Syngenta AG (SYT)

cash flow forecasts have been extrapolated to ten years including a terminal value where appropriate. Zero or declining growth rates have been used for the extrapolated period.

Of the Crop Protection goodwill of US$741 million, US$609 million arose on acquisition of Zeneca agrochemicals business, and has been reviewed at the total Crop Protection level, because this is the lowest level at which Syngenta monitors this goodwill for internal management purposes. US$132 million of goodwill which arose on other acquisitions has been reviewed as part of various individual cash generating units. Of the Seeds goodwill, US$317 million arose on the acquisition of Garst and Golden Harvest, and has been reviewed as part of the Seeds NAFTA corn and soy cash generating unit.

In the opinion of management, changes to assumptions about future sales performance which are reasonably possible, but not probable, would cause the recoverable amount of one cash generating unit to fall below that unit’s carrying amount by up to US$25 million. Recoverable amount as estimated for that unit as at September 30, 2005 using a 9% discount rate is approximately equal to its carrying amount of US$92 million. The effect of a 1% change in discount rate on the recoverable amount is US$4 million.

The cash flow forecasts which support the US$317 million carrying amount of goodwill in the Seeds NAFTA corn and soy business assume that new seed products obtain registration and are successfully introduced to the market. The cash flows included represent Syngenta’s best estimate of the outcome of the product development and introduction. However, as with all investments, there can be no absolute guarantee of success. If there are significant delays in development and launch of new products, that Syngenta was not able to offset by alternative available products, a future impairment test of this goodwill may result in impairment losses being recorded. Because of the number of variables and the potential range of values for those variables, which are inputs for the cash flow forecasts, Syngenta is unable to quantify accurately the amount of any potential future impairment loss which might be recorded.

Post-employment benefits

Post-employment benefit expense for 2006 will be determined based on the same discount rate, salary and pension increase, mortality, disability and employee turnover assumptions as used in valuing the benefit obligation at December 31, 2005, and on the assumed long-term expected rate on pension plan assets. These key assumptions are disclosed in Note 26 below, as are the experience variances which arose in the past five years between actual outcomes and the assumptions applied in each respective year. Assumptions are reviewed annually, and updated based on actual experience when appropriate. In this five year period, variances were caused principally by external financial market movements in the corporate bond yields used to benchmark the discount rate, and in asset prices which affected the actual return on assets. These factors are outside Syngenta’s direct control, and it is reasonably possible that future variances will be at least as great as past variances. Syngenta applied the corridor method, under which variances are spread prospectively over average remaining employee service. This limits the impact of variances on the reported net income and net assets of each individual accounting period. At December 31, 2005, Syngenta’s balance sheet included assets of US$497 million and liabilities of US$193 million and US$38 million for post-employment benefits (Note 26 below).

Restructuring

In February 2004, Syngenta announced a restructuring program known as “operational efficiency”. An element of this program involves the rationalization of production sites, including the relocation of manufacturing and development activities from higher cost regions, such as Western Europe, to lower cost regions, such as certain countries in Asia Pacific. Over time, this could bring about a further shift in the geographical distribution of Syngenta’s asset base. In 2004 and 2005, Syngenta has recorded impairment losses or accelerated depreciation charges for assets at sites affected by specific restructuring or closure announcements which have already been made. Further specific restructuring announcements are likely to be made, and consequently further expense is likely to be recorded, in 2006 and future years. Because the exact timing and content of specific announcements has not yet been decided, Syngenta is not able to quantify accurately the total amount of such expense in any future year. At December 31, 2005, Syngenta’s balance sheet included property, plant and equipment with a net book value of US$1,887 million, as disclosed in Note 13 below.

Deferred Tax Assets

Tax losses are recognized as deferred tax assets when it becomes probable that they will be utilized. Since its formation, Syngenta has carried out a reorganization of the legal entity structure of the group. This has increased the likelihood that tax losses in certain group subsidiaries will be utilized against future taxable profits. Based on the taxable profit forecasts approved by management, Syngenta considers it is now more likely than not that these tax losses will be recovered. Therefore, as shown in Note 16 below, Syngenta has reduced unrecognized tax losses and has increased deferred tax assets recognized for net operating tax losses. Certain tax losses have also been claimed as offsets to current tax expense, which has been reduced accordingly. However, if forecast profits are reduced by adverse market conditions in the future, or by future restructuring decisions, it may be necessary to write off deferred tax assets. Syngenta is not able to quantify accurately the amount of any

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