annual report 2006 corporate governance & social …3).pdf · activity report, financial...

ANNUAL REPORT 2006CORPORATE GOVERNANCE & SOCIAL AND ENVIRONMENTAL REPORT

L- Carnitine, enlarged 80 times; these L-Carnitine crystals result from the unique fermentation process developed by Lonza, that produces L-Carnitine in the same way as nature. Lonza offers L-Carnipure® for human nutrition, Carniking® for animal nutri-tion and Natrulon® for cosmetics.

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LONZA ANNUAL REPORT 2006CORPORATE GOVERNANCE & SOCIAL AND ENVIRONMENTAL REPORT

3

Lonza Annual Report 2006

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81013202428292931

34

38394144

46

47

INTRODUCTION Foreword from the Chairman of the Board of Directors and the Chief Executive Officer

CORPORATE GOVERNANCE Group Structure and ShareholdersCapital StructureBoard of DirectorsManagement CommitteeCompensation, Shareholdings, LoansShareholders’ Participation RightsChanges of Control and Defense MeasuresAuditorsInformation and Key Reporting Dates

HUMAN RESOURCESThe Key to Operational Excellence

SAFETY, HEALTH AND ENVIRONMENTResponsibilityGoals and PerformanceRegionsChange with a Positive Impact on the Environment –Interview with Walter Eschenmoser, Head of Corporate SHEProgress in the Redevelopment of a Former Industrial Site

AGENDA AND CONTACTS

CORPORATE GOVERNANCE & SOCIAL AND ENVIRONMENTAL REPORT CONTENTS

The Lonza Annual Report 2006 consists of the following three parts:Activity Report, Financial Report, Corporate Governance & Social and Environmental Report. These publications are accessible on the Internet at www.lonza.com. The Annual Report is also available in German. The English version prevails.In this report “Lonza” and “the Group” refer to the whole group of Lonza companies, “Lonza Group Ltd” refers to Lonza Holding.The Annual Report of Lonza Group Ltd follows the guidelines issued by the OECD for multinational corporations.

5


Dear Customers, Shareholders, Ladies and Gentlemen,

The reporting year saw the continuous transformation of Lonza towards a true life-science company. With our activities and the products we generate we are closely linked to “life” in general and specifically in “human health”. This gives us a particular responsibility towards environment, society, our employees, shareholders and customers.

For Lonza, corporate social responsibility is an active commitment that is essential for all of our employees to practice. While pursuing our economic goals, we comply with the highest legal, environmental and social requirements.

In 2006, Lonza saw healthy organic growth, we divested non-core businesses in a responsi-ble and sustainable manner and acquired new businesses. Even though our total number of employees only increased by 2.7%, we nevertheless had over 1000 new colleagues join our company. In 2007, another estimated 1300 people will come to Lonza. It is a special challenge to integrate all these people, explain our strategy and vision and familiarize them with our corporate culture of entrepreneurship and trust in each other. Lonza aims to be an attractive employer. We create an environment where our employees can live the values of Lonza and re-alize their individual potential in their daily work. In the year under review, new initiatives such as the life@lonza Employee Survey and the Career Development Center have been initiated by Human Resources and enthusiastically adopted by our line managers to support the develop-ment of our personnel – our company‘s most valuable resource.

Lonza develops its relationship with customers, society, and employees in an open and candid style and with a focus on respecting and improving the environment in which we live. In 2006, the endeavors to reduce energy and water consumption, air pollution and waste were further intensified and are in line with the goals we have set.

We are pleased to present you with our Corporate Governance & Social and Environmental Report.

Rolf Soiron Stefan BorgasChairman of the Board of Directors Chief Executive Officer

CORPORATE GOVERNANCE & SOCIAL AND ENVIRONMENTAL REPORT INTRODUCTION

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81013202428292931

CORPORATE GOVERNANCE Group Structure and ShareholdersCapital StructureBoard of DirectorsManagement CommitteeCompensation, Shareholdings, LoansShareholders’ Participation RightsChanges of Control and Defense MeasuresAuditorsInformation and Key Reporting Dates


Rhizobium sp. enlarged 112 000 times; used for the biosynthesis of L-Carnitine (L-Carnipure® and Carniking®).

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Group Structure and Shareholders

Lonza Group Ltd, a holding company under Swiss law, is fully committed to good corporate governance. As an internationally active company, Lonza complies with the local rules and reg-ulations of all countries in which it does business. Lonza’s corporate governance is measured against the SWX Swiss Exchange’s “Directive on Information relating to Corporate Governance” (Corporate Governance Directive, DCG). The principles and rules of Lonza Group Ltd are laid down in the Company’s Articles of Association, the Regulations Governing Internal Organiza-tion and Board Committees including their Charters, and the Code of Conduct1. The Board of Directors reviews these principles and rules regularly in the light of prevailing best practices.

Detailed information on governance matters is also displayed on the company’s website www.lonza.com.

Operational Group StructureLonza is one of the world‘s leading suppliers to the pharmaceutical, healthcare and life-science industries. Lonza’s products and services span its customers’ needs from research to final prod-uct manufacture. Lonza is the global leader in the production and support of pharmaceutical active ingredients, both chemically as well as biotechnologically. Biopharmaceuticals are one of the key growth drivers of the pharmaceutical and biotechnology industries. Lonza has strong capabilities in large and small molecules, peptides, amino acids and niche bioproducts which play an important role in the development of novel medicines and healthcare products. Lonza is also a leading provider of value chemical and biotech ingredients to the nutrition, hygiene, preservation, agrochemical and personal care markets.

Lonza is headquartered in Basel, Switzerland. Its activities are organized in two divisions. The divisions function as profit centers and bear full responsibility for their respective business ac-tivities.

A detailed description of Lonza’s worldwide activities is available on Lonza’s website: www.lonza.com/group/en/company/overview.html.

Exclusive Synthesis & Biopharmaceuticals

Organic Fine &Performance Chemicals

Management Committee

External Audit Internal AuditBoard of Directors

1.

1.1

1 The specified documents may be downloaded from Lonza’s website: www.lonza.com/group/en/company/corporate.html.

CORPORATE GOVERNANCE

Organizational structure

http://www.lonza.com/group/en/company/about/businesses.html

http://www.lonza.com/group/en/company/about/governance/policies.html

9


Holding Company, Principal Subsidiaries and Affiliates Lonza owns directly or indirectly all companies worldwide belon-ging to its Group. They represent 99.5 % of the revenue of the Group.

Principal subsidiaries1 In 2006, a new Swiss entity by the name of Lonza Bioproducts Ltd, a new Belgian entity by the name of Lonza Braine SA, a new Spanish entity by the name of Lonza Biologics Porriño, S.L. and a new Singapore entity by the name of Lonza Biologics Tuas Pte Ltd were established. The principal subsidiaries are shown below:

Company

Lonza Ltd

Lonza Sales Ltd

Lonza Bioproducts Ltd

Lonza Finance Limited

Lonza Braine SA

Lonza Biotec sro

Lonza GmbH

Lonza Group GmbH

Gewerbepark Hochrhein GmbH

Lonza Biologics plc

Lonza Europe BV

Lonza Biologics Porriño, S.L.

Lonza Guangzhou Ltd

Lonza Guangzhou Nansha Ltd

Lonza (China) Investments Co. Ltd

Lonza Guangzhou Research

and Development Center Ltd

Lonza Singapore Pte Ltd

Lonza Biologics Singapore Pte Ltd

Lonza Biologics Tuas Pte Ltd

Lonza America Inc

Lonza Inc

Lonza Biologics Inc

Town / Country

Visp, CH

Basel, CH

Basel, CH

St. Helier, Jersey, GB

Braine-l’Alleud, BE

Kouřim, CZ

Weil am Rhein, DE

Weil am Rhein, DE

Waldshut-Tiengen, DE

Slough, GB

Breda, NL

Porriño, ES

Guangzhou, CN

Guangzhou, CN

Guangzhou, CN

Guangzhou, CN

Singapore, SG

Singapore, SG

Singapore, SG

Wilmington DE, US

Allendale NJ, US

Wilmington DE, US

(Portsmouth NH, US)

Currency 2

CHF

CHF

CHF

CHF

EUR

CZK

EUR

EUR

EUR

GBP

EUR

EUR

USD

USD

USD

USD

SGD

USD

USD

USD

USD

USD

Share capital in 000

60 000

2 000

100

12

20 000

282 100

511

25

10 400

4 500

19

10 296

12 000

25 600

30 000

4 100

45 500

25 000

25 000

8

464

1

% Holding direct

100

100

100

100

100

100

% Holding indirect

100

100

100

100

100

100

100

100

100

100

100

100

100

50

100

100

Research & Development

Production

Sales Office

Service / Financing

Purpose

1 All companies belonging to Lonza Group are non-listed entities2 Abbreviation of currencies in accordance with ISO standards


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Principal ShareholdersThe following table outlines the identities of those Lonza Group Ltd shareholders and their re-spective shareholdings with more than 5% of voting rights (according to information received from these shareholders):

Principal ShareholdersNumber of shares at CHF 1 par value

EMS-Chemie Holding AG, Herrliberg (Switzerland)Franklin Templeton Companies, LLC, Fort Lauderdale (USA)Harris Associates L.P., Chicago (USA)The Capital Group Companies, Inc., Los Angeles (USA)

%

18.4410.06 9.92

%

9.68

5.24

31.12.2006

n.a.4 885 792

n.a.2 642 806

31.12.2005

9 305 3635 073 7745 002 650

n.a.

Lonza Group Ltd knows of no other shareholder(s) that owned more than 5% of the total share capital of Lonza Group Ltd as of 31 December 2006. To the best knowledge of Lonza Group Ltd, the above-mentioned shareholders are not linked by any shareholders’ agreement or similar arrangement with respect to their shareholdings in Lonza Group Ltd or the exercise of share-holders’ rights.

Cross-shareholdingsLonza Group Ltd has not entered into any cross-shareholdings.

Capital Structure

Share CapitalThe share capital of Lonza Group Ltd as of 31 December 2006 is CHF 50 450 000, fully paid-in and divided into 50 450 000 registered shares with a par value of CHF 1 each.

Shareholder Structure

SwitzerlandUnited KingdomGermanyUSAOthersShares in transitTreasury shares without voting rightsTotalTotal number of shares

2005 1 Shares

%

34.5617.25

0.5411.25

3.5926.71

6.10100.0

50 450 000

Shareholders

%

93.500.582.090.832.98

0.02100.0

2006 1

Shares%

19.1723.84

1.057.767.80

34.256.13

100.050 450 000

Shareholders

%

92.460.702.201.373.25

0.02100.0

Authorized and Conditional CapitalAs of 31 December 2006, Lonza Group Ltd has conditional capital of CHF 2 500 000 at its dispos-al. This conditional capital was created by the Annual General Meeting held on 11 April 2005.

1.2

1.3

2.

2.1

2.2

1 As of 31 December


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Changes in Capital

Share Capital and Registered Shares

Share capital in CHFRegistered sharesPar value in CHF/share

2005 1

50 450 00050 450 000

1

2006 1

50 450 00050 450 000

1

20041

50 450 00050 450 000

1

Changes in Lonza Group Ltd Capital and Reserves

CHF

Share capitalGeneral legal reserveReserve for own sharesAvailable earnings brought forwardTotal capital and reservesNet income for year

Financial year 2005 1

50 450 00025 225 000

336 251 047814 838 497

1 226 764 544158 803 356

Financial year2006 1

50 450 00025 225 000

337 929 138910 508 472

1 324 112 61085 223 796

Financial year 2004 1

50 450 00025 225 000

335 897 598675 527 850

1 087 100 448201 257 424

For additional information, please refer to the consolidated statement of shareholders’ equity, displayed on page 15 in the financial part of the Lonza Annual Report 2006.

Shares and Participation CertificatesLonza Group Ltd registered shares, with a par value of CHF 1 each, are listed on the SWX Swiss Exchange and included in the Swiss Market Index (SMI). They are traded on the virt-x, an elec-tronic trading system in London.

Lonza Group Ltd has not issued any participation certificates (non-voting shares).

Security number: 001384101 (valor), ISIN CH0013841017, stock symbol: LONN (Telekurs)

On 31 December 2006 Lonza had a market capitalization of CHF 5 312 million (2005: CHF 4 056 million).

Bonus CertificatesLonza Group Ltd has not issued any non-voting equity security (Genussscheine, bonus certificate).

Limitations on Transferability and Nominee RegistrationsPurchasers of registered shares declaring that they have acquired these shares in their own name and for their own account will be entered without limitation as shareholders with voting rights in the share register. Persons who do not declare to have acquired the respective shares

2.3

2.3.1

2.3.2

2.4

2.5

2.6

1 As of 31 December


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in their own name and for their own account are considered “nominees” and will be entered with voting rights in the share register up to a maximum of 2% of the share capital unless the actually entitled persons are revealed. The details are set out in Article 6 of the Company’s Ar-ticles of Association.

Convertible Bonds and OptionsConvertible Bond In July 2005, Lonza Finance Limited, St. Helier, Jersey (Great Britain), raised CHF 430 million via a convertible bond, due 2009, with a 1.5% p.a. fixed interest rate. The bond is convertible into Lonza Group Ltd shares from 25 August 2005 up to and including 1 July 2009 at a conversion price of CHF 91.70 per share. Each bond of CHF 5 000 principal amount is con-vertible into initially 54.52563 shares with a par value of CHF 1 each. The usual risk with con-vertible bonds is that the conversion will not be executed at the end of the conversion period.

The net proceeds from the offering were used for the refinancing of the convertible bond which expired 28 June 2006 and for general corporate purposes.

In conjunction with this convertible bond Lonza Finance Limited, St. Helier, Jersey (Great Brit-ain), reserved 2 222 222 shares in Lonza Group Ltd, with a par value of CHF 1 each. For the re-mainder, Lonza Finance Limited has access to the shares which will be created out of the condi-tional capital of Lonza Group Ltd in case the convertible bond is converted in full.

Options Options granted to the members of the Board of Directors and the members of the Management Committee are mentioned under section 5.6 of this report. Disclosure of all op-tions outstanding is provided in the notes to the consolidated financial statements as specified in Lonza’s financial report 2006. No further options or similar instruments have been issued by Lonza Group Ltd or any of the Group entities.

2.7


13


Members of the Board of Directors The Board of Directors is made up of non-executive members and comprises two Swiss and four non-Swiss members.

The members of the Board of Directors as of 1 January 2007 were as follows:

Expiration of current term of office

2007

2007

2007

2007

2007

2007

Name

Rolf Soiron

Sir Richard Sykes

Dame Julia Higgins

Peter Kalantzis

Gerhard Mayr

Peter Wilden

Nationality

Swiss

British

British

Swiss and Greek

Austrian

German

Year of birth

1945

1942

1942

1945

1946

1957

Position held

Chairman of the Board of Directors and Member of the Nomination and Compensation Committee

Vice-Chairman of the Board of Directors and Chairman of the Nomination and Compensation Committee

Member of the Board of Directors and Chairwoman of the Scientifi c Advisory Process

Member of the Board of Directors and Member of the Audit and Compliance Committee

Member of the Board of Directors and Member of the Audit and Compliance Committee

Member of the Board of Directors and Chairman of the Audit and Compliance Committee

Year of initial appointment

2005

2003

2006

1999

2006

2004

Dame Julia Higgins and Gerhard Mayr were elected to the Board of Directors at the Annual General Meeting of 2006.

The current members of the Board of Directors will stand for re-election for a term of one year.

3.

3.1

Board of Directors


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Activities and Functions of the Members of the Board of Directors

Rolf Soiron Holds a PhD in history from the University of Basel and a PMD from the Harvard Business School

– Chairman of the Board of Directors of Lonza Group Ltd, Basel (since April 2005)

– Chairman of the Board of Directors of Nobel Biocare Holding Ltd, Zurich (since 2003) – Chairman of the Board of Directors of Holcim Ltd, Jona (since 2003) and member of the Board (since 1994) – Member of the Board of Directors of Jungbunzlauer Group, Basel (since 1993) – Managing Director of Jungbunzlauer Group, Basel (2001 – 2003)– CEO of Jungbunzlauer Group, Basel (1993 – 2001)– Sandoz Group – COO and Head of Pharma in Basel (1992 – 1993), Group Vice President Agribusiness USA in New York (1988 – 1992)– Protek Group (orthopedic implants) President and CEO in Berne (1983 – 1987)– Sandoz Group – various functions in Human Resources, Finance and Corporate in Basel (1972 – 1983)– Chairman of the Basel University Council (1995 – 2005)

Sir Richard Sykes Holds a PhD in Microbial Biochemistry from Bristol University and DSc from the Univer-sity of London. Fellow of The Royal Society. Member of a number of government and scientific committees. Holds a number of honorary degrees and awards from institutions both in the UK and overseas. Received his knighthood in the New Year Honours List for services to the pharmaceutical industry (1994).

– Vice-Chairman of the Board of Directors of Lonza Group Ltd, Basel (since April 2005)– Member of the Board of Directors of Lonza Group Ltd, Basel (since March 2003)

– Rector of Imperial College, London (since January 2001) – Member of the Board of Directors of Rio Tinto plc (since 1997) – Chairman and Chief Executive of Glaxo Wellcome plc, London (1997 – 2002) – Served as President of the British Association for the Advancement of Science (1998 – 1999) – Deputy Chairman and Chief Executive of Glaxo plc (1993 – 1997) – Deputy Chief Executive of Glaxo Group Research Ltd, London, and Group Research and Development Director of Glaxo plc, London, and Chairman and Chief Executive of Glaxo Group Research Ltd (1987 – 1993) – Vice-President, Infectious and Metabolic Diseases, Squibb Institute for Medical Research, Princeton, New Jersey (1983 – 1986) – Director of Microbiology and Associate Director, Squibb Institute for Medical Research, Princeton, New Jersey (1979 – 1982) – Head of the Antibiotic Research Unit of Glaxo Research Ltd, London (1972 – 1978)

3.2

15



Dame Julia Higgins Holds a B.A. Honours in Physics and a D.Phil. from the Department of Physical Chem-istry at the University of Oxford. Fellow and member of a number of scientific institutions in the UK and overseas, e.g. Royal Society, Royal Academy of Engineering, Royal Society of Chemistry and the American Chemical Society. Honored with the DBE (Dame Commander of the Order of the British Empire).

– Member of the Board of Directors of Lonza Group Ltd, Basel (since March 2006)

– President of the Association for Science Education (since January 2007)– Principal of the Faculty of Engineering, Imperial College, London (since September 2006)– Chairman of the Engineering and Physical Sciences Research Council (since 2003)– Foreign Secretary and Vice President of The Royal Society (2001 – November 2006)– Trustee of The National Gallery (since 2001)– Daphne Jackson Memorial Fellowships, Trustee (since 1994)– Professor of Polymer Science, Imperial College London, Department of Chemical Engineering and

Chemical Technology (since 1989)

Peter Kalantzis Holds a PhD in economics from the University of Basel

– Member of the Board of Directors of Lonza Group Ltd, Basel (since September 1999) – Executive Vice President of Alusuisse Lonza Group Ltd, Zurich (1991 – 2000) – Held various positions in Lonza Ltd, Basel (1971 – 1990)

– Member of the Board of Directors of CNH Global N.V., Amsterdam (since 2006) – Chairman of the Board of Directors of Clair Finanz Holding Ltd, Cham (since 2004) – Member of the Board of Directors of Lamda Development Ltd, Athens (since 2004) – Member of the Board of Directors of Hansa AG, Baar (since 2003)– Member of the Board of Directors of Paneuropean Oil and Industrial Holdings SA, Luxembourg (since 2002)– Chairman of the Board of Directors of Mövenpick Holding, Cham (since 2001)– Chairman of the Board of Directors of PrivatAir Holding SA, Geneva (since 2001)– Acting President of the Swiss Society of Chemical Industries (2001 – 2002) – Member of the Executive Board of economiesuisse (2001 – 2002)

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Gerhard Mayr Holds a Masters Degree in Chemical Engineering from the Swiss Federal Institute of Technology (ETH) Zurich, and a Master of Business Administration from Stanford University.


– Member of the Board of UCB SA, Brussels (since 2005)– Member of the Board of Directors of OMV AG, Vienna (since 2002) – Executive Vice President of Eli Lilly & Company with responsibility for global pharmaceutical operations (1999 – 2004) – Member of the Board of Project Hope, USA (since 2002) – Member of the Board of the Vienna Science, Research and Technology Fund (since 2002) – Member of the circle of patrons of INSEAD Business School (since 2000)– Member of the US-Egypt President’s Council (1999 – 2004)– Member of the Board of the European Federation of the Pharmaceutical Industry (1995-1997 and 2000 – 2002)

Peter Wilden Holds a degree in business administration and information technology, as well as a PhD in business administration from the University of Kiel


– Executive Vice-President Finance and Chief Financial Officer of Ferring Pharmaceuticals in Lausanne, Switzerland (since 2000)– Member of the Board of Trace Biotech AG, Braunschweig, Germany (1999 – 2002) – Held various managerial positions in the Ferring Group (1991 – 2000) – Consultant for Mak Data System, Kiel, Germany, and the Krupp network (1988 – 1991) – Management Assistant with Krupp MaK Maschinenbau GmbH, Kiel, Germany (1986 – 1988) – Scientific Assistant of the Kiel Institute of World Economics (1983 – 1986) – Member of various scientific research organizations in Germany, the United States and the Netherlands.

Cross-involvementBesides their mandate for Lonza Group, none of the members of the Board of Directors or parties closely linked to such persons had any cross-involvement or important business con-nections with Lonza in the period under review.

Elections and Terms of OfficeEach member of the Board of Directors is individually elected by the Annual General Meet-ing for a term of one year; re-election is possible. The Board constitutes itself and elects from amongst its members the Chairman, the Vice-Chairman and the Board Committees.

3.3

3.4


17


Internal Organizational Structure In accordance with the law and the Articles of Association, the Board of Directors is the su-preme management body of the Group. It consists of the Chairman, the Vice-Chairman and the other members. In accordance with the Articles of Association the number of members must be at least three. The term of office for all members of the Board of Directors is one year, re-election is possible with an age limit of 70.

The members of the Board of Directors sat on the following committees in 2006:

In the course of 2006 Dame Julia Higgins took up her new position as Chairwoman of the Sci-entific Advisory Process, a Group-wide internal forum for the enhancement and exchange of scientific ideas, research and development for technologies, applications and processes.

Definition of Areas of ResponsibilityThe Board of Directors is responsible for the tasks assigned to it according to (i) Article 18 of the Company’s Articles of Association and (ii) the Regulations Governing Internal Organization and Board Committees. The Board of Directors defines the strategic direction and is responsible for the ultimate management of Lonza as well as the supervision of the persons entrusted with Group management, especially with regard to compliance with the law, the Articles of Associa-tion, the regulations and the directives and is entitled to issue the necessary instructions. In compliance with the law and the Articles of Association, the Board of Directors has delegated the management of the Company to the Management Committee, with the exception of non-delegable and inalienable duties.

Organizational Structures and Control Instruments The Board of Directors continues to com-mit itself to maintaining the highest standards of integrity and transparency in its governance of Lonza. On an annual basis, the Board undertakes a self-assessment process and also par-ticipates in an assessment by the Management Committee. The aim is to achieve continuous improvement in the functioning of the Board. The Regulations Governing Internal Organiza-tion and Board Committees set out in detail the powers and responsibilities of the Board of Directors, its Committees and the Management Committee. The standing Board Committees in the areas of audit/compliance and nomination/compensation provide modern corporate governance guidance and support to the Board of Directors. The Code of Conduct expresses Lonza’s core principles and values in professional business conduct, and provides assistance in recognizing, understanding and complying with the laws and ethical standards that govern Lonza’s business activities.

3.5

3.6

Nomination and Compensation Committee

Chairman

Member

Rolf Soiron

Sir Richard Sykes

Peter Kalantzis

Gerhard Mayr

Peter Wilden

Audit and Compliance Committee

Chairman

Member


18


Broad supervisory and reviewing powers are held by the Board of Directors which is directly supported by Internal Auditing.

The Regulations Governing Internal Organization and Board Committees confer on the CEO the duty to inform the Management Committee and – together with the Chairman – the Board of Directors on the business activities and all important business transactions including risk issues. The Board of Directors meets periodically with the Management Committee or its sub-committees for business updates and decisions to be taken.

Audit and Compliance Committee The Audit and Compliance Committee meets and consults regularly with the Management Committee, Internal Auditing and the independent auditors to review the scope and results of their work and their performance according to the Audit and Compliance Committee Charter. Internal and external auditors have full and free access to the Audit and Compliance Committee. The Audit and Compliance Committee reviews the systems of internal control and financial reporting and the compliance with laws and regulations. The Audit and Compliance Committee also oversees Internal Auditing.

Nomination and Compensation Committee The Nomination and Compensation Committee is entrusted, for example, with the review and recommendation of compensation policies and programs (e.g. incentive compensation and equity plans), the Chairman’s and the CEO’s compen-sation based on their performance, as well as the compensation of the members of the Manage-ment Committee and key executives. This Committee also makes an assessment to ensure the area of Nomination and Compensation is in compliance with the standards set forth in the as-sociated Charter. Further, the Nomination and Compensation Committee is continuously evalu-ating potential members of the Board of Directors.

Attendance and Main Topics Detailed information on attendance at Board and Committee meetings in 2006 is provided in the following table:

Nomination and Compensation Committee

4

100 %

– Salary benchmark to industry– Alignment of management goals with shareholder goals– Structure of long-term incentive– New Board members

Audit and Compliance Committee

5

100 %

– Control systems

– Risk management

– Implementation of internal audit findings– Financing, convertible bond

Board of Directors

101

95.5 %

Number of meetings

Overall attendance

Main topics

In addition, members of the Board of Directors supported the Management Committee through regular individual contacts.


1 Three by way of telephone conferences; four half- and three full-day meetings (with participation of the Management Committee)

19


Information and Control InstrumentsLonza has a system of internal financial and accounting policies, procedures and controls to provide a reasonable assurance, given the inherent limitations of all internal control systems, at appropriate cost, that transactions are executed in accordance with company authorization, that they are properly recorded and reported in the financial statements, and that assets are properly safeguarded. Lonza’s internal auditors comprise four experts who oversee the finance, operational and process activities of the Group with a risk-based audit program. They continu-ally evaluate the adequacy and effectiveness of this system of internal accounting policies, pro-cedures and controls, and take appropriate action to correct deficiencies as they are identified. In 2006, they delivered 21 internal audit reports to the Audit and Compliance Committee.

In addition to the documents required to pass resolutions, the Board of Directors receives the following reports at its regular meetings:

– Monthly reports on the sales and earnings performance of the company with the relevant market information in the same period since the beginning of the year, structured by

divisions/business sectors with the main sales areas and key product groups– A monthly report on the cash flows, debt and debt-equity ratio, plus other relevant key figures

for the Group– Qualitative assessments of the divisions/business sectors and major subsidiaries– Audit reports prepared by the internal and external Group auditors– Analysis of the shareholder structure– Annual overview of the Group’s key staff benefit schemes including pension funds– In cases involving extraordinary events of considerable commercial relevance, the Board of

Directors receives direct, immediate information– Reports encompassing the subject of risk assessment are submitted at least once per year,

designed to provide the Board with a consistent, Group-wide perspective of key risks accord-ing to specific criteria

3.7


20


The Management Committee is appointed by the Board of Directors of Lonza Group Ltd. It per-forms the duties assigned to it by the Board of Directors, either under the terms of the Regula-tions Governing Internal Organization and Board Committees or additional tasks as delegated. It is responsible for leading Lonza and for developing and implementing the Lonza policy and strategy after approval by the Board of Directors. It supports and coordinates the activities of the divisions, business sectors and the corporate functions. The Management Committee is also responsible for leadership development and succession planning.

Members of the Management CommitteeAt 1 January 2007, the Management Committee consisted of six active members.

Current function

Chief Executive Offi cer

Head of the Exclusive Synthesis business sector

Chief Financial Offi cer

Head of the Biopharmaceuticals business sector

Head of Global Human Resources

Head of the Organic Fine & Performance Chemicals division

Name

Stefan Borgas

Uwe H Böhlke

Toralf Haag

Stephan Kutzer

Jeanne Thoma

Lukas Utiger

Nationality

German

German

German

German

American

Swiss

Year of birth

1964

1964

1966

1965

1959

1963

In the reporting year Beat In-Albon and Rosario Valido relinquished their functions as members of the Management Committee.

4.

4.1

Management Committee



Members of the Lonza Management Committee:Uwe H. Böhlke Stefan Borgas Stephan Kutzer Jeanne Thoma Toralf Haag Lukas Utiger

22


Activities and Functions of the Members of the Management Committee

Stefan Borgas Holds a degree in business administration from the University of Saarbruecken and a lic. oec. HSG degree (MBA) from the University of St. Gallen

– Chief Executive Officer (since June 2004)

– Worked in various functions for the BASF Group (1990 – May 2004): Group Vice-President, Regional Business Unit Fine Chemicals North America, BASF Corp. (2003 – May 2004) Group Vice-President, Regional Business Unit Fine Chemicals Europe, Africa, Middle East, BASF AG,

Ludwigshafen (2001 – 2003) Director Strategic Marketing Animal Nutrition, Fine Chemicals Division, BASF AG, Ludwigshafen (1998 – 2001) Group Logistics Manager, Engineering Plastics, BASF Corp. (1995 – 1998)

Uwe H. Böhlke Holds a degree and a PhD in mechanical engineering as well as a degree in economics from RWTH Aachen University

– Member of the Management Committee and Head of the Exclusive Synthesis business sector (since January 2007)

– Held various positions at SCHOTT AG, Mainz (1996 – 2006): Executive Vice President of the global business unit “Home Tech” (2003 – 2006) Vice President Global “Research and Development” (1998 – 2003) Additional global assignment “Intellectual Properties” (2001 – 2003) Vice President “Corporate Engineering and Special Machines” (1996 – 1998)– Worked in various functions for Fraunhofer-Gesellschaft, Munich; Institute of Production Technology,

Aachen ( 1990 – 1996): Chief engineer and member of Institute Management (1994 – 1996) Consultant in Technology and Innovation Management (1990 – 1994)

Toralf Haag Holds a degree in business administration from the University of Augsburg and a PhD from the University of Kiel

– Member of the Management Committee and Chief Financial Officer (since August 2005)

– Worked as Chief Financial Officer and Member of the Management Board at Norddeutsche Affinerie AG, Hamburg (2002 – August 2005)

– CEO (President) Stamping & Frame Division of The Budd Company Detroit, a subsidiary of ThyssenKrupp Automotive (2000 – 2001)

– Director Finance, M&A and Corporate Development, The Budd Company Detroit (1997 – 1999 – Assistant to the CEO of Thyssen Handelsunion AG, Düsseldorf (1994 – 1996)

4.2


23


Stephan Kutzer Holds a PhD in chemical engineering from the Technical University of Munich

– Member of the Management Committee (since July 2005) – Head of the Biopharmaceuticals business sector (since June 2005) – Head of Performance Chemicals (2003 – May 2005) – Site manager of Lonza Bayport, TX, facilities (November 1999 – December 2002)– Assistant production manager in Lonza Guangzhou Ltd., Guangzhou, China (July – September 1999)– Joined Lonza in 1996 as assistant production manager at Visp and became production manager

nicotinates in 1998.

Jeanne Thoma Holds a Bachelor of Science from Montclair State University and a Master in Business Administration (MBA) from Fairleigh Dickinson University

– Member of the Management Committee (since August 2005) – Joined Lonza as Head of Global Human Resources (December 2004)

– Held various positions with BASF Corporation (1990 – August 2004) in Sales, Marketing and Logistics. – Worked as a Sales and Marketing Consultant to Fortune 500 companies (1985 – 1989)

Lukas Utiger Holds a PhD in chemical engineering from Imperial College, London

– Member of the Management Committee (since August 2001) – Head of the Organic Fine & Performance Chemicals division (since August 2006) – Head of the Exclusive Synthesis business sector (August 2001 – December 2006) – Head of Research and Development for Exclusive Synthesis (October 2000 – July 2001)– Joined Lonza as R&D chemist in 1992 and became R&D group leader for fine chemicals in 1998

– Acquired his business experience at ICI Chemicals & Polymers Division in Runcorn (from 1988 – 1992)

Management ContractLonza Group Ltd and its subsidiaries have not entered into management contracts with third parties.

4.3


24


Method of Determining Compensation and the Shareholding ProgramsIn 2005, The Board of Directors concluded that Management’s compensation package was not competitive enough to continue to attract and retain the talents required for the successful implementation of the ambitious strategic goals of the company. A benchmarking study and detailed review by the Board’s Nomination and Compensation committee with data from dif-ferent sources and validation from external consultants showed top management remunera-tion to be below market average compared to similar-sized companies. As a consequence the Nomination and Compensation Committee restructured the Compensation plans for the Man-agement Committee.

A new plan was implemented for the members of the Management Committee effective1 January 2006. Under the new plan, base salary targets market-average levels with the po-tential for executives to earn above the market average through a combination of attractive short- and long-term incentive programs. These incentive plans are designed to align the Man-agement Committee’s objectives with the interests of our shareholders.

The members of the Management Committee receive an annual base salary. In addition they are eligible for an annual bonus, the Short-Term Incentive (STIP), and the Long-Term Incentive for Senior Management and Key Employees (LTIP).

The STIP is an annual incentive plan which was revised with new targets in 2006 and is weighted for the Management Committee at a minimum of 70% of the financial target of Economic Value Added (EVA) and a maximum of 30% of individual qualitative targets, linked to the delivery of strategic milestones. A percentage of base salary ranging from 40% to 70% is targeted. Depend-ing upon achievement against the targets, the incentive is paid in cash.

The LTIP is a stock bonus plan which was launched in 2006. The plan establishes targets for To-tal Shareholder Return (TSR) to exceed an index of industry peers by 12% per year on average over three years. The second target is Earnings Per Share (EPS) to increase by 50% over the same three-year period. If targets are met, shares are granted. The maximum number of shares to be granted is capped at the start of the plan. The grant amount is calculated as a percentage of base salary and can range from 45% to 200% of base salary. Individual investment in Lonza shares is a mandatory prerequisite for participation in the plan.

The LTIP does not provide any compensation for the Management Committee until 2009, there-fore a three-year “Bridge the Gap” plan was also launched in 2006. This plan provides share grants for the Management Committee. The shares were granted in January and will vest over a three-year period.

Members of the Management Committee receive customary additional benefits such as a company car, health insurance and in some cases contributions to children’s education.

5.

5.1

Compensation, Shareholdings and Loans


1 Outperformance of TSR (total shareholder return) and EPS (earnings per share)

25


Transactions with Key Management Personnel

Compensations for the Board of Directors and the Management Committeemillion CHF / number of shares

Short-term benefi ts 1

Post-employment benefits 2

Other long-term benefitsTermination benefitsShare/option-based payments 3

– number of options– number of shares

2005

5.0410.3070.0000.529

355 00022 073

2006

6.3070.2270.0002.004

083 897

Board of Directors The Members of the Board of Directors received a compensation package with a base amount and additional compensation for chairing one of the Board Committees. In 2006 payments to acting members of the Board of Directors of Lonza Group Ltd totaled CHF 2.110 mil-lion (2005: CHF 2.175 million4), 73.93 % (2005: 75.17 %) of which was distributed in the form of shares. The compensation system for the Board of Directors allows the members to choose either a payment in shares or a combination of cash and shares, whereby the cash portion cannot exceed 40%. Shares granted are rated at the market price at grant date, with a discount rate of 20%. They are blocked for a period of three years. Directors are reimbursed for travel and other related ex-penses associated with the performance of their services for Lonza.

2006 Directors’ Compensation

Rolf Soiron Chairman of the Board

Richard SykesVice Chairman of the Board

Julia HigginsMember of the Board (since April 2006)

Peter KalantzisMember of the Board

Bernard MachMember of the Board (until April 2006)

Gerhard MayrMember of the Board (since April 2006)

Peter WildenMember of the Board

Currency

CHF

CHF

CHF

CHF

CHF

CHF

CHF

RestrictedLonza Shares

(number)

3 950

3 647

2 333

2 365

604

1 664

2 724

Annual Cash Compensation

200 000

0

0

120 000

30 000

60 000

140 000

Bernhard Mach did not stand for re-election in 2006.

5.2

1 Including Incentive 2006, pay out in March of 2007 and other benefits2 Social security and pension fund3 The fair values were calculated using the market price at grant date according to IFRS 2, see note 30 in the financial part of the Lonza Annual Report 2006.4 Restated according to I FRS 2


26


Management Committee The acting members of the Management Committee and those who gave up their functions in the year under review received for their contributions and time served in 2006 CHF 7.772 million (2005: 5.337 million)1 in cash and additional benefits and 66 610 shares (2005: 355 000 options).

In 2006, there were seven members on the Management Committee. Two of them relinquished their functions in the year under review. The average number of Management Committee members during the year was 6.4 full -time equivalents.

The members of the Board of Directors and the Management Committee did not receive any credits or benefits in kind.

A severance payment was made to one member of the Management Committee who gave up his function in 2006. This payment is included in the total compensation of the Management Committee.

Conflict of Interest No member of the Board of Directors benefits materially from any contract between a Lonza company and a third party.

Compensation for former Members of Governing Bodies No compensation was paid to former members of governing bodies.

Share AllotmentIn 2006, the members of the Board of Directors received shares as part of their total remunera-tion. There were no further share allotments except as stated in section 5.2 of this report. In section 5.2 the allotment of the LTIP shares for the Management Committee is included. These shares are only granted, if the targets are met. As described in section 5.1 this plan does not provide any income before 2009

Share OwnershipBased on information available to Lonza Group Ltd, the members of the Board of Directors and parties closely associated with them2 held 49 110 (2005: 51 132) registered shares in Lonza Group Ltd at 31 December 2006 and controlled 0.1 % (2005: 0.1 %) of the share capital. None of the directors owns shares in the Group’s subsidiaries or associates.

The members of the Management Committee and parties closely associated with them2 held 5 093 (2005: 2 615) registered shares in Lonza Group Ltd per 31 December 2006.

OptionsUnder various option schemes instituted since 2000, the following options were granted every year to the members of the Board of Directors and the members of the Management Commit-tee. As of 31 December 2006 the following options were held:

5.3

5.4

5.5

5.6


1 Including contribution for social security and pension fund2 Spouse, children below age 18, any legal entities that they own or otherwise control, or any legal or natural person who is acting as their fiduciary

27


1 Acting members2 Includes Incentive 2006, paid in March 2007.3 Shares are restricted over a three year period.

Issue

Board of Directors1

Management Committee1

RatioStrike price in CHF

Total

0315 000

2006

00

2005

0215 000

10:173.80

2004

090 000

10:164.25

2003

00

10:177.00

2002

010 000

10:1113.00

The options vest after three years from grant date and become exercisable thereafter for a pe-riod of two years. After the exercise period, the options lapse without compensation.

Details on the development of the Lonza Option Plan are published in note 27 in the financial part of the Lonza Annual Report 2006.

Additional RemunerationDuring the year under review, none of the members of the Board of Directors or the Manage-ment Committee or parties closely linked to such persons has billed honoraria or other remu-nerations to Lonza Group Ltd or any subsidiaries for additional services performed.

Loans Granted by Governing BodiesNo loans were granted, nor are there any loans outstanding from previous years.

Highest Total Compensation The highest compensation conferred on a member of the Board of Directors in 2006 was paid to Mr. Rolf Soiron. Mr. Soiron received CHF 200 000 paid in cash and 3 950 shares.

The highest compensation conferred on a member of the Management Committee in 2006 was paid to Mr. Stefan Borgas. Mr. Borgas received CHF 1 934 8652 paid in cash and 10 480 shares3.

5.7

5.8

5.9


28


Voting-rights Restrictions and RepresentationOnly persons with valid entries in the share register are recognized as shareholders or usufruc-tuaries. A shareholder may only be represented at the Annual General Meeting by a legal repre-sentative or – by way of written proxy – by another shareholder entitled to vote, the appointed representative of the corporate body, the independent proxy or an assignee of proxy votes for deposited shares.

Each share has the right to one vote.

The shares held by Lonza Group Ltd are not entitled to vote at the Annual General Meeting and bear no dividend.

Lonza may use an electronic voting system for all the resolutions to be taken at its Annual General Meetings.

Statutory QuoraExcept as otherwise stipulated by law, an absolute majority of the votes represented at the An-nual General Meeting is required for resolutions and elections.

For certain important matters such as the change of the company purpose and domicile, the dissolution of the company without liquidation, and matters relating to capital increases, Ar-ticle 704 of the Swiss Code of Obligation provides for a two-third majority of votes cast repre-senting an absolute majority of nominal values of shares represented.

Convocation of Shareholders’ MeetingsOrdinary Shareholders’ Meetings are called in accordance with the law and the Company’s Ar-ticles of Association. Extraordinary Shareholders’ Meetings must be called upon resolution of a Shareholders’ Meeting or if demanded by one or more shareholders representing at least 5% of the share capital.

Lonza posts the invitations to shareholders at least 20 working days before the Annual General Meeting and publishes it on its website as well as in the Swiss Official Gazette of Commerce and several newspapers.

AgendaOne or more shareholders representing together shares with a par value of CHF 100 000 may request an item to be included in the agenda of Shareholders’ Meetings. The request to include an item must be submitted in writing at least 40 days before the meeting, stating the item to be included and the motions.

Entry in the Share RegisterPurchasers of Lonza Group Ltd shares may submit a request to be entered, without limitation, as shareholders with voting rights in the share register, provided they expressly declare that they have acquired these shares in their own name and on their own account. Special rules ex-ist for persons who do not expressly declare in the entry application that they hold the shares on their own account (nominees).

There are no special statutory rules concerning a deadline for entry in the share register. The share register is regularly closed three working days before the Annual General Meeting.

6.

6.1

6.2

6.3

6.4

6.5


Shareholders’ Participation Rights

29


Changes of Control and Defense Measures

Duty to make an OfferAn offer to acquire all shares must be made in accordance with Art. 32 SESTA (Federal Act on Stock Exchange and Securities Trading) if the threshold of 33 1/3 of the voting rights is exceeded. No spe-cial opting-out or opting-up dispositions are contained in the Company’s Articles of Association.

Clauses on Changes of ControlClauses on changes of control are not part of any employment agreements or benefit plans.

Auditors

Duration of the Mandate and Term of Office of the Head AuditorSince 1999, KPMG Ltd, Badenerstrasse 172, CH-8026 Zurich 4, Switzerland, has held the man-date as the external statutory auditors of Lonza Group Ltd and the Group.

The auditing company is elected for a term of one year.

Hanspeter Stocker from KPMG Ltd has been the auditor in charge since 1 April 2005.

The Board of Directors proposes that KPMG Ltd be re-elected as statutory auditors and Group auditors for the business year 2007.

Head of Internal Audit of Lonza: Emilio Rubio, Basel (Switzerland)

Auditing HonorariumLonza Group paid KPMG Ltd CHF 2.007 million (2005: CHF 1.933 million) for professional ser-vices rendered in connection with the audit of the Group’s annual financial statements and other audit-related activities.

Additional HonorariumKPMG Ltd received a total fee of CHF 1.696 (2005: CHF 1.308 million) for other services ren-dered to Lonza.

CHF 1.440 million of the total fee for other services was due to consulting costs regarding the IPO of Polynt S.p.A.

Supervisory and Control Instruments vis-à-vis the AuditorsThe Audit and Compliance Committee is responsible for evaluating the external auditors on behalf of the Board of Directors. In the reporting year, there were three joint meetings with the representatives of the external auditors.

The Audit and Compliance Committee reviews Lonza’s financial reporting process on behalf of the Board of Directors. Management is responsible for the financial statements and the report-ing process, including the system of internal controls.

The independent statutory auditor, KPMG Ltd, is responsible for expressing an opinion on the accounting records and the financial statements prepared in accordance with Swiss law and the Company’s Articles of Association. As independent group auditors, KPMG Ltd, is responsible

7.

7.1

7.2

8.

8.1

8.2

8.3

8.4


30



for expressing an opinion on the consolidated financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity and notes) prepared in accor-dance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), and Swiss law.

The Audit and Compliance Committee is responsible for overseeing the conduct of these activi-ties by Lonza management and the external auditors.

31



Lonza pursues a proactive and professional communication policy. Lonza Group Ltd publishes price-sensitive information in accordance with the obligation to disclose price-sensitive facts as required by the SWX Swiss Exchange.

Corporate Communications reports directly to the Chief Executive Officer while Investor Relations is within the Corporate Communications organization. On basic matters of general corporate pol-icy, Corporate Communications receives its guidelines from the Management Committee.

Lonza Group Ltd provides all shareholders entered in the share register with an annual report (on request only) as well as with the full and half-year results. These reports are also available on the company’s website www.lonza.com. The website is regularly updated and provides relevant information such as share price development, news releases and presentations. It also contains an interactive version of the annual report. Media conferences and analyst meetings take place at the Company’s headquarters and other venues or by conference call. Lonza manages an annual program of investor meetings.

Investors, potential investors, as well as financial analysts, are also welcomed at the Company’s headquarters in Basel.

Anticipated Key Reporting DatesThe list of all corporate events of special interest is subject to change during the year as dates are adjusted and added.

Annual General Meeting for the financial year 200628 March 2007, 10.00 amConvention Center, MCH Swiss Exhibition (Basel) Ltd, Basel

Half-year Report 2007, analysts’ meeting26 July 2007

Full-year Report 2007, analysts’ meeting23 January 2008


Dividend Transfer to BanksAs a rule, Lonza Group pays the dividend to its shareholders on the fourth business day following the Annual General Meeting.

9. Information and Key Reporting Dates

33


34HUMAN RESOURCESThe Key to Operational Excellence


Spores from Aspergillus niger enlarged 14 000 times; appli-cation as reference strain in quality control (other Aspergillus species are used in biosynthesis and biocatalysis).

<

34


The Key to Operational Excellence

Leadership and Collaboration Operational excellence is the focus of our business strategy and people are the key to operational excellence. Developing a corporate culture of trust and entre-preneurship is essential for individuals to perform at their best. In pursuit of this goal, we pro-mote and foster the following principles so that wherever we work, we work together.

It is the mission of the Human Resources organization to proactively support Lonza’s business strategy by providing Human Resource programs and processes that support the development and sustainability of a high-performance organization.

At Lonza we recognize the relationship between risk and reward. Managers provide mentoring to facilitate continuous performance improvement. To foster growth, people are encouraged and empowered to take decisions. We celebrate our successes and share the knowledge gained from our failures. We benefit from the advantages of teamwork by leveraging the individual’s knowledge, skills and abilities. Individuals contribute good ideas, but really great ideas are more often the product of collaboration. We create opportunities for exploration and invention through cross-functional teams that broaden the individual’s knowledge of other businesses and disciplines. We know that teamwork boosts productivity, the capacity for innovation and the competitiveness of our company. Teamwork also creates a more dynamic work environment. At Lonza we are performance-oriented. Employees understand what is expected of them and how they are measuring up to these expectations. Employees are entitled to regular feedback discussions to gauge their individual performance and potential. They are rewarded in accor-dance with the performance principle.

In order to meet our business objectives now and in the future, talent management is critical. Ongoing training and development along with strategic recruitment ensure that our company has the right people and skills needed to remain a leader in our industry.

Our responsibilities extend beyond the company to each other, our communities and society as a whole. We deal with cases of hardship with fairness and integrity. We recognize employee representatives as our partners in strengthening labor relations and improving the corporate cul-ture. Leadership by example is critical to the acceptance of and compliance with these principles. It is the responsibility of the Human Resources organization to provide the businesses with the tools, systems and procedural guidelines that enable them to manage their human resource re-quirements. It is the goal of these principles to create a culture of trust and entrepreneurship that will help recruit and retain our talent pool, ensuring that we meet our strategic objectives.

Human Resources Development In December 2006 the headcount stood at 6 146 worldwide (2005: 5 984). The increase of 2.7 % is attributed to the investments or acquisitions made in China, USA, United Kingdom, Belgium, Spain, Singapore and Switzerland, with simultaneous divestitures of sites in Italy (4), Germany (2) and Poland.

Our training activities throughout 2006 focused on leadership and management development initiatives that are aligned with our desired culture and values. It is our strategy to increase the number of senior management and other key positions filled by internal candidates. In 2006 over 350 managers and high-potential employees attended special programs for which they invested an average of ten working days. Specialist training courses were held in parallel, rang-ing from safety training and legal compliance to good manufacturing practices (GMP). Training and development activities will continue to expand in 2007.

HUMAN RESOURCES

35


Lonza’s apprenticeship program in Switzerland is run in collaboration with other companies from the chemical and biotech industries.

Compensation At Lonza, compensation is based on job responsi-bility and performance criteria. Compensation includes base sal-ary and variable components. The variable compensation differs according to management level. Target variable compensation amounts to a maximum of 70 % of base salary.

In 2006, Global Human Resources continued to focus on programs and processes in support of the Lonza² Strategy. These programs include:– Leadership development– Sales and marketing training– Performance management– Succession planning

In addition, the following programs were launched:– life@lonza Employee Survey– Career Development Centers and on-line assessment for High- Potential Employees– A new Long-Term Incentive Program for Senior Managers– Management of People Training– Human Resources / Information Technology Project

Outlook 2005 was a year of invention; 2006 was a year of fortifica-tion; 2007 will be a year of integration. The human resources ac-tivities will focus on further strengthening the programs launched in 2005 and 2006. In addition, we will focus on the successful inte-gration of the new Lonza employees around the world, harmoniza-tion of Compensation and Benefits plans, building the Lonza Brand in the employment market and the development of career paths for technical experts. We will continue to gather feedback from our cus-tomers and Lonza employees to improve our human resource pro-grams and processes.

As a company, Lonza supports its local communities and – in keeping with its Code of Conduct – encourages all employees to participate in activities that contribute to good citizenship.

HUMAN RESOURCES

Employees by region 2006 1

Switzerland45.1%

EU24.3%

North America19.4%

Asia11.2%

1 Without Polymer Intermediates

Employees by division 2006

Exclusive Synthesis & Biopharmaceuticals

54.6 %

Organic Fine & Performance Chemicals

41.1 %

Holding and Others

4.3 %

37


38394144

46

SAFETY, HEALTH AND ENVIRONMENTResponsibilityGoals and PerformanceRegionsChange with a Positive Impact on the Environment –Interview with Walter Eschenmoser, Head of Corporate SHEProgress in the Redevelopment of a Former Industrial Site


Gluconobacter oxidans enlarged 61 000 times; application in biosynthesis and biocatalysis.

<

38


SAFETY, HEALTH AND ENVIRONMENT

Lonza is committed to operations and practices which prevent harm to people and damage to the environment or property. Our principles for safety, health and environment (SHE), which are derived from the company’s ethical convictions, take precedence and apply throughout the Group.

Responsibility Lonza is fully committed to the principles of sustainable development and is aware that its use of natural resources and industrial activities has an impact on man, nature and the environment. We therefore strive to keep any negative effects to an absolute minimum and reduce them further in a drive for continual improvement. We are also aware of the op-portunities and risks presented by emerging technologies, for example nanotechnology, and we take account of their possible impact in our risk assessments. At the same time, we are doing all we can, in collaboration with our customers, to enhance the benefits of our products and services for the good of society. We commit significant financial and human resources to the achievement of this aim. At the end of the reporting year, a total of 181 people, 3% of our 6146 employees, worked directly in the SHE area. Capital expenditure on SHE came to CHF 16 million in 2006, equivalent to 0.7% of sales (of continued activities) and 4.5% of the Group’s total investment in fixed assets. The operating expenses for SHE amounted to CHF 46.9 million, 7% up on the previous year’s level (on a comparable basis for continued activi-ties).

In addition to the internal dialogue and shared experience, Lonza strives to maintain a good and balanced relationship with the authorities and the neighboring population at all its loca-tions. We contribute to the safe handling of chemical substances and biopharmaceuticals and the sustainable use of raw materials in particular through our commitment to Responsible Care and similar programs of the chemical industry, as well as our active participation in na-tional and international bodies working in the SHE area.

Careful planning, effective implementation and thorough monitoring of the measures on the basis of the SHE policy valid across the Group are fundamental to continual improvement in the SHE area at Lonza. The risk-profile matrix that is binding on all production sites worldwide is applied at all sites for new and modified biopharmaceutical and chemical processes. Key figures on industrial safety, resource consumption, emissions and waste management mea-sure our progress in the SHE field and enable us to identify weak points and establish goals. Regular internal and external audits serve as a check on compliance with internal and external standards. During the reporting year, Corporate SHE comprehensively audited eight production sites for SHE system and performance, conducted eight environmental due diligence audits and paid numerous visits to Lonza Group sites to support local management in their endeavors to comply with internal and external standards. In the event of an incident, each site has a lo-cal, trained response unit at its disposal for crisis and incident management. A group-wide in-cident communication system ensures reporting to the Management Committee and enables the responsible decision-makers to immediately act.

Responsibility

39



1 Lost-time injury frequency rate: Number of accidents per 1 million hours worked2 Lost-time injury severity rate: Number of hours lost by accidents per 1 million hours

worked3 Carbon dioxide4 Volatile organic compounds5 NOx – nitrogen oxides; SO2 – sulphur dioxide

Occupational accidentsper 1 000 000 hours worked (LTIFR)

Lonza including divested activities 2006 Lonza as of end of year 2006

2000

2001

2002

2003

2004

2005

2006

Divested activities in 2006, Polymer Intermediates and LOFO GmbH, are not included in the time series 2000-2006 for rea-sons of comparability.The total energy requirement in the year under review was 8 353 terajoules, 4.8 % up on the previous year. The main energy sources used by Lonza in 2006 are: utilization of waste (33 %), electricity (29 %) and natural gas (28 %). Liquid fossil fuels ac-count for 8 % of the overall energy consumption. Energy from hydroelectric generation belongs in the category of renewable energy sources. In the year under review Lonza obtained 66 % of its electrical energy from hydroelectric sources.

Energyin terajoules

Self-generated Liquid fuels Natural gas

Steam Net electricity

2000

2001

2002

2003

2004

2005

2006

0

2

4

6

8

10

12

Goals and Performance

0

2000

4000

6000

8000

10000

Goals In 2005, on the basis of the long- term strategy and in align-ment with our obligations under the Responsible Care system, the Management Committee formulated five-year SHE goals for the Lonza Group. Taking into account the divestitures and acquisitions in the reporting year, these goals have been revised and adapted to the new Lonza organization and no longer include the Polymer Intermediates division and the LOFO GmbH in Weil (Germany):

Goal 2010

2.0 (-70 %)

330 (-70 %)

Status end 2005

3.6

587

Basis2000-2003

6.6

1 100

Safety

LTIFR1 Frequency of accidents (per 1 million hours worked)

LTISR2 Severity of accidents (per 1 million hours worked)

Status end 2006

2.6

471

Goal 2010

400

300

900

Status end 2005

425

281

814

Basis 2000

530

520

1 050

Environment

CO2 emissions 3 in 1000 metric tons

VOC emissions 4 in metric tons

Air impurities 5

(VOC, NOx, SO2 and particulate matter) in metric tons

Status end 2006

418

576

1 180

Performance Due to acquired and divested production sites, a special reporting format has been selected for SHE performance. For comparison reasons, Group accident statistics are shown in-cluding and excluding the divested activities, the Polymer Interme-diates division (until October 2006) and the LOFO GmbH in Weil, Germany (until June 2006). All other data shown refer to the com-pany structure as of the end of the reporting year and do not in-clude the divested activities. The data from previous years have been recalculated accordingly. The acquired site in Braine is con-solidated from March 2006, whereas the new site in Porriño (De-cember 2006) is not yet part of the 2006 performance reporting.

The very strong commitment to safer working conditions and the establishment of a firm safety consciousness at all sites led to a further significant reduction of the accident frequency by 28 % in the reporting year. This is the third sequential decline observed in accident frequency and Lonza is on track to meet its medium-term goal of a 70 % reduction within the ten-year period 2000 to 2010.

Both graphs show continuously decreasing rates since 2003, a result of the numerous and successful safety initiatives and programs introduced at all sites.

40



Eight of the 14 production and research sites operated without a single lost-time accident in 2006. Overall energy consumption amounted to 8 353 terajoules, up 4.8 % on the previous year, de-spite a production volume increase of almost 9 %. At the same time, total CO2 emissions were lower than in the previous year (-1.7 %). With the exception of air impurities, all intensity 1 indica-tors show a decreasing trend. The air impurity figure is influenced to a large extent by the VOC contribution from the newly acquired peptide manufacturing site in Braine. Due to the structural change of Lonza Group towards an even more life-science-oriented busi-ness with a significantly different product mix, ambitious environ-mental goals for 2010 have been set. Lonza keeps up the pressure for continued improvements in the SHE sector. The integration of the newly acquired businesses and the successful build-out of ex-isting sites are a constant challenge in meeting high environmen-tal and safety standards.

Indicators 2006 (change on 2005)

Energy intensityIndustrial water intensityCO2 intensityAir impurity intensityHazardous waste intensity

19.9 GJ / t10.7 m3 / t996 kg / t2.81 kg / t155 kg / t

(-3.8 %)(-3.8 %)(-9.7 %)(+33 %)(-10 %)

Above indicators do not include the divested activities in 2006, Polymer Intermediates and LOFO GmbH.

Further details on SHE management and performance can be found on our webpages: www.lonza.com/she.

Incidents None of our plants reported major incidents or break-downs, nor were there any accidents or damage in connection with the transportation of Lonza products and raw materials. We will do everything in our power to ensure that all sites continue to operate safely and that no one is harmed during transportation of our products to customers.

Divested activities in 2006, Polymer Intermediates and LOFO GmbH, are not included in the time series 2000-2006 for rea-sons of comparability.Total output of carbon dioxide in 2006 was 418 000 metric tons, 1.7 % down on the previous year. The slight increase of CO2 from fossil fuel consumption could be more than compen-sated for by a decrease of CO2 from other, non-fossil sources. Carbon dioxide intensity, as measured by tons of CO2 emitted per ton of finished goods produced, fell by 9.7 %. Emissions of the greenhouse gas CO2 generated by burning fossil fuels were 43 % of total CO2 emissions in 2006.

CO2 emissionsin 1000 metric tons

Other sources Fossil fuels

Divested activities in 2006, Polymer Intermediates and LOFO GmbH, are not included in the time series 2000-2006 for rea-sons of comparability.Volatile organic compounds (VOC) and nitrogen oxides (NOx) are responsible for 90 % of all air impurities, totaling 1 180 met-ric tons in 2006. The increase of VOC emissions in the reporting year is to a large part attributable to the acquisition of the site in Braine. At 91 metric tons, the proportion of halogenated VOC represents 16 % of the total VOC output.

Air impuritiesin metric tons

Particulate matter SO2 NOx VOC

2000

2001

2002

2003

2004

2005

2006

0

100

200

300

400

500

600

0

200

400

600

800

1000

1200

1 Intensity: Consumption of a resource or emission of a pollutant in relation to the production of one metric ton of finished goods

2000

2001

2002

2003

2004

2005

2006

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Europe Following the successful acquisition of new sites in Bel-gium (Braine-l’Alleud) and Spain (Porriño) and the divestment of the Polymer Intermediates Division (four sites in Italy, one in Germany and one in Poland) as well as LOFO GmbH in Weil am Rhein (DE), Lonza’s manufacturing and research base in Europe comprises Visp (CH), Kouřim (CZ), Slough (UK), Braine (BE) and Porriño (ES).

Visp is the Group’s largest and most important production center, employing some 40% of the more than 6000 employees world-wide. Safe, environmentally sound working practices are key goals which we continued to meet in 2006. The number of accidents involving more than one accident-related day lost fell by 35%. This positive outcome was achieved by safety programs on all levels and, of equal importance, the incorporation of local reduction tar-gets in employees’ individual goals. Employee training is another cornerstone of SHE management. All plants at Visp now have trained safety coaches who contribute to the high level of safety awareness. By the end of 2006, 139 employees received this train-ing. The whole SHE training concept was reviewed during the reporting year. As a result, the choice of training course is now determined by the specific function of the individual employees, and attendance is compulsory. At Visp, Lonza continued to devel-op a comprehensive program of bio-safety training for employees, which focuses on the handling of genetically modified or patho-genic microorganisms. By the end of 2006, 128 employees had undergone this training. Around CHF 65 million is being invested in systems for handling industrial-scale production of highly ac-tive pharmaceutical ingredients (APIs). These systems ensure safe handling of APIs with an exposure limit of 1 microgram per cubic meter, up to the 10 000-liter scale.

As a result of intensive construction activity at the Visp center, a growing number of people are coming to work at the site who are not familiar with the specific risks. This has prompted Lonza Visp to develop a test for newcomers, which is available online. This test provides information about existing hazards and the ap-propriate behavior in dealing with them. It must be successfully completed by all unaccompanied external employees and visitors before they enter the facility for the first time.

Notable advances in the area of environmental protection in-cluded the reduction in VOC emissions to under 170 metric tons per annum, significantly lower than the 900-ton limit specified by the operating license. Significant improvements were made pos-sible by process management to eliminate micro-pollution of the Rhone River. A storage basin for cooling water with a capacity of 20 000 m3, which extends the time available for interventions by the incident response unit to two hours, was completed and com-missioned. This significantly reduces the risk of contaminated wa-ter entering the river as the result of an incident at the plant.

Final destination of special waste 2006

Incineration88 %

Landfill7 %

External recycling / processing

5 %

Divested activities in 2006, Polymer Intermediates and LOFO GmbH, are not included in the time series 2000-2006 for rea-sons of comparability.The total quantity of waste produced by Lonza in 2006 was 136 000 metric tons, of which 65 000 metric tons consisted of special (hazardous) wastes and 71 000 metric tons of non-hazardous wastes or inert materials. Lonza has a specialized waste disposal concept at all its sites, dedicated to the principle of avoidance, recycling and environmentally sound disposal. Compared with the previous year, Lonza reduced its waste gen-eration by 4.4 %.

Divested activities in 2006, Polymer Intermediates and LOFO GmbH, are not included.In 2006, 93 % of special waste materials were incinerated or externally recycled, and 7 % went to secured landfills. All the transportation, processing and final disposal companies in-volved are known to Lonza and are specially selected also in accordance with SHE criteria. As a matter of principle, they are reputable firms which comply with all legal requirements.

Waste categoriesin 1000 metric tons

Non-hazardous waste Hazardous waste

2000

2001

2002

2003

2004

2005

2006

0

50

100

150

200

Regions

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In the area of energy management, the Visp site currently has five projects, running over sev-eral years, which are aimed at increasing the efficiency of resource usage and reducing carbon dioxide emissions. One of these projects saw energy-efficient processes brought on stream at a nicotinic acid facility in August 2006 after extensive modifications and successful tests, resulting in a 54% reduction in the quantity of CO2 produced per metric ton of niacin from the previous level of 1.43 tons to 0.66 tons. The replacement of all leaky or improperly dimen-sioned steam traps was completed during the reporting year. A district heating project with an energy saving potential of more than 2 000 MWh per annum is on the verge of completion. Two further energy saving projects in the area of off-gas combustion and at the Fine Chemicals Complex are in the planning phase.

The other manufacturing sites in Europe: Slough (UK), Kouřim (CZ) and Braine (BE), focused on implementing programs in the SHE area. Slough and Kouřim improved their security systems to enhance the protection against unauthorized access. Slough completed its general risk as-sessment program, with all assessments carried out and the action plans in the process of be-ing implemented. Ergonomics awareness training was identified in Slough as a key action area for the reporting year, and more than 25 % of the workforce was trained in manual handling and the correct usage of upper limbs and display screens. An external audit was commissioned to improve Slough‘s energy management. The site has committed to following through on a number of the recommendations, among them steam condensate recovery, boiler replacement and variable speed drives on air compressors. These measures are planned for completion in 2008 through 2011.

At the new peptide manufacturing site in Braine-l‘Alleud several internal SHE audits led to an improvement plan, which will be implemented in the future. A major concern at Braine is the emission of volatile organic compounds (VOC), which account for 20 % of the Group’s total output. A program to identify the root cause has been launched and will deliver results by mid-2007.

Asia All four of our sites in the Far East region, including Guangzhou, Nansha and Liyang in China as well as the site in Singapore, delivered a superb safety record and worked without a single lost-time injury accident during the reporting year. All plants have implemented and “live” the efficient STOP™ program, which targets every employee‘s safety consciousness and behavior. SHE investments centered on emissions management, i.e. waste water improvement in Liyang and noise reduction in Guangzhou, as well as the installation of an automatic sprin-kler system for the meta-xylene unit in Singapore.


43


United States In 2006 the major focus of the US facilities has been on the ChemStewardsSM, RAMS Implementation, Audits, C-TPAT and Community Outreach initiatives.

ChemStewardsSM is the Synthetic Organic Chemical Manufacturing Association (SOCMA) envi-ronmental, health, safety and security management system that all US sites are in the process of completing. The goal for 2006 was to complete a Program Element Verification. Plans for 2007 involve a documentation review at each facility and, in 2008, verification audits.

Training in RAMS, the Risk Analysis Management System developed by Lonza (Visp), was con-ducted at the sites in Conshohocken in January and Mapleton in July. These two sites are using the Lonza software to assist in the review and mitigation of hazards associated with the start-up of new processes and equipment or to make significant changes to the existing conditions.

During 2005 and 2006, audits were conducted at the North American facilities to ascertain compliance status with applicable US regulations. Audits reviewed all media impacts: air, wa-ter and wastewater and solid/hazardous waste. In addition, sites that need to comply with the OSHA Process Safety Management standard and US EPA Risk Management Plan were also audited to the program-specific requirements.

All Lonza Inc sites participated in C-TPAT (Customs-Trade Partnership Against Terrorism) qualifi-cation audits which focused on security improvements. The audits were completed by a third-party firm. They found that several site programs needed improvement and capital investment is required to increase overall security.

Several sites participate in Community Advisory Panels (CAP). These meetings reach out to community leaders and enable discussions of issues and projects which Lonza can become involved in to assist in community needs and initiatives, such as Williamsport’s Newberry Com-munity Partnership and Conshohocken’s donation to a township program through the sale of used computers.


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Change with a Positive Impact on the Environment

Lonza’s success in the area of safety, health and environmental protection (SHE) depends

on the active commitment of all employees and executive personnel. This is reflected in

the “Safety 2005” project and other initiatives taken by the Group in the areas of environ-

mental protection and health.

Interview with Walter Eschenmoser, Head of Corporate SHE

At the beginning of 2005, you took on the “Safety 2005” project. What does the project entail and what are its goals? The aim of “Safety 2005” is to enact measures that will reduce accident rates. At Visp and certain other loca-tions, Lonza operates flexible, multi-product plants which require modifi-cation and retrofitting several times a year. By their nature, such facilities have a higher risk of accidents than dedicat-ed plants where the same product is manufactured largely automatically all the year round. In 2004, management deemed the accident rates at some of our sites, which were at the higher end of the industry spectrum, to be no lon-

ger acceptable. That was the origin of the “Safety 2005” project. The aim of the project is a significant reduction in the number of accidents per one mil-lion working hours by 2010.

What goals have been achieved so far with this project?We’ve made good progress, achieving a further year-on-year reduction in ac-cident rates in 2006. The project team, comprising employees and line manag-ers from all levels of the organization, has resulted in a positive change in the safety culture through numerous initia-tives in training and information as well as by encouraging individual respon-

sibility on the part of employees. We have also gained valuable experience through “Safety 2005” especially by the implementation of safety coaches for other Lonza sites.

For some years now, various Lonza sites have carried out internal and external SHE audits. What do these audits consist of? All of our research and production sites conduct systematic performance audits at regular intervals. They are a central element of Lonza’s SHE man-agement system. Auditors with many years’ experience in the chemical in-dustry ascertain whether our locations


45


have an appropriate SHE organization and comply with the standards appli-cable across the Group. The auditors train employees on the spot or orga-nize a know-how transfer from other Lonza sites. The internal audit proposes a set of measures. After about a year, those responsible at the site are asked whether the measures have been im-plemented. Audits by external experts are not institutionalized; they are con-ducted when requested by Corporate SHE or by business partners. In special circumstances, for example acquisi-

tions, divestments and major orders, it is often necessary to obtain a neutral assessment of the SHE status.

Environmental protection always implies a wider social commitment. How would you describe Lonza’s commitment?We make every effort to minimize the environmental impact of our business activities and operations, and to opti-mize the use of natural resources for our processes and products. In 2006, we set long-term targets for the reduc-tion of industrial accidents as well as CO2 and VOC emissions. The measures introduced have already been success-ful. Lonza’s shift of emphasis towards

the life sciences has also had a positive effect on emission levels. The divest-ment of the bulk chemical business and the acquisition of modern chemi-cal and biotechnological activities have reduced energy consumption, produc-tion of greenhouse gases, air and water emissions, as well as the quantity of chemical waste we produce.

And how does Lonza deal with inherited liabilities, i.e. contamination produced

– knowingly or unknowingly – by its plants in the past?

As soon as we learn of such sites, we institute appropriate studies. Depend-ing on the result, we then take steps to secure the site or – where necessary

– undertake remediation measures. We assume responsibility for any residual pollution caused by our activities, re-gardless of the fact that the type of production management and waste disposal was common practice and complied with the legislation in force at the time. A current example, which is a good indication of Lonza’s sense of responsibility regarding inherited pol-lution liabilities, is the ongoing redevel-opment of the former production site at Waldshut (Germany) and its trans-

formation into the Hochrhein Business Park.

What specific measures is Lonza tak-ing to eliminate SHE risks at its present sites?All our processes and technologies are subjected to rigorous risk analysis prior to introduction. In 2006, we held numerous training sessions to provide several dozen employees worldwide with advanced training in systematic risk identification for complex techni-cal systems and processes.

How does Lonza guarantee that em-ployees’ health is not compromised by operations at its sites? The manufacture of active pharmaceu-tical ingredients, which as far as pos-sible is conducted in closed systems, requires strict measures to ensure that employees do not suffer overexpo-sure. Specialists in industrial hygiene conduct risk assessments to monitor the potential hazard posed by these substances and prescribe appropriate safety measures and permissible ex-posure levels. We have steadily built up the corresponding technical and hu-man resources in recent years. When working with highly active pharmaceu-tical substances, protecting employees from the active agents is as important as protecting the substance from the employees. Protecting the product from human contact by the highest possible working hygiene is particularly impor-tant in the production of biopharma-ceuticals. It is part of the confidence-building process to let customers see with their own eyes the high standard of industrial hygiene maintained at Lonza plants.


46



Former Lonza industrial site at Waldshut-Tiengen (Germany) The redevelopment of disused industrial premises plays an important part in our efforts to ensure that our use of natural resources is environmentally compatible and sustainable.

Production at the site of Lonza-Werke GmbH in Waldshut between 1913 and 1994 was mostly centered around inorganic products (calcium carbide, silicon carbide and corundum). Thereaf-ter, the former factory site, with around one hundred partly dilapidated buildings and technical installations, lay deserted for many years. In 2002, the Waldshut authorities and Lonza agreed on a plan of action for a redevelopment of the industrial wasteland to create the Hochrhein Business Park, a project involving the investment of EUR 14 million for the deconstruction and redevelopment of the 560 000 m2 Lonza site.

Working in close partnership with the environmental agencies of the Waldshut district author-ity and the regional administration in Freiburg, almost all of the old structures had been de-constructed by the end of 2006. The procedure opted for, in consultation with the experienced contracting companies, is a model for the redevelopment of disused industrial sites (www.gewerbeparkhochrhein.de).

The significant quantities of material produced by the deconstruction present a big challenge for internal logistics with regard to temporary storage and re-use on the construction sites. By the end of 2006, about 170 000 metric tons of concrete, brick and asphalt materials had been processed. Of this, more than half (90 000 tons) was re-used on site as filling and raw materi-als for road construction. About 35 000 tons were landfilled and the rest is to be re-used in the future.

The Hochrhein Business Park has led to a welcome surge in investment in the zone between the towns of Waldshut and Tiengen. By the end of 2006, sixteen companies and local gov-ernment offices with around 140 employees had moved into renovated or newly constructed buildings at the Business Park. More than 150 other local companies have been contracted for construction work. The German and Swiss authorities are planning joint customs facilities for clearance of commercial shipments. The location situated directly on the border makes the site particularly attractive for logistics, manufacturing and commercial operations, as well as Swiss companies interested in gaining a foothold in the EU.

Progress in the Redevelopment of a Former Industrial Site

CORPORATE GOVERNANCE & SOCIAL AND ENVIRONMENTAL REPORT AGENDA AND CONTACTS

ImprintProduction Corporate Communications, Lonza Group Ltd, Basel, Switzerland | All rights reserved | Editorial completion: February 2007 |Design zahnzimmermannfankhauser creative projects ltd, Zurich, Switzerland | Photography Tim Lüdin, Timage, Sissach, Switzerland | SEM pictures Eye of science, o. meckes, n. ottawa, Reutlingen, Germany | Martin Oeggerli & Daniel Mathys, Basel, Switzerland | The microbiological culture for the scanning electron microscope pictures in the Annual Report was provided by Lonza‘s reference stocks in Visp. | Lithography & Print Birkhäuser+GBC Ltd, Reinach, Switzerland

Legal domicileBasel, Switzerland

Global headquartersLonza Group LtdMuenchensteinerstrasse 38CH-4002 Basel, SwitzerlandTel +41 61 316 81 11Fax +41 61 316 91 11www.lonza.com

Anticipated Key Reporting Dates


Half-year Report 200726 July 2007

Full-year Report 200723 January 2008


Dividend transfer to banksAs a rule, Lonza Group Ltd pays the dividendto its shareholders on the fourth businessday following the Annual General Meeting.

Listing and Security Information

Stock exchange listingSWX Swiss Exchange

Stock exchange tradingvirt-x

Common stock symbolsBloomberg LONN VXReuters LONZn.VXTelekurs LONN

Security numberValor 001384101ISIN CH0013841017

Forward-looking Statements

Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings; pricing strategies of competitors; the company’s ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis.

Contacts

For publications and further information please contact:

Lonza Group LtdMuenchensteinerstrasse 38CH-4002 Basel, [email protected]

Investor RelationsTel +41 61 316 85 66Fax +41 61 316 95 [email protected]

Media / Corporate CommunicationsTel +41 61 316 87 98Fax +41 61 316 97 [email protected]

Share Registerc/o Nimbus LtdP.O. BoxCH-8866 Ziegelbruecke, SwitzerlandTel +41 55 617 37 29Fax +41 55 617 37 [email protected]


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