Syngenta is designed to support the
Company in its efforts to create and foster sustainable value for
all stakeholders.
The term “Corporate Governance” refers to Syngenta’s structure and
operational practices. Since the creation of the Company, its Board
of Directors has given priority to the Corporate Governance framework
by proactively and continuously implementing and improving best
corporate governance standards.
Syngenta’s Corporate Governance is aligned and fully compliant with
international standards and practice. The Company meets:
– the legal requirements as set forth in articles 663b and 663c of the
Swiss Code of Obligations
– the SIX Swiss Exchange Directive on Information relating to
Corporate Governance
– the standards established in the “Swiss Code of Best Practice
for Corporate Governance”
– the Corporate Governance Listing Standards of the New York Stock
Exchange (NYSE), as applicable for foreign private issuers1, and
– the applicable requirements of the US Sarbanes-Oxley Act of 2002,
including the certification of its Annual Report on Form 20-F2 by the
CEO and the CFO
Organizational structure
Shareholders
Board of Directors
*CEO
Head Human Resources
Head Corporate Affairs
*COO Crop Protection
*COO Seeds
*Head Global Operations
*Head Business Development
*Head Research & Development
*Head Legal & Taxes
*CFO
*Members of the Executive Committee
Under Swiss company law, Syngenta AG is registered as a stock
corporation (Aktiengesellschaft) that has issued registered shares to
investors. It was first listed on November 13, 2000, and has its main
offices at Schwarzwaldallee 215, CH-4002 Basel. Syngenta AG is the
parent company of the Syngenta Group.
For details regarding the structure of the Company’s operations,
associates and joint ventures, please refer to the information contained
in Note 3 to the Financial Statements of Syngenta AG in the Financial
Report 2010, which can be accessed on www.syngenta.com
(see section “Investor Relations”).
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
02 Capital structure and shareholders
Share capital and shares
The nominal share capital of Syngenta as of December 31, 2010, is
CHF 9,459,984.90, fully paid-in and divided into 94,599,849 registered
shares with a par value of CHF 0.10 each.
Syngenta shares are listed and traded in Switzerland on the SIX Swiss
Exchange and in the United States on the New York Stock Exchange
in the form of American Depositary Shares.
Syngenta shares
Primary exchange
Valor
ISIN
Symbol
Currency
Par value
SIX Swiss Exchange
1103746
CH0011037469
SYNN
CHF
0.10
Syngenta ADS (American Depositary Shares)
Primary exchange
New York Stock Exchange
Instrument
ADS (American Depositary Share)
Ratio
ISIN
Symbol
CUSIP
1 ordinary share = 5 ADS
US87160A1007
SYT
87160A100
Conditional and authorized share capital, bonus certificates,
participation certificates
Syngenta does not have any conditional capital and has not issued
any bonus certificates (Genussscheine) or participation certificates
(Partizipationsscheine).
At the Annual General Meeting (AGM) of April 20, 2010, shareholders
voted to give the Board of Directors the authority to increase the share
capital by a maximum of CHF 945,998.50 (10%) anytime until April 20,
2012, through issuance of a maximum of 9,459,985 fully paid-in
registered shares with a par value of CHF 0.10 each. The terms and
conditions of this entitlement to issue authorized capital are set down in
article 4bis of the Articles of Incorporation. The Articles of Incorporation
are available in print or can be downloaded from the Syngenta
website http://www.syngenta.com/global/corporate/en/about-
syngenta/governance/Pages/articles-of-incorporation.aspx.
Changes in capital
Since its establishment in 2000, Syngenta has not increased its
share capital.
The share capital has however been reduced several times by
repayment of nominal value of shares and/or by cancellation of
repurchased shares as approved by the AGM.
The 2008 AGM authorized the Board of Directors to repurchase
shares of up to 10% of the share capital for cancellation and
subsequent further reduction of the share capital. This repurchase
program started in 2010; the shares bought back in 2010 will
be proposed for cancellation to shareholders at the AGM of
April 19, 2011.
Since its foundation in 2000, the share capital of Syngenta has
developed as follows:
AGM date
April 20, 2010
April 21, 2009
April 22, 2008
May 02, 2007
April 19, 2006
April 26, 2005
April 27, 2004
April 29, 2003
April 23, 2002
Share capital (CHF)
Number of fully paid-
in registered shares
9,459,984.90
94,599,849
9,459,984.90
94,599,849
9,691,485.70
96,914,857
10,076,326.70
100,763,267
239,300,188.00
104,043,560
595,662,183.20
106,368,247
934,286,047.20
112,564,584
1,125,645,840.00
112,564,584
1,125,645,840.00
112,564,584
Nominal
value
(CHF)
0.10
0.10
0.10
0.10
2.30
5.60
8.30
10.00
10.00
November 13, 2000
(Foundation)
1,125,645,840.00
112,564,584
10.00
A table with detailed information on changes in the Syngenta share
capital can be found in Note 5 to the Financial Statements of Syngenta
AG in the Financial Report.
Convertible bonds and warrants/options
Syngenta has not issued any convertible bonds.
The Company has issued options under its employee compensation
plans. Details relating to all options granted under the Syngenta
Long-Term Incentive Plan are contained in Note 23 to the Group
Consolidated Financial Statements. Each of the granted options
gives the holder the right to purchase one registered share, or
American Depositary Share (ADS), respectively.
The total of all options outstanding corresponds to 1.4% of the total
share capital as of December 31, 2010.
Syngenta
Corporate Governance and Compensation Report 2010
Shareholder participation rights
Each share recorded and registered under a shareholder’s name
in the Swiss share register of Syngenta entitles its holder to one vote.
There are no preferential rights for individual shareholders.
03
Shares may be voted without any limit in scope if holders expressly
declare having acquired these shares in their own name and for their
own account. In accordance with article 659a of the Swiss Code of
Obligations, the Company cannot exercise the voting rights relating to
the shares held in treasury. A shareholder may at any time request that
Syngenta confirms the number of shares registered under his name in
the Company’s share register. Shareholders are not entitled, however,
to demand the printing and delivery of certificates representing shares.
On the New York Stock Exchange, the shares are traded in the
form of American Depositary Shares (ADS). ADS are US securities
representing Syngenta shares; five ADS represent one Syngenta
share. The Bank of New York Mellon acts as the Syngenta Depositary
for ADS and administers the ADS program in the US. Syngenta ADS
holders are entitled to give written instructions to the Depositary on
how to vote on their behalf at a general meeting.
Shareholders may request a registration in the share register at any
time. For technical reasons, however, the share register closes several
working days prior to a shareholders’ meeting. The closing date is
published well in advance. Only shareholders registered before the
closing date of the share register may vote their shares at a general
meeting of shareholders.
Shareholders may only be represented at a shareholder’s meeting
by their legal representative, another shareholder with the right
to vote, proxies designated in agreements or in regulations relating
to nominees, corporate bodies, independent proxies, or by a bank
or broker.
Syngenta has issued special provisions concerning nominee
registrations: a nominee holding more than 3% of the Company’s
share capital may be registered as a nominee with voting rights only
if the nominee discloses the identity of those ultimate beneficial owners
of shares claiming 1% or more of the Company’s share capital.
Significant shareholders
During the fiscal year 2010, Syngenta made the following notification:
Name and location of shareholder,
nominee or ADS depositary
Date reaching, exceeding or
falling below a threshold value
Notified holding
of voting rights
in % of
Syngenta’s
share capital
The Capital Group Companies, Inc.,
Los Angeles
January 1, 2010
12.28%1
1 Percentage of voting rights granted to a Capital Group subsidiary by funds under management
that previously voted proxies independently
No other party disclosed a notifiable holding in the share capital of
Syngenta AG in the course of 2010. To our knowledge, the following
holdings of 3% or more in the Syngenta share capital, as already
reported and disclosed in the 2009 Corporate Governance Report,
are therefore still valid:
Name and location of shareholder,
nominee or ADS depositary
Date reaching, exceeding or
falling below a threshold value
The Growth Fund of Americas, Inc.,
Los Angeles
January 5, 2009
The BlackRock, Inc., New York
December 1, 2009
2 No updates notified in 2010
Notified holding
in % of
Syngenta’s
share capital
4.942
3.842
To our knowledge, as of December 31, 2010, no other party held 3%
or more of the share capital of Syngenta AG. In addition, Syngenta has
no cross shareholdings exceeding a reciprocal 3% of capital or voting
rights with any other company.
As of December 31, 2010, Syngenta AG itself held 2,392,751 shares
in treasury corresponding to 2.53% of the share capital.
Share capital and shares
Share capital (CHF)
Number of registered shareholders
9,459,984.90
62,433
%
Total number of shares
94,599,849
100
Number of shares registered in the
name of shareholders
Number of shares in dispo
(not registered)
Number of shares per registered shareholder
55,468,787
39,131,062
59
41
1 – 50
51 – 100
101 – 1’000
1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
> 100,000
Shareholders by category (in % of registered shares)
Private individuals
Institutional investors
36,761
11,126
12,970
1,145
156
193
29
53
%
12
88
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
04 General meetings of shareholders
Under Swiss law, an Annual General Meeting must be held within
six months after the end of the Company’s financial year.
Shareholders’ meetings may be convened by the Board of Directors
or, if necessary, by the statutory auditor. An invitation including the
detailed agenda and explanation of proposals by the Board is sent
to every registered shareholder at the latest 20 days before the date
of the Annual General Meeting. The Board of Directors is further
required to convene an extraordinary shareholders’ meeting if
determined by an ordinary shareholders’ meeting, if requested
by shareholders holding in the aggregate at least 10% of the share
capital of Syngenta or if requested by the auditor.
The shareholders’ meeting passes resolutions and holds elections,
if not otherwise required by law or the Company’s Articles of
Incorporation, with the absolute majority of the votes represented.
Under Swiss law and per the Company’s Articles of Incorporation,
a resolution passed at a shareholders’ meeting with a supermajority
of 662/3% of the votes represented and the absolute majority of the
nominal value of the Syngenta shares represented is required for:
– The alteration of the purpose of the Company
– The creation of shares with increased voting powers
– An implementation of restrictions on the transfer of registered shares
and the removal of such restrictions
– An authorized or conditional increase of the share capital
– An increase of the share capital made through a transformation
of reserves, by contribution in kind, for the purpose of an acquisition
of property and the grant of special rights
– A restriction or suspension of preemptive rights
– A change of location of the registered office of the Company
– The dissolution of the Company
In addition, any provision in the Articles of Incorporation for a stricter
voting requirement than the voting requirements prescribed by law or
the existing Articles of Incorporation must be adopted in accordance
with such stricter voting requirements. The Articles of Incorporation
of Syngenta do not contain provisions that lay down stricter voting
requirements for shareholders’ meetings than the voting requirements
prescribed by law and described above.
Other shareholder rights
All shareholders are entitled to equal dividends. American Depositary
Share (ADS) holders receive dividends in proportion to the number
of Syngenta shares represented by ADS.
Syngenta does not apply any restrictions or limitations on the
transferability and tradability of its shares and ADS.
Moreover, one or more shareholders whose combined shareholdings
represent an aggregate nominal value of at least CHF 10,000 may
demand that an item be included in the agenda of a General Meeting
of Shareholders. Such a demand must be made in writing at the latest
60 days before the meeting and specify the items and proposals of
these shareholders.
Change of control
Under the Swiss Stock Exchange Act, shareholders and groups
of shareholders who directly, indirectly or acting in concert acquire
more than 331/3% of the voting rights of a company incorporated in
Switzerland of which at least one class of equity securities is listed on
the Swiss Stock Exchange must submit a takeover bid to all remaining
shareholders. A Company may raise this threshold to 49% of the
voting rights (“opting up”) or may, under certain circumstances, waive
the threshold (“opting out”). The Articles of Incorporation of Syngenta
do not include any such provision.
For more information on this chapter, please refer to the Syngenta
Articles of Incorporation, which are available on the Syngenta
website http://www.syngenta.com/global/corporate/en/about-
syngenta/governance/Pages/articles-of-incorporation.aspx.
Syngenta
Corporate Governance and Compensation Report 2010
Board of Directors
The following chart provides an overview on the Syngenta Board of Directors and its Committees:
05
Martin Taylor, Chairman
Jürg Witmer, Vice Chairman
Michael Mack, CEO
Board of Directors
Stefan Borgas
Peggy Bruzelius
Pierre Landolt
David Lawrence
Peter Thompson
Jacques Vincent
Rolf Watter
Felix A. Weber
Chairman’s Committee
Audit Committee
Compensation Committee
Martin Taylor, Chairman
Jürg Witmer
Michael Mack
Rolf Watter
Peggy Bruzelius, Chairman
Stefan Borgas
Peter Thompson
Felix A. Weber, Chairman
Martin Taylor
Jacques Vincent
Jürg Witmer
Michael Mack (guest)
Corporate Responsibility
Committee
Martin Taylor, Chairman
Michael Mack
Pierre Landolt
David Lawrence
As of December 31, 2010
Qualification, election and terms of office
Syngenta is led by a strong and experienced Board. The Board
includes representatives from six nationalities, drawn from broad
international business and scientific backgrounds. Its members bring
diversity in expertise and perspective to the leadership of a complex,
highly regulated, global business.
The activities performed by the non-executive Directors, apart from
their duties as non-executive Directors of the Board of Syngenta, are
not related to the Company.
The members of the Board of Directors are elected by the
shareholders at the Annual General Meeting. The elections are held
individually. According to the Articles of Incorporation, the terms of
office are coordinated so that every year approximately one-third of all
members of the Board are subject to election; a term of office may not
exceed three years. The members of the Board automatically retire
after the lapse of the twelfth year of office or, if earlier, on expiry of the
seventieth year of age. In each case, retirement becomes effective on
the date of the next Annual General Meeting following such event.
Role of the Board of Directors and the Board Committees
The Board exercises full and effective control of the Company. It holds
ultimate responsibility for the strategy and for the supervision of
executive management. In addition, the Board of Directors takes
an active role in reviewing and enhancing Corporate Governance
within Syngenta.
The main responsibilities of the Board of Directors are the following:
Responsibilities
– Ultimate direction of the business of the Company and the giving of the
necessary directives
– Determination of the duties and responsibilities of the Chairman
of the Board, the Chairman’s Committee, the CEO and the
Executive Committee
– Approval of the organization of accounting, financial control, and
financial planning
– Approval of the quarterly Reports and of the Annual Report for the
Company as a whole and for the Divisions
– Appointment and removal of the persons entrusted with the
management and representation of the Company
– Approval of the principles of leadership and communication
– Ultimate supervision of the persons entrusted with the management
of the Company, specifically in view of their compliance with the law,
the Articles of Incorporation, regulations and directives
– Preparation of General Meetings of shareholders and the carrying out of
the resolutions adopted by such General Meetings of shareholders
– Approval of corporate policy, including financial, investment, personnel,
and safety and environmental protection policies
– Approval of acquisitions/divestments of companies, businesses, of fixed
assets, land, IT projects, product lines and licenses
– Approval of the Company’s entry into new spheres of activity and
withdrawal from existing ones
– Approval of the choice of new or the closing of existing sites of
fundamental significance
– Adoption of resolutions concerning the increase of share capital to
the extent that such power is vested in the Board of Directors, as well
as resolutions concerning the confirmation of capital increases and
respective amendments to the Articles of Incorporation
– Approval of the strategic direction and the strategic plans of the
– Examination of the professional qualifications of the external auditor
Company and of its Divisions; approval of budgets and other financial
targets and decisions on the financial means necessary to attain
those targets
– Determination of the essential features of the organization of
the Company
– Approval of the institution or defense of legal proceedings in cases
of fundamental significance for the Company
– Notification of the court if liabilities exceed assets
The Company Secretary acts as Secretary to the Board
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
06 The Board of Directors meets on a regular basis. The Chairman, after
consultation with the Chief Executive Officer, determines the agenda
for the Board meetings. Any member of the Board of Directors may
request the convening of a meeting or the inclusion of items of
business in the agenda. In 2010, apart from the Board meetings,
Board members conducted discussions with Officers of the Company
to review relevant matters at hand, visited operating locations of the
Company and provided information to management as needed.
The Board of Directors regularly reviews its own and senior
management’s performance, and takes responsibility for succession
planning.
Some of the Board’s responsibilities are delegated to the Chairman’s
Committee, the Audit Committee, the Compensation Committee,
and the Corporate Responsibility Committee. The Board Committees
meet on a regular basis. Their members are provided with the
materials necessary to fulfill their duties and responsibilities, and to
submit full reports to the Board.
Risk Management is of highest importance in Syngenta; responsibility
for this is assumed by the full Board and, within the scope of its duties,
by every individual Board Committee.
The Board members nominate the Chairman of the Board. He shares
responsibility for the strategic direction of Syngenta with the Chief
Executive Officer (CEO). He ensures close liaison between the Board,
its Committees and the CEO. In consultation with the CEO, the
Chairman supervises the implementation of resolutions of the Board
and of its Committees. The Chairman represents, jointly with the CEO,
the interests of the Company as a whole towards authorities and
business associations, both in Switzerland and internationally.
The Board of Directors of Syngenta has delegated the operational
management of business operations to the Executive Committee.
Information and control instruments of the Board of Directors
The Board recognizes the importance of being fully informed on
material matters that impact Syngenta. It supervises management
and monitors its performance through reporting and controlling
processes and through the Board Committees. It ensures that it has
sufficient information to make the appropriate decisions through the
following means:
– All members of the Executive Committee are regularly invited to
attend Board meetings to report on their areas of responsibility,
including key data for the core businesses, financial information,
existing and potential risks, and updates on developments in
important markets. Other members of management attend
Board meetings as deemed necessary by the Board
– At each Board meeting, the CEO reports on the meetings of the
Executive Committee. The Chairman receives the minutes of the
Executive Committee meetings; on request the minutes are available
to all members of the Board of Directors
– All Board Committees regularly meet with members of
management, external advisors and the external auditor
– Important information is regularly sent to the Board
Internal Audit
Internal Audit, as an inspecting and monitoring body, carries out
control, operational and system audits. All organizational units
and associated companies are subject to audit. Audit plans are
reviewed and approved by the Audit Committee, and any suspected
irregularities are reported without delay. Internal Audit maintains
a regular dialogue with the external auditor to share reports and
risk issues arising from their respective audits and to coordinate
their activities.
In connection with the operation of controls, including controls over
financial reporting, a self-certification “Letter of Assurance” process
is in place. The letters of assurance are cascaded down through the
organization. The returned letters are analyzed, evaluated and any
arising issues and deficiencies are reported to the Head of Internal
Audit and the Audit Committee. Internal Audit reports on issues arising
from internal audits to the Audit Committee. The Audit Committee
reports to the Board of Directors.
External auditor
The external auditor is accountable to the Audit Committee, the
Board of Directors and ultimately to the shareholders. At the
completion of the audit, the external auditor presents and discusses
the audit report on the financial statements with the Audit Committee,
highlighting any significant internal control issues identified during the
course of the audit. The external auditor regularly participates in the
Audit Committee meetings, and at least once a year the lead partners
take part in a meeting with the Board of Directors.
Board of Directors oversight over external audit
The Audit Committee, on behalf of the Board of Directors, is
responsible for monitoring the performance of the external auditor,
checking its independence, and coordinating its work with Internal
Audit. In addition, the Audit Committee monitors the implementation
of findings of external and internal auditors by management. The Audit
Committee meets regularly with the lead partners of the external
auditor, as well as with Internal Audit. In addition, it prepares proposals
for the appointment or removal of the external auditor for submission
to the Board, which then nominates the external auditor for election
by the Annual General Meeting. As an additional duty, according to the
US Sarbanes-Oxley Act of 2002, the Audit Committee pre-approves
all audit and non-audit services rendered by the external auditor.
It reports to the Board of Directors about the discussions with the
external auditor. At least once a year, the lead partners take part in
a meeting of the Board of Directors.
Board of Directors
Members
Martin Taylor2
Jürg Witmer
Michael Mack
Stefan Borgas
Peggy Bruzelius
Pierre Landolt
David Lawrence
Peter Thompson
Jacques Vincent
Rolf Watter
Felix A. Weber
1 Five meetings held in 2010
2 Chairman
Meetings attended1
5
5
5
5
5
5
5
5
5
5
5
Syngenta
Corporate Governance and Compensation Report 2010
Chairman’s Committee
Responsibilities
Compensation Committee
Responsibilities
07
– Prepares the meetings of the Board of Directors
– Reviews and sets the compensation of the members of the
– Makes decisions on behalf of the Board in urgent cases
Executive Committee
– Deals with all business for the attention of the Board of Directors, and
comments on matters falling within the Board’s authority before the latter
makes any decision on them
– Makes recommendations to the Board on the compensation of the
Chairman, the CEO and the members of the Board
– Defines the rules of the Long-Term Incentive Plan (LTI) and the
– Acts as Nomination Committee for Board successions
– Upon request of the CEO, approves on its own authority appointments
to selected senior positions
– Approves acquisitions/divestments of companies, businesses, fixed
assets, land, IT projects, product lines and licenses within the financial
limits established by the Board of Directors
The Chairman’s Committee consists of four members: the Chairman,
the Vice Chairman, the CEO and one other member of the Board; the
Company Secretary acts as Secretary to the Committee.
Members
Martin Taylor2
Jürg Witmer
Michael Mack
Rolf Watter
1 Five meetings held in 2010
2 Chairman
Audit Committee
Responsibilities
Meetings attended1
5
5
5
4
– Monitors the performance of external and internal auditors as well as the
independence of the external auditor
– Monitors the implementation of findings of external and internal auditors
by Management
– Assesses the quality of the financial reporting and prepares Board
decisions in this area
– Reviews critical accounting policies, financial control mechanisms and
compliance with corresponding laws and regulations
The Audit Committee consists of at least three independent, non-
executive Directors; a member of the Corporate Legal Department
acts as Secretary to the Committee.
Members3
Peggy Bruzelius2
Stefan Borgas
Peter Thompson
Meetings attended1
6
6
6
1 Six meetings held in 2010, whereof two were telephone conferences
2 Chairman
3 The external auditor attended all meetings in 2010, except one telephone conference.
The CFO is generally invited to the meetings of the Audit Committee
Deferred Share Plan (DSP)
The Compensation Committee consists of four non-executive
Directors; the Global Head of Human Resources acts as Secretary
to the Committee.
Members3
Felix A. Weber2
Martin Taylor
Jacques Vincent
Jürg Witmer
Meetings attended1
4
4
4
4
1 Four meetings held in 2010
2 Chairman
3 The CEO attends the Compensation Committee meetings as a permanent guest, except
when his own compensation or other subjects with reference to his own situation are discussed
Corporate Responsibility Committee
Responsibilities
– Acts as custodian of the Board in all Corporate Responsibility matters
– Reviews Corporate Responsibility related actions proposed by the
Executive Committee
– Monitors the effectiveness of the implementation of Corporate
Responsibility related internal policies
The Corporate Responsibility Committee consists of at least three
non-executive Directors and the CEO; the Company Secretary acts
as Secretary to the Committee.
Members
Martin Taylor2
Pierre Landolt
Michael Mack
David Lawrence
1 Two meetings held in 2010
2 Chairman
Meetings attended1
2
2
2
2
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
08 Board of Directors
(at December 31, 2010)
Martin Taylor
British, age 58
Functions in Syngenta
Chairman of the Board, non-executive Director
Chairman of the Chairman’s Committee and the Corporate
Responsibility Committee, and member of the Compensation
Committee. He is also Chairman of the Syngenta Foundation for
Sustainable Agriculture
Professional background
Martin Taylor is currently Vice Chairman of RTL Group SA. Previously
he was an Advisor to Goldman Sachs International (1999–2005),
Chairman of WHSmith plc (1999–2003), and Chief Executive Officer
of Barclays plc (1993–1998) and Courtaulds Textiles (1990–1993).
He is a member of the British government’s Independent Banking
Commission.
Jürg Witmer
Swiss, age 62
Functions in Syngenta
Vice Chairman, non-executive Director
Member of the Chairman’s Committee and of the Compensation
Committee
Professional background
Jürg Witmer is currently Chairman of Givaudan SA and Clariant AG.
He joined Roche (1978) in the legal department and subsequently
held a number of positions including Assistant to the CEO, General
Manager of Roche Far East based in Hong Kong, Head of Corporate
Communications and Public Affairs at Roche headquarters in Basel,
Switzerland, and General Manager of Roche Austria. He became CEO
of Givaudan Roure (1999) and then Chairman of the Board of Directors
of Givaudan (2005).
Jürg Witmer has a doctorate in law from the University of Zurich, as
well as a degree in international studies from the University of Geneva.
Martin Taylor has a degree in oriental languages from Oxford
University.
Initial appointment: 2006
Term of office: 2012
Initial appointment in: 2000
Term of office: 2011
Michael Mack
American, age 50
Functions in Syngenta
Chief Executive Officer (CEO), executive Director
Member of the Chairman’s Committee and the Corporate
Responsibility Committee
Professional background
Michael Mack was Chief Operating Officer of Seeds (2004–2007) and
Head of Crop Protection, NAFTA Region (2002–2004) for Syngenta.
Prior to this, he was President of the Global Paper Division of Imerys
SA, a French mining and pigments concern, from the time of its
merger in 1999 with English China Clays Ltd., where he was Executive
Vice President, Americas and Pacific Region, in addition to being an
Executive Director of the Board. From 1987 to 1996 he held various
roles with Mead Corporation. Michael Mack is also Chairman of the
Board of the Swiss-American Chamber of Commerce.
Michael Mack has a degree in economics from Kalamazoo College
in Michigan, studied at the University of Strasbourg, and has an MBA
from Harvard University.
Initial appointment in: 2008
Term of office: 2013
Stefan Borgas
German, age 46
Functions in Syngenta
Non-executive Director
Member of the Audit Committee
Professional background
Stefan Borgas has been President and Chief Executive Officer of
Lonza since June 2004. Prior to joining Lonza, he spent 14 years
with BASF Group where he held various leadership positions in Fine
Chemicals and Engineering Plastics in the USA, Germany, Ireland
and China.
Stefan Borgas holds a degree in Business Administration from the
University of Saarbrücken and a Master of Business Administration
from the University of St. Gallen. He is member of the Board of SGCI
Chemie Pharma Schweiz, the association of Swiss chemical and
pharmaceutical industries, of the Swiss-American Chamber of
Commerce and of the Swiss Management Gesellschaft (SMG).
Initial appointment: 2009
Term of office: 2012
Syngenta
Corporate Governance and Compensation Report 2010
09
Peggy Bruzelius
Swedish, age 61
Functions in Syngenta
Non-executive Director
Chairman of the Audit Committee
Professional background
Peggy Bruzelius is currently Chairman of Lancelot Holding AB.
In addition she serves as Vice Chairman of Electrolux AB and as a
Director of Husqvarna AB, Akzo Nobel NV, Axfood AB and Diageo plc.
Peggy Bruzelius is a member of the Royal Swedish Academy of
Engineering Sciences. In addition she is a member of the Board
of Trustees of the Stockholm School of Economics. Previously she
was Executive Vice President of SEB-bank (1997–1998) and Chief
Executive Officer of ABB Financial Services (1991–1997).
Peggy Bruzelius holds a Master of Science from the Stockholm School
of Economics and an Honorary Doctorate from the same university.
Initial appointment: 2000
Term of office: 2012
David Lawrence
British, age 61
Functions in Syngenta
Non-executive Director
Member of the Corporate Responsibility Committee and Chairman of
the Science and Technology Advisory Board
Professional background
David Lawrence was Head of Research & Development at Syngenta
from September 1, 2002 until the end of September, 2008. Prior to
this role, David Lawrence was Head Research & Technology Projects
(2000–2002) for Syngenta. Prior to this, he was Head International
R&D Projects for Zeneca Agrochemicals, having previously held
several senior scientific roles. He is also a member of the BBSRC
Council and a Board member for Rothamsted Research, Plastid AS
and the UK Biosciences Knowledge Transfer Network for which he
chairs the Industrial Biotechnology Group. He is a member of the UK
Foresight Lead Expert Group on Food and Farming, and of the UK
Industrial Biotechnology Leadership Team.
David Lawrence graduated in chemistry from Oxford University with an
MA and DPhil in chemical pharmacology.
Initial appointment: 2009
Term of office: 2012
Pierre Landolt
Swiss, age 63
Functions in Syngenta
Non-executive Director
Member of the Corporate Responsibility Committee. He is also a
member of the Board of the Syngenta Foundation for Sustainable
Agriculture
Professional background
Pierre Landolt is currently Chairman of the Sandoz Family Foundation
and a Director of Novartis AG. He is also a partner with unlimited
liabilities of the private bank Landolt & Cie. Pierre Landolt serves, in
Brazil, as President of the Instituto Fazenda Tamanduá, of the Instituto
Estrela de Fomento ao Microcrédito, of AxialPar Ltda and Moco
Agropecuaria Ltda, and, in Switzerland, as Chairman of Emasan AG
and Vaucher Manufacture Fleurier SA, and as Vice Chairman of
Parmigiani Fleurier SA. He is a Director of EcoCarbone SAS, France,
and Amazentis SA, Switzerland. He is also Vice Chairman of the
Montreux Jazz Festival Foundation.
Pierre Landolt graduated with a Bachelor of Laws from the University
of Paris Assas.
Initial appointment: 2000
Term of office: 2012
Peter Thompson
American, age 64
Functions in Syngenta
Non-executive Director
Member of the Audit Committee
Professional background
Peter Thompson is currently a Director of Sodexo SA. Previously
he was President and Chief Executive Officer of PepsiCo Beverages
International (1996–2004), President of PepsiCo Foods International’s
Europe, Middle East and Africa Division (1995–1996) and of Walkers
Snack Foods in the UK (1994–1995). Before joining PepsiCo he
held various senior management roles with Grand Metropolitan plc,
including President and Chief Executive Officer of GrandMet Foods
Europe (1992–1994), Vice Chairman of The Pillsbury Company
(1990–1992), and President and Chief Executive Officer of
The Paddington Corporation (1984–1990). He is also Chairman
of the Vero Beach Museum of Art.
Peter Thompson has a degree in modern languages from Oxford
University and an MBA from Columbia University.
Initial appointment: 2000
Term of office: 2011
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
10
Jacques Vincent
French, age 64
Functions in Syngenta
Non-executive Director
Felix A. Weber
Swiss, age 60
Functions in Syngenta
Non-executive Director
Member of the Compensation Committee
Director and Chairman of the Compensation Committee
Professional background
Jacques Vincent has been Vice Chairman and Chief Operating Officer
of the Danone Group, Paris, from 1998 until 2008. He retired from this
company in 2010 and sits on the board of various companies, among
them Danone, Yakult, Cereplast and Mediaperformance. He began his
career with Danone in 1970 and has since held various financial and
overall management positions within this group.
Jacques Vincent is a graduate engineer of the Ecole Centrale, Paris.
He holds a bachelor in Economics from Paris University and a Master
of Science from Stanford University.
Initial appointment: 2005
Term of office: 2013
Professional background
Felix A. Weber is currently Executive Committee Co-Chairman of
Nomura Switzerland and a Managing Director of Nomura International
Ltd. Previously, he was a Director of Publigroupe (2005–2009), a
Director of Valora (2006–2008), a Director of Glacier Holdings GP
SA and Glacier Holdings S.C.A (former parent entities of Cablecom
GmbH) (2003–2005), a Director of Cablecom GmbH (2004–2005),
Managing Director of Lehman Brothers Ltd. (2006–2008), Executive
Vice President and Chief Financial Officer of Adecco SA (1998–2004),
Associate Project Manager and Principal of McKinsey & Company in
Zurich (1989–1997), and Chief Executive Officer of Alusuisse South
Africa (1982–1984).
Felix A. Weber graduated from the University of St. Gallen with an MBA
in operations research and finance and a PhD in marketing.
Initial appointment: 2000
Term of office: 2011
Rolf Watter
Swiss, age 52
Functions in Syngenta
Non-executive Director
Member of the Chairman’s Committee
Professional background
Rolf Watter has been a partner in the law firm Bär & Karrer in Zurich
since 1994. He was a member of its executive board and later an
executive Director from 2000 until 2009. He is a non-executive
Director of Zurich Financial Services (and its subsidiary Zurich
Insurance Company), of Nobel Biocare Holding AG, of UBS Alternative
Portfolio AG and A.W. Faber-Castell (Holding) AG. He was formerly
non-executive Chairman of Cablecom Holding (2003–2008), a Director
of Centerpulse AG (2002–2003), of Forbo Holding AG (1999–2005)
and of Feldschlösschen Getränke AG (2001–2004). In addition, Rolf
Watter is a part-time professor at the Law School of the University of
Zurich and a member of the SIX Swiss Exchange Regulatory Board
and its Disclosure Commission of Experts.
Rolf Watter graduated from the University of Zurich with a doctorate
in law and holds an LLM degree from Georgetown University; he is
admitted to the Bar of Zurich.
Initial appointment: 2000
Term of office: 2011
Syngenta
Corporate Governance and Compensation Report 2010
Executive Committee
(at December 31, 2010)
11
Michael Mack
American, age 50
Functions in Syngenta
Chief Executive Officer (CEO), executive Director
Member of the Chairman’s Committee and the Corporate
Responsibility Committee
Professional background
Michael Mack was Chief Operating Officer of Seeds (2004–2007) and
Head of Crop Protection, NAFTA Region (2002–2004) for Syngenta.
Prior to this, he was President of the Global Paper Division of Imerys
SA, a French mining and pigments concern, from the time of its
merger in 1999 with English China Clays Ltd., where he was Executive
Vice President, Americas and Pacific Region, in addition to being an
Executive Director of the Board. From 1987 to 1996 he held various
roles with Mead Corporation. Michael Mack is also Chairman of the
Board of the Swiss-American Chamber of Commerce.
Michael Mack has a degree in economics from Kalamazoo College
in Michigan, studied at the University of Strasbourg, and has an MBA
from Harvard University.
Initial appointment: 2008
Alejandro Aruffo
Italian/American, age 51
Function in Syngenta
Head of Research & Development
Professional background
Alejandro Aruffo was Vice President Global Pharmaceutical
Development, Abbott (2005–2008), President Abbott Bioresearch
Center and Vice President Abbott Immunology Research and
Development (2003–2005), President Abbott Bioresearch Center and
Divisional Vice President Abbott Immunology Research (2002–2003),
Vice President Cardiovascular and Metabolic Disease Drug Discovery
(2001–2002), and Vice President Immunology Drug Discovery
(1998–2001) for Bristol-Myers Squibb. Prior to these roles he held
various positions at Bristol-Myers Squibb.
He graduated from the University of Washington with BSc degrees
in chemistry and mathematics and from Harvard University with a PhD
in biophysics.
Initial appointment: 2008
Executive Committee
Under the direction of the CEO, the Executive Committee is
responsible for the operational management of the Company.
It consists of the Chief Executive Officer (CEO), the Chief Operating
Officers (COO) of Crop Protection and Seeds, the Chief Financial
Officer (CFO), the Head of Research & Development, the Head of
Global Operations, the Head of Business Development, and the
Head of Legal & Taxes.
The CEO is nominated by the Board and shares responsibility for
the strategic direction of Syngenta with the Chairman. The CEO is
ultimately responsible for the active leadership and operational
management of Syngenta and chairs the Executive Committee,
representing the latter both inside and outside the Company.
Members of the Executive Committee are directly responsible to the
CEO. The CEO in turn ensures the Executive Committee’s efficiency
and effectiveness for the Chairman, the Chairman’s Committee, and
the Board. The CEO represents, jointly with the Chairman, the interests
of the Company as a whole to authorities and business associations,
both in Switzerland and internationally.
Executive Committee
Responsibilities
– Formulates the fundamentals of corporate policy
– Draws up and approves the Group strategy and strategic plans for the
submission to the Board of Directors or the Chairman’s Committee
– Implements the strategies and the periodic assessment of the
attainment of goals
– Draws up, approves, and implements one-year plans for the Company
and the Divisions for the attention of the Chairman’s Committee
– Submits quarterly and yearly reports for the attention of the Board of
Directors or its Committees
– Makes personnel appointments and modifications to the organization
within its own area of authority
– Promotes a modern and active leadership style
– Ensures provision and optimal utilization of resources (finances,
management capacity)
– Promotes an active communications policy both within and outside
the Company
– Examines and approves significant agreements with third parties
and business activities involving extraordinary high risks
– Establishes guidelines for planning, organization, finance, reporting,
information technology etc.
Members
Michael Mack1
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
1 CEO
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
12
John Atkin
British, age 57
Christoph Mäder
Swiss, age 51
Function in Syngenta
Chief Operating Officer Crop Protection
Functions in Syngenta
Head of Legal & Taxes and Company Secretary
Professional background
John Atkin was Chief Executive Officer (1999–2000), Chief Operating
Officer (1999), Head of Product Portfolio Management (1998), and
Head of Insecticides and Patron for Asia (1997–1998) of Novartis
Crop Protection. Prior to 1998 he was General Manager of Sandoz
Agro France (1995–1997) and Head of Sandoz Agro Northern Europe
(1993–1995). In 2008 he was appointed Visiting Professor at the
Institute for Research on Environment and Sustainability (IRES) at the
University of Newcastle upon Tyne. He is also Chairman of CropLife’s
Crop Protection Strategy Council (global industry association).
Professional background
Christoph Mäder was Head of Legal & Public Affairs for Novartis
Crop Protection (1999–2000) and Senior Corporate Counsel for
Novartis International AG (1992–1998). He is Chairman of SGCI
Chemie Pharma Schweiz, the association of Swiss chemical and
pharmaceutical industries. He is also a member of the Executive
Committee of the Board of economiesuisse, the main umbrella
organization representing the Swiss economy and of the Executive
Board of the Business and Industry Advisory Committee (BIAC) to the
Organization for Economic Co-operation and Development (OECD).
He graduated from the University of Newcastle upon Tyne with a PhD
and a BSc degree in agricultural zoology.
He graduated from Basel University Law School, and is admitted to
the Bar in Switzerland.
Initial appointment: 2000
Initial appointment: 2000
Robert Berendes
German, age 45
Function in Syngenta
Head of Business Development
Mark Peacock
British, age 49
Function in Syngenta
Head of Global Operations
Professional background
Robert Berendes was Head of Diverse Field Crops (2005–2006)
and Head of Strategy, Planning and M&A (2002–2005) for Syngenta.
Prior to this, he was a partner and co-leader of the European chemical
practice at McKinsey & Company.
He graduated from the University of Cologne with a diploma in
chemistry and has a PhD in biophysics from the Max-Planck-Institute
for Biochemistry/Technical University of Munich.
Initial appointment: 2007
Professional background
Mark Peacock was previously Head of Global Supply (2003–2006)
and Regional Supply Manager for Asia Pacific (2000–2003) for
Syngenta. Prior to this he was a Product Manager in Zeneca
Agrochemicals and General Manager of the Electrophotography
Business in Zeneca Specialties.
He has a degree in chemical engineering from Imperial College,
London, and a Masters in international management from McGill
University in Montreal.
Initial appointment: 2007
Syngenta
Corporate Governance and Compensation Report 2010
Davor Pisk
British, age 52
Function in Syngenta
Chief Operating Officer Seeds
Management contracts
Syngenta has not entered into management contracts with any
third party.
External auditor
13
Duration of the mandate and term of office of the lead auditor
Ernst & Young was initially appointed as external auditor at the
Annual General Meeting in April 2002. The appointment of the external
auditor is for one year and is renewed annually. Before the proposal
for re-election in 2010, Ernst & Young has run through a formal tender
process. The lead partner in charge of the audit engagement assumed
this position in 2009.
Professional background
Davor Pisk was Region Head Crop Protection Asia Pacific (2003–
2007) for Syngenta and Region Head Asia for Zeneca Agrochemicals
(1998–2001). Prior to 1998, he was Head of Herbicides for Zeneca
(1993–1997) and General Manager of ICI Czechoslovakia
(1991–1993).
External auditor fees
(USD million)
Audit services
Audit-related services
Tax services
He has a BA in Economics and Politics from Exeter University, UK,
and an MA in Political Science from the University of California, USA.
Other services/additional fees
Total
2010
2009
7.8
0.3
0.4
0.2
8.7
8.7
0.9
0.3
0.2
10.1
Initial appointment: 2008
John Ramsay
British, age 53
Function in Syngenta
Chief Financial Officer
Professional background
John Ramsay was Group Financial Controller (2000–2007) for
Syngenta. Prior to that, he was Zeneca Agrochemicals Finance
Head Asia Pacific (1994–1999), Financial Controller ICI Malaysia
(1990–1993), and ICI Plant Protection Regional Controller Latin
America (1987–1990). Before joining ICI in 1984, he worked in
Audit and Tax at KPMG.
He is a Chartered Accountant and also holds an honors degree
in finance and accounting.
Initial appointment: 2007
– Audit services are defined as the audit work required to allow the
external auditor to issue an opinion on the statutory and regulatory
filings of the Group and its subsidiaries. This category includes
services such as comfort letters, statutory audits, attest services,
consents and assistance with and review of documents filed with
the US Securities and Exchange Commission.
– Audit related services include assurance and associated services
provided by auditors but which are not necessarily provided by the
external auditor. These services include audit of pension funds and
employee benefit plans, internal control reviews and consultation
concerning financial accounting and reporting standards.
– Tax services include all services performed by the external auditor’s
tax division except those services related to the audit. It includes tax
compliance, tax planning, and tax advice.
– Other services/additional fees include advice relating to process
improvements, training and subscription fees for accounting, and
reporting updates.
Syngenta
Corporate Governance and Compensation Report 2010
Corporate Governance Report
14 Information policy
Syngenta is committed to an open and fair information policy
concerning its shareholders and other stakeholders. Publications are
made available to all shareholders at the same time. All shareholders
registered in the Syngenta share register automatically receive an
invitation to the Annual General Meeting and to order the Syngenta
Annual Report.
The Annual Report 2010 comprises three documents: the Annual
Review (incorporating the Corporate Responsibility Report), the
Financial Report and the Corporate Governance and Compensation
Report.
Financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS). In addition to the Financial
Report, an annual report on Form 20-F is produced and filed with the
United States Securities and Exchange Commission (SEC). Press
releases are also furnished to the SEC under cover of Form 6-K.
An archive of Annual Reports and 20-F filings is available in the Investor
Relations section on www.syngenta.com. The site also provides a full
set of earnings releases, recent investor presentations, and answers
to the most frequently asked questions.
The Syngenta Investor Relations program includes:
– full and half year results presentations
– quarterly conference calls
– meetings with investors and analysts in the major financial centers
– visits to the Company’s Research & Development facilities
– visits to the Company’s operations in various locations
– presentations at broker-sponsored industry conferences
US regulatory disclosure requirements
As a Swiss Company listed on the New York Stock Exchange (NYSE),
Syngenta complies with the disclosure requirements of the US
Securities and Exchange Commission (SEC) and the NYSE
requirements applicable for foreign private issuers.
These include Form 20-F filings and press releases furnished under
cover of Form 6-K to the SEC. These documents can be found on
www.syngenta.com.
Syngenta meets the vast majority of the NYSE Corporate Governance
Standards. In accordance with NYSE’s listing standards, any
differences are disclosed in Form 20-F filed with the SEC.
Website information (selection)
Topic
Website
Syngenta homepage
www.syngenta.com
Board of Directors and
Executive Committee
Articles of Incorporation
Code of Conduct
Corporate Governance NYSE
Corporate Responsibility
Investor Relations
Shareholder Information
News Center
Publications
http://www.syngenta.com/global/
corporate/en/about-syngenta/
management-and-board/Pages/
management-and-board.aspx
http://www.syngenta.com/
global/corporate/en/about-
syngenta/governance/Pages/
articles-of-incorporation.aspx
http://www.syngenta.com/global/
corporate/en/about-syngenta/code-of-
conduct/Pages/code-of-conduct.aspx
http://www.syngenta.com/
global/corporate/en/
about-syngenta/governance/
Pages/corporate-governance-nyse.aspx
http://www.syngenta.com/global/
corporate/en/about-syngenta/
corporate-responsibility/Pages/
corporate-responsibility.aspx
http://www.syngenta.com/
global/corporate/en/investor-relations/
Pages/investor-relations.aspx
http://www.syngenta.com/
global/corporate/en/investor-relations/
general-shareholder-information/Pages/
general-shareholder-information.aspx
http://www.syngenta.com/global/
corporate/en/news-center/
Pages/home.aspx
http://www.syngenta.com/global/
corporate/en/about-syngenta/Pages/
publications.aspx
Compensation Report
Syngenta
Corporate Governance and Compensation Report 2010
Overview
The Compensation Report describes Syngenta’s approach to
compensation, its principles and elements in general as well as its
governance. It also provides detailed information on the compensation
of the Board of Directors and the Executive Committee for 2010.
This is in accordance with Appendix 1 of the Swiss Code of Best
Practice for Corporate Governance and in line with Swiss law and
the relevant reporting standards. The Compensation Report is
identical in all material aspects to the information contained in Note 11
to the audited financial statements of Syngenta AG included in the
Financial Report.
Compensation system
Compensation principles
Syngenta’s compensation principles are centered on the need
to provide simple, transparent, performance-oriented and market
competitive compensation for all employees, including senior
executives. In particular, the compensation policy and system
are designed to:
– attract and retain highly qualified successful employees to deliver
the strategic plans and objectives of the Company
– encourage and reward personal contribution and individual
performance in accordance with our Company values
– align reward with sustainable performance and recognize excellence
– align the interests of employees, shareholders, and other
stakeholders
All employees, including senior executives, are subject to a formalized
performance management process. This process is built on a number
of guiding principles with the aim of aligning individual, team and
organizational objectives, stretching performance, and supporting
individual development.
The Syngenta remuneration structure supports both individual and
organizational performance by linking individual performance and
the financial success of the Company to compensation. The link
to compensation is one of the key elements by which Syngenta
differentiates and recognizes individual performance and leadership.
Annual performance ratings of individuals influence both the annual
base pay and variable compensation. Changes to annual base pay
are influenced by individual performance and salary budgets that
are based on the economic situation of Syngenta.
The compensation of all employees is reviewed on a regular basis and
is designed with reference to total compensation levels for comparable
positions at relevant benchmark companies. For example, an individual
who achieves his or her performance objectives is generally awarded
compensation comparable to the median level of compensation
provided by benchmark companies. Each country regularly conducts
market research and participates in the Hay Group, Hewitt, Mercer
and Towers Watson salary surveys plus any appropriate local surveys.
Where possible, employee salaries for each role are benchmarked
against two groups within their country:
– Related industry group – examples would include BASF, Bayer,
Dow Chemical, Du Pont, Monsanto
– General industry group – especially for functional roles such as
Finance and Legal, comparisons to a range of industries are used,
including chemical, pharmaceutical, industrial, oil and gas, and
consumer goods
Compensation of members of the Executive Committee is also
reviewed on a regular basis. It is benchmarked against a set of relevant
comparable companies and markets that are evaluated and selected
to provide the best representation of the labor markets in which
Syngenta competes for top talent. For 2010, this included the following
two groups of comparable companies:
15
– Swiss Group: Twelve comparable multinational companies
headquartered in Switzerland, which included ten relevant SMI
companies and two SMIM companies. Financial institutions and
insurance companies were excluded
– Pan-European Group: Twenty companies selected from the FT
Euro 500 list. The companies are in the chemical, pharmaceutical,
industrial, oil and gas, and consumer goods sectors, and all have
significant R&D operations. These comparable companies are larger
or smaller than Syngenta, and are based in Belgium, Germany,
England, France, Ireland, the Netherlands and Switzerland.
In addition, the Compensation Committee reviews data from selected
agribusiness, pharmaceutical, and chemical companies headquartered
in the US and Canada.
Taking into account all of this data, the performance of the business
and individuals, and the recommendation of the external advisor,
the Compensation Committee uses its judgment to determine the
appropriate compensation levels of the Executive Committee.
Every year, the Syngenta Compensation Committee reviews with the
external advisor the sets of comparable companies and industries for
appropriateness and comparability. Pension and insurance information
are reviewed periodically.
The compensation of members of the Board of Directors is compared
to the same Swiss companies that are relevant for compensation of
the members of the Executive Committee.
The market data for each role in the Executive Committee is supplied
by the external compensation advisor (Hay Group), which also
provides market information and advice on compensation for the
Chairman and other non-executive Directors.
The Board of Directors and the Compensation Committee currently
consult with the Hay Group on compensation policy matters and other
relevant market information. Syngenta collaborates with the Hay Group
only in compensation related areas. As necessary, other independent
compensation advisors are consulted. In addition, support and
expertise are provided by internal compensation experts, including the
Global Head of Human Resources and Global Head of Compensation
and Benefits.
Compensation elements
Three elements of compensation are relevant for Syngenta:
– fixed compensation – base salary/pay
– variable compensation – short-term incentive plans and, for selected
senior executives, long-term incentive plans
– benefits
Fixed compensation
Fixed compensation is typically paid in cash on a monthly basis as
base salary, which is set by reference to the:
– size and scope of the job
– skills, experience and performance of the individual
– level or grade to which the job is assigned
– external market value of the job
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
16 Base salaries also serve as the basis for variable compensation.
In order to ensure accuracy, base salaries are subject to review
every year by considering such factors as benchmark data, market
movement, economic considerations, and the performance
management process.
In addition, certain employees may receive customary cash allowances
for expenses and, if applicable, housing, relocation or transition
assistance as part of an international transfer.
Variable compensation
Variable compensation consists of short-term and, for certain senior
executives, long-term incentives, and is linked to performance.
The variable compensation is determined by the size and scope
of the role, location, skills and experience of the individual, business
performance and individual performance, as well as the external
market value of the respective role. Depending on the applicable
plans, variable compensation can be granted in cash, shares,
restricted stock units and/or stock options.
A significant portion of the short-term and long-term incentive
programs for members of the Executive Committee and senior
managers is equity based and subject to a vesting period.
The purpose of equity-based compensation is to encourage the
Executive Committee and senior managers to focus on the long-
lasting success and growth of the Company, and to align their
compensation with shareholders’ interests.
Both short-term and long-term awards are determined solely on the
basis of pre-defined performance measures. They are only awarded
if the employee or executive fully meets the performance objectives.
Details of the various short-term and long-term incentive plans are
provided in the following sections.
Benefits
Benefits relate mainly to pension, insurance and healthcare plans
with the purpose to establish a reasonable level of security for all
employees and their dependants with respect to retirement, health,
disability and death. The level of benefits is subject to country-specific
laws, regulations and market practices. Other benefits that may be
paid according to local market practice include long-service awards
and perquisites. Employees at all levels who have been transferred
onto an international assignment may also receive benefits in line with
the Syngenta International Assignee Policy.
Table 1. Fixed and variable compensation
Chairman of
the Board
Members
of the Board
Executive
Committee
Senior
Management All employees
Description
Fixed compensation
Fixed pay
Variable compensation
Short-Term Incentive (STI)
Deferred Share Plan (DSP)
Long-Term Incentive Plan (LTI)
Sales Incentive Plan (SIP)
Employee Share Purchase Plan
(ESPP)
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Cash – all employees
Members of the Board
may opt for cash
and/or shares
Cash – all employees
For senior management
and Executive
Committee, cash
and/or equity
For senior management
and Executive
Committee, blocked
shares (or share awards)
and matching shares
For senior management
and Executive
Committee, stock
options and Restricted
Stock Units
Linkage to
compensation principles
Attract and retain
high quality
employees; reference
to relevant markets
and comparable
companies
Performance-based
compensation
Equity-based
compensation with
focus on sustainable
business performance
Equity-based
compensation focusing
on sustainable business
performance
• Cash – sales employees
only
Performance-based
compensation
•
Plan for all Switzerland
based Syngenta
employees: Share
purchase up to CHF
5,000.– p.a. at
50 percent
discount rate
Identification with
and commitment
towards Company
Syngenta
Corporate Governance and Compensation Report 2010
Short-Term Incentive (STI)
The Short-Term Incentive (STI) is an annual discretionary bonus in
cash for eligible employees throughout Syngenta. The amount of STI
paid is based on the achievement of financial results and individual
performance. The target value for STI is defined as a percentage
of the annual base salary and is reviewed periodically.
For employees below Executive Committee, both the financial results
and the individual performance are weighted equally at 50 percent for
the STI calculation. This variable compensation component allows
employees to participate in the Company’s success and also to be
rewarded for their individual performance. On an annual basis, specific
financial targets are set for each business unit. They are determined
for the various functions in different business units and may comprise
measures such as group net income, divisional results of business
value added, earnings before interest, tax and amortization, etc.
The personal targets are set as part of the performance management
process. Depending on the percentage achieved against the relevant
targets, both the financial and individual awards can range from 0 to
200 percent of the target.
For Executive Committee members, a greater emphasis is placed
on the achievement of financial results, with the weighting of the
STI elements being 70 percent on Group financial measures and
30 percent on individual performance. The achieved financial results
are measures such as group net income, earnings per share, return
on invested capital, business value added, all based on the respective
annual results.
Deferred Share Plan (DSP)
The DSP is an enhancement to the STI for members of the
Executive Committee and selected senior managers, and is
designed to reward leadership, innovation and performance. It aims
to provide an opportunity for greater share ownership among the
Company’s key senior management to align reward with sustainable
business performance. Under the DSP a fixed percentage of the
STI is mandatorily delivered in either deferred shares or deferred
share awards instead of cash. Deferred shares are blocked from
trading for three years, and share awards convert to tradable shares
after the deferral period. In addition, a participant may elect to allocate
a further portion of the STI in deferred shares or share awards on a
voluntary basis. At the end of the three year deferral period, Syngenta
matches on a one-for-one basis every deferred share or share award
delivered through the DSP, which doubles the total number of shares
ultimately received by the employee.
The Compensation Committee determines the value of a deferred
share at grant date by reference to the market price of the Syngenta
share. The value of such a deferred share may rise and fall in line with
the Syngenta share price.
The determination of the number of deferred shares is based on the
share price at grant date and the amount of STI eligible for deferral
(mandatory and any voluntary amount). The calculation is made by
applying the following formula:
Number of deferred shares =
(Mandatory Deferral percent + Voluntary Deferral percent) x STI award
Grant Value
The matching of the deferred shares or share awards is subject
to continued employment with Syngenta until after the expiration
of the three-year deferral period. If retirement age is reached prior
to expiration of the deferral period, the matching is accelerated.
Long-Term Incentive (LTI)
The LTI is a long-term element of the compensation of members of the
Executive Committee and selected senior managers, and is designed
17
to reward leadership, innovation and performance. It provides
participants with stock-based incentives that link the potential amount
of total compensation to Syngenta’s market value (share price). It also
helps them to align their business contribution more closely with the
interests of our shareholders. Participants are granted an LTI award as
a percentage of their base salary, based on the achievement of
individual performance objectives. They receive 50 percent as stock
options and 50 percent as restricted stock units (RSU), subject to a
three-year blocking period. The grants of stock options and RSU in
equal parts balance the advantages and risks of each instrument.
Stock options and RSU allow participants to benefit from increases
in the stock price. At vesting, RSU convert to shares regardless of the
market price of Syngenta shares. For options to have any value, the
market price of Syngenta’s shares must exceed the defined exercise
price during the exercise period.
Stock options: Syngenta stock options represent the right to purchase
Syngenta shares at a fixed price for a fixed period of time. To calculate
the number of options awarded, half of the value of the LTI award is
divided by the option value at the grant date. The fair value of an option
is measured using the Black-Scholes-Merton formula, a commonly
accepted stock option pricing method. The exercise price of the
options is set equal to the share price determined for deferred shares
under the DSP at the day of grant (see paragraph on DSP).
Stock options have a term of 10 or 11 years and cannot be exercised
during a three-year vesting period following the date of grant. After the
three-year vesting period, each option gives the right to purchase one
share at a fixed price. There is a period of (usually) seven years to
decide when to exercise, after which time the options would lapse.
RSU: Syngenta restricted stock units represent the right to receive
Syngenta shares free of charge at the end of the three-year vesting
period. To calculate the number of RSU awarded, half of the LTI
award is divided by the share value at the date of grant. The value of
an RSU is set equal to the share price determined for deferred shares
under the DSP (see paragraph on DSP). After a three-year vesting
period, each RSU converts automatically into one free tradable
Syngenta share.
Both the vesting of stock options and RSU are subject to continued
employment with Syngenta until after the expiration of the three-year
vesting period. If retirement age is reached prior to expiration of the
vesting period, vesting is accelerated.
Sales Incentive Plans (SIP)
The SIP is a sales bonus measurement and payment instrument
designed for employees in sales functions. It offers these employees
the chance to be compensated for their personal and team success,
based on the performance achieved against sales targets.
The SIP does not apply to members of the Executive Committee.
Employee Share Purchase Plan (Switzerland)
The Employee Share Purchase Plan (ESPP) is an instrument that
allows Swiss employees to become Syngenta shareholders by
purchasing shares at a preferential price. All employees in Switzerland,
including members of the Executive Committee, are eligible to
participate in the ESPP. Shares purchased under the ESPP are
subject to a blocking period of three years. Under the Swiss ESPP,
participants can purchase shares for 50 percent of the share value at
the date of grant up to a maximum share value of CHF 5,000.
Where reasonably possible, similar all-employee share plans are
in operation in other countries, taking into account local practices,
tax and legal requirements.
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
18 Compensation structure
The compensation elements described in the Compensation Report
refer primarily to the practice in Switzerland. Although many of the
elements are operated consistently on a global basis, local market
variations apply.
Correlation between fixed and variable, and between cash
and equity-based compensation for members of Executive
Committee (including CEO)
According to the Syngenta compensation plans, the correlation
between variable and fixed compensation for the members of the
Executive Committee is as follows:
Table 2. Fixed and variable compensation
Members of the
Executive Committee
Target
incentive
[%]
Maximum
incentive
[%]
100
150
250
100
270
370
Chief Executive Officer
Target
incentive
[%]
Maximum
incentive
[%]
100
244
344
100
438
538
Fixed compensation
Variable compensation
Total
Table 2 shows that variable compensation at both target and
maximum level forms a higher proportion of total compensation than
fixed compensation.
The split of total compensation between cash and equity-based
components is as follows:
Table 3. Cash and equity-based compensation
Members of the
Executive Committee
Target
incentive
[%]
Maximum
incentive
[%]
44
56
100
32
68
100
Chief Executive Officer
Target
incentive
[%]
Maximum
incentive
[%]
34
66
100
25
75
100
Cash payments
Equity-based awards
Total
100% in table 3 are equal to 250/370/344/538% in table 2 respectively
Table 3 shows that equity-based compensation at both target
and maximum level is higher than cash compensation. Members
of the Executive Committee are therefore highly exposed to share
price movements in order to focus them on the long-term success
of Syngenta and to align their interests with those of the Syngenta
shareholders.
Compensation governance
The Compensation Committee of the Board of Directors is the
supervisory and governing body for the Syngenta compensation policy
and practices for senior executives and members of the Board of
Directors. It has the responsibility to determine, review and propose
compensation and benefits in accordance with the authorization levels
set out below. The Committee consists of four independent non-
executive Directors. No Committee member is cross-linked with any of
the non-executive Directors of the Board or members of the Executive
Committee. The CEO is a guest at the meetings of the Committee
except when his own compensation is reviewed. The Chairman and
the Vice Chairman do not attend the meeting when the Committee
agrees on proposals to the Board of Directors with regard to their
own compensation.
Authorities for compensation-related decisions are governed
as follows:
Table 4. Authorization levels
Topic
Recommendation Decision-making authority
Compensation of the Chairman
Committee Board of Directors
Compensation of non-executive
Directors
Compensation
Committee Board of Directors
Compensation
Compensation
Compensation of the CEO
Committee Board of Directors
Compensation of other members
of the Executive Committee
Compensation
Committee
–
STI and LTI awards for the CEO
Committee Board of Directors
Compensation
STI and LTI awards for
other members of the
Executive Committee
Compensation
Committee
–
The Committee reviews annually the compensation policies
and systems applicable to members of the Executive Committee
as well as non-executive Directors of the Company, and makes
recommendations to the Board of Directors. The Compensation
Committee also has the responsibility for any decision affecting
pension, insurance, and other benefit policies and systems for
members of the Executive Committee (excluding the CEO, for which
the Board of Directors has responsibility). Furthermore, it has authority
to make decisions with regard to any material pension or insurance
plans of the Company, and any shareholding and compensation
program that involves the use of equity.
For all employees, the authorization of any amendments to their
compensation would, as a minimum, be by their line manager and
the next level of management. If the proposed change could impact
others, then a decision would be made by the appropriate level of
management at country, regional or Group level.
Syngenta
Corporate Governance and Compensation Report 2010
Compensation of the Board of Directors and the
Executive Committee
Compensation of non-executive Directors
Non-executive Directors receive an annual fee (cash or shares,
or a combination of both). This consists of a basic fee for services
to the Board and an additional fee for individual assignments to
committees of the Board. No variable compensation is paid to
non-executive Directors.
Table 5. Annual fees for non-executive Directors
Function
Base fees:
Chairman of the Board
Vice-Chairman of the Board
Member of the Board
Additional fees 1:
Member of the Chairman’s Committee
Head of the Audit Committee
Member of the Audit Committee
Head of the Compensation Committee
Member of the Compensation Committee
Member of the Corporate Responsibility Committee
Chairman of the Science and Technology Advisory Board
1 No additional fees are payable to the Chairman and the Vice-Chairman
Annual fee
(CHF)
2,350,000
360,000
205,000
100,000
110,000
30,000
70,000
20,000
20,000
20,000
2010 Compensation of the Board of Directors
Table 6a. Compensation of non-executive Directors in 2010
Non-executive Directors have the option of receiving part of their
annual fee in the form of shares that are either freely tradable or
blocked from trading for five years. This option exists in order to
maintain their focus on Syngenta’s long-term, sustainable success
and align their interests with shareholder’s interests.
19
Shares are granted once a year. The grant value of a Syngenta share
at grant date is the market price.
Compensation of the Chairman
The non-executive Chairman of the Board receives a predefined
annual fee but no variable compensation. The annual fee is paid
partly in cash and partly in a mandatory portion of restricted shares.
The value of the fixed share portion is equal to one-third of the net fee
(after tax and social security charges). The grant value of a Syngenta
share at grant date is the market price. The shares are blocked from
trading for a period of three years. In addition, the Chairman receives
certain benefits such as assistance with housing, commuting, and tax
services (see Table 6a for details).
Subject to his re-election at the AGM 2011, and anticipating a
reduction of his time commitment, the base fee for the Chairman (cash
and shares) will be adjusted from CHF 2,350,000 to CHF 1,600,000.
Compensation of the CEO
The Chief Executive Officer (CEO) is a member of the Board
of Directors and a member of the Executive Committee.
His compensation is disclosed as part of 2010 compensation
for members of the Executive Committee.
Non-executive Directors
Martin Taylor
Stefan Borgas
Peggy Bruzelius
Pierre Landolt2
David Lawrence
Peter Thompson
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Total
Fee in
cash
1,948,253
70,500
315,000
Fee in
free
shares
–
–
–
11,468
213,540
122,500
117,500
122,666
117,633
56,255
168,766
Fee in
restricted
shares
401,747
164,527
–
–
–
–
–
152,500
275,000
360,000
–
–
–
152,604
–
–
Number
free
shares
–
–
–
806
463
444
637
–
–
–
Number
restricted
shares
1,489
621
–
–
–
–
–
576
–
–
Total
number
shares
Benefits
in kind/
cash1
Total annual
fee/benefits
received
Company
social
security
cost
Total
annual
cost
1,489 234,024 2,584,024
– 2,584,024
621
–
806
463
444
637
576
–
–
–
–
–
–
–
–
–
–
–
235,027 12,409
247,436
315,000 79,979
394,979
225,008 14,417
239,425
245,166 32,773
277,939
235,133
225,021
–
–
235,133
225,021
305,104 17,058
322,162
275,000 17,597
292,597
360,000 23,003
383,003
3,428,976
622,605
718,878
2,350
2,686
5,036 234,024 5,004,483 197,236 5,201,719
1 Housing, commuting and tax services, including refund of relevant tax (cash)
2 According to Pierre Landolt and the Sandoz Family Foundation, the Foundation is the economic beneficiary of the fee
All values in Swiss francs
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
20 Table 6b. Compensation of non-executive Directors in 2009 (Table 3a in the report 2009)
Non-executive Directors
Martin Taylor
Stefan Borgas2
Peggy Bruzelius
Peter Doyle3
Rupert Gasser3
Pierre Landolt4
David Lawrence5
Peter Thompson
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Total
Fee in
cash
1,890,586
47,000
295,000
81,667
120,000
Fee in
free
shares
–
–
–
–
–
11,980
223,166
98,000
65,361
117,500
117,703
56,247
168,742
Fee in
restricted
shares
459,414
109,890
–
–
–
–
–
–
–
169,000
55,000
341,667
–
–
–
112,755
220,041
–
Number
free
shares
–
–
–
–
–
857
251
452
648
–
–
–
Number
restricted
shares
1,833
422
–
–
–
–
–
–
–
433
845
–
Total
number
shares
Benefits
in kind/
cash1
1,833 176,370 2,526,370
Total annual
fee/benefits
received
Company
cost social
security
Total
annual
cost
– 2,526,370
422
–
–
–
857
251
452
648
433
845
–
–
–
–
–
–
–
–
–
–
–
–
156,890
8,318
165,208
295,000 70,594
365,594
81,667
–
81,667
120,000
7,544
127,544
235,146 15,062
250,208
163,361
235,203
224,989
–
–
–
163,361
235,203
224,989
281,755 16,214
297,969
275,041 14,062
289,103
341,667 21,837
363,504
3,283,647
574,972
902,100
2,208
3,533
5,741 176,370 4,937,089 153,631 5,090,720
1 Housing, commuting and tax services, including refund of relevant tax (cash)
2 Stefan Borgas was elected to the Board of Directors at the AGM 2009
3 Rupert Gasser’s and Peter Doyle’s term of office ended at the AGM 2009
4 According to Pierre Landolt and the Sandoz Family Foundation, the Foundation is the economic beneficiary of the fee
5 David Lawrence was elected to the Board of Directors at the AGM 2009
All values in Swiss francs
2010 Compensation of former Directors
In 2010, no compensation was paid to any former non-executive
or executive Director.
2010 Compensation of members of the
Executive Committee
In 2010, the members of the Executive Committee, including the
CEO, received salaries, incentives and other elements, including
benefits in kind, in line with the compensation policy and as detailed
in Table 7 below.
In 2010, the CEO received the highest total compensation; his
compensation is reported in Table 8.
Tables 7 and 8 show in the column “compensation 2009” the number
of shares, RSU and options that were granted on February 22, 2010,
for the year 2009 (excluding the shares purchased under the
Employee Share Purchase Plan). The numbers of units granted were
determined after the preparation of the 2009 report and are therefore
disclosed retroactively in this 2010 report. The actual values of the
granted shares, options and RSU differ slightly from the values
reported in 2009. This is the result of the practice that the numbers
of shares, options and RSU at grant are rounded to the next whole
numbers of units.
David Lawrence and other former members of the Executive
Committee received contractual but immaterial benefits in kind in
relation to their international transfer to their home country. Services
from tax advisors relating to years 2008 and 2009 were provided and
paid in 2010. These benefits are set out in Table 9.
Syngenta
Corporate Governance and Compensation Report 2010
Table 7. Compensation for members of the Executive Committee (a total of 8 people in 2010)
21
Compensation elements
Fixed compensation in cash
Allowances in cash
STI compensation in cash1
Total compensation in cash
DSP deferred shares2, 3, 4
DSP matching shares2, 3, 5
LTI options6
LTI RSU7
ESPP shares
Insurance, pension costs
Benefits in kind8
Total compensation
Company social security cost9
Compensation related to earlier years
DSP matching shares10
Company social security cost
Number of units
Values
2010
2009
2010
2009
6,302,082
6,235,425
341,020
898,916
446,676
456,145
7,542,018
7,138,246
–
–
–
–
4,978 2,623,024
1,412,259
4,978 2,623,024
1,412,259
38,671 2,920,771
2,495,511
8,799 2,920,771
2,496,276
119
152
16,672
19,608
1,622,657
1,649,371
199,506
337,446
20,468,443 16,960,976
767,235
685,060
5,754
8,223 1,614,572
1,924,182
220,718
256,072
Notes refer to 2010 unless other years are indicated.
1 Short-term incentive in cash, payable in 2011 for 2010
2 The numbers of deferred shares, matching shares, options and RSU for 2009 were granted on February 22, 2010, after the preparation of the 2009 report
3 The numbers of shares, options and RSUs at grant for 2009 were rounded to the next whole number, the values actually granted therefore differ slightly from the values disclosed in the 2009 report
4 Short-term incentive in deferred shares or share awards, will be granted in 2011 for 2010 (the number of shares is not determined at the time of preparing this report)
5 Actual value of DSP matching, shares will be granted in 2014 (the number of shares is not determined at the time of preparing this report)
6 Long-term incentive in options, will be granted in 2011 for 2010 (the number of options is not determined at the time of preparing this report)
7 Long-term incentive in RSU, will be granted in 2011 for 2010 (the number of RSU is not determined at the time of preparing this report)
8 Value of housing, commuting, relocation, education and tax services including refund of relevant tax
9 Due to the rounding of allocated units and the relevant values (see footnote 3), the cost differs slightly from the value disclosed in the 2009 report
10 Matching shares, granted in 2010 for 2006
All values in Swiss francs
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
22 Table 8. Highest compensation for a member of the Executive Committee
Compensation elements
Fixed compensation in cash
Allowances in cash
STI compensation in cash1
Total compensation in cash
DSP deferred shares2, 3, 4
DSP matching shares2, 3, 5
LTI options6
LTI RSU7
ESPP shares
Insurance, pension costs
Benefits in kind8
Total compensation
Company social security cost9
Compensation related to earlier years
DSP matching shares10
Company social security cost
Number of units
Values
2010
2009
2010
2009
1,315,008
1,307,508
109,138
216,883
107,580
119,398
1,641,029
1,534,486
–
–
–
–
17
1,684
1,684
867,533
867,533
12,398
960,000
2,820
960,000
19
2,382
477,751
477,594
800,043
800,034
2,451
399,584
383,546
24,522
25,642
5,722,583
4,501,547
198,652
153,533
1,404
2,298
393,962
537,732
119,279
45,555
Notes refer to 2010 unless other years are indicated.
1 Short-term incentive in cash, payable in 2011 for 2010
2 The numbers of deferred shares, matching shares, options and RSU for 2009 were granted on February 22, 2010, after the preparation of the 2009 report
3 The numbers of shares, options and RSUs at grant for 2009 were rounded to the next whole number, the values actually granted therefore differ slightly from the values disclosed in the 2009 report
4 Short-term incentive in deferred shares or share awards, will be granted in 2011 for 2010 (the number of shares is not determined at the time of preparing this report)
5 Actual value of DSP matching, shares will be granted in 2014 (the number of shares is not determined at the time of preparing this report)
6 Long-term incentive in options, will be granted in 2011 for 2010 (the number of options is not determined at the time of preparing this report)
7 Long-term incentive in RSU, will be granted in 2011 for 2010 (the number of RSU is not determined at the time of preparing this report)
8 Value of housing, commuting, relocation, education and tax services including refund of relevant tax
9 Due to the rounding of allocated units and the related values (see footnote 3), the cost differs slightly from the value disclosed in the 2009 report
10 Matching shares, granted in 2010 for 2006
All values in Swiss francs
Table 9. Compensation to former members of the Executive Committee
Compensation elements
Fixed compensation in cash1
STI/LTI compensation in cash2
Total compensation
Pension, insurance, benefits in kind3
Company social security cost
Compensation related to earlier years
DSP matching shares4
Company social security cost
Notes refer to 2010 unless other years are indicated.
1 David Lawrence, January 1 – April 17, 2009
2 STI/LTI awards 2009 paid prorated in cash due to retirement
3 Benefits in kind are post employment tax and other services to executives that retired from work, including the refund of relevant tax
4 Matching shares, granted in 2009 for 2005, 2006 and 2007 due to retirement in 2009
All values in Swiss francs
Number of units
Values
2010
2009
2010
2009
40,443
3,035
2,121
208,690
277,027
485,717
28,990
63,267
490,158
62,740
Syngenta
Corporate Governance and Compensation Report 2010
2010 Holding of shares and options
Members of the Board of Directors (shares)
Table 10. Holding of shares of non-executive Directors* at December 31, 2010
23
Non-executive Directors
Martin Taylor
Stefan Borgas
Peggy Bruzelius
Pierre Landolt1
David Lawrence
Peter Thompson2
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Total free/restricted shares
Total shares
Peter Thompson ADS2
Total ADS
Number of free shares
Number of restricted shares
% voting rights
2010
6,622
–
2,464
7,525
11,226
1,298
3,456
1,857
23
3,000
37,471
48,078
2009
2,744
–
2,464
4,219
9,651
854
2,819
2,177
23
2,300
27,251
36,987
2010
4,998
1,043
–
509
24
–
–
2,077
1,407
549
10,607
2009
5,324
422
–
509
24
–
–
1,501
1,407
549
9,736
2010
2009
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
Number of free ADS
Number of restricted ADS
% voting rights
2010
7,000
7,000
2009
7,000
7,000
2010
2009
2010
2009
–
–
–
–
< 0.1%
< 0.1%
< 0.1%
< 0.1%
1 According to Pierre Landolt and the Sandoz Family Foundation, of the total amounts 7,184 shares were held by the Foundation at December 31, 2010, and 3,878 were held at December 31, 2009
2 Peter Thompson holds shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Members of the Executive Committee (shares)
Table 11a. Holding of shares by members of the Executive Committee* as of December 31, 2010
Members of the Executive Committee
Michael Mack
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Total shares
Number of vested shares
Number of unvested shares
Free
shares
10,448
2,000
18,869
1,184
3,949
42
4,020
2,561
Restricted
shares
10,046
522
3,724
1,257
2,583
60
3,007
3,656
% voting
rights
Unconverted
share awards
Unmatched
shares
Unconverted
RSU
<0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
–
1,918
1,958
1,031
–
3,418
–
–
9,986
2,380
5,622
2,269
2,523
3,418
2,966
3,596
7,689
3,327
3,998
2,717
2,304
2,388
2,264
2,476
Total
Vested/
unvested
38,169
10,147
34,171
8,458
11,359
9,326
12,257
12,289
43,073
24,855
< 0.1%
8,325
32,760
27,163
136,176
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
24 Table 11b. Holding of shares by members of the Executive Committee* at December 31, 2009 (Table 8a in the report 2009)
Members of the Executive Committee
Active members
Michael Mack1
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Total shares 2009
Michael Mack ADS1
Total ADS 2009
Number of vested shares
Number of unvested shares
Free
shares
Restricted
shares
% voting
rights
Unconverted
share awards
Unmatched
shares
Unconverted
RSU
6,211
2,000
21,182
35
3,915
58
3,025
2,672
39,098
34,463
34,463
9,768
43
3,008
971
2,979
62
2,493
3,746
23,070
–
–
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
< 0.1%
–
–
–
1,918
3,760
1,321
–
3,413
488
–
9,706
1,918
6,706
2,254
2,917
3,413
2,938
3,684
6,279
4,544
4,439
2,450
2,479
2,113
1,961
2,182
10,900
33,536
26,447
133,051
–
–
–
–
–
–
34,463
34,463
Total
Vested/
unvested
31,964
10,423
39,095
7,031
12,290
9,059
10,905
12,284
1 Michael Mack held shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
The number of vested shares of each individual includes free shares and blocked shares to which voting rights are attached. The unvested
shares are shown separately by category including unconverted share awards, unmatched shares and restricted share units (RSU).
Members of the Board of Directors (options)
Table 12a. Holding of options by non-executive Directors* at December 31, 2010
Year of allocation
Underlying equity
Term (years)
Exercise period (years)
Option: share/ADS ratio
Exercise price CHF
Exercise price USD
Vesting status
Options held at December 31, 2010:
Martin Taylor
Stefan Borgas
Peggy Bruzelius
Pierre Landolt1
David Lawrence2
Peter Thompson3
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Totals by grant year
Total options on ADS
Total options on shares
2008
Share
2005
Share
10
7
1:1
10
7
1:1
2004
ADS
11
8
1:1
2004
Share
11
8
1:1
2003
Share
2002
Share
11
8
1:1
11
8
1:1
301.50
127.38
89.30
59.70
98.00
14.53
All vested
–
–
–
3,532
–
–
–
–
–
–
1,363
6,560
–
1,682
1,615
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,484
2,652
1,713
–
–
–
–
–
–
2,652
1,713
–
–
–
–
2,050
2,121
3,425
–
–
–
8,192
6,560
6,534
7,425
6,851
–
–
–
–
3,225
–
–
–
–
–
3,225
6,560
32,227
After 2005 no options were granted to non-executive Directors.
1 According to Pierre Landolt and the Sandoz Family Foundation, all options are held by the Foundation
2 David Lawrence received options as a former member of the Executive Committee
3 Peter Thompson holds options and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Corporate Governance and Compensation Report 2010
Table 12b. Holding of options by non-executive Directors* at December 31, 2009 (Table 9a in the report 2009)
25
Options on shares
Year of allocation
Underlying equity
Term (years)
Exercise period (years)
Option: share ratio
Exercise price CHF
Vesting status
Options held at December 31, 2009:
Martin Taylor
Stefan Borgas1
Peggy Bruzelius
Pierre Landolt2
David Lawrence1, 3
Peter Thompson4
Jacques Vincent
Rolf Watter
Felix A. Weber
Jürg Witmer
Totals by grant year
Total options on shares
Options on ADS
Year of allocation
Underlying equity
Term (years)
Exercise period (years)
Option: ADS ratio
Exercise price USD
Vesting status
2008
Share
10
7
1:1
2007
Share
10
7
1:1
2006
Share
2005
Share
10
7
1:1
10
7
1:1
2004
Share
11
8
1:1
2003
Share
11
8
1:1
2002
Share
2000
Share
11
8
1:1
10
7
1:1
301.50
226.70
185.00
127.38
89.30
59.70
98.00
76.50
All vested
–
–
–
–
–
–
–
–
–
–
–
–
1,312
1,281
1,061
685
–
–
–
–
–
–
–
–
–
–
–
3,532
4,484
2,652
1,713
2,500
3,225
3,213
4,214
–
–
–
–
–
–
–
–
–
–
–
1,363
–
1,682
1,615
–
–
–
–
–
–
–
2,652
1,713
–
–
–
–
2,050
2,121
3,425
–
–
–
–
–
–
–
–
–
3,213
4,214
9,504
7,815
8,486
7,536
2,500
2004
ADS
11
8
1:1
14.53
6,560
2000
ADS
10
7
1:1
8.68
12,500
All vested
–
–
–
–
–
3,225
46,493
Options held at December 31, 2009:
Peter Thompson4
Total options on ADS
19,060
After 2005 no options were granted to non-executive Directors.
1 Stefan Borgas and David Lawrence were elected to members of the Board of Directors at the AGM 2009
2 According to Pierre Landolt and the Sandoz Family Foundation, all options were held by the Foundation
3 David Lawrence received the options in 2006–2008 while he was an executive of Syngenta
4 Peter Thompson held options on shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
26 Members of the Executive Committee (options)
Table 13a. Holding of options by members of the Executive Committee* as of December 31, 2010
Year of allocation1
2009
2010
2008
2007
Underlying equity
Term (years)
Exercise period (years)
Option: share/ADS ratio
Exercise price CHF
Vesting status
Options held as of December 31, 2010:
Members of the Executive Committee
Michael Mack
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Totals by grant year
Total unvested options
Total vested options
Total options on shares
Share
Share
Share
Share
10
7
1:1
10
7
1:1
10
7
1:1
10
7
1:1
2006
Share
10
7
1:1
2005
Share
2004
Share
10
7
1:1
11
8
1:1
283.70
233.43
Unvested
301.50
226.70
185.00
127.38
89.30
Vested
12,398
16,426
4,669
6,075
7,077
3,440
5,127
3,589
3,304
3,276
3,739
3,798
2,381
6,843
4,790
3,920
4,055
4,435
4,506
–
5,292
3,362
2,739
2,988
1,666
2,431
–
–
2,369
3,993
2,023
2,360
2,453
–
–
2,959
4,915
2,212
2,031
3,059
38,671
47,356
23,147
19,273
22,253
–
–
–
–
–
–
4,138
4,048
–
–
–
986
5,124
–
–
–
–
4,048
109,174
50,698
159,872
1 All options granted in 2003 and earlier years under the Company option plan are exercised
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Corporate Governance and Compensation Report 2010
Table 13b. Holding of options by members of the Executive Committee* at December 31, 2009 (Table 10a in the report 2009)
Year of allocation1
2008
2007
2009
2005
2005
2006
Underlying equity
Term (years)
Exercise period (years)
Option: share/ADS ratio
Exercise price
Vesting status
Options held as of December 31, 2009:
Members of the Executive Committee
Michael Mack2
Alejandro Aruffo
John Atkin
Robert Berendes
Christoph Mäder
Mark Peacock
Davor Pisk
John Ramsay
Totals by grant year
Share
Share
Share
Share
ADS
Share
10
7
1:1
10
7
1:1
CHF
233.43
CHF
301.50
Unvested
10
7
1:1
10
7
1:1
10
7
1:1
10
7
1:1
CHF
226.70
CHF
185.00
USD
21.30
CHF
127.38
CHF
89.30
Vested
27
2004
Share
11
8
1:1
16,426
4,669
6,075
7,077
47,319
2,381
6,843
4,790
3,920
4,055
4,435
4,506
–
5,292
3,362
2,739
2,988
1,666
2,431
–
6,930
2,369
3,993
2,023
2,360
2,453
–
–
2,959
4,915
2,212
2,031
3,059
–
–
–
–
–
–
–
–
–
–
4,138
5,920
–
3,502
986
–
–
–
4,048
–
–
–
–
47,356
23,147
26,203
22,253
47,319
14,546
4,048
Total vested options on shares
Total unvested options on shares
Total options on shares (vested and unvested)
Total options on ADS (all vested)
40,847
96,706
137,553
47,319
1 All options granted in 2003 and earlier years under the Company option plan are exercised
2 Michael Mack held options on shares and ADS
*Including related parties. Related parties are spouses, parents, children living in the same household, legal entities they own or otherwise control, and any legal or natural person that acts as their fiduciary
Syngenta
Corporate Governance and Compensation Report 2010
Compensation Report
28 Contractual provisions, loans, additional benefits
The notice periods for members of the Executive Committee and
the Chief Executive Officer are in accordance with market practice.
All employment agreements with members of the Executive
Committee and the CEO are subject to notice periods of 12 months.
The agreements with the non-executive Directors are not subject to
notice periods. They end on expiry of the Directors’ term of office.
The employment agreements with members of the Executive
Committee, including the CEO, and the agreements with the
members of the Board of Directors, including the Chairman, do not
have any change of control clauses. The agreements with members
of the Executive Committee or the Board of Directors do not contain
any provisions for termination payments (“golden parachute” or
“handshake” or similar arrangements) with regard to severance or
other events of termination. In case the Chairman is removed from
office by the Board of Directors prior to expiry of his term of office,
he is entitled to a payment of one fourth of the annual fee.
In 2010, no severance payments were made to former Directors or
members of the Executive Committee, and there were also no loans
or credits granted to active or former Directors or members of the
Executive Committee, or parties related to them and, at
December 31, 2010, there are no such loans or credits outstanding.
In 2010, no guarantees, pledges, collateral, promises or other forms
of liabilities were entered into with third parties to the benefit of non-
executive Directors or members of the Executive Committee, or
parties related to them, and, at December 31, 2010, there are no
such liabilities outstanding.
In 2010, no claims, receivables, or debts of non-executive Directors
or members of the Executive Committee, or parties related to them,
were waived or cancelled, and, at December 31, 2010, no such
items are outstanding.
In 2010, no compensation was paid to any active Director or member
of the Executive Committee for other services provided, and, as
of December 31, 2010, no such payment is outstanding.
Valuation and accrual principle
The “accrual basis” is applied to all elements of compensation
including STI and LTI awards. They are disclosed in accordance with
the year for which they are paid. The STI and LTI awards in this 2010
report relate to performance and results in 2010, and will be paid in
2011 or later. This is in line with the accrual principle as requested by
relevant guidelines. The number of equity units to be granted for 2010
will be determined after the editorial deadline of this report. As a result,
while the compensation amount is known and included, the numbers
of shares, RSU and options to be issued for this amount is not
determined and not included in this report.
The number of equity units that were granted for 2009 had been
determined after the editorial deadline of the relevant report. For that
reason, the actual numbers of shares, RSU, and options awarded for
2009 are included in this 2010 report (see Tables 7 and 8).
The shares for the incentive year 2010 that will be allocated to the
DSP in 2011 will be matched in 2014 if the vesting condition is met.
In this report, the same value as determined for the deferral of shares
in 2011 was used to state the value of the expected matching of
shares in 2014.
Some exceptions to the “accrual principle” apply to personal tax
services, which the Company has paid for some members of the
Executive Committee and the Chairman of the Board of Directors.
Tax compliance services typically lag behind the year of compensation
by one or more years. The amounts payable for services that relate to
employment income 2010 cannot be determined at this time.
In Notes 2 and 24 to the Syngenta Group consolidated financial
statements included in the Financial Report, the amounts disclosed
for equity-settled awards is the expense recognized for the period
calculated in accordance with IFRS 2 “Share Based Payment”. In this
report, the same equity-settled awards are disclosed as the values at
grant date and consequently differ. Cash-settled awards are disclosed
in accordance with the year for which they are paid.
Corporate Governance and
Compensation Report 2010
For the business year 2010, Syngenta has
published three reports: Annual Review
(incorporating the Corporate Responsibility
Report), Financial Report and Corporate
Governance and Compensation Report.
All documents were originally published in
English. The Annual Review 2010 and the
Corporate Governance and Compensation
Report 2010 are also available in German.
These publications are also available on the
Internet: www.syngenta.com
Syngenta International AG, Basel, Switzerland.
All rights reserved.
Editorial completion: February 2011.
Design and production:
Radley Yeldar, London, UK
Printing: NZZ Fretz AG, Zürich, Switzerland
Printed on Hello Silk, made with wood fiber
from managed forests and manufactured at
a mill that has achieved the ISO14001 and
EMAS environmental management standards.
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Switzerland
Investor Relations
T +41 61 323 5883
F +41 61 323 5880
E global.investor_relations@syngenta.com
Media Relations
T +41 61 323 2323
F +41 61 323 2424
E media.relations@syngenta.com
Share Register
T +41 58 399 6133
F +41 58 499 6193
E syngenta.aktienregister@sag.ch
Shareholder Services
T +41 61 323 9492
F +41 61 568 4146
E shareholder.services@syngenta.com
Ordering of publications
T +41 58 399 6133
E syngenta.aktienregister@sag.ch
Syngenta switchboard
T +41 61 323 1111
F +41 61 323 1212
E global.webmaster@syngenta.com
USA
Investor Relations
T +1 202 737 6520
T +1 202 737 6521
E global.investor_relations@syngenta.com
Media Relations
T +1 202 628 2372
F +1 202 347 8758
E media.relations_us@syngenta.com
Contacts for ADS holders
T +1 866 253 7068 – from within the USA
T +1 201 680 6825 – from outside the USA
Syngenta International AG
Corporate Affairs
Schwarzwaldallee 215
P.O. Box
CH-4002 Basel
Switzerland
www.syngenta.com
Article number 016842.040
Corporate Governance Report 2009