Funding strategy & Policies
Two of Syngenta's largest markets are Europe, Africa and the Middle East (EAME) and North America. Both sales and operating profit in these two regions are seasonal and are weighted towards the first half of the calendar year, reflecting the northern hemisphere planting and growing cycle. Latin America is another large market for Syngenta and sales and operating profit there is weighted towards the second half of the calendar year, reflecting the southern hemisphere planting and growing cycle. This seasonal operating activity results in seasonal working capital requirements.
Syngenta's principal source of liquidity consists of cash generated from operations. Working capital fluctuations due to the seasonality of the business are supported by short-term funding available from a $2.5 billion Global Commercial Paper program supported by a $2.5 billion committed, revolving, multi-currency syndicated credit facility. This syndicated credit facility was originally signed in 2012 for $ 1.5 billion and in January 2016, an additional $1 billion committed facility was established. The syndicated facility will mature in 2019.
At December 31, 2015 and 2014, Syngenta had no commercial paper issuances outstanding. The average outstanding balance under the Global Commercial Paper program for the year 2015 was $500 million (2014: $360 million).
Although the Terms of the Global Commercial Paper Program allow the issuance of Index Linked Notes, where the amount of promised principal is contractually dependent on the performance of an index or a formula, Syngenta hereby notifies investors under this Commercial Paper Program that all Notes will be redeemed at par.
Long-term capital employed is currently financed through seven unsecured bonds, one unsecured floating rate note, and unsecured notes issued under the Note Purchase Agreement in the US Private Placement market. During 2014, the 4 percent Eurobond 2014 with the principal of EUR 500 million matured.
Long-term capital employed is currently financed through eight unsecured bonds, one unsecured floating rate note, and unsecured notes issued under the Note Purchase Agreement in the US Private Placement market. During 2015, the 4.125 percent Eurobond 2015 with the principal of EUR 500 million matured and during 2014, the 4 percent Eurobond 2014 with the principal of EUR 500 million matured.
During 2015, Syngenta issued an unsecured non-current 12 year EUR 500 million security with a fixed interest rate of 1.25%. During 2014, Syngenta issued five unsecured non-current bonds denominated in Euro and Swiss franc with varying maturities and notional amounts under the Euro Medium Term Note (EMTN) program.
The issuances in the Swiss market consisted of a 5 year CHF 350 million security with a fixed interest rate of 0.75 percent, a 10 year CHF 250 million security with a fixed interest rate of 1.63 percent, and a 15 year CHF 150 million security with a fixed interest rate of 2.13 percent. The Euro-denominated debt consisted of a 7 year EUR 500 million security with a fixed interest rate of 1.88 percent and a 3 year EUR 250 million floating rate note with a 0.25 percent interest mark-up on EURIBOR.
Liquidity Risk and Refinancing Risk
Within Syngenta's risk management framework, liquidity risk is defined as the risk of being unable to raise funds to meet payment obligations when they fall due.
Refinancing or funding risk is defined as the risk of being unable, on an ongoing basis, to borrow in the market to fund actual or proposed commitments. Syngenta mitigates its liquidity and refinancing risk by maintaining: a committed unsecured funding facility; ongoing discussions with its core banks to best monitor its funding capacity; simulations; and diversification of its debt portfolio. Syngenta's liquidity risk policy is to maintain at all times sufficient liquidity reserves both at Group and subsidiary level in order to meet payment obligations as they become due and also to maintain an adequate liquidity margin. The planning and supervision of liquidity is the responsibility of the subsidiaries and Group Treasury. Liquidity requirements are forecasted on a weekly basis. Syngenta operates regional or country cash pools to allow efficient use of its liquidity reserves.
Interest Rate Risk
Syngenta is exposed to fluctuations in interest rates on its borrowings (including forecasted borrowings) and excess cash. While the majority of Syngenta's borrowings have fixed interest rates, portions of Syngenta's net borrowings, including its short-term commercial paper program and local borrowings, are subject to changes in short-term interest rates.
Syngenta monitors its interest rate exposures and analyzes the potential impact of interest rate movements on net interest expense. The risk management strategy involves ensuring an efficient fixed/floating mix of total debt within approved interest rate limits.
Capital Structure & Gearing
Absent major acquisitions, Syngenta targets maintaining a solid investment grade credit rating, as recognized by major third-party rating agencies, which it currently believes provides an optimal balance between financial flexibility and the cost of capital. Syngenta manages capital by monitoring levels of net debt, as calculated below, and equity against targets. Capital is returned to shareholders primarily through dividend payments, with the aim of continuous dividend growth, complemented by tactical share repurchases.
The net debt to equity ratio was 31 percent at December 31, 2015 (25 percent at December 31, 20141).
1 Under the definition of net debt used in 2014, net debt was $2,423 million, including $175 million of financing-related derivatives, and the net debt to equity ratio was 27 percent
||Full Year 2015
||Full Year 2014
|Cash Flow from Operating Activities/Net Debt
|Cash Flow from Operating Activities / Net Debt
(including Pension Deficit)
Legal Positioning of Syngenta's Debt
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2 Earnings before interest, tax, non-controlling interests, depreciation, amortization, restructuring and impairment
Syngenta Finance N.V.
Syngenta files accounts for Syngenta Finance N.V. with the London Stock Exchange and the Netherlands Authority for the Financial Markets (AFM). Electronic copies are available using the links provided below.