CORE Results

Reconciliation of IFRS Results to CORE Results 2018

million CHF

 

IFRS results

 

Amortization of intangible assets from acquisitions

 

1Impairments

 

Restructuring costs / income

 

2Income / expense from acquisition and divestures

 

Environmental-related expenses

 

Other

 

CORE results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Impairment charges relate to the market revaluation of land in Guangzhou (CHF 35 million), the production facilities in Walkersville subsequent to the transfer of the cell-therapy activities to Portsmouth and Houston (CHF 29 million) as well as other production assets in Nansha and Visp

2

Income / expense resulting from acquisition and divestitures.
Result from operating activities (EBIT):
– Integration cost resulting from the acquisition of Capsugel (CHF 28 Million) and other acquisitions
Net financing costs:
– Fair value adjustment on Lonza’s pre-acqisition investment in Octane
Discontinued operations:
– Water Care related divestiture expenses

3

Tax impact calculated based on the estimated average Group tax rate of: 18.3%

Sales

 

5,542

 

0

 

0

 

0

 

0

 

0

 

0

 

5,542

Cost of goods sold

 

(3,449)

 

0

 

42

 

5

 

0

 

39

 

0

 

(3,363)

Gross profit

 

2,093

 

0

 

42

 

5

 

0

 

39

 

0

 

2,179

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and distribution

 

(344)

 

0

 

0

 

0

 

0

 

0

 

0

 

(344)

Research and development

 

(110)

 

0

 

0

 

0

 

0

 

0

 

0

 

(110)

Administration and general overheads

 

(732)

 

164

 

0

 

3

 

30

 

0

 

0

 

(535)

Other operating income

 

50

 

0

 

0

 

0

 

0

 

0

 

0

 

50

Other operating expenses

 

(115)

 

0

 

35

 

3

 

0

 

2

 

0

 

(75)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from operating activities (EBIT)

 

842

 

164

 

77

 

11

 

30

 

41

 

0

 

1,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

85

 

0

 

0

 

0

 

(32)

 

0

 

0

 

53

Financial expenses

 

(119)

 

0

 

0

 

0

 

0

 

0

 

1

 

(118)

Net financing costs

 

(34)

 

0

 

0

 

0

 

(32)

 

0

 

1

 

(65)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of profit / (loss) of associates/joint ventures

 

(1)

 

0

 

0

 

0

 

0

 

0

 

1

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income taxes

 

807

 

164

 

77

 

11

 

(2)

 

41

 

2

 

1,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes3

 

(148)

 

(30)

 

(14)

 

(2)

 

0

 

(7)

 

0

 

(201)

Profit from continuing operations

 

659

 

134

 

63

 

9

 

(2)

 

34

 

2

 

899

Loss from discontinued operations, net of income taxes

 

(96)

 

3

 

69

 

1

 

18

 

0

 

1

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

563

 

137

 

132

 

10

 

16

 

34

 

3

 

895

Non-controlling interests

 

(4)

 

0

 

0

 

0

 

0

 

0

 

0

 

(4)

Profit for the period, attributable to the equity holders of the parent

 

559

 

137

 

132

 

10

 

16

 

34

 

3

 

891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares basic

 

74,408,243

 

 

 

 

 

 

 

 

 

 

 

 

 

74,408,243

Number of shares diluted

 

74,723,145

 

 

 

 

 

 

 

 

 

 

 

 

 

74,723,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share for profit from continuing operations attributable to equity holders of the parent:

 

CHF

 

 

 

 

 

 

 

 

 

 

 

 

 

CHF

Basic earnings per share – EPS basic

 

8.80

 

 

 

 

 

 

 

 

 

 

 

 

 

12.03

Diluted earnings per share – EPS diluted

 

8.77

 

 

 

 

 

 

 

 

 

 

 

 

 

11.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share for profit attributable to equity holders of the parent:

 

CHF

 

 

 

 

 

 

 

 

 

 

 

 

 

CHF

Basic earnings per share – EPS basic

 

7.51

 

 

 

 

 

 

 

 

 

 

 

 

 

11.97

Diluted earnings per share – EPS diluted

 

7.48

 

 

 

 

 

 

 

 

 

 

 

 

 

11.92

CORE Results as Defined by Lonza

Lonza believes that disclosing CORE results of the Group’s performance enhances the financial markets’ understanding of the company because the CORE results enable better comparison across years. CORE results exclude exceptional expenses and income related to e.g. restructuring, environmental-remediation, acquisitions and divestitures, 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 internally assessing the Group’s performance.

Reconciliation of IFRS Results to CORE Results 20171

million CHF

 

IFRS results

 

Impact from tax reform in US / Belgium

 

Results after US / Belgium tax reforms

 

Amortization of intangible assets from acquisitions

 

Impairments

 

Reversal of impairments

 

Restructuring costs / income

 

2Income / expense from acquisition and divestures

 

Environmental-related expenses

 

3Gain from Guangzhou (CN) land transaction

 

Other

 

CORE results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Restated to reflect adoption of IFRS 15 (see note 1) and classification of Water Care business as discontinued operations (see note 5.2).

2

Income / expense resulting from acquisition and divestitures.
Result from operating activities (EBIT):
– Capsugel: CHF 77 Million related to the fair value step-up of acquired Capsugel inventories as well as CHF 27 million for acquisition and integration-related costs
– Peptides business: accumulated exchange rate translation reserve losses of CHF 35 million
– Other acquisitions: acquisition and integration costs of CHF 2 million
Net financing costs:
– Capsugel: Amortization of fees on bridge financing (see note 5) of CHF 37 million as well as option premium paid of CHF 19 million for derivative financial instrument to manage foreign currency exposure
– InterHealth: Favorable impact from fair value adjustment on contingent purchase price consideration of CHF 7 million

3

See note to Operational Free Cash Flow.

4

Excluding the impact from tax reform in United States / Belgium, an average Group tax rate of 6.6% results, which is used for the calculation of income taxes on CORE reconciliation items.

Sales

 

4,548

 

0

 

4,548

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

4,548

Cost of goods sold

 

(2,893)

 

0

 

(2,893)

 

0

 

21

 

(2)

 

0

 

77

 

27

 

0

 

0

 

(2,770)

Gross profit

 

1,655

 

0

 

1,655

 

0

 

21

 

(2)

 

0

 

77

 

27

 

0

 

0

 

1,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and distribution

 

(277)

 

0

 

(277)

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(277)

Research and development

 

(95)

 

0

 

(95)

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(95)

Administration and general overheads

 

(609)

 

0

 

(609)

 

100

 

0

 

0

 

7

 

29

 

0

 

0

 

0

 

(473)

Other operating income

 

109

 

0

 

109

 

0

 

0

 

0

 

0

 

0

 

0

 

(74)

 

0

 

35

Other operating expenses

 

(110)

 

0

 

(110)

 

0

 

0

 

0

 

6

 

35

 

5

 

0

 

0

 

(64)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Result from operating activities (EBIT)

 

673

 

0

 

673

 

100

 

21

 

(2)

 

13

 

141

 

32

 

(74)

 

0

 

904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

30

 

0

 

30

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

30

Financial expenses

 

(169)

 

0

 

(169)

 

0

 

0

 

0

 

0

 

49

 

0

 

0

 

1

 

(119)

Net financing costs

 

(139)

 

0

 

(139)

 

0

 

0

 

0

 

0

 

49

 

0

 

0

 

1

 

(89)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of profit / (loss) of associates/joint ventures

 

1

 

0

 

1

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(1)

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before income taxes

 

535

 

0

 

535

 

100

 

21

 

(2)

 

13

 

190

 

32

 

(74)

 

0

 

815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes4

 

131

 

(187)

 

(56)

 

(7)

 

(1)

 

0

 

(1)

 

(13)

 

(2)

 

5

 

0

 

(75)

Profit from continuing operations

 

666

 

(187)

 

479

 

93

 

20

 

(2)

 

12

 

177

 

30

 

(69)

 

0

 

740

Loss on sale of discontinued operations, net of income taxes

 

43

 

0

 

43

 

4

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

709

 

(187)

 

522

 

97

 

20

 

(2)

 

12

 

177

 

30

 

(69)

 

0

 

787

Non-controlling interests

 

(2)

 

0

 

(2)

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

(2)

Profit for the period, attributable to the equity holders of the parent

 

707

 

(187)

 

520

 

97

 

20

 

(2)

 

12

 

177

 

30

 

(69)

 

0

 

785

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares basic

 

67,878,060

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,878,060

Number of shares diluted

 

68,460,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

68,460,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share for profit from continuing operations attributable to equity holders of the parent:

 

CHF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHF

Basic earnings per share – EPS basic

 

9.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.87

Diluted earnings per share – EPS diluted

 

9.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.78

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share for profit attributable to equity holders of the parent:

 

CHF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHF

Basic earnings per share – EPS basic

 

10.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.56

Diluted earnings per share – EPS diluted

 

10.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11.47

Reconciliation of EBITDA to CORE EBITDA

million CHF

 

2018

 

2017
1restated

 

 

 

 

 

1

Restated to reflect adoption of IFRS 15 (see note 1) and classification of Water Care business as discontinued operations (see note 5.2)

Earnings before interests, taxes and depreciation (EBITDA)

 

1,429

 

1,084

Restructuring costs / income

 

11

 

13

Income / expense resulting from acquisition and divestitures

 

30

 

141

Environmental-related expenses

 

41

 

32

Gain from Guangzhou (CN) land transaction

 

0

 

(74)

CORE EBITDA

 

1,511

 

1,196