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UBS Investment Research

Syngenta

Nine warnings from peers: raise to Key Call

Profit warnings are always an intriguing moment to revisit a stock… We think fear will govern Syngenta’s share price after nine warnings/cautiouscomments from Monsanto (3), Nufarm (3), MA Industries (2) and BayerCropScience. But we believe this marks the point of share-price recovery, as witnessed by the outperformance of industrial chemicals after BASF and Dowwarnings in late 08’. Syngenta shares have underperformed the sector by c30% andare now back at April levels. This contrasts with previous setbacks when it stillwas a relative outperformer.

…but while peers have warned multiple times, we think Syngenta won’t Seven of the nine peer warnings came on the back of glyphosate destocking andfalling gly prices, themes to which Syngenta has negligible exposure. But there is alate start to the LatAm crop cycle as well. Q3 top-line results due on Oct 23 should therefore be weak, but we expect Syn to reiterate EPS guidance. We also tend tobuy agri shares when crop prices have bottomed…which seems increasingly likely.

We reiterate estimates – we project robust 13% EBITDA growth for 2010 Despite moderate assumptions for volume/price in Crop Protection (+2% vols, -1.5% price) we would expect strong 13.5% EBITDA growth in 2010, due to partialreversal of raw material burden and currency hit, further price increases in seedsand cost savings. We also expect strong 2010 FCF growth as EBITDA rises while capex has peaked in 09, with share buybacks an option after Dow talks have ended.

Valuation – target of CHF 295 allows for compelling c30% upside Our PT is set via blend of DCF, SOP, EV/EBITDA and EPS multiples. PT hasfallen from CHF 300 due to the adverse impact of a weaker USD on valuation.

Highlights (US$m) 12/07 12/08 12/09E 12/10E 12/11ERevenues 9,240 11,624 10,782 11,337 11,722EBIT (UBS) 1,455 2,068 1,954 2,267 2,425Net Income (UBS) 1,079 1,531 1,472 1,680 1,831EPS (UBS, US$) 11.11 16.17 15.80 18.03 19.65Net DPS (UBS, US$) 4.80 6.00 6.50 7.25 8.00 Profitability & Valuation 5-yr hist av. 12/08 12/09E 12/10E 12/11EEBIT margin % 13.6 17.8 18.1 20.0 20.7ROIC (EBIT) % 17.6 29.2 24.9 26.3 27.0EV/EBITDA (core) x 8.9 11.0 10.0 8.6 7.9PE (UBS) x 15.0 15.5 14.1 12.3 11.3Net dividend yield % 2.3 2.2 2.8 3.1 3.5 Source: Company accounts, Thomson Financial, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Valuations: based on an average share price that year, (E): based on a share price of CHF230.30 on 05 Oct 2009 19:08 BST Thomas Gilbert, PhD Analyst [email protected] +41-44-23 91643

Laurent Favre, CFA Analyst [email protected] +44-20-756 84008

Joe Dewhurst Analyst [email protected] +44 207 56 88327

Global Equity Research Switzerland

Chemicals, Specialty

12-month rating Buy Unchanged 12m price target CHF295.00/US$57.03 Prior: CHF300.00/US$57.99

Price CHF230.30/US$44.86 (ADR) RIC: SYNN.VX BBG: SYNN VX

7 October 2009 Trading data (local/US$) 52-wk range CHF275.25-162.90/US$51.44-27.60Market cap. CHF21.5bn/US$20.9bnShares o/s 93.2m (BEAR)/466m (ADR)ADR ratio 5 ADR:1 BEARFree float 100%Avg. daily volume ('000) 394/77Avg. daily value (CHFm) 96.4/3.5 Balance sheet data 12/09E Shareholders' equity US$6.64bnP/BV (UBS) 3.1xNet Cash (debt) (US$2.40bn) Forecast returns Forecast price appreciation +28.1%Forecast dividend yield 3.1%Forecast stock return +31.2%Market return assumption 5.6%Forecast excess return +25.6% EPS (UBS, US$) 12/09E 12/08 From To Cons. ActualH1 - 15.27 - 16.64H2E - 0.53 - (0.48)12/09E - 15.80 15.7712/10E - 18.03 17.67 Performance (CHF)

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This report has been prepared by UBS Limited ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 26. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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mailto:[email protected]



Syngenta 7 October 2009

UBS 2

Syngenta snapshot Chart 1: Sales by product class Chart 2: Crop protection market 1970 – 2010E ($m)

Herbicides32%

Fungicides23%

Seeds&Traits21%

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Seed Treatment7%

Insecticides12%

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Chart 3: Sales by geography Chart 4: Gross profit by business line

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Chart 7: Sales and margin evolution ($) Chart 8: Cash flow return on gross tangible fixed assets

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Chart 3: Adjusted EPS ($ per share) Chart 4: Dividend per share and yield (CHF)

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Investment Thesis – add to UBS European ‘Key Call’ List We think below CHF 230 the implied value the market places on Seeds is zero, hence we see these levels as particularly attractive buying opportunities,following the weakness after numerous profit warnings from Monsanto,Nufarm, MA Industries and various fertilizer companies. We see four positivesfor Syngenta: (1) Further mix improvement in crop protection chemicals throughvalue priced seed care solutions, novel technologies such as Invinsa (2) at lastsome signs of gross margin expansion in Seeds (3) a capex peak in 2009 withFCF acceleration in 2010 (4) continued market growth of CAGR 3% in crop protection chemicals, with share gains expanding such growth for Syngenta.

From a peak of 22x one-year forward earnings and 13x EV/EBITDA Syngenta has derated to 12x P/E, and 8x 12m rolling EV/EBITDA. Following weakness around comparably poor H1/Q2 results the previous 30%+ premia to both the Swiss market and chemical sector have eroded, with Syngenta now trading at unprecedented discounts. This was complemented by rotation into stocks that are more leveraged to the restocking event underway in China and European auto sector, and as government stimuli packages provide temporary support for industrial production. We reiterate our Buy stance with good conviction, as company appears set up for double digit EPS growth again in 2010 and earnings growth beyond. FCF generation is set to pick up markedly as well.

Third quarter sales outlook Investors are clearly unsettled ahead of Syngenta’s trading update due on Friday, October 23. In the past months we have had three warnings from Monsanto, three from Nufarm, two from MA Industries and a cautious trading comment from Bayer CropScience. Most of them related to overcapacity, weak demand and price pressure for the only commoditised bulk agrochemical – glyphosate – but still sentiment for Syngenta got badly hurt.

Last Thursday, generics player MA Industries warned that its 3Q09 revenues should be expected at $425-440 down, ie down by some 30% YoY and significantly below recent estimates of turnover just over $500m. The company also expects a net loss of $15-25m vs. net income of $50m last year. We spoke with management, which said high inventories of herbicides (particularly glyphosate) in Brazil have impacted volumes and pricing. Bayer CropScience cited a slow start to the LatAm season, and as intermediaries and some farms switch back to a just in time order pattern, where last year purchases were brought forward to Q3 as buyers were anxious they would have to swallow price increases later in the season. There is no such incentive this year as prices have stabilised.

As to Syngenta, we expect a weak performance, though much better than peers. Its glyphosate leverage to the bottom line is much lower, it sells an ever increasing 30%+ portion in Brazil via the Barter model, and unlike MA Industries, it caters to the sophisticated, yield-conscious larger farms. We forecast Q3 sales of $1.68bn, down 11% yoy. That said, we expect Syngenta to confirm 2009 earnings guidance of “EPS approaching 2008 level”of $16.26.

We reiterate Syngenta as Buy with a CHF295 price target

We think levels at or below CHF230 represent highly attractive opportunities, as at these levels we compute the implied value of Seeds to be zero.


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Consensus is currently discounting yoy EPS decline of some 4%, and certainly, big (10-20%) earnings revisions are hardly in the cards, from our perspective.

Table 3: Syngenta quarterly sales progression ($m)

Q1 Q2 H1 Q3 Q4 H2 FY08 Q1 Q2 H1 Q3 Q4 H2 FY09Crop Protection Sales by GeographyEurope, Africa & Middle East 1116 1134 2250 563 401 964 3214 987 823 1,810 456 401 857 2667U.S., Canada & Mexico 790 1060 1850 505 338 843 2693 893 989 1,882 465 352 816 2698Latin America excl. Mexico 380 318 698 515 824 1339 2037 288 262 550 469 782 1,251 1801Asia&Pacific 388 368 756 292 239 531 1287 417 341 758 286 244 530 1288Total Crop Protection Sales 2674 2880 5554 1875 1802 3677 9231 2585 2415 5000 1675 1778 3454 8454Change yoy 30.8% 27.5% 29.1% 30.6% 16.6% 23.3% 26.7% -3.3% -16.1% -10.0% -10.6% -1.3% -6.1% -8.4%

Seed Sales by GeographyEurope, Africa & Middle East 525 286 811 173 93 266 1077 408 251 659 151 97 247 906U.S., Canada & Mexico 530 243 773 99 107 206 979 580 300 880 115 125 240 1120Latin America excl. Mexico 33 33 66 107 43 150 216 27 14 41 101 40 141 182Asia&Pacific 39 50 89 38 43 81 170 39 57 96 39 48 87 183Total Seed Sales 1127 612 1739 417 286 703 2442 1,054 622 1,676 405 310 715 2391change yoy 19.9% 28.0% 22.6% 47.3% -9.8% 17.2% 21.0% -6.5% 1.6% -3.6% -3.0% 8.6% 1.7% -2.1%

Intersegment elimination (12) 14 2 (15) (36) (51) (49) (17) (4) (21) (15) (27) (42) (63)Total Sales 3789 3506 7295 2277 2052 4329 11624 3622 3033 6655 2065 2062 4127 10781change yoy 28.1% 28.3% 28.2% 33.2% 11.4% 21.9% 25.8% -4.4% -13.5% -8.8% -9.3% 0.5% -4.7% -7.2%Change in Crop Protection SalesEurope, Africa & Middle East 35% 35% 35% 25% -5% 10% 26% -12% -27% -20% -19% 0% -11% -17%P 3% 3% 3% 3% 3% 3% 3% 6% 6% 6% 3% 0% 1% 5%V 16% 17% 17% 9% -2% 4% 13% 0% -18% -9% -8% 3% -3% -7%FX 16% 15% 15% 13% -10% 2% 10% -18% -15% -17% -14% -3% -8% -14%

U.S., Canada & Mexico 16% 16% 16% 49% 12% 31% 20% 13% -7% 2% -8% 4% -3% 0%P 6% 6% 6% 6% 6% 6% 6% 11% 6% 9% 5% 1% 0% 7%V 5% 8% 7% 42% 9% 26% 12% 11% -7% 2% -10% 3% -4% -1%FX 5% 2% 3% 1% -3% -1% 2% -9% -6% -7% -3% 0% -2% -6%Portfolio

Latin America excl. Mexico 65% 45% 55% 25% 47% 38% 43% -24% -18% -21% -9% -5% -7% -12%P 15% 15% 15% 15% 15% 15% 15% 6% 6% 6% 4% 2% 3% 4%V 50% 30% 40% 10% 32% 21% 28% -30% -24% -27% -13% -7% -10% -15%FX 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Asia&Pacific 28% 29% 29% 25% -8% 8% 19% 7% -7% 0% -2% 2% 0% 0%P 4% 4% 4% 4% 4% 4% 4% 6% 6% 6% 4% 2% 3% 5%V 16% 17% 17% 21% -4% 9% 13% 14% -4% 5% 0% 3% 2% 4%FX 8% 8% 8% 0% -8% -4% 2% -13% -9% -12% -6% -3% -5% -8%

Change in Seed Sales by GeographyEurope, Africa & Middle East 37% 47% 41% 34% -17% 10% 32% -22% -12% -19% -13% 4% -7% -16%P 5% 5% 5% 5% 5% 5% 5% 8% 17% 13% 14% 9% 12% 11%V 1% 12% 6% 15% -12% 3% 4% -12% -7% -10% -10% -5% -8% -10%FX 16% 16% 16% 14% -10% 2% 12% -18% -22% -20% -17% 0% -9% -17%Portfolio 15% 14% 14% 0% 0% 0% 10%

U.S., Canada & Mexico 5% 13% 7% 57% -18% 6% 7% 9% 23% 14% 16% 17% 17% 14%P 1% 1% 1% 1% 1% 1% 1% 8% 17% 13% 14% 9% 12% 11%V 4% 12% 5% 56% -18% 6% 6% 2% 7% 5% 2% 8% 5% 4%FX 0% 0% 1% 0% -1% -1% 0% -1% -1% -1% 0% 0% 0% -1%Portfolio

Latin America excl. Mexico 65% 14% 35% 70% 26% 55% 48% -18% -58% -38% -6% -6% -6% -16%P 14% 14% 14% 14% 14% 14% 14% 8% 17% 13% 14% 9% 12% 13%V 51% 0% 21% 56% 13% 41% 34% -26% -75% -51% -20% -15% -18% -28%FX 0% 0% 0% 0% -1% -1% 0% 0% 0% 0% 0% 0% 0% 0%

Asia&Pacific 30% 28% 29% 36% 8% 19% 24% 0% 14% 8% 2% 12% 7% 8%P 8% 8% 8% 8% 8% 8% 8% 8% 17% 13% 14% 9% 12% 12%V 12% 15% 14% 29% 18% 21% 16% 10% 14% 12% 3% 3% 3% 8%FX 10% 5% 7% -1% -18% -10% -1% -18% -17% -18% -15% 0% -8% -12%

Total Crop Protection Sales 31% 28% 29% 31% 17% 23% 27% -3% -16% -10% -11% -1% -6% -8%P 2% 4% 3% 14% 7% 11% 6% 8% 6% 7%V 20% 17% 18% 12% 14% 13% 16% 0% -13% -6%FX 9% 7% 8% 5% -4% -1% 5% -11% -9% -11%Portfolio

Total Seeds Sales 20% 28% 23% 47% -10% 17% 21% -6% 2% -4% -3% 9% 2% -2%P 3% 1% 2% 15% 3% 12% 4% 8% 17% 11%V 4% 14% 7% 26% -7% 5% 7% -5% -3% -4%FX 7% 7% 8% 6% -6% 0% 5% -9% -12% -11%Portfolio 6% 6% 6% 0% 0% 0% 5%

Total Sales 28% 28% 28% 33% 11% 22% 26% -4% -13% -9% -9% 0% -5% -7%P 3% 3% 3% 14% 6% 11% 6% 8% 8% 8%V 15% 16% 15% 14% 10% 11% 14% -1% -12% -6%FX 8% 7% 8% 5% -5% 0% 5% -11% -9% -11%Portfolio 2% 2% 2% 0% 0% 0% 1%

2009E2008

Source: company data, UBS estimates

In the following note, we have compiled new positives and negatives, ie have revisted our basic investment thesis. As the positives far outweigh the risks, we reiterate our Buy rating with >30% upside to target. We add Syngenta to our European’s strategist Key Call list (we had removed Akzo, BASF, Linde earlier this year).


UBS 5

Positives and opportunities

Valuation. In 2008 Syngenta was an overpriced growth story at 22x forward earnings and 2% divi yield, now looks like a more reasonably priced margin expansion/FCF generation story at 12x forward earnings.

Glyphosate position misunderstood. Capital markets continue to misunderstand Syngenta’s earnings exposure to the commoditised bulk herbicide glyphosate, both on the upside (2007-08) and on the downside (2009-10). Syngenta has c$550m or 7% of 2008 global crop protection sales in glyphosate. Syngenta does not manufacture the product, they buy the active ingredient from third parties, reformulate and re-brand and then sell on to intermediaries charging a small margin.

45% of its glyphosate sales cater to North America, including Canada (where Syngenta sells Touchdown as a burndown product), 55% is in Latin America, Eastern Europe and Asia. Latin American turnover is slightly higher than NAFTA ex Canada (ie U.S.).

In the key U.S. market Syngenta positions the product in three ways: 1) stand-alone as branded Touchdown product in the premium segment where they follow Monsanto on price, 2) as Helix brand, formulated with mesotrione and s-metalochlor (c$30m in sales in 08, $50m in H1 2009), 3) within the so-called AgriEdge comprehensive insurance package to growers (glyphosate packaged with GM seed offering and seed care products).

Syngenta has recently gained access to two new Chinese suppliers, and has scaled back purchases from Monsanto. This will reduce purchasing costs substantially.

As illustrated below, Syngenta has quantified its gly exposure to gross profit at c3%. The attention capital markets award to it seems disproportionate in our view.

Chart 4: Glyphosate as % of gross profit Chart 5: Sales profile of a genericised fungicide blockbuster

Fungicides

Insecticides

Seed Care

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Prof.Products

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Source: Syngenta Source: Phillips McDougall

Amistar position misunderstood The second over-appreciated product risk is with regard to Amistar, a blockbuster fungicide (active ingredient azoxystrobilurin), which sold at $1bn revenue in 2008. A few commentators in the market have recently been very vocal about the risk of forthcoming patent expiries – Syngenta has patented Amistar in 65 countries, with Brazil


UBS 6

patent expiring in Feb 2010, European patent disappearing in 2011 and the U.S. in 2014. Sales are fairly evenly spread geographically, with Latin American turnover approaching c$400m in 2008.

Looking to chart 5 above, we believe the perceived risks related to Amistar are overdone. In 2008, 60% of overall Amistar sales were already conducted through mixtures with other products. This ratio will increase to 80% in 2012, on our estimates. Syngenta explores use in new crops and new applications. With the shift of regulation towards hazard in Europe, Phillips McDougall reckons that Amistar has by some margin the best profile as alternative chemistry is imposed with restrictions.

Syngenta will also double Amistar capacity by 2011 as it expects continued good demand. Through this capacity increase, the company will almost certainly ensure it will maintain lowest cost of goods position worldwide. This is critical as the cost of goods for an agrochemical product is a much higher share of the selling price than for, say, a pharmaceutical product. Also the costs to a generic company are significantly higher, due to the number of crop and country registrations that may need to be achieved.

Phillips McDougall also notes that single crop products tend to reach maturity earlier. However, multi crop products such as Amistar, due to the level of post launch development, generally take longer to reach maturity, such as Amistar and the case study product depicted above. We would acknowledge the risk of patent expiries for agrochemicals companies with low innovation capabilities. However, Syngenta due to breadth of its product ranges is in the best industry position together with Bayer to extend life-cycles through mixtures, new registrations, product combinations and insurance packgages for sophisticated growers.

Chart 6: Selected crop prices

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we witnessed them for some time in 2008. As depicted above, corn and wheat and soy prices have retreated substantially, but have recently stopped falling. This although the USDA continues to report record harvest yields, good weather conditions, specially for US corn, and as emerging markets showed meat consumption and per capita calorific intake below the level of 2006-08. We see this as a sign that the bearish sentiment on soft commodities is getting tired.

We see quite a few “idden surprises for corn prices in particular: in addition to a weak dollar and the threat of a frost risk to the current crop, an increase in the ethanol blend rate could provide support to corn prices. Ethanol proponents are pushing for an increase to the 10% limit on ethanol in motor fuel to 15% in order to ensure that the 2007 RFS mandate is met. The EPA has until December 1st to approve/deny a request for a higher ethanol blend rate. An increase would fuel a renewed corn rally, in our view.

Furthermore, China's almost set-in-stone self-sufficiency in corn is suddenly under scrutiny because a 2009 drought is likely to reduce the harvest by some 10 percent. With stockpiles thousands of miles from the market, the risk for a need to import corn from the U.S. has significantly increased, in our view. According to FeedInfo, prices in the south of the country jumped by $30 per metric ton above U.S. corn last week, opening the question of U.S. imports for the first time in years.

Chart 7: China corn production (mT) Chart 8: China corn imports (+) versus exports (-) (mT)

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To recall, China had a record harvest of 166 million metric tons last year and, in order to secure its growers’ income, the state agency Sinograin bought 35 million tons, a huge increase over the previous year. Although imports are not yet imminent, any purchases of corn by China, which until 2003 was the leading Asian exporter of the grain, could ignite the Chicago market, which has fallen by nearly 30 percent since June on expectation of a second largest ever U.S. crop.

Finally some progress in overall Seeds profitability. Price increases in Seeds are coming through across ALL seed product lines (not just corn and soy) and should tell at the bottom line…for the first time in years Syngenta could demonstrate tangible progress in Seeds profitability. Seeds only account for 20% of gross profit but it is disproportionately important for sentiment and forward trading multiple (performance vs Monsanto).


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While the market focuses a lot on the U.S. corn seed business (a $400 m business posting double digit million EBITDA losses at this point in time, on our estimates), this represents only c4% of group turnover on our estimates. The remainder of the business is performing in line with peers or ahead. The fruit and vegetables seed business (a business almost twice the size of US corn) is growing at +6% CAGR at this point, assisted by 20%+ EBITDA margins, thereby improving divisional margin mix. In Flowers, a business geared towards consumer spending, economic recovery and end of destocking signals return to growth in 2010.

On top of that, Syngenta is demonstrating a firm commitment to its seeds business, underpinned by several acquisitions in the past two years. In total, c$200m in revenue were acquired for est.$430m in spend, and without dilution for margins as it appears:

6th August 2009: acquisition of Monsanto hybrid sunflower seeds ($75m sales) for $160m

10th November 2009: acquisition of SPS Argentina SA corn, soy and sunflower seeds ($15m sales) for $40m (UBSest)

29th October 2008: acquisition of Yoder Brother’s pot and garden Chrysanthemum and Aster business ($24m sales) for $60m (UBSest)

21th October 2008 acquisition of US flower seeds producer Goldsmith ($50m sales) for $74m

9th July 2007: acquisition of Israeli vegetable seeds producer Zeraim Gedera ($33m sales) for $95m

Syngenta’s expenditures topping out. Capex is peaking at c$1bn in 2009, which sets the scene for accelerating FCF generation in 2010. Most industrials likely to have declining FCF in 10 vs 09 due to absence of working capital windfalls

Use of cash – Syngenta is in a comfortable financial position (0.8x debt/EBITDA coupled to low tax rate and low borrowing costs) to complement organic growth with selected acqusitions. After talks with Dow regarding a potential acquisition of Dow AgroScience have been put to bed for the time being (Dow no longer a seller according to releases by Dow), a resumption of Syngenta’s share repurchase programme in 2010 is becoming a real alternative.

Double digit EPS growth in 2010 in the cards. For 2010, we forecast 2% volume growth in CP, 3% in Seeds. For 2010 we forecast continued price power in Seeds, +4%. For 2010, we would expect CP chemicals prices down 1.5%, 0.5% related to improving emerging market ccy, 1% related to raw material deflation. Despite these underwhelming assumptions for volume/price in CP we see 13.5% EBITDA growth in 2010, due to reversal of raw material, currency hit, price increases in seeds and cost savings


UBS 9

Chart 9: CropProtection volumes/pricing, 2000-13E Chart 10: Seeds volumes/pricing, 2000-13E

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Chart 11: Syngenta EBITDA bridge FY 2009E Chart 12: Syngenta EBITDA bridge FY 2010E

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124

50 77 73

2,411

96

75 35200

1,5001,7502,0002,2502,5002,7503,0003,2503,500

2009EEBITDA

Volume/miximpact

Rawmaterialimpact

Costsavings

Currencyimpact onEBITDA

Priceincrease

Seeds

Pricedecline on

risingemerg

market ccy

Pricedecline in

cropprotection

chems

S,G/A costsand royaltystream in

Seeds

2010EEBITDA

Source: Syngenta, UBS estimates Source: Syngneta guidance for parts of bridge, UBS estimates.

Seed Care a major differentiator for growth and margins. Further inflation in seed prices in Europe and the US should continue to encourage the take-up of novel seed care chemicals – a US$2.3bn high margin chemicals market dominated by Bayer CropScience (41% share) and Syngenta (36% share). Even in the notoriously difficult second of quarter of 2009, Syngenta Seed Care managed to achieve autonomous growth of 10%.

To recall, all current trait providers such as Monsanto or Pioneer require that their rootworm traits also get a seed treatment on that seed. Low dose Cruiser (Syngenta) and Poncho (Bayer) are two examples of such seed care chemicals. In other words, seed care is used as an add-on to the traits. As an alternative option to cost conscious growers, the rootworm trait seed treatment companies can also offer high dose versions of Cruiser, Poncho. Finally, we note that the ‘refuge in the bag’ concept for multi-stacked traits such as SmartStax or AcreMax (if approved) would provide a small additional stimulus for Syngenta’s seed care range.


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Chart 13: Bayer Seed Treatment revenue growth Chart 14: Syngenta Seed Care revenue growth

0

100

200

300

400

500

600

700

800

900

1000

2003 2004 2005 2006 2007 2008

Sales $m

CAGR 15.4%

0

100

200

300

400

500

600

700

800

900

2003 2004 2005 2006 2007 2008

Sales $m

CAGR 19.8%

Source: Bayer Source: Syngenta

Respected leading player in a lumpy but attractive market. We maintain our view that Syngenta probably runs the best managed and most commercial ethical crop protection business there is. Syngenta continues to gain share, approximately 0.5% per annum, notably due to superior marketing and branding strategies in Emerging Markets, smart life cycle product management (new formulation, bundling of chemicals in mixes, bundling of seeds and CP, insurance programmes for US growers etc). Market growth has averaged 6.9% since 1970, and 3.1% since the mid 90’s when the new EU Common Agricultural Policy was unveiled and when the advent of biotech crops dented growth in herbicides and later on, insecticides.

Chart 15: Crop protection market 1970 – 2010E ($m) Chart 16: Crop Protection market shares, 2008

05000

1000015000200002500030000350004000045000

197019721974197619781980198219841986198819901992199419961998200020022004200620082010E

CAGR 6.9%

CAGR 3.1%

Sy ngenta19%

BASF12%

Monsanto9%

Dow9%

Bay er19%

DuPont7%

Makhteshim5%

Sumitomo4%

Nufarm4%

Ary sta3%

FMC2%

Chemiv ov a2% Other

3%

United Phosphorous2%

Source: PhillipsMcDougall, UBS est. Source: PhillipsMcDougall, UBS est.

We are not factoring in unusual disease pressures in our forecasts. Such can occur and boost short-term demand for agrochemicals. Examples include the Asian rust outbreak in Brazil in 2003-04 and the outbreak of potato blight in the UK in the late summer of 2007.


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Risks

Table 1: Net grower margins in Europe

Corn 10E Wheat 10E2008 2008 2010E 2010E

Operating costs:

Seed 0.31 0.47 0.36 0.51Fertilizer 0.68 2.45 0.38 1.47Chemicals 0.55 0.73 0.59 0.79Other variable expenses, fuel 0.62 1.22 0.47 0.92

Total, operating costs 2.17 4.87 1.79 3.69December 08/10 future price 6.75 9.78 3.87 5.36Cash margin 4.58 4.91 2.08 1.67y/y -55% -66%Allocated overhead:

Labour 0.31 0.34 0.31 0.34Capital recovery - - - -Land 0.69 0.73 0.69 0.73Machinery, Equipment 0.62 1.47 0.56 1.32Taxes and insurance - - - -Other Costs 0.04 0.10 0.04 0.10

Total, allocated overhead 1.67 2.63 1.61 2.48

Total costs listed, before land 2.17 6.78 2.70 5.44December 08/09 future price 6.75 9.78 3.87 5.36Grower net Margin 4.58 3.00 1.17 -0.08

Corn 08 Wheat 08EU EU

$ per bushel

Source: K+S (2008), UBS estimates.

European wheat grower margins look terrible at this point in time. While grower margins for corn, soy in both Latin America and North America still look supportive (though not as high as in 2008, please refer to “Fertilisers - Restrained recovery in 2010”, published by our U.S. colleagues on 2nd October), profitability of cereal growers looks severely damaged at this moment. Our channel check on costs (depicted above) implies that EU wheat growers currently would earn no money if current December 2010 futures prevailed.

Cereals are important crops for all European agrichemicals players, and they account for c13% of Syngenta group sales, on our estimates. Key markets are Central and Eastern Europe and Canada. French winter wheat farmers are amongst the first to be served by distributors as a new Northern hemisphere season gets underway. Accordingly, every year they serve as a ‘test sample’ for new list prices for agrochemicals, and which the leading players typically release in October/November. As such, it is very likely that crop protection chemicals prices might fall in Europe into the 2010 season, aggravated if one of the leading players (i.e. Bayer, Syngenta, BASF) became undisciplined and sold on volume and share gains.


UBS 12

Chart 17 : European net grower margins ($ ber bushel)

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

Corn 08 Corn 10E Wheat 08 Wheat 10E

Source: CFTC, as of 22 September 2009

Still some residual risk/volatility in soft commodity prices from non-commercial parties ? A major factor influencing the volatility of future prices is non-commercial interest in corn, soy and wheat. We are less worried than a year ago, though still anxious that crop prices will remain volatile, potentially undermining near-term grower confidence. Although we have seen record inflows into corn futures in the second quarter, corn prices fell sharply, unlike previous patterns (where corn prices fell upon disinvestment of financial institutions and rose upon money inflows). This implies risk for money outflows and pressure on corn prices, should CFTC regulate soft commodity future markets, or if the USDA further increases year-end stock estuimates via upward revisions of yield assumption (favourable weather during harvest thus far).

Chart 18 : Net purchases into ag commodity indexed products, weekly flows

Chart 19 : Net purchases into ag commodity indexed products, quarterly flows

-3

-2

-1

0

1

2

Jan-07 Jul-07 Dec-07 Jul-08 Dec-08 Jun-09

Net

Wee

kly

Flo

w, $

bln

-12

-6

0

6

12

18

Cu

mu

lati

ve C

han

ge,

$b

n

Weekly Change

Cumulative

-11

-8

-5

-2

1

4

Q1-06 Q3-06 Q1-07 Q3-07 Q1-08 Q3-08 Q1-09 Q3-09

US$

bn

Source: CFTC, as of 22 September 2009 Source: CFTC, as of 22 September 2009

Continued share losses to Monsanto and now also DuPont/Pioneer in US corn – with acreage share a must-have in order to facilitate a profitable upgrade to proprietary traits in corn. Launch of Monsanto’s/Dow’s SmartStax and refuge reduction likely to further undermine share evolution. US corn accounts for just over 20% of Syngenta Seeds revenues and just under 5% of group revenues, on our estimates. It is disproportionately


UBS 13

important for investor sentiment however, due to the impact from US corn seeds markets on Monsanto and Du Pont earnings and valuation.

Chart 20: US corn branded seed market shares

0%5%

10%15%20%25%30%35%40%45%

2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E

Monsanto (Dekalb) Monsanto (ASI) Du Pont (Pioneer)Syngenta (NK, Garst, GH) Dow Other, Mom&Pop

Source: Company data, USDA, UBS estimates.

Weather and agricultural economics – Syngenta’s exposure to agricultural production means that its volumes are exposed to total crop area planted by farmers. This is driven by weather and rainfall as well as commodity prices, exchange rates and input costs.

Sensitivity analysis Given the relative size of Syngenta’s Crop Protection business, we find that our sum-of-the-parts valuation is most sensitive to the input multiple awarded to this business. The other important variable is the CHF/USD exchange rate at which dollar-denominated earnings, cash flows and enterprise values are translated into a CHF fair value. At the current exchange rate, every 100bps addition to the CP multiple adds cCHF28 per share to fair value. For every 10 cents change for the USD/CHF exchange rate we would have to add/substract cCHF25 in value per share.

Table 2: SoP value sensitivity to Crop Protection multiple and CHF/USD exchange rate Sensitivity analysis to Crop Protection multiple

2010E EV/EBITDA/ 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0xExchange rate CHF/$0.95 127 155 183 211 239 267 295 323

1.05 152 180 208 236 264 292 320 3481.15 177 205 233 261 289 317 345 373

Source: UBS estimates. SoP fair value in Swiss francs.

Another important earnings driver going forward is the success rate with which Syngenta can penetrate US farmland with its proprietary triple stack corn trait. On our estimates, the trait can attract a retail value of US$30 per acre, if not priced at a discount to Monsanto’s current YieldGard VT triple offering. Net of royalty payments due to Monsanto for its corn borer “switch-on” technology, we compute an EPS sensitivity of US$0.11 per million acre triple stack planted.

More important for sentiment, though, is the sensitivity of the overall Seeds EBITDA margin to the (currently falling) branded market share in US corn, and


UBS 14

the acreage penetration Syngenta will achieve with this overwhelmingly important product. Assuming an overall available area of 87m US corn acres in 2011, we compute that Syngenta needs to both grab a 10% market share (vs. 2009E of 7.5%) and at the same time penetrate at least c5.4m acres with its proprietary triple stack technology (i.e., 60% of its own share in acreage, currently 0%), in order to hit target.

Consensus expectations Table 3: UBS vs Consensus ($m except EPS in $ per share)

Sales EBITDA adj EPSIBES UBS UBS vs IBES IBES UBS UBS vs IBES IBES UBS UBS vs IBES

2009 10945 10782 -1% 2375 2402 1% 16 15.8 0%2010 11546 11337 -2% 2657 2739 3% 18 18.0 2%

Source: UBS estimates, IBES

Forthcoming events Monsanto fiscal Q4 on 07th October

WASDE report on 9th October

Syngenta Q3 trading update on 23rd October

Bayer CropScience will report Q3 results on 27th October

BASF Agricultural Products will report Q3 results on 29th October

Increased ethanol mandate/EPA decision by 1st December

Valuation: price target of CHF295 We value Syngenta using four methodologies, applying a spot CHF/USD exchange rate of 1.05 in each case: normalised earnings (16x our 2010E EPS of US$18, or CHF304 per share); a three-stage discounted cash flow analysis (USD 288, CHF 304); target EV/EBITDA (10x our 2010 estimate, implied equity value of CHF276); and a sum of the parts (CHF293). From the average of these we derive our price target. This has fallen from CHF 300 versus our last publication due to impact of a weaker USD on valuation and PT.

SoP valuation We derive a fair value of CHF293. We put the Crop Protection enterprise on 10x our 2010 estimated EBITDA, ie a 25% premium to generic competitors, and for a 25%+ EBITDA margin,which is 40% higher than the c17% EBITDA margin of Nufarm and Makhteshim Agan. Nufarm has recently been bid for by Sinochem, and for 9.2x 09E EV/EBITDA. For Seeds, our valuation implies an EV/sales multiple of 1.7x. This compares to the current 3.4x EV/revenue valuation for Monsanto, using fiscal 2010E sales (August year-end). Of course, Monsanto commands a 25%+ margin in its seed business where Syngenta has


UBS 15

struggled to exceed 10% in the past. Recent M&A deals in the Seeds arena were completed at around 2x EV/sales.

Table 4: Syngenta sum-of-the-parts valuation implied

EBITDA EV/EBITDA Rationale EV ($m) EV/sales per share % of totalCrop Protection Chemicals 2,549 10.0x 25% premium to generic comps 25,492 2.9x 273.6 88%Seeds 280 16.0x 50% discount to Monsanto on EV/sales 4,481 1.7x 48.1 15%Central costs & other (90) 10.6x Blended multiple (953) (10.2) -3%Total 2,739 29,020 311.4 100%

less: Net Debt (avg 09) (2,062) (22.1)less: Pension underfunding (425) (4.6)less: Cash relevant provisions (760) (8.2)less: Minorities (17) (0.2)add: investments in associates, JVs 134 1.4

Equity value in $m 25,890Exchange rate 1.05

Equity value in CHFm 27,311No. of shares 93.2M.V. per share, CHF 293Multiples based on 2010 forecasts

Source: UBS estimates

Three-stage DCF valuation The table below outlines our DCF valuation for Syngenta, including details on horizon period and normalised forecasts, assumptions for WACC, terminal returns, cash flow returns, normalised maintenance-to-growth investment etc. We derive fair value of CHF304.

As a reminder, we set our margins, growth and capex in our terminal year so that the capital turnover (i.e., the growth capex Syngenta needs to make in US dollars in order to generate one dollar of growth) matches what the company and the business model have historically achieved. In Syngenta’s case we assume that Syngenta in its current format needs to make US$0.75 of growth capex to generate US$1 of growth, i.e., to generate 2% long-term growth we assume that Syngenta has to invest 1.5% growth capex on top of c4%/sales for replacement.


UBS 16

Table 5: Three-stage DCF model yields fair value of CHF304 Source: UBS estimates (all amounts in $ million, except per share data)Particulars 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2033 Norm. AssumptionsSales 8,104 8,047 9,240 11,624 10,782 11,337 11,722 12,110 12,622 13,001 13,391 13,792 14,206 14,632 14,925 19,693 20,087 WACC 7.51%Growth % -0.7% 14.8% 25.8% -7.2% 5.2% 3.4% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 2.0% 2.0% 2.0% Terminal growth 2.00%EBITA, before any amortisation 1306 1279 1587 2229 2106 2419 2552 2643 2790 2831 2874 2917 2961 3005 3057 3881 3959 Tax rate 22.0%growth % -2.1% 24.0% 40.5% -5.5% 14.9% 5.5% 3.0% 3.0% 1.5% 1.5% 1.5% 1.5% 1.5% 1.7% 1.7% 1.7%Margin % 16.1% 15.9% 17.2% 19.2% 19.5% 21.3% 21.8% 21.8% 22.1% 21.8% 21.5% 21.1% 20.8% 20.5% 20.5% 19.7% 19.7% EBITA CAGR (2007-32) 2.54%plus: R&D / marketing expense less amortizatio 128 128 128 128 128 330 330 324 324 308 298 286 269 253 233 200 204 Terminal ROIC 9.60%less: restructuring -199 -173 -214 -140 -161 -140 -80 -50 -50 -50 -50 -50 -50 -50 -50 -50 -50 Terminal CFROI 13.86%EBITA pre R&D, post restruct. 1,107 1,106 1,373 2,089 1,945 2,279 2,472 2,593 2,740 2,781 2,824 2,867 2,911 2,955 3,007 3,831 3,909 Terminal EV/EBITDA 9.96xgrowth % -0.1% 24.1% 52.2% -6.9% 17.2% 8.5% 4.9% 5.7% 1.5% 1.5% 1.5% 1.5% 1.5% 1.7% 1.7% 2.0% EV/EBITDA 2017 10.72xMargin % 13.7% 13.7% 14.9% 18.0% 18.0% 20.1% 21.1% 21.4% 21.7% 21.4% 21.1% 20.8% 20.5% 20.2% 20.1% 19.5% 19.5%Less: Prov for taxes -133 -167 -192 -283 -368 -474 -517 -537 -569 -612 -621 -631 -640 -650 -662 -843 -860NOPLAT 974 939 1,181 1,806 1,577 1,805 1,955 2,056 2,171 2,169 2,203 2,236 2,270 2,305 2,345 2,988 3,049 Implied Valuationsgrowth % -3.6% 25.7% 53.0% -12.7% 14.4% 8.3% 5.2% 5.6% -0.1% 1.5% 1.5% 1.5% 1.5% 1.7% 1.7% 2.0% Input price OutputPlus: Depreciation 252 252 229 230 242 272 297 317 338 390 402 414 426 439 597 788 803 If tg 0% and capex=depreciation 272.65dep /sales 3.1% 3.1% 2.5% 2.0% 2.2% 2.4% 2.5% 2.6% 2.7% 3.0% 3.0% 3.0% 3.0% 3.0% 4.0% 4.0% 4.0% Terminal growth 238.00 -0.78%Gross Cash flow 1,226 1,191 1,410 2,036 1,819 2,077 2,252 2,373 2,509 2,560 2,604 2,650 2,697 2,744 2,942 3,776 3,852 Terminal ROIC 238.00Less: Capex on tangibles and intangibles -216 -295 -421 -632 -950 -780 -620 -600 -600 -715 -736 -759 -781 -805 -695 -1,083 -1,105 Tax rate 238.00 45.45%Capex / Sales 2.7% 3.7% 4.6% 5.4% 8.8% 6.9% 5.3% 5.0% 4.8% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% 5.5% Ebita CAGR 238.00 0.62%Capex/Depreciation 0.48x 0.65x 1.11x 1.59x 2.25x 1.74x 1.31x 1.31x 1.25x 1.35x 1.36x 1.37x 1.38x 1.39x 0.94x 1.17x 1.17x IRR 238.00 8.98%Change in Working Capital -244 -211 -291 -712 -385 -113 -153 -336 -274 -156 -161 -166 -171 -176 -121 -159 -162 Scenario AnalysisWC % of sales 40.6% 34.9% 39.5% 39.5% 34.5% 40.7% 39.7% 39.7% 41.2% 41.2% 41.2% 41.2% 41.2% 41.2% 41.2% 41.2% 41.2% Beta 1.0 297.42Enterprise Free Cash Flow 766 685 698 692 484 1,184 1,480 1,437 1,635 1,688 1,707 1,726 1,745 1,763 2,127 2,534 2,585 Terminal growth 1.50% 301.27Terminal Value 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 47,890 Terminal EV/EBITDA 10.00x 297.55Total Cash Flow 766 685 698 692 484 1,184 1,480 1,437 1,635 1,688 1,707 1,726 1,745 1,763 2,127 2,534 50,476 Tax rate 25% 292.84TROIC = WACC 286.45

Growth rates for 2019-2033 Cost of Debt 6% 253.00NPV of Terminal Value 28% 7,842 Sales growth 2.00% WACC ComputationNPV of Free Cash Flows 72% 20,620 EBIT growth 1.72% Riskfree rate 4.50%Enterprise value 100% 28,462 R&D / Mktg % sales 10.00% Beta (levered) 0.90Less: Net Debt of last Dec -1,886 term capex/dpcn 1.17 Equity Risk Premium 4.50%Less: Pension Deficits -425 Maint capex 4.0% Cost of Equity 8.55%Less: Cash relevant provisions -760 Growth capex/growth 0.75Less: Other post retirement liabilities 0 Growth cap. turnover 1.33Less: Minority Interest -17 Asset Life 33 Debt Rating A-Add: Investments 134 2008-19 EBITA CAG 2.9% Pre tax cost of debt 6.50%Estimated Equity Value ($) 25,508 Tax rate 22%Estimated Equity value per share now (CHF) 288.8 Assumed AL 20 Post-tax debt cost 5.07%Expected dividend per share upcoming 6.5Estimated Equity value per share 12m from now 304 288 USD Debt/Total capital 30.00%Current Market Price 226Premium / (Discount) to Market Price 35% WACC 7.51%

UBS Target Price 295Total number of shares, including treasury shares 93.2

Gross Assets 5,076 5,030 5,308 5,208 5,447 6,192 6,742 7,202 7,652 8,367 9,104 9,862 10,643 11,448 12,143 25,518 26,623CFROI 12.3% 19.0% 24.9% 27.2% 25.5% 32.5% 31.8% 28.9% 29.8% 28.7% 26.8% 25.2% 23.7% 22.4% 23.2% 14.2% 13.9%Value of Research Asset 4,626 4,956 5,286 5,610 5,934 6,242 6,540 6,826 7,095 7,348 7,581 10,218 10,423CFROI adjusted 10.0% 13.6% 13.6% 12.1% 12.7% 12.9% 12.2% 11.6% 11.0% 10.5% 11.3% 7.9% 7.8%

Valuation

Projections


UBS 17

Syngenta Company overview, portrait and SWOT anaylsis Overview Syngenta was formed by combining the agribusinesses of Novartis and Zeneca. The merger in 2000 created a joint leader in global crop protection, with top three franchises in all regions and across various treatments. A 20%-plus market share in crop protection chemicals compares with a 10%-plus share in the fast-growing seeds market.

Sensitivities Short the dollar in the first half of the year, but net long in the second. So unhedged, and provided that the dollar against the swiss franc, euro and pound shows the same appreciation or depreciation yoy in H1 as in H2, the currency impact on EBITDA is zero. Notice that the company has also a significant exposure to asian currencies such as the thai bath or HK$, as well as the ruble.

Key markets and segments By product class: herbicides (32%), fungicides (21%), insecticides (13%), seed treatment non agro (13%) and seed & traits (21%). By crop: corn (21%), cereals (13%), fruits & vegs (25%), professional products (10%), soybeans (10%), cotton (4%), rice (4%) and others (13%). “

Business characteristics Crop protection forms a cash generative core while seeds is a more capital and research-intensive growth business. Broadly speaking these are stable R&D driven high margin businesses with no real pricing power. In crop protection, products typically have high added value with long lifecycles, and enhance agricultural yields by controlling weeds, pest and infection. Barriers to entry are high, and include patent and registration requirements, complex manufacturing requirements, the need for global reach in marketing and strong brands. The structure of the agribusiness in this respect is similar to that of the pharma industry. Generics, however, have reached a 30% market share. The industry is still driven by volumes, with powerful distributors (which have consolidated faster) on one end and supplier with low bargaining power on the other.

Chart 21 FY08 - EBIT By Division

Crop Pro tect ion97%

Seeds3%

Source: Company data


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Table 6: Syngenta portrait Division Market Position Principal Products Uses/Customers Comments Main Competitors

Crop Protection Syngenta ranks joint 1 Herbicides (top 2 position, 21% share) Farming Well-managed cash generating business Bayer(79.1% of sales) Fungicides (#1 position, 30% share)) Controlling weeds (herbicides) Subsidised farming in Europe, US BASF(80% of gross profit) Sales breakdown: Insecticides (top 2 position, 20% share) Controlling fungal attack (fungicides) GM food remains a political issue Monsanto

35% EMEA Seed care (joint No 1 position, 30% share) Controlling insect pests (insecticides) Seasonality (strong H1, weak H2) DuPont$38bn Crop protection market (8% East Europe) Non crop usage (No 2 position, 15% share) Non-crop uses, e.g. in construction, Specialties, R&D driven Dow Agroc.2% growth p.a expected 30% North America garden care, golf courses Impact of weather on planting seasons MakhteshimSyngenta c23% market share 20% Latam Seed treatment for corn, soy, cotton Acreage shifts drive subsegment annual growth Nufarm

15% APAC Seed care above avg gross margin Long-term growth rate of the market is appr. 2% United Phosphorosusof which: Fungicides above avg gross margin Higher barriers to entry (patents, branding) Smaller genericsSeed care/treatment Insecticides below avg gross margin Generics have 30% market share - consequencemarket of US$1.7bn Herbicides below avg gross margin of patent loss far less severe than in pharmaSyngenta c.30% market share Registration for generics is shortening (1-2yrs)

Glyphosate brand Touchdown is Cost of bringing product to market: av. $184m30% share in US corn chems market the only true commodity ($94m research, $79m development, $11m registration)

Raw materials c30% of sales30% share in NAFTA ($8.2bn) bioethanol boom marked cooling off22% share in Europe ($12.5bn) 7-8% of the current Latin America top line could(of which 23% in EastE, $2.5bn) be displaced by biotech26% share in Latin America ($8bn) 85% of Syngenta's portfolio is deemed quite mature13% share in Asia ($9bn) 90% of agrochems are sold spot

Powerful distributors, which have consolidated fasterLow bargaining power of suppliersGM crops are pressuring the industrySyngenta's op. leverage to vol. growth is decreasingDemand for "insurance packages" and bundled solutionsGlyphosate purchased externally

Seeds&Traits Syngenta ranks 3 Corn & Soybean 39% Farming Matching germplasms and traits is an art DuPont/Pioneer(20.9% of sales) Flowers 16% Fresh produce to food retailers Long-term growth rate of the market EX TRAITS is 3-4% Monsanto(20% of gross profit) Sales breakdown: Vegetables 29% Highly capital intensive poroduction, warehousing Limagrain

44% EMEA Others 16% Breeding to some extent outsourced to contract SeminisUS$24bn market 40% North America growers and who link fees to crop prices Advanta(Syngenta 8.5% market value share) 9% Latam Vegetables margin: 20% Breeding of biotech seeds in commercial quantities KWS(higher volume share but low trait 7% APAC Flowers margin: 10% takes years and is capital intensive Bayerexposure limits value share) Others margin: 7% To some extent inferior than peers in this segment13% share in US soy acres Corn & Soybean margin: -6% We expect corn and soy to remain loss-making9% share in US corn acres Period of "peaceful co-existence" in US soybean

Branded seed businesses: market ending soon - pipeline race with MonsantoCAGR 8-10% expected Garst Poor track record and a few setbacks for reputation

Golden Harvest Syngenta increasingly isolated as Monsanto growing$3.9bn vegetable seed market NK We do not share enthusiasm for corn amylaseSyngenta 13% share Agrisure traits Single-digit million relief from absence of royalty to MonsantoCAGR 5% expected S&G, Hilleshoeg A switch in the US back to soy would lead to margin expansion

Source: Company data, UBS estimates


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SWOT analysis — Syngenta

Strengths • Leading player in a cash generative consolidated crop protection

chemical market with close to 20% share • Breadth of both geographic and product spread (no dominant crop).

Proposes hedge i.e. not extremely sensitive to a particular region, weather and political developments

• Stable, R&D driven and high margin crop protection businesses • Extremely well managed chemical business, taking full advantage of

being a pure play mainly through innovative marketing concepts. Largest sales force in key Latin American market.

• Leading profitable vegetable seeds business with vegetables profitable cash crops

• Track record in chemical lifecycle management through branding and ingredient mixtures

• Outstanding track record of group earnings guidance delivery and of cash returns to shareholders

Weaknesses

• Limited pricing power in crop protection due to consolidated and powerful distributors

• Late narrow and subscale entry into the gene modified field crop seeds arena

• Track record on seeds delivery mixed • Ageing crop protection portfolio • Low transparency, at times opacity on R&D pipeline • Growth ambitions come with increased investments (returns as yet

unclear) • Industry performance is highly vulnerable to exogenous factors such as

weather, currencies, and credit availability of farmers Opportunities

• The modernization of agriculture markets in Eastern and Central Europe and other regions, and vast areas of untapped arable land in Latam, Africa, etc. offer a substantial long-term opportunity

• Growing consumption of protein in China and India and low grain stocks present positive underlying trends

• Fix lackluster profitability in the seeds business • Increased use of high value expensive seed by farmers prompts market

expansion for seed treatment chemicals • Emerging US corn fungicides market opportunity of some USD500m • Emerging demand for drought resistance or stress tolerance crop

varieties

Threats • Increased share of generics in agrochemicals • Continued market shares losses in US corn seed business • Stable soybean seed franchise at risk due to forthcoming launch of

RoundupReady soy II by Monsanto • Shift from first to second generation biofuels could undermine demand

for seed and crop protection in corn


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Summary Financials

Table 22: Syngenta P&L ($m) IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS

1999pf 2000pf 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E

Crop Protection 6,047 5,888 5,385 5,260 5,421 6,030 6,330 6,378 7,285 9,231 8,454 8,733 9,003 9,281 9,667Seeds 950 958 938 937 1,104 1,239 1,797 1,743 2,018 2,442 2,391 2,667 2,782 2,891 3,018Intersegment elimination (23) (74) (63) (49) (63) (63) (63) (63) (63)Total Turnover 6,997 6,846 6,323 6,197 6,525 7,269 8,104 8,047 9,240 11,624 10,782 11,337 11,722 12,110 12,622Growth -2.2% -7.6% -2.0% 5.3% 11.4% 11.5% -0.7% 14.8% 25.8% -7.2% 5.2% 3.4% 3.3% 4.2%

COGS incl. D&A (3,580) (3,510) (3,204) (3,132) (3,248) (3,532) (3,926) (3,957) (4,663) (5,704) (5,377) (5,386) (5,488) (5,658) (5,857)Gross Profit incl. D&A 3,417 3,336 3,119 3,065 3,277 3,737 4,178 4,089 4,577 5,920 5,404 5,952 6,234 6,451 6,765Marketing & distribution (1,362) (1,295) (1,178) (1,146) (1,193) (1,382) (1,518) (1,470) (1,638) (2,039) (1,833) (1,984) (2,051) (2,119) (2,209)General & Admin (673) (603) (581) (582) (674) (651) (742) (668) (654) (849) (701) (737) (762) (787) (820)Research & Development (769) (745) (723) (697) (726) (809) (822) (796) (830) (969) (916) (964) (996) (1,029) (1,073)EBITDA 1,134 1,195 1,127 1,154 1,180 1,395 1,549 1,535 1,852 2,494 2,402 2,739 2,892 3,004 3,172Depreciation (312) (293) (260) (264) (253) (250) (252) (229) (230) (242) (272) (297) (317) (338) (360)Amortisation (209) (209) (230) (250) (243) (250) (201) (151) (168) (181) (175) (175) (150) (150) (150)

of which acquired/merger goodwill (53) (53) (53) (53) (56) (56) 0 0 0 0 0 0 0 0 0of which acquired intangible goodwill 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

EBIT 613 693 642 640 684 895 1,096 1,155 1,455 2,071 1,954 2,267 2,425 2,516 2,663EBITA 666 746 695 693 740 951 1,096 1,155 1,455 2,071 1,954 2,267 2,425 2,516 2,663NoPAT, after all amortisation 326 359 366 383 429 670 858 921 1,107 1,541 1,543 1,748 1,871 1,942 2,057

EBITDA margin 16.2% 17.5% 17.8% 18.6% 18.1% 19.2% 19.1% 19.1% 20.0% 21.5% 22.3% 24.2% 24.7% 24.8% 25.1%EBITA margin 9.5% 10.9% 11.0% 11.2% 11.3% 13.1% 13.5% 14.4% 15.7% 17.8% 18.1% 20.0% 20.7% 20.8% 21.1%EBIT margin 8.8% 10.1% 10.2% 10.3% 10.5% 12.3% 13.5% 14.4% 15.7% 17.8% 18.1% 20.0% 20.7% 20.8% 21.1%NoPAT margin 4.7% 5.2% 5.8% 6.2% 6.6% 9.2% 10.6% 11.4% 12.0% 13.3% 14.3% 15.4% 16.0% 16.0% 16.3%

Operating profit 613 693 642 640 684 895 1,096 1,155 1,455 2,071 1,954 2,267 2,425 2,516 2,663Exceptional charges (281) 523 (277) (396) (163) (354) (236) (326) 9 (196) (150) (100) (80) (50) (50)Net interest (243) (243) (249) (188) (138) (73) (96) (53) (40) (45) (94) (92) (57) (57) (57)Other financial income 7 (1) (5) (7) (1) (2) 2 22 (5) (138) (20) (20) (20) (20) (20)Pre-tax profit 96 972 111 49 382 466 766 798 1,419 1,692 1,690 2,054 2,268 2,389 2,536Taxes (102) (348) (76) (70) (134) 70 (140) (161) (308) (307) (368) (474) (517) (537) (569)Minority interest & discontinued (6) (12) (1) (6) 2 (76) (4) (3) (2) 0 0 0 0 0 0Net income (12) 612 34 (27) 250 460 622 634 1,109 1,385 1,322 1,581 1,751 1,852 1,967Dividend 0 0 (54) (60) (143) (271) (260) (299) (452) (535) (574) (640) (707) (729) (751)To reserves (12) 612 (20) (87) 107 189 362 335 657 850 748 940 1,045 1,124 1,216

Adjusted PTP 377 449 388 445 545 820 1,002 1,124 1,415 1,888 1,840 2,154 2,348 2,439 2,586Adjusted tax (181) (216) (164) (174) (202) (204) (219) (249) (334) (357) (368) (474) (517) (537) (569)Adjusted profit after tax 196 233 224 271 343 616 783 875 1,081 1,531 1,472 1,681 1,831 1,902 2,017Minorities (6) (12) (1) (6) (3) 7 (4) (3) (2) 0 0 0 0 0 0Adjusted Net Income 190 221 223 265 340 623 779 872 1,079 1,531 1,472 1,681 1,831 1,902 2,017growth 16.3% 0.9% 18.8% 28.3% 83.2% 25.0% 11.9% 23.7% 41.9% -3.8% 14.1% 9.0% 3.9% 6.0%Adjusted Net before merger goodwill 243 274 276 318 396 679 779 872 1,079 1,531 1,472 1,681 1,831 1,902 2,017

Tax rate 106% 36% 68% 143% 35% -15% 18% 20% 22% 18% 22% 23% 23% 22% 22%Adjusted tax rate 48% 48% 42% 39% 37% 25% 22% 22% 24% 19% 20% 22% 22% 22% 22%No. of shares y-e, diluted 101.3 101.3 101.3 101.6 102.4 105.9 100.0 98.7 94.7 94.0 93.2 93.2 93.2 93.2 93.2No. of shares average, diluted 101.3 101.3 101.3 101.5 101.8 106.0 101.5 99.9 97.1 94.7 93.2 93.2 93.2 93.2 93.2

EPS after exceptionals (0.12) 6.04 0.34 (0.27) 2.46 4.34 6.13 6.35 11.42 14.63 14.19 16.96 18.80 19.88 21.11EPS before exceptionals 1.88 2.18 2.20 2.61 3.34 5.88 7.68 8.73 11.11 16.17 15.80 18.04 19.65 20.42 21.65EPS growth (Syngenta definition) 83% 25% 12% 24% 42% -4% 14% 9% 4% 6%CEPS before exceptionals 7.81 7.93 7.83 8.47 9.00 11.35 12.93 13.34 16.02 21.48 21.46 23.96 25.52 26.52 27.97CEPS after exceptionals 5.81 11.79 5.96 5.59 8.11 9.81 11.38 10.95 16.33 19.94 19.85 22.89 24.67 25.98 27.44

Dividend (SF) 0.00 0.00 0.80 0.85 1.75 2.70 3.30 3.80 4.80 6.00 6.50 7.25 8.00 8.25 8.50Dividend growth 6.3% 105.9% 54.3% 22.2% 15.2% 26.3% 25.0% 8.3% 11.5% 10.3% 3.1% 3.0%Pay-out ratio 0.0% 0.0% 24.2% 22.5% 42.2% 43.5% 33.4% 34.3% 41.9% 34.9% 39.0% 38.1% 38.6% 38.3% 37.2%

Headcount year-end 25,000 24,921 22,791 22,364 21,457 19,536 19,337 21,457 21,200 24,100 24,100 24,100 24,100 24,100 24,100Headcount average 25,000 24,961 23,856 22,578 21,911 20,497 19,437 20,397 21,329 22,650 24,100 24,100 24,100 24,100 24,100Personnel costs -1,314 -1,338 -1,479 -1,517 -1,567 -1,705 -1,726 -1,829 -1,928 -2,179 -2,365 -2,412 -2,460 -2,510 -2,560Cost per employee 52,560 53,605 61,997 67,191 71,518 83,185 88,802 89,670 90,395 96,203 98,127 100,090 102,091 104,133 106,216wage inflation 2.0% 2.0% 15.7% 8.4% 6.4% 16.3% 6.8% 1.0% 0.8% 6.4% 2.0% 2.0% 2.0% 2.0% 2.0%Pension & HC service cost (14) (18) (100) (101) (113) (126) (109) (110) (105) (96) (96) (96) (96) (96) (96)Pension & HC interest costs (13) (24) (129) (143) (153) (176) (176) (194) (220) (206) (206) (206) (206) (206) (206)Pensions, exp. return on assets 12 25 144 142 145 172 167 221 256 229 229 229 229 229 229 Operating lease expense 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Personnel costs as % of sales 18.8% 19.5% 23.4% 24.5% 24.0% 23.5% 21.3% 22.7% 20.9% 18.7% 21.9% 21.3% 21.0% 20.7% 20.3%Gross Margin ex D&A 56.3% 56.1% 57.1% 57.8% 57.8% 58.3% 57.1% 55.5% 53.8% 54.6% 54.3% 56.7% 57.2% 57.3% 57.6%Gross margin, incl. D&A 48.8% 48.7% 49.3% 49.5% 50.2% 51.4% 51.6% 50.8% 49.5% 50.9% 50.1% 52.5% 53.2% 53.3% 53.6%Marketing & distribution as % of sales 19.5% 18.9% 18.6% 18.5% 18.3% 19.0% 18.7% 18.3% 17.7% 17.5% 17.0% 17.5% 17.5% 17.5% 17.5%G & A as % of sales 9.6% 8.8% 9.2% 9.4% 10.3% 9.0% 9.2% 8.3% 7.1% 7.3% 6.5% 6.5% 6.5% 6.5% 6.5%D&A as % of sales 7.4% 7.3% 7.7% 8.3% 7.6% 6.9% 5.6% 4.7% 4.3% 3.6% 4.1% 4.2% 4.0% 4.0% 4.0%R & D as % of sales 11.0% 10.9% 11.4% 11.2% 11.1% 11.1% 10.1% 9.9% 9.0% 8.3% 8.5% 8.5% 8.5% 8.5% 8.5%

Source: company data, UBS estimates.


UBS 21

Table 23: Syngenta segment forecasts and EBITDA bridge, part I ($m)

IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS1999pf 2000pf 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E

Crop Protection Sales by GeographyEurope, Africa & Middle East 2,310 1,991 1,870 1,919 1,978 2,251 2,283 2,242 2,545 3,214 2,667 2,814 2,870 2,927 2,986U.S., Canada & Mexico 1,933 2,008 1,887 1,864 1,848 1,869 2,081 2,119 2,238 2,693 2,698 2,820 2,904 2,991 3,081Latin America excl. Mexico 850 850 677 596 748 1,017 1,027 1,036 1,423 2,037 1,801 1,774 1,862 1,955 2,151Asia&Pacific 954 1,039 951 881 847 893 939 981 1,079 1,287 1,288 1,327 1,366 1,407 1,450Total Crop Protection Sales 6,047 5,888 5,385 5,260 5,421 6,030 6,330 6,378 7,285 9,231 8,454 8,733 9,003 9,281 9,667Sales change -2.6% -8.5% -2.3% 3.1% 11.2% 5.0% 0.8% 14.2% 26.7% -8.4% 3.3% 3.1% 3.1% 4.2%

Seed Sales by GeographyEurope, Africa & Middle East 416 387 393 427 565 641 699 690 818 1,077 906 1,056 1,098 1,131 1,165U.S., Canada & Mexico 409 429 404 396 400 437 903 838 916 979 1,120 1,198 1,246 1,296 1,348Latin America excl. Mexico 67 85 88 65 79 86 107 107 146 216 182 214 229 245 275Asia&Pacific 58 57 53 49 60 75 88 108 138 170 183 198 208 219 230Total Seed Sales 950 958 938 937 1,104 1,239 1,797 1,743 2,018 2,442 2,391 2,667 2,782 2,891 3,018Sales change 0.8% -2.1% -0.1% 17.8% 12.2% 45.0% -3.0% 15.8% 21.0% -2.1% 11.5% 4.3% 3.9% 4.4%

Intersegment elimination (23) (74) (63) (49) (63) (63) (63) (63) (63)Total Sales 6,997 6,846 6,323 6,197 6,525 7,269 8,104 8,046 9,240 11,624 10,782 11,337 11,722 12,110 12,622Sales change -2.2% -7.6% -2.0% 5.3% 11.4% 11.5% -0.7% 14.8% 25.8% -7.2% 5.2% 3.4% 3.3% 4.2%

Change in Crop Protection Sales by GeographyEurope, Africa & Middle East -13.8% -6.1% 2.6% 3.1% 13.8% 1.4% -1.8% 13.5% 26.3% -17.0% 5.5% 2.0% 2.0% 2.0%Price 0% 0% -2% 0% 0% 0% -1% -1% 3% 4.6% -1.5% 0.0% 0.0% 0.0%Volume -3% -2% -1% -8% 5% -2% 1% 7% 13% -7.4% 4.0% 2.0% 2.0% 2.0%Currency -11% -4% 3% 15% 9% 3% -1% 8% 10% -14.3% 3.0% 0.0% 0.0% 0.0%

U.S., Canada & Mexico 3.9% -6.0% -1.2% -0.9% 1.1% 11.3% 1.8% 5.6% 20.3% 0.2% 4.5% 3.0% 3.0% 3.0%Price -3% -3% -3% 1% -1% 2% -1% -1% 6% 6.7% -1.5% 0.0% 0.0% 0.0%Volume 7% -3% -2% -2% 1% 7% 2% 6% 12% -1.0% 3.0% 3.0% 3.0% 3.0%Currency 0% 0% 0% 0% 1% 2% 1% 0% 2% -5.4% 3.0% 0.0% 0.0% 0.0%Portfolio 1%

Latin America excl. Mexico 0.0% -20.4% -12.0% 25.5% 36.0% 1.0% 0.9% 37.4% 43.1% -11.6% -1.5% 5.0% 5.0% 10.0%Price -4% -4% -7% 4% 2% -1% -4% 3% 15% 3.8% -1.5% 0.0% 0.0% 0.0%Volume 4% -15% -5% 22% 34% 2% 5% 34% 28% -15.5% 0.0% 5.0% 5.0% 10.0%Currency 0% -1% 0% 0% 0% 0% 0% 0% 0% 0.0% 0.0% 0.0% 0.0% 0.0%

Asia&Pacific 8.9% -8.5% -7.4% -3.9% 5.4% 5.2% 4.5% 10.0% 19.3% 0.1% 3.0% 3.0% 3.0% 3.0%Price 0% 1% 1% -1% -2% -2% -1% -1% 4% 4.8% -1.5% 0.0% 0.0% 0.0%Volume 9% 0% -8% -9% 3% 6% 6% 6% 13% 3.6% 3.0% 3.0% 3.0% 3.0%Currency 0% -9% 0% 7% 5% 1% 1% 5% 2% -8.4% 1.5% 0.0% 0.0% 0.0%

Overall Pricing CP -1% -2% -2% 0% -1% 0% -1% 0% 4% 5% -2% 0% 0% 0%Overall Volumes CP 3% -4% -3% -3% 7% 3% 3% 11% 16% -6% 3% 3% 3% 4%

Change in Seed Sales by GeographyEurope, Africa & Middle East -7.0% 1.6% 8.7% 32.3% 13.5% 9.0% -1.3% 18.6% 31.7% -15.9% 16.5% 4.0% 3.0% 3.0%Price 1% 2% 2% 2% 3% 2% 1% 2% 5% 11.4% 4.0% 2.0% 1.0% 1.0%Volume 5% 9% 6% 4% 0% 2% 2% 3% 4% -9.7% 4.0% 2.0% 2.0% 2.0%Currency -13% -9% 0% 20% 10% 5% -4% 9% 12% -17.5% 3.0% 0.0% 0.0% 0.0%Portfolio 5% 10% 5.5%

U.S., Canada & Mexico 4.9% -5.8% -2.0% 1.0% 9.3% 106.6% -7.2% 9.3% 6.9% 14.4% 7.0% 4.0% 4.0% 4.0%Price 1% -2% 2% 0% 2% 0% -1% 2% 1% 10.9% 4.0% 1.0% 1.0% 1.0%Volume 5% -4% -4% -1% 6% 12% -6% 7% 6% 3.9% 3.0% 3.0% 3.0% 3.0%Currency -1% 0% 0% 0% 1% 1% 0% 0% 0% -0.4% 0.0% 0.0% 0.0% 0.0%Portfolio 93%

Latin America excl. Mexico 26.9% 3.5% -26.1% 21.5% 8.9% 24.4% 0.0% 36.4% 47.9% -15.7% 17.7% 7.0% 7.0% 12.0%Price 7% -6% -6% 26% 4% 9% -3% 13% 14% 12.5% 4.0% 2.0% 2.0% 2.0%Volume 20% 11% -20% -4% 4% 15% 2% 24% 34% -28.3% 0.0% 5.0% 5.0% 10.0%Currency 0% -1% 0% 0% 0% 0% 0% 0% 0% 0.0% 0.0% 0.0% 0.0% 0.0%Portfolio 13.7%

Asia&Pacific -1.7% -7.0% -7.5% 22.4% 25.0% 17.3% 22.7% 27.8% 23.2% 7.6% 8.5% 5.0% 5.0% 5.0%Price 2% -6% -3% 8% -2% 2% 4% 0% 8% 12.2% 4.0% 2.0% 2.0% 2.0%Volume 0% 9% -5% 6% 21% 13% 18% 19% 16% 7.8% 3.0% 3.0% 3.0% 3.0%Currency -4% -10% 0% 8% 7% 2% 1% 9% -1% -12.5% 1.5% 0.0% 0.0% 0.0%

Overall Pricing Seeds 1% -1% 1% 3% 2% 2% -0% 3% 4% 11% 4% 2% 1% 1%Overall Volumes Seeds 6% 3% -1% 1% 4% 7% -1% 7% 8% -5% 3% 3% 3% 3%

Savings from integration/restructuring

Initial merger savings programme 165 362 559 646 646 646 646 646 646 646 646 646 646Additional 425m operational efficiency programme 7 173 350 428 428 428 428 428 428 428Additional 290m operational efficiency programme 0 88 198 215 250 290 290 290

EBITDA bridgeVolume impact on EBITDA 282 136 89 158 336 (274) 124 143 149 202 Price impact on EBITDA (3) 30 (88) 28 359 746 (31) 41 32 34 Incremental savings 87 166 177 168 110 17 35 40 0 0 Currency impact on EBITDA (23) 51 (31) 72 164 (400) 200 0 0 0 Acquisitions 8 Raw material cost inflation (65) (165) (110) (19) (68) (150) 75 0 0 0 Other cost inflation & glyphosate costs (63) (64) (51) (90) (259) (67) (67) (67) (67) (67)Delta from GM traits 35 (6) (5) (1) 0

EBITDA 1,134 1,195 1,127 1,154 1,180 1,395 1,549 1,535 1,852 2,494 2,402 2,739 2,892 3,004 3,172Margin 16.2% 17.5% 17.8% 18.6% 18.1% 19.2% 19.1% 19.1% 20.0% 21.5% 22.3% 24.2% 24.7% 24.8% 25.1%



UBS 22

Table 24: Syngenta segment forecasts and EBITDA bridge, part II ($m)

IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS1999pf 2000pf 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E

Sales by product line

Selective Herbicides 2,147 1,841 1,722 1,606 1,717 1,867 1,889 1,813 2,019 2,412Non-sel. Herbicides 657 760 687 650 616 645 688 725 902 1,329Fungicides 1,518 1,541 1,392 1,398 1,438 1,702 1,779 1,716 2,004 2,620Insecticides 970 1,069 944 855 960 1,049 1,100 1,093 1,205 1,423Professional Products 560 558 522 585 642 708 807 958 1,079 1,357Other 195 119 118 166 48 59 67 73 76 90Crop Protection 6,047 5,888 5,385 5,260 5,421 6,030 6,330 6,378 7,285 9,231

Corn&Soybean 345 325 380 401 880 785 893 1,040 1,133 1,125 1,122 1,180 1,251Other Field Crops 540 581 185 178 218 247 301 309 351 462 393 527 548 564 570Vegetables 410 406 236 254 302 356 384 421 502 610 524 592 622 641 673Flowers 172 180 204 235 232 228 272 330 341 423 491 507 524Seeds 950 958 938 937 1,104 1,239 1,797 1,743 2,018 2,442 2,391 2,667 2,782 2,891 3,018check 2,391 2,667 2,782 2,891 3,018Total 6,997 6,846 6,323 6,197 6,525 7,269 8,104 8,047 9,240 11,624

Sales growth analysis

Selective Herbicides -14.3% -6.5% -6.7% 6.9% 8.7% 1.2% -4.0% 11.4% 19.5%Non-sel. Herbicides 15.7% -9.6% -5.4% -5.2% 4.7% 6.7% 5.4% 24.4% 47.3%Fungicides 1.5% -9.7% 0.4% 2.9% 18.4% 4.5% -3.5% 16.8% 30.7%Insecticides 10.2% -11.7% -9.4% 12.3% 9.3% 4.9% -0.6% 10.2% 18.1%Professional Products -0.4% -6.5% 12.1% 9.7% 10.3% 14.0% 18.7% 12.6% 25.8%Other -39.0% -0.8% 40.7% -71.1% 22.9% 13.6% 9.0% 4.1% 18.4%Crop Protection -2.6% -8.5% -2.3% 3.1% 11.2% 5.0% 0.8% 14.2% 26.7%

Corn&Soybean -5.8% 16.9% 5.5% 119.5% -10.8% 13.8% 16.5% 9.0% -0.7% -0.3% 5.2% 6.0%Other Field Crops 7.6% -3.8% 22.5% 13.3% 21.9% 2.7% 13.6% 31.6% -15.0% 34.1% 4.0% 3.0% 1.0%Vegetables -1.0% 7.6% 18.9% 17.9% 7.9% 9.6% 19.2% 21.4% -14.0% 13.0% 5.0% 3.0% 5.0%Flowers 4.7% 13.3% 15.2% -1.3% -1.7% 19.3% 21.4% 3.2% 24.1% 16.0% 3.2% 3.5%Seeds 0.8% -2.1% -0.1% 17.8% 12.2% 45.0% -3.0% 15.8% 21.0% -2.1% 11.5% 4.3% 3.9% 4.4%

Total -2.2% -7.6% -2.0% 5.3% 11.4% 11.5% -0.7% 14.8% 25.8%

Profits by business linecheck 1,127 1,154 1,180 1,395 1,549 1,535 1,852 2,494 2,402 2,739 2,892 3,004 3,172EBITDA 1134 1195 1127 1154 1180 1395 1549 1535 1852 2494 2402 2739 2892 3004 3172Crop Protection 1281 1299 1173 1214 1203 1463 1513 1509 1821 2455 2300 2549 2662 2747 2885Seeds 87 60 110 109 105 68 148 158 98 135 191 280 320 347 377Plant Science & Other (234) (164) (156) (169) (128) (136) (112) (95) (64) (96) (90) (90) (90) (90) (90)Elimination (37) (3)

EBIT 613 693 642 640 684 895 1096 1192 1458 2063 1954 2267 2425 2516 2663Crop Protection 918 866 738 745 758 1030 1125 1184 1501 2121 1957 2188 2313 2384 2507Seeds 42 3 71 68 59 5 91 99 28 49 98 180 213 233 256Plant Science & Other (347) (176) (167) (173) (133) (140) (120) (91) (71) (107) (101) (101) (101) (101) (101)Elimination (37) (3)

D&A (521) (502) (485) (514) (496) (500) (453) (380) (397) (428) (447) (472) (467) (488) (510)Crop Protection (363) (433) (435) (469) (445) (433) (388) (325) (320) (334) (343) (361) (349) (363) (378)Seeds (45) (57) (39) (41) (46) (63) (57) (59) (70) (86) (93) (100) (107) (114) (121)Plant Science & Other (113) (12) (11) (4) (5) (4) (8) 4 (7) (11) (11) (11) (11) (11) (11)

Margin & growth analysis

EBITDA growth 5.4% -5.7% 2.4% 2.3% 18.2% 11.0% -0.9% 20.7% 34.7% -3.7% 14.1% 5.6% 3.9% 5.6%Crop Protection 1.4% -9.7% 3.5% -0.9% 21.6% 3.4% -0.3% 20.7% 34.8% -6.3% 10.8% 4.4% 3.2% 5.0%Seeds -31.0% 83.3% -0.9% -3.7% -35.2% 117.6% 6.8% -38.0% 37.8% 41.7% 46.4% 14.3% 8.4% 8.7%

EBITDA margin 16.2% 17.5% 17.8% 18.6% 18.1% 19.2% 19.1% 19.1% 20.0% 21.5% 22.3% 24.2% 24.7% 24.8% 25.1%Crop Protection 21.2% 22.1% 21.8% 23.1% 22.2% 24.3% 23.9% 23.7% 25.0% 26.6% 27.2% 29.2% 29.6% 29.6% 29.8%Seeds 9.2% 6.3% 11.7% 11.6% 9.5% 5.5% 8.2% 9.1% 4.9% 5.5% 8.0% 10.5% 11.5% 12.0% 12.5%

EBIT growth 13.1% -7.4% -0.3% 6.9% 30.8% 22.5% 8.8% 22.3% 41.5% -5.3% 16.0% 7.0% 3.7% 5.8%Crop Protection -5.7% -14.8% 0.9% 1.7% 35.9% 9.2% 5.2% 26.8% 41.3% -7.7% 11.8% 5.7% 3.1% 5.2%Seeds NM NM -4.2% -13.2% NM NM 8.8% -71.7% 75.0% 100.6% 83.2% 18.3% 9.4% 10.0%

EBIT margin 8.8% 10.1% 10.2% 10.3% 10.5% 12.3% 13.5% 14.8% 15.8% 17.7% 18.1% 20.0% 20.7% 20.8% 21.1%Crop Protection 15.2% 14.7% 13.7% 14.2% 14.0% 17.1% 17.8% 18.6% 20.6% 23.0% 23.1% 25.1% 25.7% 25.7% 25.9%Seeds 4.4% 0.3% 7.6% 7.3% 5.3% 0.4% 5.1% 5.7% 1.4% 2.0% 4.1% 6.8% 7.7% 8.1% 8.5%

Seeds profitability breakdown, UBS estCorn&Soybean 31 26 6 (47) 22 22 (54) (52) 20 76 102 122 144 Other Field Crops 15 14 17 20 25 28 25 37 35 47 49 51 51 Vegetables 47 51 60 71 77 84 100 122 105 118 124 128 135 Flowers 17 18 20 24 24 24 27 28 31 38 44 46 47 EBITDA 110 109 105 68 148 158 98 135 191 280 320 347 377Corn&Soybean 9.0% 8.0% 1.7% -11.7% 2.5% 2.8% -6.1% -5.0% 1.8% 6.8% 9.1% 10.4% 11.5%Other Field Crops 8.0% 8.0% 8.0% 8.0% 8.3% 9.0% 7.0% 8.0% 9.0% 9.0% 9.0% 9.0% 9.0%Vegetables 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0% 20.0%Flowers 10.0% 10.0% 10.0% 10.0% 10.5% 10.5% 10.0% 8.5% 9.0% 9.0% 9.0% 9.0% 9.0%EBITDA Margin 11.8% 11.6% 9.5% 5.5% 8.2% 9.1% 4.8% 5.5% 8.0% 10.5% 11.5% 12.0% 12.5%



UBS 23

Table 25: Syngenta cash flow schedule ($m)

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E

EBIT 516 544 642 640 684 895 1,096 1,155 1,455 2,071 1,954 2,267 2,425 2,516 2,663depreciation 175 208 260 272 268 250 252 229 230 242 272 297 317 338 360amortisation 84 105 230 250 243 250 201 151 168 181 175 175 150 150 150Working capital 209 155 138 408 63 255 (244) (211) (291) (712) (385) (113) (153) (336) (274)Restructuring (48) 150 (416) (295) (179) (185) (199) (173) (214) (140) (161) (140) (80) (50) (50)Received from associatesOther &gains/losses on disposals 122 292 171Pension contributions/refinancing (53) (209) (110) (144) (351) (150) (124) (113) (100)Operating Cash Flow 936 1,162 801 1,066 969 1,321 755 1,123 1,515 1,700 1,755 2,486 2,659 2,618 2,848

Net interest (133) (82) (190) (217) (114) (14) (125) (28) (155) 49 (94) (92) (57) (57) (57)Dividends paid 0 0 0 (54) (65) (143) (208) (264) (299) (452) (535) (574) (640) (707) (729)Taxation (185) (170) (258) (191) (116) (128) (133) (167) (192) (283) (368) (474) (517) (537) (569)Deferred tax 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Capex of tangible assets (185) (185) (253) (165) (211) (166) (174) (217) (317) (444) (750) (630) (470) (450) (450)

Trading Cash Flow 433 725 100 439 463 870 115 447 552 570 9 716 975 868 1,044

Acquisitions (479) (6) (143) (164) (144) (160)Sales of fixed Assets 59 895 219 71 37 63 78 129 219 71Sale of businesses (net) (39) 387 (4) (102) (112)Purchase of intangibles, associates & other finan (118) (52) (81) (58) (104) (42) (78) (104) (188) (200) (150) (150) (150) (150)Shares issued (purchased) 0 (592) 3 3 4 (98) (183) (557) (662) (613)Currency effects 1 (42) (26) 9 46 36 (48) 11 39 (101)Other (350) (1,554) 19 (30) 57 90 (96)

Net cash change (14) (233) 211 541 462 345 4 (293) (232) (501) (351) 566 825 718 894

Net (debt) / cash -2,190 -2,423 -2,212 -1,671 -1,209 -864 -860 -1,153 -1,385 -1,886 -2,237 -1,672 -847 -128 765Balance sheet -2,190 -2,429 -2,219 -1,671 -1,209 -864 -860 -1,153 -1,385 -1,886 -2,237 -1,672 -847 -128 765Average debt -2,307 -2,318 -1,942 -1,440 -1,037 -862 -1,007 -1,269 -1,636 -2,062 -1,955 -1,259 -487 319

Interest charge 3.6% 8.2% 11.2% 7.9% 1.4% 14.5% 2.8% 12.2% -3.0% 4.8% 5.0% 5.0% 5.0% 5.0%Net capex to sales 4.0% 2.7% 3.2% 2.3% 2.1% 2.7% 3.4% 3.8% 7.0% 5.6% 4.0% 3.7% 3.6%Capex / depcn 1.1 0.9 1.0 0.6 0.8 0.7 0.7 0.9 1.4 1.8 2.8 2.1 1.5 1.3 1.3

Free cashflow 315 673 19 493 470 909 281 633 747 834 343 1,140 1,466 1,425 1,622FCF/EBIT conversion 61% 124% 3% 77% 69% 102% 26% 55% 51% 40% 18% 50% 60% 57% 61%

Memo : debt for interest calculationPrior year closing debt (2,429) (2,212) (1,671) (1,209) (864) (860) (1,153) (1,385) (1,886) (2,237) (1,672) (847) (128) Current year operating profit 642 640 684 895 1,096 1,155 1,455 2,071 1,954 2,267 2,425 2,516 2,663 Other cash movements 70 518 118 (264) (834) (1,103) (1,216) (2,225) (1,744) (1,135) (1,026) (1,204) (1,143) Interest paid in current year (194) (208) (117) (14) (117) (27) (138) 49 (91) (95) (63) (24) 17 Tax paid in current year (189) (169) (210) (219) (214) (250) (252) (255) (258) (260) (263) (265) (268) Overall cash movement in current year 329 781 475 398 (69) (225) (152) (360) (138) 777 1,073 1,023 1,268 Average debt in current year (2,300) (1,821) (1,433) (1,010) (898) (972) (1,229) (1,565) (1,955) (1,849) (1,135) (335) 506


UBS 24

Syngenta

Income statement (US$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % chRevenues 7,269 8,104 8,047 9,240 11,624 10,782 -7.2 11,337 5.2 11,722 3.4 Operating expenses (ex depn) (5,818) (6,555) (6,511) (7,388) (9,138) (8,380) -8.3 (8,598) 2.6 (8,830) 2.7 EBITDA (UBS) 1,451 1,549 1,536 1,852 2,491 2,402 -3.6 2,739 14.1 2,892 5.6 Depreciation (500) (453) (380) (397) (423) (447) 5.8 (472) 5.6 (467) -1.1 Operating income (EBIT, UBS) 951 1,096 1,156 1,455 2,068 1,954 -5.5 2,267 16.0 2,425 7.0 Other income & associates (58) 2 22 (5) (135) (20) -85.2 (20) 0.0 (20) 0.0 Net interest (73) (96) (53) (40) (45) (94) 109.0 (93) -1.0 (58) -37.8 Abnormal items (pre-tax) (354) (236) (326) 9 (196) (150) -23.5 (100) -33.3 (80) -20.0 Profit before tax 466 766 799 1,419 1,692 1,690 -0.1 2,054 21.5 2,267 10.4 Tax 70 (140) (161) (308) (307) (368) 19.9 (474) 28.8 (516) 9.0 Profit after tax 536 626 638 1,111 1,385 1,322 -4.5 1,580 19.5 1,751 10.8 Abnormal items (post-tax) 0 0 0 0 0 0 - 0 - 0 - Minorities / pref dividends (76) (4) (3) (2) 0 0 - 0 - 0 - Net income (local GAAP) 460 622 635 1,109 1,385 1,322 -4.5 1,580 19.5 1,751 10.8 Net Income (UBS) 679 779 872 1,079 1,531 1,472 -3.8 1,680 14.1 1,831 9.0 Tax rate (%) 0 18 20 22 18 22 20.0 23 6.0 23 -1.3 Pre-abnormal tax rate (%) 0 22 23 23 19 20 5.8 22 10.0 22 0.0 Per share (US$) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % chEPS (local GAAP) 4.34 6.13 6.36 11.42 14.63 14.19 -3.0 16.96 19.5 18.79 10.8 EPS (UBS) 6.40 7.68 8.73 11.11 16.17 15.80 -2.3 18.03 14.1 19.65 9.0 Net DPS 2.70 3.30 3.80 4.80 6.00 6.50 8.3 7.25 11.5 8.00 10.3 Cash EPS 11.12 12.14 12.54 15.19 20.63 20.60 -0.2 23.10 12.1 24.66 6.7 BVPS 52.14 52.40 56.94 61.76 60.57 71.30 17.7 81.50 14.3 92.81 13.9 Balance sheet (US$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % chNet tangible fixed assets 2,188 1,887 1,957 2,138 2,188 2,776 26.9 3,108 12.0 3,262 4.9 Net intangible fixed assets 2,951 2,732 2,724 2,790 3,083 3,108 0.8 3,083 -0.8 3,083 0.0 Net working capital (incl. other assets) 2,381 1,799 2,175 2,551 2,704 3,150 16.5 3,303 4.9 3,456 4.6 Other liabilities (1,119) (1,038) (728) (622) (659) (659) 0.0 (659) 0.0 (659) 0.0 Operating invested capital 6,401 5,380 6,128 6,857 7,316 8,375 14.5 8,836 5.5 9,142 3.5 Investments 1,460 1,777 1,625 1,682 1,693 1,693 0.0 1,693 0.0 1,693 0.0 Total capital employed 7,861 7,157 7,753 8,539 9,009 10,068 11.8 10,529 4.6 10,835 2.9 Shareholders' equity 5,658 5,403 5,666 6,022 5,884 6,644 12.9 7,594 14.3 8,648 13.9 Minority interests 469 67 41 166 164 164 0.0 164 0.0 164 0.0 Total equity 6,127 5,470 5,707 6,188 6,048 6,808 12.6 7,759 14.0 8,813 13.6 Net debt / (cash) 864 860 1,153 1,385 2,040 2,399 17.6 1,842 -23.2 1,027 -44.3 Debt deemed provisions 870 827 893 966 921 861 -6.5 928 7.8 995 7.2 Total capital employed 7,861 7,157 7,753 8,539 9,009 10,068 11.8 10,529 4.6 10,835 2.9 Cash flow (US$m) 12/04 12/05 12/06 12/07 12/08 12/09E % ch 12/10E % ch 12/11E % chOperating income (EBIT, UBS) 951 1,096 1,156 1,455 2,068 1,954 -5.5 2,267 16.0 2,425 7.0 Depreciation 500 453 380 397 423 447 5.8 472 5.6 467 -1.1 Net change in working capital 255 (244) (211) (291) (712) (385) -45.9 (113) -70.7 (153) 35.2 Other (operating) (185) (199) (173) (214) (140) (161) 15.0 (140) -13.0 (80) -42.9 Operating cash flow 1,521 1,106 1,152 1,347 1,639 1,855 13.2 2,486 34.0 2,659 6.9 Net interest received / (paid) (14) (125) (28) (155) 49 (94) - (93) -1.0 (58) -37.8 Dividends paid (143) (208) (264) (299) (452) (542) 20.0 (582) 7.4 (650) 11.5 Tax paid (128) (133) (167) (192) (283) (368) 30.1 (474) 28.8 (516) 9.0 Capital expenditure (270) (216) (295) (421) (632) (950) 50.3 (780) -17.9 (620) -20.5 Net (acquisitions) / disposals (416) 72 (116) (57) (73) (160) 119.2 0 - 0 - Other 93 (309) 11 39 (197) 0 - 0 - 0 - Share issues (98) (183) (557) (662) (613) 0 - 0 - 0 - Cash flow (inc)/dec in net debt 401 (347) (292) (232) (504) (359) -28.7 557 - 815 46.3 FX / non cash items (56) 351 (1) 0 (151) 0 - 0 - 0 - Balance sheet (inc)/dec in net debt 345 4 (293) (232) (655) (359) -45.2 557 - 815 46.3 Core EBITDA 1,451 1,549 1,536 1,852 2,491 2,402 -3.6 2,739 14.1 2,892 5.6 Maintenance capital expenditure (212) (194) (209) (216) (201) (235) 17.1 (260) 10.7 (279) 7.2 Maintenance net working capital 0 0 0 0 0 0 - 0 - 0 - Operating free cash flow, pre-tax 1,239 1,355 1,327 1,636 2,290 2,167 -5.4 2,479 14.4 2,613 5.4

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Note: For some companies, the data represents an extract of the full company accounts.

UBS 25

Global Equity Research Switzerland

Chemicals, Specialty

12-month rating Buy

12m price target CHF295.00

Company profile Syngenta was formed by combining the agribusinesses of Novartisand Zeneca. The merger in 2000 created a joint leader in global cropprotection, with top three franchises in all regions and across varioustreatments. A 20%-plus market share in crop protection chemicalscompares with a 10%-plus share in the fast-growing seeds market.Crop protection forms a cash generative core while seeds is a morecapital and research-intensive growth business. The market grew at aCAGR of 3.5% until 1995 when new policies, depressed crop pricesand the advent of GM crops dampened prospects. Growth resumedin 2004.

Value (EV/OpFCF & P/E)

12/07 12/08 12/09E 12/10E 12/11E0.0x2.0x

4.0x6.0x

8.0x10.0x

12.0x

14.0x

0.0x

5.0x

10.0x

15.0x

20.0x

EV/OpFCF (LHS) P/E (RHS)

Profitability

12/07 12/08 12/09(E) 12/10(E) 12/11(E)14.00%

15.00%16.00%

17.00%

18.00%

19.00%

20.00%21.00%

21.00%

22.29%23.57%

24.86%

26.14%

27.43%

28.71%30.00%

EBIT margin (LHS) ROIC (RHS)

ROE v Price to book value

12/07 12/08 12/09(E) 12/10(E) 12/11(E)16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

ROE (LHS) Price to book value (RHS)

Growth (UBS EPS)

12/07 12/08 12/09(E) 12/10(E) 12/11(E)8500

90009500

10000

10500

11000

1150012000

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Revenue (LHS) UBS EPS Growth (RHS)

Syngenta

Valuation (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11EP/E (local GAAP) 19.6 17.6 17.2 15.7 13.1 11.8 P/E (UBS) 15.0 18.1 15.5 14.1 12.3 11.3 P/CEPS 9.4 13.2 12.2 10.8 9.6 9.0 Net dividend yield (%) 2.3 2.0 2.2 2.8 3.1 3.5 P/BV 2.1 3.3 4.1 3.1 2.7 2.4 EV/revenue (core) 1.7 2.4 2.4 2.2 2.1 1.9 EV/EBITDA (core) 8.9 11.9 11.0 10.0 8.6 7.9 EV/EBIT (core) 12.6 15.1 13.3 12.3 10.4 9.4 EV/OpFCF (core) 10.4 13.4 12.0 11.1 9.5 8.7 EV/op. invested capital 2.2 3.4 3.9 3.1 2.7 2.5

Enterprise value (US$m) 12/07 12/08 12/09E 12/10E 12/11EAverage market cap 19,786 24,568 20,790 20,790 20,790 + minority interests 19 17 17 17 17 + average net debt (cash) 1,385 1,886 2,245 1,688 873 + pension obligations and other 879 1,185 1,185 1,185 1,185 - non-core asset value (89) (134) (134) (134) (134) Core enterprise value 21,980 27,522 24,104 23,546 22,731 Growth (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11ERevenue 9.1 14.8 25.8 -7.2 5.2 3.4 EBITDA (UBS) 10.6 20.6 34.5 -3.6 14.1 5.6 EBIT (UBS) 18.4 25.9 42.1 -5.5 16.0 7.0 EPS (UBS) 30.0 27.2 45.6 -2.3 14.1 9.0 Cash EPS 14.8 21.2 35.8 -0.2 12.1 6.7 Net DPS 28.7 26.3 25.0 8.3 11.5 10.3 BVPS 6.3 8.5 -1.9 17.7 14.3 13.9

Margins (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11EEBITDA / revenue 19.4 20.0 21.4 22.3 24.2 24.7 EBIT / revenue 13.6 15.7 17.8 18.1 20.0 20.7 Net profit (UBS) / revenue 9.5 11.7 13.2 13.7 14.8 15.6

Return on capital (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT ROIC (UBS) 17.6 22.4 29.2 24.9 26.3 27.0 ROIC post tax - 17.2 23.7 19.9 20.5 21.0 Net ROE 13.9 18.5 25.7 23.5 23.6 22.5

Coverage ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E EBIT / net interest 17.7 NM NM 20.8 24.4 NM Dividend cover (UBS EPS) 1.8 1.9 2.5 2.2 2.4 2.4 Div. payout ratio (%, UBS EPS) 54.6 51.9 40.2 44.8 41.6 42.1 Net debt / EBITDA 0.7 0.7 0.8 1.0 0.7 0.4

Efficiency ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Revenue / op. invested capital 1.3 1.4 1.6 1.4 1.3 1.3 Revenue / fixed assets 1.6 1.9 2.3 1.9 1.9 1.9 Revenue / net working capital 3.5 3.9 4.4 3.7 3.5 3.5

Investment ratios (x) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E OpFCF / EBIT 1.2 1.1 1.1 1.1 1.1 1.1 Capex / revenue (%) 3.8 4.6 5.4 8.8 6.9 5.3 Capex / depreciation 0.7 1.1 1.5 2.1 1.7 1.3

Capital structure (%) 5Yr Avg 12/07 12/08 12/09E 12/10E 12/11E Net debt / total equity 19.7 23.0 34.7 36.1 24.3 11.9 Net debt / (net debt + equity) 16.4 18.7 25.7 26.5 19.5 10.6 Net debt (core) / EV 8.0 6.3 6.9 9.3 7.2 3.8

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Valuations: based on an average share price that year, (E): based on a share price of CHF230.30 on 05 Oct 2009 19:08 BST Market cap(E) may include forecast share issues/buybacks. Thomas Gilbert, PhD Analyst [email protected] +41-44-23 91643

Laurent Favre, CFA Analyst [email protected] +44-20-756 84008

Joe Dewhurst Analyst [email protected] +44 207 56 88327


UBS 26

Syngenta

Syngenta was formed by combining the agribusinesses of Novartis and Zeneca. The merger in 2000 created a joint leader in global crop protection, with top three franchises in all regions and across various treatments. A 20%-plus market share in crop protection chemicals compares with a 10%-plus share in the fast-growing seeds market. Crop protection forms a cash generative core while seeds is a more capital and research-intensive growth business. The market grew at a CAGR of 3.5% until 1995 when new policies, depressed crop prices and the advent of GM crops dampened prospects. Growth resumed in 2004.

Statement of Risk

We believe management teams of agribusinesses face few but impoprtant uncontrollable risks when operating on a daily basis, such as agricultural government policies and weather. While widely perceived as a defensive subgroup of the Chemicals industry we believe there are inherent risks to the business which could create substantial volatility in earnings, cash flows, our respective forecasts, and ultimately the share price. Flawless integration of new corn and cotton traits into respective seed germplasms is required to lead to a smooth roll-out of traits, and without temporary or sustained market share losses.

Analyst Certification

Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.


UBS 27

Required Disclosures This report has been prepared by UBS Limited, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request.

UBS Investment Research: Global Equity Rating Allocations

UBS 12-Month Rating Rating Category Coverage1 IB Services2

Buy Buy 44% 39%Neutral Hold/Neutral 40% 35%Sell Sell 15% 27%UBS Short-Term Rating Rating Category Coverage3 IB Services4

Buy Buy less than 1% 33%Sell Sell less than 1% 0%

1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 30 September 2009. UBS Investment Research: Global Equity Rating Definitions

UBS 12-Month Rating Definition Buy FSR is > 6% above the MRA. Neutral FSR is between -6% and 6% of the MRA. Sell FSR is > 6% below the MRA. UBS Short-Term Rating Definition

Buy Buy: Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.

Sell Sell: Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.


UBS 28

KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months. EXCEPTIONS AND SPECIAL CASES UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece. Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS AG: Thomas Gilbert, PhD. UBS Limited: Laurent Favre, CFA; Joe Dewhurst. Company Disclosures

Company Name Reuters 12-mo rating Short-term rating Price Price date Syngenta2, 4, 5, 13, 15, 16, 22 SYNN.VX Buy N/A CHF230.30 05 Oct 2009

Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 2. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of

this company/entity or one of its affiliates within the past 12 months. 4. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking

services from this company/entity. 5. UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services

from this company/entity within the next three months. 13. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company`s common equity

securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end).

15. UBS AG, its affiliates or subsidiaries has issued a warrant the value of which is based on one or more of the financial instruments of this company.

16. UBS Securities LLC makes a market in the securities and/or ADRs of this company. 22. UBS AG, its affiliates or subsidiaries held other significant financial interests in this company/entity as of last month`s end

(or the prior month`s end if this report is dated less than 10 working days after the most recent month`s end). Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.


UBS 29

Syngenta (CHF)

01-O

ct-04

01-Ja

n-05

01-A

pr-0

5

01-Ju

l-05

01-O

ct-05

01-Ja

n-06

01-A

pr-0

6

01-Ju

l-06

01-O

ct-06

01-Ja

n-07

01-A

pr-0

7

01-Ju

l-07

01-O

ct-07

01-Ja

n-08

01-A

pr-0

8

01-Ju

l-08

01-O

ct-08

01-Ja

n-09

01-A

pr-0

9

01-Ju

l-09

01-O

ct-09

0

100

200

300

400

Price Target (CHF) Stock Price (CHF)

Buy 1Neutral 1

BuyNeutral

SellNo Rating

Source: UBS; as of 05 Oct 2009 Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6% above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 = FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA, lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6% below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities. A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities. From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%. Additional Prices: BASF, €34.90 (05 Oct 2009); Bayer, €46.48 (05 Oct 2009); Dow Chemical, ¥2,170 (05 Oct 2009); MA Industries, NIS16.60 (05 Oct 2009); Nufarm Limited, A$11.43 (05 Oct 2009); Source: UBS. All prices as of local market close.


UBS 30

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