CORE Results as Defined by Lonza

Lonza believes that understanding in the financial markets of the Group’s performance is enhanced by disclosing core results of performance because the core results enable better comparison across years. Therefore the core results exclude exceptional items such as restructuring charges, impairments and amortization of acquisition-related intangible assets which can differ significantly from year to year. For this same reason, Lonza uses these core results in addition to IFRS as important factors in assessing the Group’s performance.

 

Lonza’s Investment Grade Rating Maintained Post  FY 2013 Results

Following Lonza’s full-year 2013 results presentation on 23 January 2014 a number of the leading Swiss  banks have re-evaluated Lonza’s investment rating. Following their analysis, the banks came to the conclusion that Lonza’s investment grade rating should be maintained. At the end of 2013 the Company’s net debt amounted to CHF 2103 million, giving  a debt-equity ratio of 0.99 and a net debt/EBITDA ratio of 2.77x, as a result of the acquisition of Arch Chemicals in October 2011 which was entirely debt financed. During its 2013 Results Presentation, Lonza communicated that due to the free cash flow generation of the business it was targeting a net debt/EBITDA ratio of around 2x by the end of 2015. This focus on reducing net debt is expected to continue for the next several years. ­­­­­­­­­­­­­­

Dividends

The policy is to pay between 25% and 40% of net profit to shareholders in the form of dividends.
At the 2014 Annual General Meeting of the Shareholders, held on Wednesday, 16 April 2014, the shareholders followed the proposal of the Board of Directors and voted for a payment of a dividend (out of reserves from capital contribution) of CHF 2.15 per share for the fiscal year 2013. Since 2010 Lonza is paying a stable dividend of CHF 2.15 per share.

 

Currency Exposure

Despite having a strong exposure to the US dollar in terms of sales (50%), Lonza has an extremely good natural hedge in that a majority (45%) of costs are also in US dollar or dollar-denominated currencies. In addition, Lonza also has some exposure to the Swiss franc (20% of sales, 25% of costs), and the euro (15% of sales, 20% of costs), whereas exposure to all other currencies represent less than 5% of sales. Translation represents 2/3 and transaction represents 1/3. Hedging policy / foreign exchange management policy and process:

  • Focus on natural hedge
  • Contract hedging
  • Central hedging
  • Partial, forward hedging of net exposure

 

WACC

Lonza uses an average WACC of 8,0% for the group, this figure varying then division by division depending on the anticipated volatility of the business.

 

Pension Benefits

The group operates defined-benefit pension plans in various countries, with the major plans in Switzerland, Great Britain and the United States (these plans are described in the Annual Report 2013 on pages 125-127). For pension accounting purposes, these plans are considered as defined benefit plans.

The significant actuarial assumptions at the reporting date (expressed as weighted averages) were as follows:

 in %  2013  2012
             
                                                    CH        US        UK          CH       US       UK      
             
Discount rate  2.30 4.69 4.39 1.90 3.67 4.13
Future salary increases 1.00 0.00 3.53 2.00 0.00 3.25
Future pension increases n/a 0.00 2.49 n/a 0.00 1.93

Additional information on Employee Benefit Liabilities e.g:

  • Movements of the defined benefit liability
  • Mortality assumptions
  • Sensitivity analysis
  • Detail of plan assets
  • Defined benefit obligations and plan assets by country

are disclosed in the Annual Report  2013 on pages 128-131.

How Much Does Lonza Spend on Research and Development (R&D)?

Research and development costs include all primary costs directly related to this function as well as internal services and imputed depreciations. These costs are incurred for:

  • Development of new prodcuts and services
  • Improvement of existing products and services
  • Development of new production processes
  • Improvement of existing production processes
  • Cost for patents
  • Purchase price for product and process know-how as far as it has not been capitalized

The research and development costs amounted to CHF 215 million (2012: CHF 215 million) and represent the full range of R&D activity. However, the consolidated income statement discloses research and development costs of only CHF 111 million (2012: CHF 116 million), because of costs absorbed in "Cost of goods sold" by R&D products and services sold.

 

Where are Lonza Shares Traded?

Lonza shares are traded at the SIX Stock Exchange in Zurich the home market for the Swiss Leader Index (SLI) and at the Main Board of the Singapore Exchange Securities Trading Limited (“SGX-ST”). Lonza has secondary listing at SGX Singapore Exchange.

 

What is the Stock Symbol?

The stock symbol for Lonza shares at the SIX is LONN and O6Z at the SGX-ST.

 

How Many Shares Does Lonza Have Issued?

Registered shares  2013  2012 
Number of shares issued  52,920,140 52,920,140
Number of shares ranking for dividend 51,975,198 51,916,401
Par value per share CHF 1 1
Net income (equity holders of the parent) million CHF 87 174
Diluted net income million CHF 87 174
Ratios per security 2013 2012
Weighted average number of shares 51,949,121 51,775,225
Diluted weighted average number of shares 52,157,971 51,978,758
Basic earnings per share CHF 1.67 3.36
Diluted earnings per share CHF 1.67 3.35

 

What is Lonza Doing to Protect the Environment?

Lonza is committed to generating sustainable added value. This is only possible if ecological, social as well as economic objectives are met. Our highest priorities are personal safety and environmentally sound processes and products. For more information, please visit our Environment, Safety & Health section.

 

What is Lonza Position on Corporate Governance?

Lonza has implemented modern corporate governance structures to ensure accountability, responsibility and transparency throughout the Group and for its shareholders. Corporate governance reporting is in compliance with the guidelines of SWX Swiss Exchange. For more information, please refer to the section relating to Corporate Governance.

 

Where can I Obtain More Information?

Don’t hesitate to contact the Investor Relations team.