06/25/2004 - Annual General Meeting of Süd-Chemie AG, Munich, 25 June 2004

Speech by Dr. Jürgen F. Kammer, Chairman of the Managing Board of Süd-Chemie AG - The spoken word applies - Mr. Chairman, shareholders, friends of Süd-Chemie, I should also like to welcome you most warmly to Süd-Chemie AG´s Annual General Meeting. I am delighted that so many of you were able to attend. Before my term of office comes to a close after twelve years, I should firstly like to report on the last financial year of 2003. Afterwards, please allow me to look back over the past twelve years, which have been the most exciting, most varied and best years of my career. Many of you have accompanied us along this long stretch of the road. But first of all I should like to turn to the year 2003, which in view of the weak economic environment, can be described as successful. Difficult market environment Contrary to all forecasts, the economy failed to show a strong recovery during 2003. Worldwide economic growth amounted to 2.4%. The USA proved to be the driving force behind the global economy with a gross domestic product of 3.1%, at the same time stimulating a strong upswing in Asia, especially in China. Economic momentum remained low in the euro zone, with a rise of only 0.4%. Bringing up the rear in Europe in 2003 was Germany, where structural problems outweighed economic momentum. In spite of an approximately 2% rise in production levels, the chemical companies suffered from keen price competition on the world market, coupled with low margins and considerable pressure on prices, as well as from the high price of raw materials. A successful year for Süd-Chemie in 2003 In 2003, Süd-Chemie was able to demonstrate yet again that it is able to hold its own, even in a difficult environment. We made considerable progress, strengthening our competitive position even further and achieving our sales and profit targets. Süd-Chemie was able to bring this difficult year to a successful close, whereas business performance was restrained in the majority of European chemical enterprises. It was possible to increase consolidated sales by €7.4 million to €763.0 million. Fluctuations in exchange rates had a negative impact on the consolidated financial statements following the conversion of sales revenue invoiced in local currencies, and led to a €50.4 million reduction in sales in 2003. In spite of a one-percent rise in sales, total assets decreased by 5% to €648.5 million. Due mainly to rigorous inventory management, we achieved a marked improvement in the capital structure of the Group. The result of ordinary operations (EBIT) rose by 11% to €44.6 million and consolidated net income by 44% to €15.0 million. Stable high dividend of €0.62 Even in less stable times, Süd-Chemie is and remains a company on which shareholders, customers and employees can rely. The Managing and Supervisory Boards of Süd-Chemie AG are therefore proposing that an unchanged dividend of €0.62 per share be passed by yourselves. This represents a total dividend of €7.3 million and a continuation of Süd-Chemie´s stable dividend policy of recent years. Positive performance by Süd-Chemie shares In 2003, Süd-Chemie shares performed well. Although the price fell sharply at the beginning of the year, the shares rallied strongly in an increasingly brighter stockmarket environment, climbing by 27% between the beginning of January and the end of December 2003. At 31 December 2003, the shares stood at €33.00. A long-term view highlights their sustained stability. Gaining 106% since 1993, Süd-Chemie´s shares have performed better the either the DAX or the C-DAX, which recorded growth rates of 75% and 97% over the same period. Successful end to patents lawsuit One highlight of the 2003 financial year was the successful conclusion of the US patents lawsuit against Southern Clay in June of last year, which I also mentioned in last year´s report. There is only one thing to add, namely that this legal dispute involving some 80 million euros has taken up considerable resources at Süd-Chemie over the past three years. Its conclusion means that capacity can be released to help us reach our operating goals. And now to the other highlights of 2003 – what were Süd-Chemie´s main focal points, which business activities were expanded, in which segments were we able to realise good ideas and innovative solutions? Organisation structure directed more strongly towards customers The positive trend throughout the Group was largely a result of the many successful measures introduced to improve performance at Süd-Chemie. Wherever we saw that adjustments were necessary, we acted quickly and resolutely. For instance, we recognised that greater orientation to customer needs offered a major opportunity and adapted our organisation structure accordingly. Within only two years, the number of business units has been reduced from fourteen to eight, resulting in more streamlined structures and shorter lines of communication. In the course of changing the Group structure to focus on markets and customers instead of on products, the division of our activities into product groups has been replaced by twenty-one industry groups geared to serving Süd-Chemie´s main markets and supplemented by a new key account management structure. All processes from order intake to purchasing, production, logistics and after-sales service, are tailored specifically to customer needs. Extremely well positioned in all parts of the world Today, Süd-Chemie is represented in all parts of the world, having for the most part completed its globalisation process of recent years by establishing itself in Spain, Brazil, Peru, Australia and especially in China and Singapore. As a company specialised in chemistry for surfaces comprising the finest-grained inorganic matter, our two divisions of Catalysts and Adsorbents occupy niche markets which, in view of their limited extent and their complexity, allow no scope for profitable servicing by the major chemical groups – markets calling for a high degree of specialisation in order to offer top-quality products at competitive prices. Thanks to our worldwide presence, we are in a position to market suitable solutions for these niches on a global scale. Our employees include excellently-qualified chemists, engineers and experts from a wide range of disciplines, as well as a large number of young talented trainees from all parts of the world. Research and development operations have been restructured and expanded. State-of-the-art, process-oriented information technology is available to the majority of Group members. We are now in a better position than ever before to achieve sustained growth based primarily on our own resources. Balanced growth In our niche markets, we are either the leading player or at least among the top three. To maintain these positions, we are aiming above all for organic growth. Intensive research and marketable developments are basic requirements for internal growth and last year, we were again able to file an increased number of patents compared with the previous year. The fact that our innovations are indeed marketable is demonstrated by the high proportion of annual sales contributed by new products, namely 25%. As well as growing and increasing the value of the company on the basis of our own ability, we are also open for cooperation and acquisition opportunities which could substantially strengthen our market position. In 2003 for instance, targeted purchases were made in fast-growing areas of activity. We also entered into a series of partnerships to supplement our range of products and services, as well as our know-how. Allow me to briefly outline the main cooperation ventures and acquisitions. Partnerships and acquisitions expand strong position In the Catalysts Division, we were able to strengthen our position in the field of petrochemicals by acquiring the former Linde subsidiary, Scientific Design Company in the USA. Together with Saudi Basic Industries Corporation (SABIC is one of the world´s largest petrochemical enterprises based in Saudi Arabia), we took over Scientific Design on a joint 50:50 basis and made our entry into the market for ethylene-oxide catalysts and process-technology licensing with a potential of more than US$200 million. Ethylene oxide is an intermediate used for instance in the manufacture of plastic bottles, polyester, antifreeze and polyurethane. By acquiring customer data, patents, know-how and the production range from Alsi-Penta Zeolithe GmbH, we significantly increased our market lead in the sector of zeolite catalysts for refineries and for the petrochemical and air-purification industries. We entered into cooperation with Choren Industries GmbH for the manufacture CO2-neutral fuels using renewable resources, the so-called biomass-to-liquid (BTL) process. Choren Industries leads the field in the development, construction and operation of plants for the production of synthetic fuel from carbonised regenerative raw materials. To manufacture high-quality, synthetic fuel, biomass consisting mainly of recycled and waste wood or straw is converted into synthesis gas (CO + H2) and synthesised to create fuel. Our contribution to this future-oriented industry envisages developing and supplying catalysts to convert the synthesis gas gained from biomass into fuel, as well as providing process-engineering support. Based on an EU resolution, biogenous fuels should account for 5.75% of total fuel consumption by 2010, compared with less than one percent today. Synthetic biodiesel will therefore make a significant contribution to sparing use of those resources which are in short supply, Süd-Chemie being one of the driving forces in this sector. In the Adsorbents Division, we acquired the French bentonite activities belonging to the company Ceca S.A. in France. By taking over its trademarks and know-how, we have strengthened our leading position on the bentonite market, especially in France. Group increases profitability Let us now turn to the details of the financial statements. Last year, Süd-Chemie was able to continue the positive business trend of the two previous years, recording in particular a notable increase in profitability in 2003. Consolidated sales rose marginally by €7.4 million to €763.0 million. Of this figure, €325.7 million were attributable to the Catalysts Division, a rise of €18.3 million compared with 2002, and €437.3 million to the Adsorbents Division, a drop of €10.9 million. While sales were marginally lower in Europe, amounting to only 44.3% of consolidated sales, the contribution to total sales made by America and Africa rose slightly to 26.6% and 6.6%. Asia and the Middle East generated a 22.3% share of sales. Profitability was boosted mainly by an improvement of 1.3% percentage points in the gross margin, which reached 36.6% as a result of measures taken to reduce both the cost of goods sold and purchase prices. Gross profits improved by €12.7 million compared with 2002, reaching €279.2 million. Sales and marketing expenses rose mainly as a result of higher freight costs and expansion of the sales team. Expenditure on research and development was increased by €0.8 million to €29.1 million. General administrative costs rose by €2.5 million to €92.4 million, due partially to non-recurring expenditure on reorganisation and a project aimed at improving purchasing performance throughout the Group, and partially to the administrative costs incurred by newly-acquired subsidiaries. It was possible to improve the balance of other operating income and expenses by €2.8 million to €16.6 million, mainly a result of the positive outcome of the patents dispute with Southern Clay Products. Consequently, the operating result (EBIT) of €44.6 million was €4.4 million higher than in 2002. As a result of expanding the scope of consolidation and the acquisitions made in 2003, interest expense increased by €2.3 million to €17.8 million. Consolidated pre-tax profits amounted to €27.8 million, up by €6.0 million on 2002. Consolidated net income rose to €15.0 million, after €10.4 million the previous year, an increase of 44%. Compared with 2002, we were also able to significantly increase the earnings per share based on DVFA/SG by €0.47 to €1.17 in 2003. Decline in Süd-Chemie AG earnings in a difficult market environment Compared with 2002, Süd-Chemie AG sales fell by 7.0% to €227.2 million. This was however largely due to concentrating the pet products business at H. von Gimborn GmbH. In 2002, Gimborn had contributed €17.3 million to sales. In addition, sales performance was curtailed by the aggressive price competition due to stagnating markets in Germany and Europe, which was intensified by the appreciation of the euro. Measures taken to reduce production costs and purchase prices led to a notable decrease in the cost of goods sold. Based on a gross profit of €65.2 million, the gross margin increased by 0.9 percentage points to 28.7%. Whereas sales and marketing expenses rose by €0.7 million to €36.9 million due to higher personnel costs, and administrative costs increased by €1.5 million to €28.7 million, expenditure on research and development of €11.6 million remained at the same level as in 2002. The operating result (EBIT) of minus €1.6 million was €5.9 million below the 2002 figure. Account must however be taken of the fact that the AG also includes Group holding activities and therefore bears Group expenses which cannot be charged to other units. Higher dividend distributions from subsidiaries led to an increase in Süd-Chemie AG´s investment income of €3.7 million compared with 2002, to reach €16.7 million. Net interest income dropped to €5.5 million. Net income amounted to €9.5 million after €12.9 million in 2002. Improved capital structure of the Group During the year under review, we were able to further improve levels of capital commitment throughout the Group. While sales rose by 1%, total assets were down by €32.1 million, or 4.7%, to €648.5 million in the Süd-Chemie Group. Coupled with currency-rate fluctuations, global measures undertaken to improve inventory management led to a notable reduction in stocks of €15.3 million or 12.0%. Fixed assets also decreased by €31.3 million. This drop resulted partly from shifts in currency rates and partly from a reduction in interests held in subsidiary companies due to expanding the scope of consolidation. Not even companies consolidated for the first time were able to compensate for this decrease in fixed assets. On the other hand, receivables and other current assets increased by €9.9 million, owing to some extent to the changes in the scope of consolidation. In spite of earnings-related growth, the Group´s equity decreased. This was mainly a result of converting the net assets of foreign Group companies at the rates prevailing on the closing date, which had changed compared with 2002. At 31 December, equity amounted to €221.3 million. The Süd-Chemie Group therefore reported an equity ratio of 34.1%, after 35.3% in 2002. Balance-sheet trends at Süd-Chemie AG In the case of Süd-Chemie AG, total assets of €318.3 million were 7.7% higher than the 2002 figure. Owing mainly to a marked increase in financial assets, fixed assets increased by €28.3 million compared with 2002 to reach €240.9 million. Measures aimed at releasing committed capital led to a marked €3.1 million drop in inventories to €29.6 million. Due mainly to the rise in financial assets, Süd-Chemie AG´s equity ratio fell by 3.0 percentage points to 48.7% Increased cash flow In 2003, the consolidated cash flow from operating activities rose by €7 million to €76.9 million. This not only sufficed to finance the Group´s entire capital expenditure and acquisitions, but also to reduce its debts. It was possible to decrease the net debt, namely total liabilities to banks less cash and cash equivalents, by €6.7 million to €246.4 million during 2003. In order to achieve a higher return on capital, the levels of committed capital are being systematically lowered throughout the Süd-Chemie Group. In 2003, a large number of measures were successfully implemented to reduce inventories without limiting delivery capacity. One major step was the introduction of the Logistic Monitoring System (LMS), an extremely effective tool for efficient inventory management. 60% of total Group sales were integrated into LMS during 2003. Capital expenditure reduced, but maintained at a good level After completing extension of the Heufeld plant in 2003 to become Süd-Chemie´s most advanced catalyst research and production centre, it was possible to substantially reduce capital expenditure on tangible and intangible assets throughout the entire Group. Reaching €52.3 million, the volume of capital expenditure was significantly lower than the previous year, but higher than the depreciation figure of €48.7 million. Capital expenditure during the period under review focused on expanding capacity and modernising production plants. Employees At December 31, 2003, 4,982 people were employed by the Süd-Chemie Group. This represented an increase of 563 in 2003 due to changes in the scope of consolidation. The largest additions were in China with 301 employees, in the USA with 77 employees and 66 employees in the Gimborn Group based in the Czech Republic, Hungary and Russia. Conclusion In conclusion, it may be said that Süd-Chemie continued to make good progress in 2003, in spite of the difficult economic environment, improving both earnings capacity and capital productivity during the year. We are now very well-equipped in both financial and balance-sheet terms to face the coming years with confidence. Ladies and gentlemen, Before passing you over to Dr. von Au, please allow me to review the past twelve years. Looking around me, I see many familiar faces - Süd-Chemie shareholders who have remained loyal to our company for years and even decades. Starting point in 1992 In 1992, Süd-Chemie was already a global enterprise with 67 companies in 28 countries. In the sectors of clay chemistry, catalysts and chemicals, it recorded sales of €446 million, 74% of which were generated abroad. Its employees numbered 4,327. Süd-Chemie was one of the companies setting the pace in terms of internationalisation in the chemical industry in Germany. It recognised at an early stage the opportunities offered by maintaining a presence in important parts of the world and consistently pursued its international policy. But even Süd-Chemie had to face the rapidly increasing competition and focus on reducing costs and increasing returns. A group of independent and at that time very successful, although extremely heterogeneous subsidiaries would have had no future in an environment dominated increasingly by the international division of labour. Modified organisation, vision and values It was necessary to interlink the individual companies to form a single entity, a corporate alliance, in order to contend with the highly intensive competition on the open markets by realising synergies in terms of costs and know-how, and operating on the basis of a common strategy. On the one hand, this called for the creation of a suitable organisational base to overcome local worlds and on the other, for a uniting vision of the Group´s goals and its values that would be binding for everyone. The structure required to bundle our worldwide activities and strengths was created by defining our niche markets and subsequently setting up the relevant business units, each headed by a manager with global responsibility. This was the only way to consolidate our niches worldwide and achieve the position of leading supplier. Within a short space of time, a fundamental group structure was in place, allowing for effective control of the Group´s different product lines with the aid of the central management departments. It was possible to quickly expand the company´s technological potential, placing its patents and licensing policy on an international footing. In view of the marked increase in the demand for innovation, this was absolutely essential. Significant increases in efficiency were the only way to compensate for the rapid rise in research and development costs which were coupled with falling margins. The new structure created the necessary basis for thinking and acting in global processes. At the same time, international personnel development and the harmonisation of information technology on a Group-wide scale became even more important. No less important was the creation of a common identity by formulating common goals and values. In 1992, Süd-Chemie was a company marked by open and trusting co-existence. It was however also very heterogeneous. Consequently, the introduction of a uniform canon of values did not meet with immediate success. A great deal of time was needed to impart a common identity to companies from differing cultures. The vision and values drawn up jointly by these companies, which today apply to and are binding for each and every employee, provide Süd-Chemie with an inner bond, a common goal and a unified public image. Based on its vision and values, the Group then succeeded in drawing up a global strategy. This identity has however not only had an impact within Süd-Chemie, but is also of great benefit to our customers. Our wide range of products and services can now all be classified by one single binding concept. Our claim, "Creating Performance Technology“, affirms the fact that, irrespective of their industrial application, our products and services all have one thing in common - they create added value for our customers, helping them make their own production processes faster, more efficient and therefore more economic. Successful innovation policy / Innovative solutions to protect the environment This added value is not possible without extensive know-how. For this reason, the history of Süd-Chemie is also a history of constant innovation. Süd-Chemie provides the answers to the pressing issues of power supplies and protection of the environment in a world with a rapidly-growing population. For many years, the company has been a driving force for sustainable progress. Süd-Chemie´s catalysts for instance help a large number of other industries to manufacture their products using substantially lower quantities of natural resources. In view of the continually declining levels of oil reserves, the sparing use of resources is of growing importance. Catalysts are the key to efficient use of primary chemical substances. Süd-Chemie´s catalysts set standards in the gas-to-liquid (GTL) and gas-to-chemicals (GTC) processes used to manufacture high-grade petroleum products, basic and intermediate petrochemical products and chemical products from natural gas. The acquisition of Montecatini, Mont Edison´s Italian catalyst company, in 1997 marked our entry into the market for oxidation catalysis. This provided a vital boost to our expertise in the petrochemical sector, opening up markets involved in downstream products such as plastic bottles, plastic bags and film, insulating foam and plastic piping. Our catalysts also help to comply with the increasingly stricter constraints on air pollution caused by traffic. A unique capacity for storing hydrocarbons and reducing nitrous oxide makes zeolites an indispensable component in exhaust-gas catalysts for automobiles. In addition to the technical advantages in emission control, zeolites are also noted for their excellent environmental compatibility. Activities aimed at eliminating the harmful particulate matter in diesel exhausts, public transport authorities in Asia are currently fitting buses with catalytic particulate filters to neutralise these pollutants. Extension of this concept is also under consideration. Similar projects in Mexico, Chile and Brazil are already in existence, while the major Asian cities are expecting a massive surge of motorization over the next few years, coupled with a rapid increase in the levels of CO2. Step by step towards a future powered by hydrogen We are preparing ourselves for the future demand in this technological field based on a framework of strict cost controls. In my opinion, the year 2010 is a realistic date for a widescale introduction of fuel-cell-powered cars, especially since last month Opel announced that it will be launching a mass-produced hydrogen-driven fuel-cell car no later than this date. Meanwhile, Opel is already testing fuel-cell cars under daily operating conditions. However, fuel cells are not only the answer to the challenges of sustained mobility. Although environmentally-friendly automotive drives are the dominating theme at the present time, fuel cells can be used for many diverse applications. This technology can in fact be tailored to almost any use, including mobile phones, laptops and domestic heating, all areas where fuel cells will come into operation at a much earlier date. In view of their unbeatable advantages, fuel cells will become a source of future power. Hydrogen is the cleanest fuel imaginable at the present time and represents a practical supplement to fossil-based sources of energy in the form of oil and coal. For just think - if China were to reach Germany´s level of motorization, the number of cars would double worldwide and this would be a catastrophe for our climate. In my eyes, promoting the progress of this future-oriented technology is therefore of prime importance. Especially in Germany, the right course must be set at a political level and the necessary hydrogen infrastructure installed in the form a of hydrogen-fuelling network, otherwise there is a danger that on-going technological developments to reach market maturity will take place outside this country. Well-positioned with catalysts for hydrogen production Since entering this field in 1999, Süd-Chemie has created an excellent technological platform for itself by developing new, high-performance catalysts for the production of hydrogen. It has expanded its involvement by cooperating with leading manufacturers of fuel-cell products and hydrogen filling-stations. As part of the current field trials with fuel-cell-powered vehicles, initial steps have been taken to install the necessary infrastructure for hydrogen supplies. For instance, a large number of hydrogen filling-stations have been set up around the world, including those in Madrid, Porto, Stuttgart and London, sponsored by the European Union as part of the C.U.T.E. project (Clean Urban Transport for Europe). These hydrogen filling-stations, which represent the core cells of an adequate hydrogen infrastructure, are equipped with Süd-Chemie catalysts. With the aid of nanotechnology, we advanced into a new world of materials in 2001, opening up new fields of application for bentonite, a clay mineral that has been in use for over a hundred years. Bentonite is broken down into the most minute layers - one hundred nanometres long and one nanometre thick. It is then used as an additive, mainly in plastics. For instance, cables produced using Süd-Chemie additives offer improved fire-retardant properties and at the same time increased elasticity. We are also currently working on new plastic composites to facilitate lightweight automobile construction and on developing self-cleaning, scratch-resistant surfaces. A further example of our innovative strength is a patented polymer technology to absorb humidity in packaging for medicines and diagnostics products. The purchase of Airsec in 1996 paved the way for creating a fast-growing global packaging division geared to the pharmaceutical sector and other related industries. Since that time, the protective packaging sector has performed very well. Following the development of new enzyme applications for the olive-oil industry, Süd-Chemie launched an innovative biocatalyst product onto the market at the end of 2003. Using our olive-oil enzyme, the natural yield and consequently the economic efficiency of olive harvests can be considerably increased. The main markets are initially Europe´s three largest oil-producing countries of Spain, Italy and Greece. Successful personnel policy Constant progress within our company is not possible without competent employees. In order to remain on the leading edge of future technologies, highly-qualified staff are needed. Personnel policy is therefore a key factor for success and one of my special personal concerns. I have resolutely continued Dr. Wamsler´s policy in this regard and always promoted young, ambitious, talented individuals. I consider the good mix of keen, young talents and older, more experienced staff to be Süd-Chemie´s vital competitive advantage. The young recruits quickly become capable of accepting personal responsibility and showing initiative. We call this scheme "Young blood and old hands". We also make an effort to create mixed teams from a range of different disciplines - scientists and economists finding a home with us, as much as arts and social science graduates. We have built up a management team based not only on professional, but also on personal excellence. Our employees have the scope required for their professional and personal development and are willing to take on responsibility. They are noted for their loyalty to the company and their openness, as well as their courage and positive attitude to change. They enjoy discovering the world of Süd-Chemie. These qualities are extremely important for us as a Group operating on a global scale and have a positive impact on our corporate culture. I am firmly convinced that the personnel policy determines whether an enterprise develops key technologies, becomes established in the marketplace and can exist in our globalised world. Chemical industry landscape Ladies and gentlemen, In order to place Süd-Chemie´s development in recent years in the right perspective, it is worth taking a look at the development of chemistry in Germany. Many of you will recall the heyday of the chemical industry in this country. In 1992, the three largest chemical enterprises in the world, Hoechst, Bayer and BASF, all came from Germany, all three of them being diversified multinational companies. German companies generated sales of €129 billion, representing about 13% of worldwide chemical sales. Within just over a decade, the picture has changed, with only BASF being able to hold third place among the leaders (1: Dow Chemical, 2: Du Pont). At an international level, Bayer has fallen behind, and Hoechst – once the largest chemical enterprise in the world - has been merged with Aventis and now focuses exclusively on pharmaceuticals. Although German chemical companies generated sales of €210 billion in 2003, an increase of 63% compared with 1992, the share of worldwide chemical sales held by German companies fell to 11%. This declining market share has been accompanied by a substantial loss of jobs in Germany. Of the 655,000 people employed in 1992, only some 450,000 still work in the German chemical industry today, a drop of more than 200,000. This is of course also a result of the dwindling chemical industry in Eastern Germany and of outsourcing data-processing and general administrative services. Above all, it is however a reflection of on-going cost-saving measures and concentration processes. If this negative trend remains intact, the German chemical industry will no longer be employing 400,000 people in the year 2010. Süd-Chemie has succeeded in keeping abreast of the growth registered by the global chemical industry. Whereas we recorded sales of some €446 million in 1992, the figure has meanwhile reached €763 million (+71%). This means that since 1992, Süd-Chemie´s sales have increased at almost the same rate as global chemical sales - in spite of the adverse dollar trend since 2000. The Süd-Chemie Group employed more than 4,300 people in 1992 and just under 5,000 at the end of 2003. In Germany, the number of employees only fell from around 1,600 in 1992 to 1,400 at the end of 2003. I am however particularly proud of maintaining the Group´s independence in the face of the high surge of concentration activity at the end of the nineties. EU chemical policy on the wrong track The chemical industry is able to provide answers to the critical issues influencing our future. Although people´s awareness of the limited nature of fossil-based sources of energy and the implications of our changing climate has increased, the key role of the chemical industry in meeting these challenges is however neither acknowledged nor encouraged. On the contrary, pressure is increasing as the screw is tightened and this in turn is leading to the tacitly accepted withdrawal of an entire sector of industry that is of major significance for the future competence of a high-wage country and scientifically-oriented location like Germany. Unresolved structural problems are causing considerable difficulties in the chemical industry, affecting not only the production side, but meanwhile research activities too. The fact that Germany is still Süd-Chemie´s most important country for research is by no means a foregone conclusion - mediocre schooling, too few scientists and engineers, minimal venture capital for innovations and too much bureaucracy. There is also the threat of an excessive European control policy in the chemical sector which, as the country with the largest chemical industry in Europe, will impact Germany most of all. Although the envisaged European chemical legislation known as REACH has already been considerably diluted, reinforced bureaucracy and a significant rise in costs may be expected. This will result in a further decline in production and innovation in Europe. The good intentions behind REACH - protection of the environment and employees - have long been reality in Germany and are firmly entrenched in the consciousness of the chemical industry, which for decades has been aware of its responsibility for the population, for subsequent generations, for the environment and last, but not least for its employees and has therefore committed itself to sustainability and responsible care. One example of this in the case of Süd-Chemie is the development of a solid catalyst requiring up to twenty times less water and releasing no nitrate into the environment during its manufacturing process. Solid catalysts are used to produce hydrogen, clean fuels and chemicals. Last year, we were presented with the Presidential Green Chemistry Challenge Award by the American environment authorities for this innovation. There is therefore no conflict between environmental protection and chemistry. Enhanced protection of the environment and an increasing quality of life are not possible without new developments in the field of chemistry. Ladies and gentlemen, Süd-Chemie has successfully met the demands of globalisation, having already been established worldwide as an international Group operating from a comparatively small German base for several decades. The major part of our sales and profits are generated abroad. Nevertheless, we regard Süd-Chemie as a German, indeed as a Bavarian company, true to the long, outstanding scientific and industrial tradition of this country. Our history, our shareholders, most of our employees and our most important research facilities are at home in Germany. And we feel committed to them. Handover of the chair, thanks to the staff and shareholders I have now come to the end of my speech. It was my wish to hand over Süd-Chemie in a well-appointed state. Süd-Chemie occupies excellent positions in its markets, its key production and research facilities are highly advanced, the major part of the investment required for an IT infrastructure has been made. I am happy that Süd-Chemie has been able to appoint Dr. von Au as my successor. I have great confidence in his ability to lead Süd-Chemie towards further success in an increasingly demanding environment. The major challenges facing Süd-Chemie are undoubtedly growth based on reinforced sales and marketing activity and on the launch of marketable innovations. Nor is our IT landscape quite as homogeneous as might be expected of an international group. I am however convinced that Dr. von Au, who like Dr. Wamsler is chemist with marketing experience, will provide the necessary impetus. The very amiable cooperation and smooth successive handover of responsibility over the past six months makes it easy for me to formally hand over the Managing Board chair today. There is one piece of advice I would like to give you, Dr. von Au. I took over from Dr. Wamsler a company that was marked by openness, fairness and a friendly working environment. I have made every effort to continue to cultivate this spirit and I know that you also wish to maintain this corporate culture. I am firmly convinced that this effort will prove worthwhile in the long run. Finally, I should like to thank the Süd-Chemie staff most warmly for their achievements and constructive exchanges of opinion over the past twelve years. It was no doubt not always easy working with me - my temperament having got the better of me now and then, for which I apologise. Without its employees all around the world and its excellent management team armed with talent and the will to prevail, Süd-Chemie would not be the outstanding company that it is today. One could always depend on their know-how, their ideas and their commitment, and this forms the basis of Süd-Chemie´s success. They repeatedly face up to new challenges in the marketplace, mastering them with great enthusiasm. Thank you very much, also on behalf of my colleagues on the Managing Board. And last, but not least, my special thanks also go of course to you, dear shareholders and friends of Süd-Chemie, for your trust and your patience, also in difficult years, and for constructively supporting our company for such a long time. Thank you for your attention.

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