Investor Update

Basel, 21 March 2013

Roche adopts IAS19 (revised) and implements presentational changes with effect from 1 January 2013

  • Change in the accounting policy - IAS 19 (revised) Employee Benefits
  • Presentational change - Pharmaceuticals Division geographic sales split changed to reflect new internal organisational structure
  • No impact on 2013 outlook as communicated at FY 2012 results: sales to grow in line with previous year, Core EPS targeted to grow ahead of sales. Roche expects to further increase dividend.

Change in accounting policy - IAS 19 (revised) Employee Benefits

The revised version of IAS 19 was adopted by Roche on 1 January 2013. It will be implemented in the 2013 results and the 2012 results will be restated retrospectively. Amongst other matters the revised version of IAS 19 ‘Employee Benefits’ includes the following changes to the previous version of the standard:

  • Eliminating the option to defer the recognition of actuarial gains and losses from defined benefit post-employment plans, known as the ‘corridor method’. Roche has not previously applied this option, but rather used the option to recognise such gains and losses in other comprehensive income. The option previously applied by Roche will henceforth be a requirement under the revised standard and therefore this change in the new standard has no impact on the Roche Group’s financial statements.
  • The previous method of including the expected income from the plan assets at an estimated asset return is replaced by using the discount rate that is used to discount the defined benefit obligation. In the restated results of 2012 this results in a reduction in net financial income of 164 million Swiss francs for the 2012 full year and 81 million Swiss francs for the 2012 half-year. The on-going impact for 2013 and beyond is expected to be of a similar magnitude. There was no impact on Roche’s operating income or net assets from this change.
  • Past service cost is recognised in the income statement in the period of a plan amendment instead of deferring the portion related to unvested benefits. The impact of this results in an increase in the Group’s net assets by 22 million Swiss francs for the 2012 full year and 24 million Swiss francs for the 2012 half-year.

Following the revision to IAS19 disclosed above the Group has also made a presentational change to rename ‘Financial income’ to ‘Other financial income (expense)’ and this caption has been moved below ‘Financing costs’.

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About Roche

Headquartered in Basel, Switzerland, Roche is a leader in research-focused healthcare with combined strengths in pharmaceuticals and diagnostics. Roche is the world’s largest biotech company, with truly differentiated medicines in oncology, infectious diseases, inflammation, metabolism and neuroscience. Roche is also the world leader in in vitro diagnostics and tissue-based cancer diagnostics, and a frontrunner in diabetes management. Roche’s personalised healthcare strategy aims at providing medicines and diagnostic tools that enable tangible improvements in the health, quality of life and survival of patients.

In 2012 Roche had over 82,000 employees worldwide and invested over 8 billion Swiss francs in R&D. The Group posted sales of 45.5 billion Swiss francs. Genentech, in the United States, is a wholly owned member of the Roche Group. Roche is the majority shareholder in Chugai Pharmaceutical, Japan. For more information, please visit www.roche.com.

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