Syngenta AG (SYT)

Realize Cost Savings from the Operational Efficiency Program

On February 11, 2004, Syngenta announced an Operational Efficiency cost saving program. The aim of this program is to realize significant cost savings after the completion of the integration of the former Novartis and Zeneca businesses and in response to low underlying growth in Crop Protection markets. This program will include the relocation of production to lower cost regions, a further reduction of the asset base, an increase in the globalization of purchasing, further consolidation of research and development sites and the outsourcing of some administrative processes. The total cash cost of the program was forecast to be around US$500 million over the five years beginning in 2004 and non-cash charges, principally writing-down the value of fixed assets, to be around US$350 million over the same period. These forecasts remain current. In 2005, the closure of two Crop Protection production sites and partial closure of another were announced. In 2004, the closure of three Crop Protection production sites and rationalization of two further sites were announced. Production from these closing sites will be relocated. In addition, in 2004, the rationalization of Syngenta’s Research activities, including the concentration of biotechnology research at Research Triangle Park in North Carolina and, at expected completion in 2007 / 2008, the closure of the Basel chemistry facility, were announced. Restructuring costs related to all these announcements are included in the above program totals. See Item 5 “Operating and Financial Review and Prospects—Overview—Operational Efficiency Program” for more information on the charges incurred under this program.

In 2005, savings from the program realized in cost of goods sold offset the impact of higher oil and gas prices and the rationalization of research activities kept the growth in research and development expenditure at 2% despite the acquisitions in Seeds in 2004 and increased resource behind trait development.