Investors/Analysts Conference Accounting Workshop

Transcription

1 Investos/Analysts Confeence Accounting Wokshop Ian Bishop This pesentation contains cetain fowad-looking statements. These fowad-looking statements may be identified by wods such as believes, expects, anticipates, pojects, intends, should, seeks, estimates, futue o simila expessions o by discussion of, among othe things, stategy, goals, plans o intentions. Vaious factos may cause actual esults to diffe mateially in the futue fom those eflected in fowad-looking statements contained in this pesentation, among othes: 1 picing and poduct initiatives of competitos; 2 legislative and egulatoy developments and economic conditions; 3 delay o inability in obtaining egulatoy appovals o binging poducts to maket; 4 fluctuations in cuency exchange ates and geneal financial maket conditions; 5 uncetainties in the discovey, development o maketing of new poducts o new uses of existing poducts, including without limitation negative esults of clinical tials o eseach pojects, unexpected side-effects of pipeline o maketed poducts; 6 inceased govenment picing pessues; 7 inteuptions in poduction 8 loss of o inability to obtain adequate potection fo intellectual popety ights; 9 litigation; 10 loss of key executives o othe employees; and 11 advese publicity and news coveage. Any statements egading eanings pe shae gowth is not a pofit foecast and should not be intepeted to mean that Roche s eanings o eanings pe shae fo this yea o any subsequent peiod will necessaily match o exceed the histoical published eanings o eanings pe shae of Roche. FY esults 2005 Accounting wokshop Febuay 1,

2 Agenda Equity Compensation Plans Eanings Pe Shae Question & Answe Session Equity Compensation Plans Agenda Opeating expenses Income taxes Impact on equity Questions & Answes FY esults 2005 Accounting wokshop Febuay 1,

3 Equity Compensation Plans Opeating expenses Full disclosue in Note 14 (pages 64-69). Impact on FY 05 (pe-tax) esults 504m CHF - 364m CHF equity-settled plans - 140m CHF cash-settled plans FY 06 expense (pe-tax) fo equity-settled plans - Initial estimate 420m CHF (given 8 Mach 05) - Revised estimate ove 500m CHF - Incease due to incease in Genentech stock pice. Equity Compensation Plans Income taxes: main pinciples Opeating expense is fixed at gant date and spead ove vesting peiod, but Tax benefit vaiable (depending on maket pice) and booked until execise - Tax benefit can be zeo (if option out-of-money) - Tax benefit can include catch-up fom pio peiods - Oveall cap on tax benefit (opeating expense multiplied by tax ate) - Tax impacts last beyond vesting until execise FY esults 2005 Accounting wokshop Febuay 1,

4 Equity Compensation Plans Income taxes: the stoy so fa Genentech equity compensation plans: HY 2004 USD m FY 2004 USD m HY 2005 USD m FY 2005 USD m Opeating pofit (35) (105) (105) (245) Tax benefit Effective tax ate 54% 27% 58% 40% Equity Compensation Plans Impact on equity Diect to equity impact 2.6 bn CHF incease in equity bn CHF etained eanings bn CHF minoity inteests Consists of - Cash eceived fom execises 1.1 bn CHF - Income taxes (balance sheet) 1.1 bn CHF - ECP expense 0.4 bn CHF FY esults 2005 Accounting wokshop Febuay 1,

5 Eanings Pe Shae Agenda Which EPS to use? Coe EPS Modelling EPS Impact of changes in IFRS Questions & Answes Eanings Pe Shae Which EPS to use? (1) Diluted EPS Best suited fo epoting to shaeholdes on actual esults. - Includes eveything Coe EPS Best suited fo epoting to analysts and investos on actual esults and tagets. - Focuses on the undelying business - Excludes histoic iegula items (discontinuing businesses, exceptional items) and items that educe compaability to pees (intangible asset amotisation) FY esults 2005 Accounting wokshop Febuay 1,

6 Eanings Pe Shae Which EPS to use? (2) Diluted EPS Coe EPS Eanings Net income Net income - Minoity inteest - Minoity inteest - Discontinued businesses, afte tax - Exceptional items, afte tax - Intangible asset amotisation, afte tax - Minoity inteest on above - Dilution 1 - Dilution 1 Eanings fo diluted EPS Coe Net Income Pe # of issued shaes and NES # of issued shaes and NES Shae - Own equity - Own equity - Dilution 1 - Dilution 1 # shaes fo EPS # of shaes fo EPS 1 Dilution fom convetible debt and employee stock options, especially Genentech Eanings Pe Shae Coe EPS (1) FY esults 2005 Accounting wokshop Febuay 1,

7 Eanings Pe Shae Coe EPS (2) Eanings Pe Shae Modelling Coe EPS (1) Minoity inteests Numbe of shaes (net of Teasuy shaes) - inceasing as Teasuy shae holdings educe Convetible debt - LYONs V : 30m USD eanings (annual), 11m shaes Genentech and Chugai stock options - gowing eanings dilution (FY 05 63m CHF) Roche stock options - gowing pe shae dilution (FY 05 2m shaes) FY esults 2005 Accounting wokshop Febuay 1,

8 Eanings Pe Shae Modelling Coe EPS (2) Amotisation of intangible assets 2005 CHF m 2006 CHF m 2007 CHF m 2008 CHF m Roche Phama Genentech Chugai Phamaceuticals Division Diagnostics Division Total 1, * based on estimates in most ecent intenal business plans Eanings Pe Shae Impact of changes in IFRS EPS 2004 estated fo etospective IFRS changes EPS 2004 not estated fo pospective changes (e.g. goodwill amotisation only stopped fom 1 Jan 05) Impact of IFRS changes assessed at 8 Mach 2005 wokshop EPS 2005 will be estated in 2006 fo changes in IFRS implemented in 2006 (IAS 19 (evised) Pensions) FY esults 2005 Accounting wokshop Febuay 1,