Note 2: Changes in Accounting Policies - IFRS for Syngenta

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SYT » Topics » Note 2: Changes in Accounting Policies - IFRS

This excerpt taken from the SYT 6-K filed Feb 8, 2007.

Note 2: Changes in Accounting Policies - IFRS

Except for the following, no changes to accounting standards had an effect on the 2006 consolidated financial statements, which have otherwise been prepared in accordance with the same accounting policies as in 2005, consistently applied.

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IFRIC 4, ‘Determining whether an Arrangement contains a lease’. With effect from 1 January 2006, certain contracts for the supply of goods or services to Syngenta which depend upon the use of a specific asset of the supplier are accounted for partly as a lease of that asset and partly as a supply contract. Under Syngenta’s previous policy, these contracts would have been accounted for purely as supply contracts, with all contractual payments charged to Cost of Goods sold in the income statement as the related inventories were sold. Under the new policy, if the lease embedded in the contract is classified as a finance lease, Syngenta capitalizes the supplier’s asset as Property, plant and equipment in its own consolidated balance sheet, with a corresponding entry to Financial debt. Contractual payments are allocated between Cost of Goods sold, interest expense and repayment of financial debt. In 2006, the new policy increased Property, plant and equipment by $9 million, Financial debt by $6 million, Deferred tax liabilities by $1 million and Shareholders’ equity by $2 million. In the income statement, Cost of Goods sold was reduced by $2 million, Net financial expense increased by $1 million and Net income increased by $1 million. There was no material effect on prior periods.

SYNGENTA FULL YEAR RESULTS 2006 / PAGE 18 OF 31

–	IFRIC 5, ‘Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation funds’. Adoption of IFRIC 5 with effect from 1 January 2006 had no effect on the consolidated financial statements.

–	IFRS 7, ‘Financial Instruments: Disclosures’. Syngenta has adopted IFRS 7 early and has provided the required additional disclosures in Notes 10, 18, 19, 21 and 32 to the consolidated financial statements.

–	IFRIC 8, ‘Scope of IFRS 2’ requires share based payment expense to be recorded when equity instruments are granted at less than fair value in situations where the goods or services received in exchanged for the grant cannot be specifically identified. Syngenta has adopted IFRIC 8 early, with effect from 1 January 2006. Adoption had no effect on the consolidated financial statements.

–	IFRIC 9, ‘Reassessment of Embedded Derivatives’. IAS 39 requires a derivative embedded within a financial instrument to be accounted for separately to its host instrument if it is not closely related to the instrument. IFRIC 9 clarified in what circumstances the accounting for such a hybrid instrument should be re-assessed once it has been determined. Syngenta has adopted IFRIC 9 early, with effect from 1 January 2006. Adoption had no effect on the consolidated financial statements.

–	IFRIC 10, ‘Interim Financial Reporting and Impairment’. Under IFRIC 10, if an impairment of goodwill, an available-for-sale equity instrument, or a financial asset measured at amortized cost is reported in interim financial statements during a year, it may not be reversed in a later interim period or in the annual financial statements at the year end, even if conditions at that later date would support an increased valuation of the asset. Syngenta has adopted IFRIC 10 early, with effect from 1 January 2006. Because Syngenta’s previous accounting policy already complied with IFRIC 10, adoption had no effect on the consolidated financial statements.

–	IFRIC 11, ‘IFRS 2 – Group and Treasury Share Transactions’. IFRIC 11 clarified that share-based payment transactions in which an entity receives services as consideration for its own equity instruments are accounted for as equity-settled, regardless of whether the entity repurchases its equity instruments from a third party in order to settle the transaction. IFRIC 11 also establishes how subsidiaries should account for grants of parent company equity instruments to their employees. Syngenta has adopted IFRIC 11 early, with effect from 1 January 2006. Adoption had no effect on the consolidated financial statements.

In the consolidated balance sheet, deferred tax assets and deferred tax liabilities have been netted against each other within the same taxable entity. Previously, they were netted only where they related to the same balance sheet item as well as the same taxable entity. 2005 comparative figures have been reclassified accordingly. This has no impact on net income or shareholders’ equity, but has reduced deferred tax assets and deferred tax liabilities in the consolidated balance sheet, and total assets and total liabilities, by $269 million, and $204 million as at 31 December 31 2006, and 2005 respectively.

This excerpt taken from the SYT 6-K filed Jul 27, 2006.

Note 2: Changes in Accounting Policies - IFRS

Syngenta has applied IFRIC 4, “Determining whether an Arrangement contains a Lease”, and IFRIC 5, “Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds”, with effect from 1 January 2006. Neither Interpretation had a material effect on these condensed consolidated financial statements. Also, Syngenta has applied IFRIC 8, “Scope of IFRS 2”, early as from 1 January 2006. IFRIC 8 had no effect on these condensed consolidated financial statements.

SYNGENTA HALF YEAR RESULTS 2006 / PAGE 15 OF 27

This excerpt taken from the SYT 6-K filed Feb 14, 2006.

Note 2: Changes in Accounting Policies - IFRS

Except for the following, no changes to accounting standards had an effect on the 2005 consolidated financial statements, which have otherwise been prepared in accordance with the same accounting policies as in 2004, consistently applied.

Syngenta has applied IFRS 3, ‘Business Combinations’, fully as from 1 January 2005. Accordingly, goodwill on acquisitions has not been amortized as from that date. Goodwill amortization charged in the consolidated income statement for the year ended 31 December 2004 was $56 million. In accordance with IFRS 3, the prior year has not been restated.

With effect from 1 January 2005, Syngenta has adopted IAS 32 (revised) and IAS 39 (revised). The changes in fair value of certain financial assets in prior years have been recognized as impairment losses within net income in accordance with the revised impairment criteria in IAS 39 (revised), instead of as unrealized holding losses within shareholders’ equity. A pre-tax impairment loss of $19 million has been recognized in the 2005 consolidated income statement. This would have been accounted for as an unrealized holding loss in shareholders’ equity in accordance with the previous policy. Also, gains and losses on hedges of currency exposures arising from forecast sales and purchases between Syngenta subsidiaries are now recognized in profit or loss when the related third party sale transaction occurs. This change delays recognition of these gains and losses in consolidated profit or loss for approximately 120 days compared with the previous policy of recognition when the inter-company forecast transaction occurred. The effect of the new policy is to increase 2005 pre-tax income by $17 million. It also aligns the timing of these gains and losses for IFRS and

SYNGENTA FULL YEAR RESULTS 2005 / PAGE 18 OF 30

for US GAAP. 2004 comparative figures have not been adjusted, as permitted by the transitional provisions of IAS 39 (revised).

With effect from 1 January 2005, Syngenta has adopted IAS 16, “Property, Plant and Equipment” (revised). Subsequent expenditure on existing assets has now been capitalized when a component is replaced. Previously, component replacement was expensed as incurred if the asset’s originally assessed standard of performance was not enhanced but merely restored. This has reduced 2005 cost of good sold by approximately $3 million compared to continuing the previous policy. There is no effect on prior periods.

This excerpt taken from the SYT 6-K filed Jul 28, 2005.

Note 2: Changes in Accounting Policies - IFRS

Syngenta disclosed the impact of recent changes in accounting standards on prior year financial statements in Note 2 to its 2004 consolidated financial statements and, in respect of the six months ended 30 June 2004, in additional information available on its website. As stated above, these interim consolidated financial statements have been prepared in accordance with the same accounting policies, except for the following additional changes to accounting standards, and previously published figures have been adjusted where appropriate.

Syngenta has applied IFRS 3, ‘Business Combinations’, fully as from 1 January 2005. Accordingly, goodwill on acquisitions has not been amortized as from that date. Goodwill amortization charged in the consolidated income statement for the six months ended 30 June 2004 was $27 million. In accordance with IFRS 3, the prior year has not been restated.

This excerpt taken from the SYT 6-K filed Feb 15, 2005.

Note 2: Changes in Accounting Policies - IFRS

The IASB issued several new or revised accounting standards between December 2003 and March 2004. These standards are mandatory for Syngenta as from 1 January 2005. Wherever practicable, Syngenta has adopted these standards early as from 1 January 2004. Notes 2 and 34 to the consolidated financial statements contain a full description of the changes. The main points are given below. The adjustments for changes which have been applied retrospectively to 2003 were given in the media release issued by Syngenta on 18 January 2005.

Syngenta adopted IAS 1 (revised 2003), ‘Presentation of Financial Statements’ early, as from 1 January 2004, and has consequently presented minority interests in the condensed consolidated income statement as an allocation of net income, and within equity in the condensed consolidated balance sheet. Previously, minority interests were presented in the income statement as a deduction from net income, and positioned in the balance sheet between liabilities and shareholders’ equity.

Syngenta adopted IAS 21 (revised 2003), ‘The Effects of Changes in Foreign Exchange Rates’, early, as from 1 January 2004. This revised standard has had two effects:

Syngenta has accounted for goodwill and fair value adjustments arising on 2004 business combinations in the currencies of the acquired entities. This did not have a material effect on the consolidated financial statements. Goodwill and fair value adjustments on earlier business

SYNGENTA FULL YEAR RESULTS 2004 / PAGE 17 OF 32

combinations continue to be accounted for as previously, mainly in US dollars, as permitted by the revised standard.

Certain long term loans between Syngenta group companies are no longer treated as part of the group’s net investment in the borrowing subsidiary for foreign currency translation purposes. As a result, currency translation differences on these loans are now recorded in the income statement, whereas previously they were recorded as a movement on shareholders’ equity. This change did not have a material effect on the 2004 consolidated income statement.

Syngenta adopted IFRS 2, ‘Share Based Payment’ early, as from 1 January 2004. IFRS 2 requires Syngenta to record the fair value of share and share option grants to its employees as an expense. Previously, these grants were accounted for within shareholders’ equity as transactions with shareholders. Syngenta’s employee share and share option schemes are described, and details of transactions given, in Note 27 to the consolidated financial statements. Syngenta has calculated the expense for 2003 using the same model based on the Black-Scholes-Merton formula, and the same inputs, which it used in previous years to prepare the SFAS No.123 pro-forma disclosures required by US GAAP in the consolidated financial statements. Syngenta has recorded share based compensation expense in 2004 of $33 million before tax, on a consistent basis with 2003.

Syngenta applied IFRS 3, ‘Business Combinations’, to the 2004 acquisitions mentioned in Note 3 below, as immediate application of IFRS 3 to business combinations with an agreement date after 31 March 2004, is mandatory. The main effects of the new standard compared to applying the previous standard, IAS 22, is that goodwill on those acquisitions has not been amortized, and all costs of restructuring the acquired businesses have been shown within restructuring and impairment in the consolidated income statement; under IAS 22, the goodwill would have been amortized and cash restructuring costs of $9 million would have been recorded as part of purchase accounting. For goodwill on previous acquisitions, Syngenta will apply IFRS 3 and the related changes in IAS 36, ‘Impairment of Assets’ (revised March 2004), and IAS 38, ‘Intangible Assets’ (revised March 2004) as from 1 January 2005, as permitted by those standards. As a result, Syngenta will cease to amortize that goodwill as from that date. Amortization charged in the consolidated income statement on that goodwill in 2004 was $56 million.

Syngenta adopted IFRS 5, ‘Non-current Assets held for Sale and Discontinued Operations’ early, as from 1 January 2004. In accordance with IFRS 5, SF-Chem AG has been reported as a discontinued operation. SF-Chem results, together with the loss on disposal, have been shown on a post-tax basis in a single, separate line within the condensed consolidated income statement. As required by IFRS 5, the 2003 income statement has been restated to present it consistently with 2004.

As from 1 January 2004, Syngenta has presented $46 million of royalty income as part of sales, and related royalty expense of $28 million within cost of goods sold. The change has no effect on Syngenta’s consolidated net income, balance sheet or cash flow statement.

EXCERPTS ON THIS PAGE:

6-K	Feb 8, 2007

6-K	Jul 27, 2006

6-K	Feb 14, 2006

6-K	Jul 28, 2005

6-K	Feb 15, 2005

Syngenta AG (SYT)

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