BALANCE SHEET – VARIANCE ANALYSIS

ASSETS
 LIABILITIES AND EQUITY – VARIANCE ANALYSIS
ACCOUNTS
CURRENT LIABILITIES
FINANCIAL DEBT
TRADE AND OTHER PAYABLES
ACCRUALS AND DEFERRED
INCOME
PROVISIONS
DERIVATIVE LIABILITIES
CURRENT INCOME TAX
LIABILITIES
LIABILITIES DIRECTLY ASSOCIATED
WITH ASSETS HELD FOR SALE
NON-CURRENT LIABILITIES
FINANCIAL DEBT
EMPLOYEE BENEFITS LIABILITIES
PROVISIONS
DEFERRED TAX LIABILITIES
EXPLANATION OF MAJOR VARIANCES VARIANCE VARIANCE
(TOTAL %
EXPLAINED
Equities and government debts
represents 62% (2017: 60%) of the plan
assets. Almost all of them are quoted in 7134 0.38
an active market. Corporate debts, real
estate, hedge funds and private equities
represent 36% (2017: 35%) of the plan
asset. Almost all of them are either not
quoted or quoted in a market which is
not active.
The Group's salaries of CHF 12 196
million (2017: CHF 12 350 million) and
welfare expenses of CHF 4234 million
(2017: CHF 4221 million) represent a -1192 -0.17
total of CHF 16 430 million (2017: CHF
16 571 million. In addition, certain
Group employees are eligible to long-
term incentives in the form of equity in
the form of compensation plans, for
which the cost amounts to CHF 227
million (2017: CHF 247 million).
Provisions comprise liabilities of
uncertain timing or amount that arise -114 -10
from restructuring plans, environmental,
litigation and other risks. See Table 11.1,
that is the computation of 2018 and
2017's provisions.
At December 31, 2018, the
unrecognized deferred tax assets, -952 -27
amount to CHF 579 million (2017: CHF
655 million). In addition, the Group has
 not recognized deferred tax liabilities in
respect of unremitted earnings that are
considered indefinitely reinvested in
foreign subsidiaries. At December 31,
2018, these earnings amount to CHF
26.3 billion (2017: CHF 25.2 billion).
They could be subject to withholding
and other taxes on remittance. See
Table #3
OTHER PAYABLES The Group has entered into long-term
agreements to in-license or acquire
intellectual property or operating rights
for some third parties or associates. If -2080 -84
agreed objectives or performance
targets are achieved, these agreements
may require potential milestone
payments and other payments by the
group. As you can see, the total amount
of other payables in 2018 is 390,
compared to 2017 which is 2476.
EQUITY
OTHER RESERVES This is the reconciliation of the other -1172 119
reserves: See table #2
RETAINED EARNINGS 2017 and 2018's retained earnings;
represent the cumulative profits as well 991 2
as remeasurement of defined benefit
plans attributable to shareholders of the
parent.
NON-CONTROLLING INTEREST As in the previous year, the Group
increased its ownership interests in
certain subsidiaries; the most significant
one was in China in 2018 as in 2017. For
China and other countries, the
consideration paid to non-controlling -233 -18
interests in cash amounted to CHF 528
million (2017: CHF 526 million) and the
decrease of non-controlling interests
amounted to CHF 162 million (2017: CHF
152 million). Part of the consideration
was recorded as a liability in previous
year for CHF 510 million (2017: CHF 518
million). The equity attributable to
shareholders of the parent was
positively impacted by CHF 144 million
(2017: CHF 144 million).
1st Table

2nd Table
3rd Table
INCOME STATEMENT – VARIANCE ANALYSIS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

In millions of CHF

2018 2017 Year-over-Year Variance

$ %

Profit for the year 10, 468 7,511 2,957 39%

recognized in the
income statement

Currency (1,004) (561) (443) -79%

retranslations, net
of taxes
Fair value - (10)
Changes on
available-for-sale,
financial
instrument, net of
taxes
Fair Value (39) - 0%
changes on debt
instruments, net
of taxes
Fair Value (46) (55) (9) -16%
changes on cash
flow hedges, net
of taxes
Share of other (21) (240) (219) -91%
comprehensive
income of
associates and
joint ventures
Items that are (1, 018) (866) (152) (18%)
may be
reclassified
subsequently to
the income
statement
Remeasurement 600 1,063 (463) -44%
of defined
benefit plans, net
of taxes
Fair Value 4 - - -
changes on equity
instruments, net
of taxes
Share of other 117 52 65 1.25%
comprehensive
income of
associates and
joint ventures
Items that will 721 1,115 (394) -35%
never be
reclassified to the
Income
Statement

OTHER (297) 249 (48) -19%

COMPREHENSIVE
INCOME FOR THE
YEAR

TOTAL 10,171 7,760 2,411 31%

COMPREHENSIVE
INCOME FOR THE
YEAR
Of which 218 328 (110) -34%
attributable to
non-controlling
interests
Of which 9,953 7.432 2,521 34%
attributable to
shareholders of
the parent

EXPLANATION OF MAJOR VARIANCES

Translation Reserves and Other
Reserves
The translation reserve comprises the cumulative gains and losses
amount attributable to shareholders of the parent of the item that
may be reclassified subsequently to the income statement. The
other reserves mainly comprise our share in the items that may be
reclassified subsequently to the income statement by the associate
and joint ventures.
Transaction with associates and The main transactions are royalties received on brand licensing,
Joint Ventures dividends and interest received as well as loans granted and
research and development commitments.

Associates We are associates with L’Oreal whose ultimate parent company is

domiciled in France, which they are the world leader in cosmetics,
representing a 23.2% participation in its q

Fair Value Hedges The group uses fair value hedges to mitigate foreign currency and
interest rate risks of its recognized assets and liabilities and mostly
financial debt. The underlying transactions are recognized in the
income statetement

Cash Flow Hedges The effective part of the changes in fair value of hedging
instruments is recognized in other comprehensive income while
the ineffective part is recognized immediately in the income
statement. Cash flow hedge used to mitigate a particular risks
associated with a recognized asset or liability or highly probable
forecast transaction such as anticipated future export sales,
variability of expected interest payments and receipt as well as the
purchases of equipment and goods.