ANNUAL REPORT 2005 - Acino

1 

ANNUAL REPORT 2005

SCHWEIZERHALL | PROFILE 

Schweizerhall is active in the pharmaceutical and chemical industries. 

The Business Unit Pharma is specialized in the development, registration and approval, production and 

packaging of pharmaceuticals, which are no longer under patent protection. With a focus on solid phar- 

maceutical forms, the Business Unit Pharma supplies leading generics firms throughout Europe. 

The Business Unit Chemicals is the leading Swiss supplier of chemical raw materials, intermediates, 

specialty chemicals and customized-mixtures within comprehensive supply chain solutions. Leveraging 

its in-depth experience and state-of-the-art infrastructures, the business unit offers global sourcing, op- 

timal storage, packaging, quality assurance, just-in-time delivery, disposal and recycling. 

Schweizerhall Group is headquartered in Basle, currently employs approximately 380 staff and gene- 

rates annual sales of about CHF 300 million. Schweizerhall Holding AG,the Group’s parent company, 

is listed on the SWX Swiss Exchange (Swiss security number 2119090; Telekurs/Bloomberg SWHN; 

Reuters SWHN.S). 

Share 120price 

and trading volumes of Schweizerhall (SWHN) in 2005 

2 

140 

100 

80 

60 

140 

120 

100 

80 

60 

120 000 

100 000 

80 000 

60 000 

40 000 

20 000 

0 

120 000 

100 000 

80 000 

60 000 

40 000 

20 000 

0 

SWHN (CHF) 

SWHN (CHF) 

Jan 05 

Jan 05 

Number of shares 

Number of shares 

SMI (adjusted) 

SMI (adjusted) 

July 05 Dec 05 

July 05 Dec 05 

Jan 05 July 05 Dec 05 

Jan 05 July 05 Dec 05

SCHWEIZERHALL | KEY FIGURES 

Schweizerhall Group 

in CHF million 

2005 2004 

Net revenues 302.6 220.6 

Change in inventory (0.1) (0.5) 

Work performed by the entity 

and capitalised 2.3 - 

Goods and services purchased (202.8) (168.1) 

Net operating proceeds 102.0 52.0 

in % net revenues 33.7% 23.6% 

Operating expense (65.6) (44.2) 

EBITDA 36.4 7.7 


Depreciation (8.2) (4.4) 

EBITA 28.2 3.3 


Amortization (14.4) (2.6) 

Operating profit / EBIT 13.8 0.7 


Financial result 3.8 7.7 

Tax (1.3) (1.2) 

Net profit 16.3 7.2 


Balance sheet total 366.2 415.6 

Equity 258.8 283.4 

Equity ratio 70.7% 68.2% 

Equity return 6.0% 2.6% 

Investments in 

tangible assets 15.9 8.5 

Investments in 

intangible assets 8.6 0.1 

Headcounts (FTE) 377 362 

Business Unit Chemicals 


Business Unit Pharma 





Gross margin 53.3 50.2 



EBITDA 15.4 8.9 


Depreciation and 

amortization (6.0) (6.7) 



Investments in tangible and 



2005 2004* 



in % net revenues 58.0% - 


EBITDA 23.0 0.0 



EBITA 19.3 (0.1) 



Operating profit / EBIT 6.3 (0.3) 


Investments in tangible assets 10.7 - 

Investments in intangible assets 8.3 - 


* from the date of acquisition (December 10, 2004) 

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SCHWEIZERHALL | TABLE OF CONTENTS 

Chairman’s Letter 6 

Business Units 

Pharma 13 

Chemicals 19 

Consolidated Financial Statements 


Consolidated Income Statement 24 

Consolidated Balance Sheet 25 

Consolidated Cash Flow Statement 26 

Consolidated Statement of 

Recognized Income and Expense 28 

Notes to Consolidated Financial Statements 29 

Report of the Group Auditors 66 

Financial Statements 

Schweizerhall Holding AG 

Income Statement 68 

Balance Sheet 69 

Notes to Financial Statements 70 

Proposal of the Board of Directors 73 

Report of the Auditors 74 

Corporate Governance 77 

Investor Information 91 

Addresses 94 

5

SCHWEIZERHALL | CHAIRMAN’S LETTER 

6 

Dear Shareholders, 

2005 was a very successful year for the Schweizerhall Group. The 

company activities Pharma (Cimex), consolidated in the Group 

income statement as of mid December 2004, were successfully 

integrated. The Business Unit Chemicals achieved a significant 

increase in profitability and made important investments in order 

to further improve service level, market position and results in 

the forthcoming years. The company reporting changed to the International Financial Reporting Standards 

(IFRS) on time and, for the first time, the present Financial Statements are based on this internationally 

recognized accounting standard. Since the beginning of the year, the Group has had a stable ownership 

structure. The share price of Schweizerhall Holding AG reached historical all-time highs during the year 

under review. 

We are optimistic to further expand the position of the Schweizerhall Group as a leading specialist for 

pharmaceuticals, generics and contract developments for the research-driven pharma industry as well as 

to further increase and stabilize the profitability of the Business Unit Chemicals. 

Increased operational profitability 

The overall annual revenues 2005 of the Schweizerhall Group totaled CHF 302.6 million (2004: CHF 220.6 

million) and topped by 37% the results year-on-year (Cimex acquisition included). 

The newly consolidated Business Unit Pharma achieved a dynamic sales increase of +26% or 

CHF 88.4 million (2004: CHF 70.4 million). According to IFRS, revenues reached CHF 83.9 million as a 

result of the different accounting for milestone payments. The acceleration in growth is mainly due to the 

favorable order situation of newly launched own developments in Europe. 

The Business Unit Chemicals contributed CHF 218.9 million to the overall revenues and grew by 1.2% 

compared with the previous year. The development of the disposal and recycling business was excep- 

tionally positive, as were sales to customers from the fine chemicals and pharma industry. 

The group earnings developed very positively in the period under review. The earnings before interest, 

tax, depreciation and amortization (EBITDA) reached CHF 36.4 million and were nearly five times higher 

than in 2004 (CHF 7.7 million). Operating results including acquisitions grew to CHF 13.8 million (2004: 

CHF 0.7 million). The improvement in the operational profitability was mainly reached in the second half 

of 2005 and reflects the benefits of the continued restructuring efforts within the Business Unit 

Chemicals (EBITDA +73%) as well as the sales increase achieved by the BU Pharma, which developed 

according to plan.


Overall, profit after tax at group level doubled with CHF 16.3 million year-on-year (CHF 7.3 million). The 

financial profits from the sale and market-price adjustments of various investments held by the company 

contributed CHF 3.8 million to this result. 

The Group cash flow from business activities grew by more than 85% compared with 2004 (CHF 16.6 mil- 

lion) to CHF 30.7 million. On the investment side, around CHF 24.5 million were spent in the year under 

review, whereof more than two-thirds accounted for the Business Unit Pharma. 

With an equity ratio of 71%, the balance sheet of the Schweizerhall Group shows a very healthy structure 

as of the end of 2005. The interest-bearing liabilities amounted to CHF 16.5 million whereas the liquid 

funds, securities and financial assets totaled CHF 56.7 million. The portfolio of the non-listed investments 

was valued at approximately CHF 30 million. Those positions will be divested in the coming two years. 

Thus, the Group still has considerable reserves to further fuel the growth of its business activities. The 

share price of Schweizerhall Holding AG rose from CHF 71.40 to CHF 117.40 year-on-year. Taking into 

account the dividend of CHF 2.00 per share, paid out in May 2005, the shareholders of Schweizerhall 

Holding AG achieved a total yield (dividends and capital gains) of 67%. The market capitalization rose 

from CHF 216.9 million at the end of 2004 to CHF 356.6 million as of the end of 2005. 

In 2005, for the first time the reporting was made according to IFRS (International Financial Reporting 

Standards) with comparative figures for the financial year 2004. We wish to thank all who were 

involved in the change to the new reporting standards for their outstanding commitment. 

Business Unit Pharma: structures, earnings and management strengthened 

By acquiring 80% of the share capital of Cimex Pharma AG in mid December 2004, Schweizerhall Hold- 

ing AG consolidated and expanded its operational activities within the fast growing European generics 

industry. In March 2005 Schweizerhall decided to acquire the remaining public float and tendered for the 

remaining Cimex Pharma AG shares. Almost all Cimex shareholders accepted the bid. Today, Schweizerhall 

controls almost 100% of all outstanding shares of Cimex Pharma AG, which were delisted from Euronext 

Paris as of May 31, 2005. 

The revenues of the Business Unit Pharma were in line and increased in the course of the year to reach 

CHF 83.9 million or +26% year-on-year. The EBITDA reached CHF 23.0 million or 27.4% of the sales. The 

sales growth was primarily fuelled by the launch of new proprietary products in Europe.This good result is 

mainly due to the favorable order situation of products launched in the year under review, and reflects the 

benefits ot the successfully implemented strategy and competence at every level of the Business Unit. 

For the coming years, the Business Unit has a well-filled development pipeline as well as the required 

technical expertise for the manufacturing of special pharmaceutical forms. Hence, the signing of a long- 

term manufacturing contract with one of the leading pharmaceutical companies concluded in autumn 2005 

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for the production of patent-protected pellets at the Liesberg site confirms the performance potential of 

the Business Unit Pharma. The necessary investments for the start of the production in 2006 were made 

already in the year under review. 

After many years of successful cooperation, Schweizerhall acquired 20% of the share capital of Glochem 

Industries Ltd., located in Hyderabad, in the South Indian State of Andhra Pradesh, in September 2005. 

Schweizerhall is represented in the Board of Directors of Glochem. Glochem is a leading and dynamically 

growing development, production and marketing company for pharmaceutical intermediates, active phar- 

maceutical ingredients (APIs), fine chemicals and custom synthesis. Glochem has global registrations and 

approvals. 

The partnership with Glochem reflects the strategic importance of the active substance synthesis for the 

generics business. The customers include top international addresses of the industry. With the strategic 

stake Schweizerhall benefits from access to a successful and focused speciality company on the Indian 

subcontinent. 

As of August 1, 2005, Dr. Axel Müller assumed his positions as the new CEO of the BU Pharma and as a 

member of Schweizerhall Group Management. Axel Müller is a highly qualified manager in the generics 

business with a successful track record in the development and marketing of generics. He succeeds the 

present managing directors Jean Lüchinger und Eduard Kny, who will continue as active members of the 

Board of Directors in the Group. The Business Unit employs 161 staff as of the end of 2005 (+19%) and 

has the capacity necessary for processing the newly obtained development orders and for fuelling future 

growth. 

Business Unit Chemicals: increased efficiency and performances 

The economic situation of the Business Unit Chemicals still did not get boosted. Strong price increases 

for crude oil and solvents, especially after the hurricane events in the US, could not be passed on imme- 

diately to customers but were largely absorbed by the strong profitability and performance, reflecting the 

benefits of the successfully implemented customer- and process-oriented sales organization. 

The Business Unit Chemicals generated total annual revenues of CHF 218.9 million (+1.2%). The increase 

in the margin and the generation of a high free cash flow remained priority objectives. Gross profit 

(revenues less cost of materials) increased by 6% and rose from 23.2% to 24.3% on sales. EBITDA 

increased by 73% to CHF 15.4 million. With an increase in the EBIT of CHF 9.4 million (+336.5%) and a 

profit-turnover ratio of 4.3%, the profitability reached a very satisfactory level. The free cash flow reached 

a record high of CHF 14.3 million. 

Overall, the Business Unit moved an important step closer to its strategic objective of providing services 

with a higher added-value in the year under review. Important customers from the pharma and cosmetics 

8


industry were won. The disposal and recycling business successfully developed and contributed to the 

result, as well. 

On the operational side, the introduction of various IT platforms was successfully finalized, which 

resulted in recurrent structural cost savings of several millions on an annual basis. Investments in tan- 

gible fixed assets of CHF 5.2 million were well below the level of the previous years and were mainly 

made for the sake of industrial safety and of environmental protection. 

As of the reporting date, the Business Unit employed a total of 211 staff – a small adjustment compared 

with the previous year. 

The improvement of the operational profitability of the Business Unit Chemicals strongly reflects the 

benefits of the continued restructuring efforts to optimize service level and operational procedures. 

Outlook: targeted niches within the European generics and pharmaceuticals markets 

Schweizerhall specializes in the development, registration, approval, manufacturing and packaging of 

pharmaceuticals and generics in Europe and is the leading Swiss supplier of chemical raw materials, 

intermediates, specialty chemicals and customized mixtures on the Swiss market. 

The current structure and market position of the Business Unit Chemicals give rise to expectations of a 

constant, positive contribution to the results of the Schweizerhall Group in the near future. The Business 

Unit has identified further potential of optimization within logistic procedures, and has taken measures to 

increase the added value of the services in the next few years. Schweizerhall is convinced that the Busi- 

ness Unit Chemicals will further strenghten its leadership role from own resources and reach very good 

financial results in the coming years. 

As the market for generics is growing three times faster than the classical pharmaceutical market, 

Schweizerhall Group is focused on services with regard to the generics market and, more specifically, on 

the outsourcing requirements of the research-driven pharmaceutical industry in the field of contract 

development. 

The first objective is to push the upgrading of the pharmaceutical forms, so as to become a leading 

European development, manufacturing and marketing company for generics in all core areas of pharma- 

ceutical formulations (galenicals) in the long term. Most recent market developments show that a high 

degree of flexibility concerning the form in which the individual substances are offered, is increasingly 

becoming a central success criterion. 

Secondly, Schweizerhall plans to establish itself to a greater extent as a leading provider of pharma- 

ceutical contract developments. The research-driven pharmaceutical industry is increasingly outsourcing 

9


research and development activities, which are not part of their strategic core areas, to outside 

companies. Schweizerhall did follow this trend in the year under review by concluding a long-term 

development and manufacturing contract. The investments made in this area in 2005 offer a good basis 

to further strengthen the range of services within this field. 

Thirdly, Schweizerhall intends to occupy additional added-value segments in the generics market, and is 

constantly checking options at a strategic and operational level, in order to further fuel the performance 

spectrum of the Business Unit Pharma. At the time of the approval of the present Group Financial State- 

ments by the Board of Directors, the Schweizerhall Group was at an advanced stage of purchasing nego- 

tiations with the owners of a privately held pharmaceuticals company. The successful conclusion of these 

negotiations would lead to a significant merger of companies. 

Dividend proposal and elections to the Board of Directors 

The period of office of the members of the Board of Directors Dr. René Muttenzer and Luzi Andreas von 

Bidder will end on the date of the General Meeting of Shareholders. Both are standing for re-election. 

On the basis of the earnings power of the Schweizerhall Group, the Board of Directors is proposing a 

dividend of CHF 2.00 per share this year. This would mean that the dividends would again reach the level 

of the past two years. 

The Schweizerhall Group closed the year 2005 with good results. Once again, the commitment and the flexi- 

bility of the competent staff were a guarantee for the success of the Schweizerhall Group. Many thanks! 

We wish to thank you, esteemed shareholders, for the interest and confidence shown towards 

Schweizerhall once again in 2005. 

Yours sincerely, 

Luzi A. von Bidder 

Chairman of the Board of Directors 

of Schweizerhall Holding AG 

Basle, March 2006 

10

SCHWEIZERHALL | PHARMA 

Key figures Business Unit Pharma 


2005 2004* 


Work performed by the entity 

and capitalised 2.3 - 

Goods and services purchased 

(incl. change in inventory) (37.4) (2.2) 



EBITDA 23.0 0.0 



EBITA 19.3 (0.1) 



Operating profit / EBIT 6.3 (0.3) 


Cash flow from operating 

activities 22.0 0.0 

Investments in tangible assets 10.7 - 

Investments 

in intangible assets 8.3 - 

Headcount (FTE) 161 135 

* from date of acquisition (December 10, 2004) 

Profile 

The Business Unit Pharma has a full-service 

offering for the generics industry and includes 

all the activities of the Cimex Group, which was 

taken over in 2004 and which is one of the leading 

suppliers in Europe. With currently 161 employees 

in the Basle area, the activities are concentrated 

on specific segments of the generics market 

with higher margins and barriers to entry. The 

core competencies include specialized know- 

how in galenics and in the development of solid 

formulations with controlled release of the active 

substances. In addition to the development and 

manufacture of specialty generics, the Business 

Unit Pharma provides complementary services for 

its customers, such as registration, the sourcing 

and procurement of active ingredients, packaging 

and logistics, and covers the value chain in a com- 

prehensive and integrated manner. 

13


Optimum niche positioning within the 

dynamic generics market 

The generics market is dominated by the following 

factors: numerous, top-selling original drugs will 

be losing their patent protection in the near future 

and will be replaced by similar follow-on products, 

so-called generics. Equally important is the trend 

towards the prescription of more favorably priced 

generics, which is being encouraged by the vari- 

ous health organizations of both the industrial 

and the developing countries. Finally, the industry 

is currently passing through a period of change 

which is being accentuated by recent major 

acquisitions as well as increased market activities 

of Indian suppliers, and thus further increasing 

price pressure, above all on simple, patent-free 

active ingredients. Within this dynamic environ- 

ment, the Business Unit Pharma has, through the 

Cimex Group, positioned itself as a specialized 

niche provider of technologically demanding 

generics in selected market segments with less 

cost or price competition. 

For certain products, Cimex Pharma AG is the sole 

supplier of a specific generic. Complex formulation 

expertise and long-term partnerships with around 

80 customers from the generics industry ensure 

sustainable growth opportunities for the company. 

14 

Accelerated growth in 2005 

In the period under review, the Business Unit 

Pharma developed in line with budget. Proceeds 

totaled CHF 83.9 million and grew by 26% com- 

pared with the previous year. The growth of the 

Business Unit Pharma in the past year was above 

the average growth of the industry which was 

around 12% to 15%. The acceleration is due to a 

major extent to the favorable order situation for 

own developments launched this year. Thanks to 

new launches in Europe, particularly in Germany, 

Great Britain and the Netherlands, turnover was 

increased by an above average amount. There was 

even a pleasing development in turnover from 

contract production. The EBITDA increased to 

CHF 23.0 million; the EBIT before goodwill 

amortization was CHF 19.3 million. The earnings 

before interest and tax (EBIT) reached 

CHF 6.3 million. 

Investments secure room for future growth 

In 2005, primary investments made in new plants 

to secure further growth and the expansion of the 

technology platform, totaled CHF 10.7 million of 

the fixed assets (2004: CHF 11.9 million). The new 

plant started operations at the beginning of 2006 

and will be used also for contract manufacturing. 

Additional investments will support the improve- 

ment of quality and the compliance to GMP regu- 

lations. Finally, an installation for the recycling 

of solvents started running, production facilities 

were expanded and the existing infrastructure 

improved.


The number of employees in the Business Unit 

Pharma increased during the year under review, 

mainly in product development and quality 

management, rising by 26 to a total of 161. The 

investments carried out make it possible to 

accelerate the advancement of numerous 

development projects and to comply with new 

regulations. They secure room for future growth 

and led to slightly higher operating costs in the 

year under review. 

Gains in market share due to 

successful new launches 

In the year under review, each new launch 

contributed to the gain of market share and 

to improve the product mix in the portfolio of 

the Business Unit. Amongst the three newly 

launched products, in particular the sales of 

the antimycotic Itraconazol (original drug: 

Sempera® by Janssen) against internal and 

external fungal infections developed favorably. 

The Schweizerhall Group is currently the only 

supplier to the generics industry with a generic 

version of this drug. The switch of Metoprolol, a 

drug for lowering blood pressure (original drug: 

Beloc-Zok® by AstraZeneca) to a new form and 

its market launch were successful. A further 

product for reducing blood pressure, Doxazosin 

(original drugs: Cardular® by Pfizer, Diblocin® 

by AstraZeneca), launched in 2004, developed in 

line with expectations. Yet, the approval for a key 

European market is expected in 2006. The most 

important pipeline product which was introduced 

in 2005 was Alfuzosin (original drugs: Xatral XL®, 

UroXatral® by Sanofi-Synthélabo), an α-recep- 

tor blocker against benign enlargement of the 

prostrate gland (so-called benign prostate hyper- 

plasia), was successfully launched in the first 

European markets. 

Full development pipeline lays the 

foundation for future growth 

The Business Unit Pharma has a well-filled 

development pipeline, a leading market position 

and well-founded expertise, above all in the 

development and manufacturing of extended 

release drug formulations. In addition to the eight 

proprietary products already launched on the 

market, the development of a total of five new 

projects has been started since the beginning of 

the year and promise further growth of the 

Business Unit. In 2005, CHF 10.6 million were 

spent on the project development of 18 new 

products. In the coming years, up to five new 

products are likely to be launched on the market 

each year. 

15


Partnership with Indian API manufacturer 

strengthened through participating interest 

The Business Unit Pharma has been cooperating 

for many years with Glochem Industries Ltd., 

based in Hyderabad in the South Indian State of 

Andhra Pradesh. Glochem is specialized in the 

development, manufacturing and marketing of 

pharmaceutical intermediates, active pharma- 

ceutical ingredients (APIs), fine chemicals and 

custom synthesis. Glochem has comprehensive 

global registrations and approvals. This very 

successful industrial partnership was further 

strengthened in 2005 through the acquisition 

of 20% of the share capital. Schweizerhall is re- 

presented on the Board of Directors of Glochem. 

With the strategic stake Schweizerhall benefits 

from access to a successful and focused specialty 

company on the Indian subcontinent. 

16 

Metoprolol Tartrate 1 

Levodopa Carbidopa ER 

Doxazosin ER 4 mg 

Doxazosin 8 mg 

Alfuzosine ER 

Amlodipine Maleate 

Amlodipine Besylate 

Itraconazole 

Simvastatin 

Amoxiclav FR 

Metoprolol Tartrate 2 

Metoprolol Felodipine 

Metoprolol Succinate 

Oxycodone 

Project 2007 

Projects 2008 

Projects 2009 

Projects 2010 

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 

5 

5 

5


Outlook 

The Business Unit Pharma will pursue its strategy 

focusing on selected areas of contract develop- 

ment and of manufacturing specialty generics for 

the European generics industry. In addition, the 

Business Unit will increasingly use its expertise 

for the research-driven pharmaceutical industry, 

and produce technically demanding formulations 

of patent-protected drugs. 

Development capacities will be further expanded 

in 2006. This good starting position and, above all, 

the planned market launch of new products, will 

allow the Cimex Group to continue growing at an 

above average rate. 

17

SCHWEIZERHALL | CHEMICALS 

Key figures Business Unit Chemicals 





Gross margin 53.3 50.2 



EBITDA 15.4 8.9 


Depreciation and amortization (6.0) (6.7) 



Cash flow from operating 

activities 19.8 13.3 

Investments in tangible and 



Profile 

Schweizerhall Chemie AG is the leading chemical 

distribution and trading company in Switzerland. 

With its comprehensive range of products and 

services, it is the preferred outsourcing partner in 

the fields of procurement, storage and transport, 

quality assurance, development and mixing of 

customer recipes, packaging, as well as disposal 

and recycling of chemicals, and its customers 

include companies from the most differing 

industries in Switzerland and the neighboring 

countries. The company has its headquarters in 

Basle. Further business establishments are 

located in Avenches/VD, Flawil/SG and Lohn/ 

Bätterkinden SO/BE. 

19


Optimization of Schweizerhall Chemie 

successfully completed 

In the last three years, the Business Unit 

Chemicals has completed a profound turnaround 

and is today a leading and highly profitable 

chemical distribution company. In the past three 

years, for example, all segments and procedures 

have been redesigned in a market-oriented and 

efficient manner. The consistent industrial 

orientation, the streamlining of the organization 

of the Business Unit Chemicals and the measures 

carried out in the course of the optimization have 

been reflected in noticeably improved results. 

2005 – a year of qualitative growth and 

gaining of market shares 

In the year under review, the Business Unit 

Chemicals was above all successful in increasing 

the quality of growth. The new, industry-oriented 

sales organization is focused on customers and 

markets with the greatest growth and added- 

value potential, and on the serving of the existing 

customer base. The Business Unit Chemicals 

achieves roughly one third of its total turnover in 

the Basle region and in north-western Switzerland, 

where many globally-active companies from the 

fine chemicals and pharmaceuticals industry are 

located. In the year under review, this customer 

segment experienced a particularly dynamic devel- 

opment with double digit growth in turnover. On 

the other hand, there was a clear drop in turnover 

in the food sector, an area with severe price pres- 

sure. The paint and lacquer sector also experi- 

enced severe price pressure and sales were below 

the level of the previous year. With a growth rate 

of 40% in the year under review, above all the dis- 

posal and recycling business developed exception- 

20 

ally positively and, thanks to its high added value, 

made an over-proportional contribution towards 

the EBIT. This growth was achieved fundamentally 

through the increased use of synergies in the 

field sales force. Used solvents are reprocessed 

by the own recycling company and recycled in 

original purity. The overall revenues of the 

Chemicals unit rose by 1.2% compared with 2004 

to CHF 218.9 million. 

Improved quality offering for 

demanding customers 

The Business Unit Chemicals offers its customers 

a very broad and, at the same time, deep range 

of products and services with optimal availability. 

With its increased focus on a quality offering for 

demanding business customers in regulated 

markets, such as, for example, the pharmaceuti- 

cals and cosmetics industry, standards were im- 

proved, above all in the GMP area. Initial, positive 

reaction from customers shows that the improved 

standards are further strengthening the position of 

Schweizerhall as a supplier of top quality. 

Efficient, well-thought-out distribution for annual 

unit sales of almost 180 000 tonnes 

Improved customer service and significant in- 

creases in efficiency were once again achieved 

thanks to the integrated business software SAP. 

The SAP system links all processes, starting from 

goods receipt, via warehousing, quality checking, 

mixing, make-up, certification, right through to 

delivery to the customer. In stock management, 

major improvements were achieved thanks to the 

interconnected batch management. As a result 

of the linking of customer orders to requirements


planning, it is therefore possible, for example, to 

avoid holding stock for all too long. Schweizerhall 

is one of the first companies to have made com- 

plete use of the transport scheduling in SAP in- 

cluding route planning. The SAP system provides 

order information, delivery dates, container sizes 

as well as container units, and automatically pre- 

pares a route-oriented delivery schedule. Complex 

certifications and customer-specific or statutorily 

prescribed documentation are prepared with the 

fully integrated information technology platform, 

monitored and in part delivered fully automatically 

by fax or e-mail. 

Constant improvement in margins and increase in 

operating profits 

In the year under review, the gross profit was 

increased to CHF 53.3 million (2004: CHF 50.2 mil- 

lion) or from 23.2% in the previous year to 24.3% 

of turnover. The EBITDA (profit before interest, 

tax, depreciation and amortization) improved to 

CHF 15.4 million or by 73% compared with the 

previous year. The centralization of the order 

entry and processing led to further savings and 

to a structural reduction of the operating costs. 

The EBIT (profit before interest and taxes) was 

quadrupled compared with the previous year. With 

an EBIT intensity of 4.3%, an important milestone 

was achieved towards reaching the long-term 

objective. 

The free cash flow of funds was almost tripled 

compared with 2004. Amongst other things, this 

was possible thanks to stricter management of 

the working capital. 

Investments in infrastructure improve quality 

and safety 

The tank and storage installation in Basle, com- 

missioned in 2005, is running without problems 

and led to noticeable improvements in workflow 

as early as during the first few weeks. In the year 

under review, investments of around CHF 5.2 mil- 

lion flowed mainly into the construction of a 

combustion oven for vapors of organic solvents, 

as well as into various replacement and environ- 

mental protection projects, and into further 

measures for increasing quality and safety in the 

handling and delivery of chemical products. In 

May, the new filling plant for hydrogen peroxide in 

Avenches was commissioned. Since then, 

Schweizerhall’s market share in the distribution of 

this product has doubled. 

Foundation laid for earnings-oriented growth 

Schweizerhall Chemie will continue to consistently 

pursue a strategy of qualitative growth, with the 

focus on customer segments with high standards 

in terms of quality and documentation, and on 

regulated areas of chemical distribution. At the 

same time, new products will be introduced for 

the most important customer groups in the mar- 

ket, with the aim of further accelerating 

medium-term growth. Various, current IT projects 

in the field of b2b and e-commerce are an integral 

part of the systematic expansion of the service 

range and contribute towards increasing customer 

and supplier benefit. Additional focusing and cost- 

optimization measures in logistics are planned 

for 2006, which are likely to lead to a renewed 

increase in operating results. Given the positive 

turnover expectations and operative improve- 

ments, Schweizerhall Chemie expects continued 

improvement in the operating ratios over the 

coming years. 

21

SCHWEIZERHALL | FINANCIAL REPORT 

FINANCIAL STATEMENTS 2005 

Consolidated Financial Statements 


Consolidated Income Statement 24 

Consolidated Balance Sheet 25 

Consolidated Cash Flow Statement 26 

Consolidated Statement of 

Recognized Income and Expense 28 

Notes to the Consolidated 

Financial Statements 29 

Report of the Group Auditors 66 

Financial Statements of 




Notes to the Financial Statements 70 



23

SCHWEIZERHALL GROUP | CONSOLIDATED INCOME STATEMENT 

in CHF 1 000 Notes 

24 


Net Revenues 302 592 220 592 

Change in inventory (133) (533) 

Work performed by the entity and capitalized 2 261 - 

Goods and services purchased (202 750) (168 084) 

Employee benefits 7 (38 719) (28 448) 

Other operating expenses 8 (27 538) (16 792) 

Other operational income 9 675 1 014 

Operating result before net financial result, 

taxes, depreciation and amortization 36 388 7 749 

Depreciation 13 (8 213) (4 492) 

Amortization 14 (14 410) (2 523) 

Operating result before net financial result and taxes 13 765 734 

Financial income 10 24 266 36 598 

Financial expense 10 (20 504) (28 890) 

Net profit before tax 17 527 8 442 

Tax 11 (1 255) (1 238) 

Net profit 16 272 7 204 

Thereof account for 

- Shareholder of the parent company 16 368 7 246 

- Minorities (96) (42) 

Net result per registered share in CHF as it accounts for the 

shareholder of the parent company 12 

- Not diluted 5.43 2.50 

- Diluted 5.43 2.50 

The notes on pages 29 to 65 are an integral part of the Financial Statements.

SCHWEIZERHALL GROUP | CONSOLIDATED BALANCE SHEET 


Assets 

31.12.2005 31.12.2004 

Tangible fixed assets 13 98 947 91 337 

Intangible fixed assets 14 120 022 125 728 

Pension schemes 15 12 414 19 549 

Financial investments in associated companies 16 2 520 - 

Financial Investments 17 38 857 70 236 

Deferred tax assets 18 939 511 

Total assets 273 699 307 361 

Inventories 19 25 959 27 587 

Trade receivables 20 42 014 34 669 

Other current assets 21 6 664 5 193 

Marketable securities 22 6 351 23 189 

Cash and cash equivalents 11 471 17 640 

Total current assets 92 459 108 278 

Total assets 366 158 415 639 

Liabilities and shareholders‘ equity 

Share capital 23 1 215 1 215 

Share premium 3 500 3 500 

Treasury shares 24 - (16 621) 

Reserves 25 254 027 282 751 

Total shareholders’ equity excl. minority interests 258 742 270 845 

Minority interests 26 64 12 508 

Total shareholders’ equity incl. minority interests 258 806 283 353 

Long-term financial liabilities 27 3 625 19 660 

Deferred tax liabilities 18 18 494 19 704 

Deferred revenue, long-term portion 28 21 703 18 292 

Total long-term liabilities 43 822 57 656 

Trade and other payables 29 31 481 28 455 

Short-term financial liabilities 27 12 907 4 802 

Deferred revenue, short-term portion 28 4 783 3 659 

Current tax 1 824 1 790 

Other current liabilities 30 12 535 35 924 

Total current liabilities 63 530 74 630 

Total liabilities 107 352 132 286 

Total liabilities and equity 366 158 415 639 

The notes on pages 29 to 65 are an integral part of the Financial Statements. 

25

SCHWEIZERHALL GROUP | CONSOLIDATED CASH FLOW STATEMENT 

in CHF 1 000 Anhang 

26 


Net profit 16 272 7 204 

(Profits) and losses from the sale of fixed assets (10) (279) 

Depreciation 13 8 213 4 492 

Amortization 14 14 410 2 523 

Market-value adjustments on financial investments 10, 17, 22 (11 765) 599 

Change in deferred taxes 18 111 988 

Change in deferred revenue 28 4 535 - 

Change in pension plans assets and liabilities 15 (582) 3 847 

Change in provisions and other long-term liabilities - (116) 

Cash flow from operating activities 

before changes in net working capital 31 184 19 258 

Change in inventories 1 628 1 441 

Change in trade receivables (7 345) 193 

Change in other current assets 690 (672) 

Change in trade and other payables 3 026 1 126 

Change in other short-term liabilities 1 514 (4 744) 

Cash flow from operating activities 30 697 16 602 

Investment in tangible fixed assets 13 (15 940) (8 457) 

Proceeds from disposals of tangible fixed assets 13 12 498 

Investment in intangible fixed assets 14 (8 589) (140) 

Investment in marketable securities 22 - (22 023) 

Proceeds from disposals of marketable securities 22 21 970 44 202 

Investment in financial investments 17 (893) (3 589) 

Proceeds from disposals of financial investments 17 24 874 48 124 

Investment in associated companies 16 (2 520) - 

Investment in subsidiaries 31 (57 505) (73 001) 

Cash flow from investing activities (38 591) (14 386) 

Change in long-term financial liabilities 27 (16 035) - 

Change in short-term financial liabilities 27 7 992 - 

Dividends paid 25 (6 075) (5 816) 

Treasury shares 24 15 843 (8 660) 

Cash flow from financing activities 1 725 (14 476) 

Net change in cash (6 169) (12 259) 

Liquid funds at the beginning of the period 17 640 29 899 

Liquid funds at the end of the period 11 471 17 640

SCHWEIZERHALL GROUP | CONSOLIDATED CASH FLOW STATEMENT 

The following items are included in the cash flow from business activities: 

in CHF 1 000 


Interest paid (804) (32) 

Taxes paid (1 039) (32) 

Interest received 77 527 

Dividend received 371 382 

The notes on pages 29 to 65 are an integral part of the Financial Statements. 

27

SCHWEIZERHALL GROUP | CONSOLIDATED STATEMENT OF 

RECOGNIZED INCOME AND EXPENSE 


28 


In equity recognized amounts for pension schemes 15 (7 717) 2 521 

Actuarial gains and losses 15 (7 062) 3 968 

Impact of limits according to article 58b 15 (655) (1 447) 

Fair value adjustments for 

financial assets available for sale 17 (9 651) 731 

Realized (gains) / losses 

on financial assets available for sale 10 (2 329) (3 577) 

Change in deferred tax 18 1 688 (621) 

Income / expense directly recognized in equity (18 009) (946) 

Net profit 16 272 7 204 

Total net profit (1 737) 6 258 

Thereof account for 

- Shareholder of the parent company (1 641) 6 300 

- Minorities (96) (42) 

The notes on pages 29 to 65 are an integral part of the Financial Statements.

SCHWEIZERHALL GROUP | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

1 General 


The Business Unit Pharma is specialized in the development, registration and approval, production and packaging 

of pharmaceuticals, which are no longer under patent protection. 

The Business Unit Chemicals is the leading Swiss supplier of chemical raw materials, intermediates, specialty 

chemicals and customized mixtures within comprehensive supply chain solutions. Leveraging its in-depth 

experience and state-of-the-art infrastructures, the business unit offers global sourcing, optimal storage, 

packaging, quality assurance, just-in-time delivery, disposal and recycling. 

The Schweizerhall Group is headquartered in Basle. Schweizerhall Holding AG, the Group’s parent company, is 

listed on the SWX Swiss Exchange. 

The present Group Financial Statements were approved for publication by the Board of Directors on 

March 3, 2006. 

2 Summary of fundamental balance sheet accounting and valuation methods 

The fundamental balance sheet accounting and valuation methods applied in the preparation of these Group 

Financial Statements are illustrated below. The methods described were applied consistently to the reporting 

periods shown, unless otherwise stated. 

2.1 Principles of the financial statement preparation 

The Schweizerhall Group Consolidated Financial Statements have been prepared in Swiss Francs (CHF). They 

comply with the International Financial Reporting Standards (IFRS) approved by the International Accounting 

Standards Board (IASB) and are conform to the Swiss statutory regulations, They are in accordance with the 

historical cost convention except for items which are required to be accounted for at fair value, unless otherwise 

stated in the following balance sheet accounting principles. 

These are the first consolidated financial statements according to IFRS. The accounting principles stated below 

have been applied consistently to all periods shown in the present Financial Statements, as well as to the preparation 

of the IFRS opening balance sheet as of January 1, 2004 for the purpose of changeover to the IFRS accounting 

principles. 

More detailed information on the effects of the IFRS changeover on the illustration of the asset and earnings 

situation, as well as on the flows of funds, is contained in a separate part of these Notes (pt. 5). 

The preparation of financial statements requires management to make estimates and assumptions that affect 

the reported amounts of assets and liabilities as well as of contingent assets and liabilities as of the date of the 

financial statements. The reported amounts of revenues and expenses during the reporting period might be 

affected, as well. Actual outcomes may differ from those estimates. 

2.2 Recently published but not yet implemented International Financial Reporting Standards (IFRS), 

interpretations and reviews 

Numerous new standards, reviews and interpretations of existing standards have been published, whose application 

is mandatory for the financial year beginning on January 1, 2006 or later. With the exception of IAS 19, the 

Schweizerhall Group does not apply these in advance. The standards, reviews and interpretations which will be 

of relevance for the Group are as follows: 

(a) IFRS 7 Financial Instruments 

Disclosure and amendment to IAS 1 – Presentation of Financial Statements: Capital Disclosures IFRS 7 replaces 

the previous Standards IAS 30, Disclosure in the Financial Statements of Banks and Similar Financial Institutions, 

and IAS 32, Financial Instruments: Disclosure and Presentation, and will come into effect as of January 1, 2007. 

The objective of the new disclosure regulations is the conveying of information, of relevance for decision 

making, concerning the level, time and probability of the occurrence of the future cash flows resulting from 

financial instruments. The Group is currently in the process of analyzing the effects of IFRS 7. Fundamental 

changes are expected in the additional disclosure of sensitivities from market risks and capital management. 

The standard will be applied by the Group for the financial year beginning on January 1, 2007. 

29


(b) IAS 39 (revised) Fair value option 

The revised Standard alters the definition of “financial assets and liabilities posted at fair value through profit or 

loss” and restricts the possibility of classifying financial instruments in this category. The Schweizerhall Group is 

convinced that this adaptation will not have any fundamental influence on the classification of the financial 

instruments, as the Group is in a position to fulfill the adapted criteria for the classification of the financial 

instruments as “financial assets and liabilities posted at fair value through profit or loss”. The revised Standard 

will be applied as from January 1, 2006. 

(c) IFRIC 4: Determining whether an arrangement contains a lease 

IFRIC 4 demands assessment of whether a contractual agreement, regulating the transfer or use of specific 

assets, must be classified as a rental relation. The Schweizerhall Group does not expect any fundamental 

influence on financial reporting as a result of this interpretation, which will be applied as from January 1, 2006. 

2.3 Consolidated group and consolidation methods 

2.3.1 Subsidiaries 

Companies are classified as subsidiary companies if the Group has the power to govern the financial and 

operating policies of an entity; as a rule, with a share of more than 50% of voting rights. When assessing 

whether control exists, the presence and effect of potential voting rights, currently exercisable or transferable, 

will be taken into consideration. 

Subsidiary companies will be included in the Group Financial Statements (full consolidation) from the time at 

which control has passed to the Group. They will be deconsolidated at the time at which the control ends. 

The purchase methode of accounting is used to account for the acquisition of business combinations by the 

Group. The cost of an acquisition is measured as the fair value of the assets surrendered, the equity capital 

instruments issued and the liabilities created or assumed as of the date of exchange, plus the costs directly 

attributable to the acquisition. Assets, liabilities and contingent liabilities, identifiable within the scope of a 

business combination, will be valued in the initial consolidation at their fair value at the time of the acquisition, 

irrespective of the extent of any minority interests. The surplus of the costs of acquisition over the fair value of 

Group’s share in the identifiable net assets is recorded as goodwill. If the acquisition costs are lower than the 

fair value of the acquired subsidiary company’s net assets, the amount of the difference will be included directly 

in the profit and loss statement. 

2.3.2 Transactions with minorities 

Transactions with minorities are treated as transactions with own shareholders. Thus all payments for the purchase 

of minority shares or revenues for the sale of minority shares are recognized directly in shareholders’ 

equity capital. Any differences to the minority shares reported in the balance sheet are settled via reserves 

(economic entity model). 

2.3.3 Associated companies 

Associated companies are companies over which the Group has significant influence, but has no control; as 

a rule, where the Group holds between 20% and 50% of the voting rights. Participating interests in associated 

companies are accounted for using the equity method and are initially included at their acquisition costs. 

The Group’s share in associated companies includes the acquired goodwill (after consideration of any value 

impairments). 

The Group’s share in the result of its associated companies is included in the profit and loss statement from the 

time of acquisition onwards. The cumulative changes following acquisition are offset against the book value of 

the participating interest. If the Group’s share of losses of an associated company corresponds to or exceeds the 

Group’s share in this company – including other unsecured receivables – the Group does not enter any further 

losses, unless it has entered into obligations for the associated company or has made payments for the associated 

company. 

Non-realized profits from transactions between Group and associated companies are eliminated in accordance 

with the share of the Group in the associated company. Non-realized losses are also eliminated, unless the transaction 

indicates an impairment of value of the assets transferred. The accounting and valuation methods of 

associated companies have been altered where necessary to ensure uniform Group accounting principles. 

30


2.4 Segment reporting 

A business segment is a group of assets and operating activities, providing products or services which differ in 

terms of their risks and opportunities from those of other business areas. A geographical segment provides 

products or services within a specific economic environment, the risks and opportunities of which vary from those 

of other economic environments. 

2.5 Currency conversion 

2.5.1 Functional currency and reporting currency 

The items included in the financial statements of each Group company are valued on the basis of the currency 

corresponding to the currency of the primary economic environment in which the company operates (functional 

currency). 

The Group Financial Statements are prepared in Swiss Francs (CHF) which is the functional currency of all 

Group companies and the reporting currency of the company. 

2.5.2 Transactions and balances 

Foreign currency transactions are converted into the functional currency using the rates of exchange at the time 

of the transaction. Profits and losses, resulting from such transactions as well as from the conversion of 

monetary assets and liabilities managed in foreign currency at the rate of exchange as of the key date, are 

included in the profit and loss statement, unless they are to be included in Group equity as cash flow hedges 

or hedges of a net investment. Conversion differences with non-monetary items, such as financial assets at fair 

value through profit and loss, are shown as part of the foreign currency gains or losses. On the other hand, 

conversion differences with non-monetary items, such as financial assets available for sale, are included in the 

fair value adjustments of financial assets recognized in equity. 

2.5.3 Group companies 

The functional currency of all Group companies is the Swiss Franc. Conversion differences from foreign partial 

units preparing their annual accounts in another currency, are posted as expenditure or income affecting 

operating results. 

2.5.4 Exchange rates of the most important currencies 

The following exchange rates were applied for the most important currencies: 

Currency Year-end rate Average rate 

2005 2004 2005 2004 

EUR/CHF 1.56 1.55 1.55 1.55 

USD/CHF 1.31 1.14 1.24 1.24 

2.6 Tangible fixed assets 

Tangible fixed assets are valued at their historical acquisition/manufacturing costs less depreciation. Acquisition / 

manufacturing costs include the expenditure directly allocable to the acquisition. 

For the initial opening balance sheet as per IFRS as of January 1, 2004, all real estate and buildings were included 

at fair value as historical acquisition/manufacturing cost (further explanations see pt. 5.4.4). 

Retrospective acquisition/manufacturing costs are only included as part of the acquisition/manufacturing costs 

of the asset or – if relevant – as separate asset, if it is probable that the Group will obtain an economic benefit 

from them and if reliable calculation of the costs of the asset is possible. All other repair and maintenance costs 

are included in the profit and loss statement with affect on operating results in the financial year in which they 

accrued. 

31


Real estate and fixed assets under construction are not depreciated. All further assets are depreciated on a 

straight-line basis, whereby the acquisition costs are depreciated as follows to the residual book value over the 

expected useful economic life of the assets: 

Fixed asset category Useful economic life in years 

– Office buildings 25 – 35 

– Warehouse and production buildings 25 – 35 

– Tanks, filling and storage facilities 20 – 30 

– Production machines and installations 10 – 15 

– Vehicles 5 – 10 

– Furniture 5 – 10 

– Hardware 3 – 4 

The residual book values and useful economic lives are reviewed on each balance sheet key date and adjusted if 

necessary. 

If the book value of an asset exceeds the estimated recoverable amount, it is depreciated to the latter immediately. 

The recoverable amount is the higher value between the fair value of the asset less selling costs and the 

utility value. 

Profits and losses from the disposal of assets are calculated as the difference amount between the sales proceeds 

and the book value, and are included in results-affecting manner (profits under other operating income, 

losses under other operating expenditure). 

2.7 Intangible assets 

2.7.1 Goodwill 

The goodwill represents the surplus of the acquisition costs over the fair value of Group’s share in the identifiable 

net assets of the purchased company. Goodwill created through the acquisition of a company is allocated 

to the intangible assets. Goodwill, created through the acquisition of an associated company, is included in the 

book value of the participating interest in associated companies. The goodwill is subjected to an annual impairment 

test and valued at its original acquisition costs less cumulative value impairment. Profits and losses from 

the sale of a company comprise the book value of the goodwill allocated to the departing company. 

The goodwill is allocated to the identified cash-generating unit of the Group. 

2.7.2 Development projects 

Costs accrued within the scope of development projects (in connection with the registration of new generics) 

are capitalized as intangible assets if it is considered probable that the project will be commercially successful, 

is technically feasible and the costs can be calculated in a reliable manner. Development costs comprise raw 

materials and supplies, direct personnel costs, depreciation on laboratory and analysis devices, other direct costs 

and overheads allocable to the development. Work perfomed by the entity and capitalized is shown separately in 

the profit and loss statement. Third party costs are capitalized at acquisition cost. Other development costs are 

included as expenditure when accrued. Research costs are included immediately as expenditure when accrued. 

Capitalized development costs with a limited useful economic life, are amortized over the period of their expected 

usefulness (5 to 6 years) upon the start of commercial production. 

2.7.3 Contractual and non-contractual customer relations 

As per IFRS 3, acquired contractual and non-contractual customer relations are valued independently at fair value 

within the scope of the purchase price allocation of a business combination. The corresponding amount must be 

shown separately from the goodwill and is allocated to the cash-generating units. 

The contractual and non-contractual customer relations capitalized in this manner, are amortized over the period 

of their expected usefulness (6 years) as from the time of acquisition. 

2.7.4 Software 

Acquired computer software licenses are capitalized at their acquisition/manufacturing costs plus the costs of 

putting these into a ready-for-use condition. These costs are amortized over the estimated useful economic life 

(3 to 5 years). 

32


2.8 Value impairment of assets 

Assets with an indefinite useful economic life are not amortized but are subject to at least annual impairment 

testing. Assets subject to scheduled depreciation are reviewed for impairment whenever events or changes in 

circumstances indicate that the balance sheet amount may not be recoverable. The amount of the book value exceeding 

the recoverable amount is recognized as impairment loss. The recoverable amount is the higher amount 

between the fair value of the asset less sales costs and the utility value. For the impairment test, assets are 

summarized at the lowest level for which flows of funds can be identified separately (cash-generating). 

2.9 Benefits to employees 

2.9.1 Personnel pension scheme 

Various pension schemes exist within the Group. As a rule, the schemes are financed through payments to insurance 

companies, the level of payments is based on actuarial calculations obtained on an ongoing basis. The 

Group has exclusively defined-benefit pension schemes. A defined-benefit scheme is a pension scheme with 

which the employer also bears the risk. 

For defined-benefit schemes with surplus cover, the amount shown in the balance sheet as asset corresponds to 

the fair value of the scheme assets on the balance sheet key date, less the present cash value of the defined- 

benefit obligation (DBO) and less the economically unusable part of the existing surplus cover. 

The DBO is calculated annually by an independent actuarial expert using the projected unit credit method. 

All actuarial profits and losses are included in the period in which they accrued. Posting is outside of the profit 

and loss statement in the equity capital. 

Past service cost arising from amendments to pension plans are charged or credited to income immediately, 

unless the changes to the pension scheme are dependent on the employee remaining in the company for a predetermined 

period (period up until occurrence of non-forfeitability). In this case, past service cost arising from 

amendments to pension plans are charged or credited to income over the service lives of the related associates. 

2.9.2 Share-based compensation 

The Group does not have any share-based compensation programs. 

2.9.3 Bonus plans 

The Group carries a reserve as a liability in cases in which there is a contractual obligation or in which a de facto 

obligation results from past business practice. 

2.10 Financial assets 

Financial assets are sub-divided into the following categories: financial assets to be valued at fair value through 

profit or loss, loans and receivables, and financial assets available for sale. The classification depends on the 

respective purpose for which the financial assets have been acquired. The Management determines the classification 

of the financial assets when these are reported for the first time and checks the classification on each 

key date. 

2.10.1 Financial assets valued at fair value through profit or loss 

Financial assets are allocated to this category if they have principally been acquired with the intention of shortterm 

sale, or if the financial assets have been determined accordingly by the Management. Derivatives also 

belong to this category unless they are qualified as hedges. Assets in this category are shown as short-term 

assets under the item marketable securities if they are held either for trading purposes or can foreseeably be 

realized within 12 months following the balance sheet key date. Assets in this category held on a long-term basis 

or which cannot be realized within 12 months are included under the item financial assets. 

2.10.2 Loans and receivables 

Loans and receivables are non-derivative, financial assets with fixed or determinable payments, which are not 

listed on an active market. They occur if the Group makes money, goods or services directly available to a debtor 

without the intention of trading these receivables. They are considered part of the short-term assets if their 

maturity date is not more than 12 months following the balance sheet key date. Financial assets whose maturity 

date is more than 12 months following the balance sheet key date, are shown as long-term assets. Loans and 

receivables are included in the balance sheet under receivables from deliveries and performances and other 

receivables. 

33


2.10.3 Financial assets available for sale 

Financial assets available for sale are non-derivative, financial assets which have either been allocated to this 

category or to none of the other categories shown. They are allocated to the long-term assets under the item 

financial assets. 

2.10.4 Valuation principles of financial investments 

All purchases and sales of financial investments are reported as of the trading date, the date on which the Group 

commited to purchase or sell the assets. Financial assets which do not belong to the category “at fair value 

through profit or loss”, are initially reported at their fair value plus transaction costs. With financial assets belonging 

to the category “at fair value through profit or loss”, the transaction costs are included at profit or loss. 

Financial assets are deleted from the accounts if the rights to payments from the investment have expired or 

have been transferred, and the Group has fundamentally transferred all risks and opportunities associated with 

the ownership. 

Financial assets available for sale and assets in the category “at fair value through profit or loss” are valued on 

the basis of their initial reporting at their fair value. Loans and receivables, as well as financial investments to be 

held until their final maturity, are included in the balance sheet at net book value using the effective interest-rate 

method. 

Realized and non-realized profits and losses from the fair value adjustments of financial assets “at fair value 

through profit or loss” are recorded in the financial result in the period in which they occur. Changes in the fair 

value of financial assets available for sale are deferred as a fair value adjustment in equity. If securities in the 

category “financial assets available for sale” are sold or their value impaired, the adjustments of the fair value, 

accumulated in the equity capital, are recorded in the profit and loss statement as profits or losses from financial 

assets. 

The fair value of shares listed on the stock exchange is calculated on the basis of the current closing price. If no 

active market exists for financial assets or if the assets concerned are not listed on the stock exchange, the fair 

values will be calculated using suitable valuation methods. These comprise reference to recent transactions 

between independent business partners, the use of current market prices for other assets which are fundamentally 

identical to the assets under consideration, as well as discounted cash-flow procedures. On the basis 

of these valuation methods, the fair values are fixed by the Valuation Committee and approved by the Board of 

Directors. 

On each balance sheet key date, a check is made as to whether there are objective points of reference for a 

value impairment of a financial asset or of a group of financial assets. In the event of equity capital instruments 

which are classified as “financial assets available for sale”, a fundamental or lasting fall in their fair value below 

the acquisition costs of these equity-settled instruments will be taken into consideration in the determination of 

the extent to which the equity-settled instruments have been value impaired. Given the existence of an indication 

of this nature for assets available for sale, the cumulative loss – measured as difference between the acquisition 

costs and the fair value, less value impairment losses recorded beforehand with regard to the financial 

asset under consideration – will be posted out of the equity and recorded in the profit and loss statement. Value 

impairment losses of equity-settled instruments already recorded in the profit and loss statement, will not be 

reversed through profit or loss. 

2.11 Deferred taxes 

Deferred taxes are determined using the comprehensive liability method. They are calculated due to temporary 

differences that arise between the tax base of an asset or liability and its book value. Deferred taxes are calculated 

using applicable entity tax rates (and tax regulations) valid on the balance sheet key date, or which have 

been fundamentally approved by law and the application of which is expected at the time of the realization of the 

deferred tax claim or of the settlement of the deferred tax liability. 

Deferred tax assets are recorded when it is likely that taxable profits will be available and against which the temporary 

difference can be used. 

Deferred tax liabilities resulting from temporary differences in connection with investments in subsidiaries and 

associated companies are included. 

34


2.12 Inventories 

Inventories are valued at the lower of their acquisition / manufacturing costs or net realizable value. The manufacturing 

costs of finished and semi-finished products comprise the costs for raw materials and supplies, direct 

personnel costs, other direct costs and overheads allocable to the production (based on normal operating 

capacity). The acquisition or manufacturing costs do not include costs of liabilities. The net realizable value is the 

estimated market sales value achievable in the normal course of business, less the necessary variable selling 

costs. 

The valuation of the inventories in the balance sheet or the value of goods and services purchased in the profit 

and loss statement is at standard costs, corresponding normally to historical costs and determined on a first-in 

first-out basis. Value adjustments are made for slow-selling inventories and for inventories with lower net 

realizable values. If, to all appearances, the inventories cannot be exploited, the value adjustments will be 

dissolved to the extent that the net realizable value of the inventories equals to their original costs. Unsellable 

inventory is fully written off. 

2.13 Trade receivables 

Trade receivables are valued at the current value. Doubtful receivables provisions are established based upon the 

difference between the receivable value and the net collectible amount. The value impairment will be included 

through profit or loss. 

2.14 Liquid funds / cash and cash equivalents 

In both the balance sheet as well as in the cash flow statement, the terms liquid funds or cash and cash equivalent 

are used to describe cash in hand, bank and postal checks, current account credit balances with banks 

and time deposits, as well as liquid money-market papers with an original term of less than three months. 

Current account liabilities with banks are shown as short-term financial liabilities. 

2.15 Equity capital 

If a company within the Group purchases treasury shares, the value of the paid price including directly allocable 

costs (net after tax), is deducted from shareholders’ equity, until the shares are called in, re-issued or sold on. 

If such shares are re-issued or sold retrospectively, the amount received – net following deduction of directly 

allocable additional transaction costs and related income taxes – will be included in shareholders’ equity 

2.16 Financial liabilities 

When included for the first time, financial liabilities are shown at fair value less transaction costs. In the subsequent 

periods, they are valued at net book value; any difference between the amount paid (after deduction of 

transaction costs) and the repayment amount is included in the profit and loss statement over the term of the 

loan subject to application of the effective interest rate method. 

Loan liabilities are classified as short-term liabilities if the Group does not have the unconditional right to postpone 

settlement of the liabilities until a date at least 12 months after the balance sheet key date. 

2.17 Provisions 

Provisions for the rectification of environmental damage, restructuring costs and legal disputes are created if the 

Group has a current legal or de facto obligation resulting from a past event, if it is probable that settlement of 

the obligation will lead to an economic burden and the level of the provision can be calculated in a reliable 

manner. Provisions for restructuring comprise payments for the premature termination of rental relations as well 

as severance payments to employees. 

2.18 Trade accounts payable 

The nominal value is usually taken as the fair value for trade accounts payable. 

35


2.19 Revenue recognition 

The revenues comprise the fair value received for the sale of goods and services, excluding turnover tax, rebates 

and price discounts, and following elimination of Group-internal sales. Sales revenues are realized as follows: 

2.19.1 Goods turnover 

Sales revenues from the sale of goods are included if a Group company has delivered products to a customer, 

the customer has accepted the goods and the ability to collect the resulting receivable can be regarded as 

sufficiently certain. 

2.19.2 Revenue with development and service performances 

Revenue from development performances, based on corresponding development, manufacturing and delivery 

contracts, is included following completion of the development and over the term of the manufacturing and 

delivery agreement. Milestone payments, invoiced for these developments, are classified as liabilities in 

deferred revenue up until the start of production. 

As a rule, earnings from development and service performances without long-term contracts, are recorded as 

revenue after conclusion of the services. 

2.19.3 Interest earnings 

Interest earnings are included on a pro-rata temporis basis using the effective interest rate method. 

2.19.4 Dividend earnings 

Dividend earnings are included at the time at which the right to receipt of the payment is created. 

2.20 Cost of materials 

The cost of materials includes all expenditure for raw materials and supplies, for goods bought and the expenditure 

for the external manufacture, processing or treatment of own products (external services) as well as 

commission and license fee expenditure for the use of technologies used in manufacturing. 

2.21 Leasing relations 

Leasing relations, which carry a fundamental share of the risks and opportunities associated with ownership of 

the leased object and which remain with the lessor, are classified as operating leasing. Payments made in connection 

with operating leasing (net after consideration of incentive payments made by the lessor) are included in 

the profit and loss statement over the term of the leasing relation using the straight line method. 

2.22 Payment of dividends 

The entitlements of the shareholders to the payment of dividends are included as liability in the period in which 

the corresponding resolution was passed. 

3 Financial risk management 

3.1 Financial risk factors 

Through its business activity, the Group is exposed to various financial risks: the market risk (includes the foreign 

currency risk, the fair value interest rate risk and the market price risk), the credit risk, the liquidity risk and the 

cash flow interest rate risk. The Group’s overall risk management focuses on the unforeseeability of developments 

on the financial markets, and is directed towards minimizing the potential negative effects on the financial 

situation of the Group. In order to control the risks associated with these fluctuations, the Group makes use of 

derivative financial instruments wherever it is considered appropriate by the Company Management under the 

given circumstances. The contract partners then involved are financial institutions with a high creditworthiness. 

Hedging transactions are always in connection with existing assets and liabilities or with future business transactions, 

which are highly likely to come about. The Group’s risk policy also includes the covering of risks through 

corresponding insurance. 

36


3.1.1 Market risk 

(a) Foreign currency risk 

The Group operates internationally and is therefore exposed to a foreign currency risk based on the ex-change 

rate fluctuations of various foreign currencies – mainly the US Dollar and the Euro. Foreign currency risks result 

from expected future transactions, assets and liabilities included in the balance sheet as well as from net investments 

in foreign business operations. 

A foreign currency risk results if future business transactions, assets and liabilities included in the balance sheet 

are denoted in a currency other than the functional currency of the company. 

Financial assets included in the balance sheet are hedged by means of foreign currency futures transactions depending 

on the estimation of the market situation. Future inflows and outflows of funds (cash flows) are hedged 

in the short term only and only in specific cases. 

(b) Exchange rate risk 

The Group is exposed to an exchange rate fluctuation risk of several of its equity capital participating interests, 

as some of the participating interests held by the Group have been included in the Group balance sheet either 

as “available for sale” or as “at fair value through profit or loss”. The sales revenues, as well as the cost of 

materials, of the Business Unit Chemicals are exposed to an exchange rate fluctuation risk of the underlying raw 

materials, since price alterations cannot always be passed on immediately. 

3.1.2 Credit risk 

Within the Group, there is no significant concentration in terms of possible credit risks. Trading regulations exist 

which ensure that sales are only made if the customer has demonstrated appropriate payment conduct in the 

past. Contracts for derivative financial instruments and financial transactions are only concluded with financial 

institutions with the highest level of creditworthiness. 

3.1.3 Liquidity risk 

Cautious liquidity management includes the keeping of a sufficient reserve of liquid funds and marketable securities, 

the possibility of financing through an adequate amount of assured credit lines and the ability to make 

issues on the market. Given the dynamic nature of the business environment in which the Group operates, the 

objective of the Group Management is to maintain the necessary flexibility in financing through the existence of 

sufficient non-utilized credit lines. 

3.1.4 Cash flow and fair value interest rate risk 

As the Group does not hold any fundamental interest-bearing assets, Group profits and cash flow are to a major 

extent independent of changes in market interest rates. Financing transactions and related interest rate conditions 

are managed centrally. Liquid and liquidity-relevant funds are invested on a short-term basis. Interest rate 

risks are only hedged in specific cases. The Group Management aims to achieve a well-balanced mixture of short 

and long-term interest rates. 

3.2 Accounting for derivative financial instruments and hedging transactions 

Derivative financing instruments are first included in the balance sheet at fair value at the time of conclusion of 

the derivatives contract, and, in the following reporting periods, with the respective newly valued fair value. The 

derivative financial instruments held by the Group in the reporting period do not qualify for hedge accounting. 

Changes to the fair value of these derivatives are included directly in the profit and loss statement. 

3.3 Calculation of the fair value 

The fair value of derivatives traded on an active market (for example, publicly traded derivatives, trading and 

securities available for sale) is based on the closing price of the stock market on the balance sheet key date. The 

fair value of foreign currency future transactions is calculated using the foreign currency forward exchange rates 

on the balance sheet key date. In the case of trade account receivables, it is assumed that the nominal amount 

less value adjustments corresponds to the fair value. 

4 Critical estimations in the balance sheet accounting and valuation 

All estimations and assessments are revalued on an ongoing basis and are based on historical experience and 

additional factors, including expectations in terms of future occurrences, which appear reasonable under the 

given circumstances. 

37


4.1 Critical estimations and assumptions in the balance sheet accounting 

The Group makes estimations and assumptions concerning the future. The estimations derived from these will 

not always correspond to the actual situation. The estimations and assumptions, which involve a significant risk 

in the form of a fundamental adjustment of the book values of assets and liabilities within the next financial year, 

are explained below. 

(a) Estimated value impairment of the goodwill, of the development projects and of the contractual and 

non-contractual customer relations 

The Group carries out an annual examination, in line with the balance sheet accounting and valuation methods 

set out, as to whether a value impairment of the intangible assets is given. The recoverable amount of cash- 

generating units was determined on the basis of calculations of the value in use. These calculations are based 

on assumptions. 

Even if the actual turnover in 2006 and the future turnover as per estimation of the Management on December 

31, 2005 were to be lower by 10%, there would be no need to correct the book value of the intangible assets. 

Non-scheduled impairments to development projects can also be necessary as a result of occurrences – for 

example results from development projects, obtaining of market allotment and market launch of competitor 

products – within the scope of the overall capitalized costs for a corresponding product. 

Non-scheduled impairments to contractual and non-contractual customer relations can be necessary if, as a result 

of occurrences – for example results from development projects, obtaining of market allotment and market 

launch of competitor products – several customer relations are ended prematurely and cannot be compensated 

for through other customer relations. 

Once carried out, impairments to intangible assets can no longer be reversed even in the event of any reversal 

of the impairment loss of the intangible asset. 

(b) Valuation of non-listed investments 

The financial assets include investments in non-listed healthcare companies of approximately CHF 30.3 million. 

The determination of the values necessitates assumptions and estimations. Due to the uncertainties associated 

with these assumptions and estimations and the fact that liquid markets do not exist in all cases, the values 

determined can vary from the realizable values. These differences can be material. 

(c) Tradability of listed investments 

The financial assets include a participating interest in Aceto Corp. (NASDAQ: ACET) of CHF 8.5 million. Due to 

the size of the investment and to existing shareholding-binding agreements, the effective realizable value can 

deviate from the current market value. 

The marketable securities include a participating interest in Xenoport, Inc. (NASDAQ: XNPT) of CHF 1.7 million. 

In the event of sale of the investment, regulatory volume restrictions must be observed; given the size of the 

item held, these should not be material compared with normal trading volumes of the title. 

(d) Income Taxes 

The Group is obliged to pay income taxes in Switzerland and in the United States. Calculation of the tax reserve 

necessitates fundamental assumptions. There are many business transactions and calculations for which conclusive 

calculation of the final taxation is not possible during the ordinary course of business. The Group assesses 

the level of the provision for deferred taxes on the basis of estimations as to whether and in what amount tax 

will be liable. If the final taxation of these business transactions deviates from the original assumption, this will 

have affects on the actual and deferred taxes in the period in which the taxation is conclusively calculated. 

(e) Valuation of real property as of January 1, 2004 

The real property was valued as of January 1, 2004 at capitalized earnings value less estimated remediation 

costs of contaminated sites. With individual items of real property, the capitalized earnings value was below the 

estimated remediation costs; in these cases, the real property was included with zero value. Calculation of the 

values necessitates assumptions and estimations. Due to the uncertainties associated with these assumptions 

and estimations and to the non-liquid markets, the values determined can vary from the realizable values. These 

differences can be material. At present there are no legal or de facto obligations to redevelop existing contaminated 

sites on the Group real estate. Should redevelopment be necessary, the flow of funds for this is likely to 

be significant. 

38


4.2 Critical assessments in the application of the accounting and valuation methods 

4.2.1 Warranty withholdings on financial assets sold 

The Group has realized proceeds from the sale of the participating interests in Syrrx, Inc. and Transform, Inc. 

Part of the purchasing price was withheld by the sellers in an Escrow account for possible warranty claims; 

pay-out will be due in March 2006 (USD 0.4 million) and in October 2006 (USD 1.3 million). The Group assumes 

that no warranty claims will be made concerning these transactions. The Group would suffer a financial loss of 

USD 1.7 million in the financial year 2006 in the event of justified warranty claims being made in the total 

amount of the Escrow accounts. 

4.2.2 Refund of milestone payments already received 

The Group posts payments, received for milestones achieved in development projects, as liabilities (deferred 

revenue) and as cash flow from operating activities. The definitive payments to be made are tied to the 

adherence to project objectives and project time schedules. The Group assumes that the agreed objectives can 

be adhered to. The Group would suffer an estimated outflow of funds of CHF 19.3 million in the financial year 

2006 in the event of all milestone payments, already received but not yet owed definitively, having to be 

refunded. 

5 Transition Swiss GAAP FER to IFRS 

5.1 Transition profit 

in CHF 1 000 

Net result, Swiss GAAP FER 10 250 

IFRS 1 Fair value revaluation of properties 1 224 

IAS 12 Deferred tax (1 503) 

IAS 19 Employee benefits / pension plans (3 826) 

IAS 21 Financial statements of foreign companies 519 

IAS 39 Financial assets available for sale 804 

IFRS 3 Business combinations / Adjustments in minority interests (215) 

Others (50) 

Net result, IFRS 7 204 

5.2 Transition equity capital 

in CHF 1 000 

2004 

31.12.2004 1.1.2004 

Equity incl. minority interests, Swiss GAAP FER 267 921 264 932 

IFRS 1 Fair value revaluation of properties (7 991) (9 216) 

IAS 12 Deferred tax (2 469) (345) 

IAS 19 Capitalized surplus of pension plans 20 349 21 654 

IFRS 3 Business combinations / Adjustments in minority interests 6 079 - 

Others (536) (483) 

Equity incl. minority interests, IFRS 283 353 276 542 

39


5.3 Transition cash flow statement 

40 

2004 2004 

Swiss 

in CHF 1 000 IFRS GAAP FER 

Cash flow from operating activities 16 602 12 467 

Cash flow from investing activities (14 386) (33 249) 

Cash flow from financing activities (14 476) (14 476) 

Net effect of currency translation - 1 054 

Net change in cash (12 259) (34 204) 

5.4 Notes to the transitions 

5.4.1 Exceptions with business combinations 

Business combinations which took place before the transition date are not revalued. 

5.4.2 Exception with benefits to employees 

All cumulative actuarial profits and losses as of the transition date January 1, 2004, were included in the equity 

capital. 

5.4.3 Exception for cumulative conversion differences 

Conversion differences at the time of transition were included at zero. 

5.4.4 Exception in the determination of the historical acquisition and manufacturing costs of 

tangible fixed assets 

The fair values of the real estate and buildings as of the transition date January 1, 2004 were determined on the 

basis of external property valuation reports. As per IFRS 1, these fair values form the new historical acquisition 

costs and thus the future basis for depreciation. 

This leads to the following adjustment of the book values: 

Balance as of January 1, 2004 

in CHF 1 000 Land Buildings Total 

Swiss GAAP FER 

Initial value 2 599 82 183 84 782 

Accumulated amortization - (47 143) (47 143) 

Net book value 2 599 35 040 37 639 

IFRS 

Fair value 8 991 19 432 28 423 

Adjustment 6 392 (15 608) (9 216) 

The book values of the real property as per Swiss GAAP FER were based on the value in use analysis. 

For the valuation of the real estate as per IFRS, the recoverable value of unpolluted and undeveloped land at 

similar locations was taken as a basis. This figure was reduced by expected remediation costs for contaminated 

sites in the event of ground excavation. 

The valuation of the buildings as per IFRS is based on normal market rental charges for similar real property. 

This figure was reduced by the value of the unpolluted land as described above (additional explanations under 

pt. 4.1 (e)).


5.4.5 IAS 12 Deferred income taxes 

Under Swiss GAAP FER, the Schweizerhall Group took the decision not to capitalize deferred tax assets. As 

per IAS 12, deferred income taxes must be included for all deductible temporary valuation differences, if the 

achievement of taxable profits can be reckoned with, against which these deductible temporary differences can 

be offset. 

On the transition date January 1, 2004, the deferred tax assets from net operating losses carried forward totaled 


In addition, the tax effect on the following aspects was taken into consideration: 

– Temporary differences in connection with investments in subsidiaries 

– The application of IAS19 (capitalized pension scheme surplus cover) 

– The valuation of the real property as of January 1, 2004 at fair value 

5.4.6 IAS 19 benefits to employees/personnel pension benefits and obligations 

Under Swiss GAAP FER, Schweizerhall had exercized the optional right of not capitalizing the existing surplus 

cover from personnel pension benefits and obligations. As of January 1, 2004, there was a net surplus cover of 

CHF 48.6 million (difference between the pension obligations [CHF 104.0 million] and the pension assets 

[CHF 152.6 million]). CHF 21.7 million of the surplus were capitalized in the IFRS opening balance sheet as 

economically usable part. 

Under Swiss GAAP FER, the ongoing regulatory employer contributions were included as periodical pension expenditure. 

Under IFRS, actuarial assumptions are necessary with a defined-benefit plan in order to include costs. 

This leads to the following adjustment in the profit and loss statement: 

Swiss 

in CHF 1 000 GAAP FER IFRS Adjustment 

Periodic pension costs (2 837) (3 826) (989) 

- thereof social compensation plans - (3 401) (3 401) 

Extraordinary income 

(employers pension costs 

covered by the foundations reserves) 2 837 - (2 837) 

Impact on profit and loss statement - (3 826) (3 826) 

5.4.7 IAS 21 Financial statements of foreign companies 

As per IAS 21, the Swiss Franc is defined as the functional currency of Schweizerhall, Inc., New Jersey. As such, 

the balance sheet prepared in US Dollars must be converted to Swiss Francs as if it had been prepared in Swiss 

Francs. Conversion differences must be posted via the profit and loss statement. Under Swiss GAAP FER, the 

cumulative conversion differences were recognized in the equity. 

5.4.8 Financial assets available for sale 

Under Swiss GAAP FER, all financial assets were included at fair value and the adjustments recognized in profit 

and loss statement. 

As of January 1, 2004, the existing financial assets were divided into categories as per IAS 39. The private 

equity participating interests (as of January 1, 2004: CHF 45.0 million) were classified as ”financial assets 

valued at fair value through profit or loss”, fundamental participating interests listed on the stock exchange (as 

of January 1, 2004: CHF 27.8 million) were classified as “financial assets available for sale”. As a result, nonrealized 

value fluctuations on Aceto Corp. are recognized in equity and not in the profit and loss statement. This 

has no influence on the equity shown; nevertheless, the financial result in the profit and loss statement changes. 

5.4.9 IFRS 3 business combinations 

Under Swiss GAAP FER, the Cimex Group acquired in December was consolidated in the balance sheet for the 

first time as of December 31, 2004. The profit and loss statement of the Cimex Group was not included in the 

consolidated profit and loss statement 2004 of the Schweizerhall Group, due to the short period and its 

materiality. 

41


Under IFRS 3, the Cimex Group must be included in the consolidated financial statements of the Schweizerhall 

Group with effect from the date of acquisition, i.e. as from December 10, 2004. 

At that time, the price for the purchase of the Cimex Group was allocated to the assets and liabilities taken over, 

which were valued at fair values. The depreciation and amortization on the tangible and intangible fixed assets 

were carried out from these current values. The non-allocable share of the purchasing price was capitalized as 

goodwill and, as a result, is not amortized, but, however, subjected to an annual impairment test. 

5.4.10 Alterations to the cash flow statement 

Under Swiss GAAP FER, the fund was defined as “liquid funds” which contained both the liquid funds as well as 

the marketable securities and derivative financial instruments. Under IFRS, the fund consists solely of the liquid 

funds. 

Since, under IFRS, the Swiss Franc is the functional currency of all consolidated companies, the conversion differences 

are treated differently in the cash flow statement. 

Differences in the cash flow from operating activities, from investment activities and from the net change in 

cash are caused by adjustments of the fund. 

5.4.11 Illustration of the segment reporting 

Under Swiss GAAP FER, the Business Unit Financial Investments was shown as a separate segment. As a result, 

the financial expenditure and income of the Business Unit Financial Investments were included in the EBIT. 

Following the acquisition of the Cimex Group, the financial assets no longer have the same importance; consequently 

the liquid funds, securities and financial assets are no longer shown as a separate segment neither are 

their financial results shown separately any more. 

6 Segment reporting 

6.1 Primary reporting format - business areas 

As of December 31, 2005, the Group was organized in two Business Units: 

(a) Business Unit Chemicals 

Trade with chemical raw materials, intermediates, chemical specialties and customized mixtures. 

(b) Business Unit Pharma 

Development, registration, approval, production and packaging of pharmaceuticals which are no longer under 

patent protection. 

Other areas of activity within the Group concern principally management services for the two operative Business 

Units. 

42


The segment results for the financial years 2004 and 2005 are as follows: 

in CHF 1 000 

Corporate / 

BU Chemicals BU Pharma Eliminations Total Group 

2005 2004 2005 2004 2005 2004 2005 2004 

Net revenues 218 936 216 250 83 913 4 437 (257) (95) 302 592 220 592 

Thereof intercompany 

revenues 257 96 - - (257) (96) - - 

Change in inventory - - (133) (533) - - (133) (533) 

Work performed by 

the entity and capitalized - - 2 261 - - - 2 261 - 

Goods and 

services purchased (165 666) (166 019) (37 341) (2 161) 257 96 (202 750) (168 084) 

Employee benefits (23 105) (27 582) (15 409) (1 014) (205) 148 (38 719) (28 448) 

Other operating expenses (15 143) (14 406) (10 534) (712) (1 861) (1 674) (27 538) (16 792) 

Other operational income 376 657 202 - 97 357 675 1 014 

Operating result before 

net financial result, 

taxes, depreciation and 

amortization 15 398 8 900 22 959 17 (1 969) (1 168) 36 388 7 749 

Depreciation (4 546) (4 422) (3 667) (70) - - (8 213) (4 492) 

Amortization (1 447) (2 323) (12 963) (200) - - (14 410) (2 523) 

Operating result before 

net financial result 

and taxes 9 405 2 155 6 329 (253) (1 969) (1 168) 13 765 734 

Transfers and transactions between the segments are at normal market conditions as would be applicable with 

third parties. 

43


The segment assets, the segment liabilities and the segment investments at the end of the financial year were 

as follows: 

Corporate / 

BU Chemicals BU Pharma Eliminations Total Group 

in CHF 1 000 

44 


Segment assets 97 376 103 501 193 826 183 662 72 437 128 476 363 638 415 639 

Investment in 

associated companies - - 2 520 - - - 2 520 - 

Total segment assets 97 376 103 501 196 346 183 662 72 437 128 476 366 158 415 639 

Segment liabilities 31 125 12 115 49 271 62 743 26 956 57 428 107 352 132 286 

thereof deferred tax 4 052 3 464 7 888 8 864 6 554 7 376 18 494 19 704 

Investment in 

tangible fixed assets 5 203 8 457 10 737 - - - 15 940 8 457 

Investment in 

intangible fixed assets 337 140 8 252 - - - 8 589 140 

Investment in 

associated companies - - 2 520 - - - 2 520 - 

Investment in 

subsidiaries - - 57 505 73 001 - - 57 505 73 001 

Total investing 

activities per segment 5 540 8 597 79 014 73 001 - - 84 554 81 598 

The segment assets of the Business Units Chemicals and Pharma comprise primarily tangible fixed assets, intangible 

assets, inventories and receivables. Liquid funds and marketable securities are excluded. 

The segment liabilities of the Business Units Chemicals and Pharma comprise the operating liabilities. Financial 

liabilities are not included. 

6.2 Secondary reporting format – geographical segments 

Both business units operate exclusively from Switzerland. All assets are allocable to Switzerland, likewise all 

investments. 

The revenues are divided up as follows: 

BU Chemicals BU Pharma 

Corporate / 

Eliminations Total Group 

in CHF 1 000 


Switzerland 205 616 203 352 5 229 - (257) (95) 210 588 203 257 

Germany 3 425 4 221 53 686 4 227 - - 57 111 8 448 

United Kingdom 8 218 10 738 200 - - 10 746 418 

France 3 771 3 740 2 798 10 - - 6 568 3 750 

Italy 530 561 - - - - 530 561 

Rest of Europe 2 340 1 534 7 752 - - - 10 092 1 534 

Rest of the World 3 247 2 624 3 710 - - - 6 957 2 624 

A fundamental part of the goods delivered to Germany by the Business Unit Pharma is further distributed within 

Europe by the customers. As such, the above table does not reflect the view of the final customers or of the 

markets determining the sales.


7 Employee benefits 

in CHF 1 000 


Wages and salaries 34 809 21 781 

Pension expenses employer’s contribution – defined benefit plan (580) 3 826 

Other social security contributions 3 729 2 463 

Other employee benefit costs 761 378 

Total employee benefits 38 719 28 448 

8 Other operating expenditure 

in CHF 1 000 


Losses on sale of fixed assets 2 69 

Capital taxes 464 312 

Repairs and maintenance 2 667 2 174 

Other operating expenses 24 405 14 237 

Total other operating expenses 27 538 16 792 

Included under other operating expenditure is all expenditure not allocated to other items, such as the costs of 

external dispatch freight, energy costs, operating materials and expendables, external services, insurance etc. 

9 Other operating income 

in CHF 1 000 


Gain on sale of fixed assets 10 346 

Income on rent of property 366 310 

Other operating income 299 358 

Total other operating income 675 1 014 

45


10 Financial result 

in CHF 1 000 

46 


Interest income 77 527 

Dividend income 371 382 

Realized gains on financial investments available for sales 2 329 3 577 

Gains on foreign exchange and on fair value adjustments 

on financial investments at fair value through profit and loss 16 786 12 510 

Other gains on foreign exchange 4 692 19 600 

Other financial income 11 2 

Total financial income 24 266 36 598 

Interest expense (804) (51) 

Losses on foreign exchange and on fair value adjustments 

on financial investments through profit and loss (7 351) (8 334) 

Other losses on foreign exchange (12 107) (20 274) 

Other financial expense (242) (231) 

Total financial expense (20 504) (28 890) 

Net financial result 3 762 7 708 

11 Current income taxes 

in CHF 1 000 


Current taxes on income (1 144) (250) 

Deferred taxes (111) (988) 

Total taxes (1 255) (1 238)


in CHF 1 000 


Net profit before tax 17 527 8 442 

Group‘s overall expected tax (weighted average tax 

based on the income before tax of each subsidiary) (3 063) (1 880) 

in % net profit before tax 17.5% 22.3% 

Effect of utilization of non-capitalized tax loss carryforwards 1 338 722 

Effect of utilization of tax 

loss brought forward from prior periods 60 (145) 

Effect of deferred tax changes on 

temporary differences in investments in subsidiaries 807 (301) 

Effect of tax rate changes on 

timing differences from prior years and others (682) 348 

Income / expenses not allowed for tax purposes 

and other items 285 18 

Current taxes on income (1 255) (1 238) 

The applicable average tax rate is 17.5% (2004: 22.3%). The reduction is a result of the acquisition of the Cimex 

Group. 

12 Result per share 

12.1 Not diluted 

in CHF 


Net profit, attributable to the shareholder 

of the parent company 16 368 705 7 246 032 

Weighted average number of shares outstanding 3 017 250 2 902 775 

Not diluted result per share (CHF per share) 5.43 2.50 

12.2 Diluted 

As there are no option rights or similar outstanding, the diluted result per share corresponds to the not diluted 

result per share. 

47


13 Tangible fixed assets 

13.1 Movement schedule of tangible fixed assets 

Plant 

under con- Total 

Initial value Land Buildings Equipment Vehicles struction 

Balance as of January 1, 2004 8 991 19 432 32 147 13 008 5 307 78 885 

Transfers - - 88 - (88) - 

Additions - 329 700 84 7 344 8 457 

Disposals - - (1 311) (2 248) - (3 559) 

Impact of business combinations 2 609 12 698 24 968 275 - 40 550 

Balance as of December 31, 2004 11 600 32 459 56 592 11 119 12 563 124 333 

Transfers - 8 925 5 337 636 (15 083) (185) 

Additions - 2 360 6 896 74 6 610 15 940 

Disposals - (42) (333) (912) - (1 287) 

Balance as of December 31, 2004 11 600 43 702 68 492 10 917 4 090 138 801 

Accumulated amortization 

Balance as of January 1, 2004 - - (24 175) (7 668) - (31 843) 

Additions - (1 484) (2 189) (819) - (4 492) 

Disposals - - 1 288 2 051 - 3 339 

Balance as of December 31, 2004 - (1 484) (25 076) (6 436) - (32 996) 

Transfers - - 392 (322) - 70 

Additions - (2 247) (5 210) (756) - (8 213) 

Disposals - 42 333 910 - 1 285 

Balance as of December 31, 2005 - (3 689) (29 561) (6 604) - (39 854) 

Net book value 

as of December 31, 2004 11 600 30 975 31 516 4 683 12 563 91 337 

as of December 31, 2005 11 600 40 013 38 931 4 313 4 090 98 947 

Insured value 

as of December 31, 2004 213 864 

as of December 31, 2005 239 640 

No financial leasing contracts exist. 

48


14 Intangible fixed assets 

14.1 Movement schedule of intangible fixed assets 

Contractual 

and non- 

Develop- contractual 

ment customer 

Initial value Goodwill projects relations Software Total 

Balance as of January 1, 2004 3 196 - - 8 422 11 618 

Transfers - - - (19) (19) 

Additions - - - 140 140 

Disposals (3 196) - - (3 041) (6 237) 

Impact of business combinations 51 298 - 72 479 738 124 515 

Balance as of December 31, 2004 51 298 - 72 479 6 240 130 017 

Transfers - - - 115 115 

Additions - 3 454 4 569 566 8 589 

Disposals - - - (228) (228) 

Balance as of December 31, 2005 51 298 3 454 77 048 6 693 138 493 

Accumulated amortization 

Balance as of January 1, 2004 (2 682) - - (5 340) (8 022) 

Transfers - - - 19 19 

Additions (514) - (200) (1 809) (2 523) 

Disposals 3 196 - - 3 041 6 237 

Balance as of December 31, 2004 - - (200) (4 089) (4 289) 

Additions - (194) (12 461) (1 755) (14 410) 

Disposals - - - 228 228 

Balance as of December 31, 2005 - (194) (12 661) (5 616) (18 471) 

Net book value 

as of December 2004 51 298 - 72 279 2 151 125 728 

as of December 2005 51 298 3 260 64 387 1 077 120 022 

14.2 Impairment test on goodwill and development projects 

The goodwill is allocated to the identified cash-generating units of the Group and concerns 100% the Business 

Unit Pharma. 

The recoverable amount of a cash-generating unit is determined through calculations of its value in use. These 

calculations are based on forecast net cash flows, derived from the five-year plan approved by the Management. 

Cash flows as per this five-year plan were extrapolated using an assumed rate of growth. An average weighted 

growth rate of 8% was reckoned with for the entire planning period. 

The discount interest rate used of 13.2% reflects the weighted capital costs and the specific risks of Business 

Unit. As the tax expenditure has been taken into consideration in the cash flows, the discount rate after tax is 

applied. 

49


The application of a discount interest rate after tax leads to a result comparable with the application of a discount 

rate before tax on cash flows before tax. 

The check did not lead to any postings of value impairments on goodwill, development projects, and contractual 

and non-contractual customer relations in the years 2004 and 2005. 

15 Personnel pension scheme 

The employees of the Schweizerhall Group are insured in various defined-benefit pension schemes – financed 

from a fund – against the risks of death, invalidity as well as for old age. Using a dynamic method of calculation, 

these pension schemes show a deficit in cover as of December 31, 2005. Nevertheless, free trust funds are 

available in the Welfare Fund of Schweizerhall Chemie AG (a patronal trust under Swiss Law, the trust company 

of which is Schweizerhall Chemie AG and the beneficiaries of which are all employees of the Schweizerhall 

Group), which must be taken into consideration in the scheme assets of the pension schemes, with the result 

that, overall, there is surplus cover. That part of this surplus cover, which the Group assumes will bring its economic 

benefit in the form of reductions in future contributions, is capitalized. 

(a) Status of the pension schemes, financed from funds 

in CHF 1 000 

50 


Fair value of plan assets 168 579 164 803 

Defined benefit obligations (127 092) (116 832) 

(Deficit) / surplus 41 487 47 971 

Not accounted for surplus according article 58b 29 073 28 422 

Net assets in the balance sheet 12 414 19 549 

shown in assets 12 414 19 549 

shown in liabilities - - 

(b) Periodic pension expenditure 

The following amounts for defined-benefit pension schemes were included in the profit and loss 

statement: 

in CHF 1 000 


Service cost (4 501) (4 654) 

Interest cost (4 254) (3 802) 

Expected return on plan asset 7 422 6 868 

Social compensation plans - (3 401) 

Employee contribution 1 913 1 163 

Net periodic benefit (cost) / income 580 (3 826) 

(c) Effective return on plan assets 

in CHF 1 000 


Actual return on plan asset 8 260 4 873


(d) Changes in the obligations from defined-benefit pension schemes 

in CHF 1 000 


Net liability in the balance sheet at the beginning of the year (116 832) (103 995) 

Service cost (4 501) (4 654) 

Social compensation plans - (3 401) 

Interest cost (4 254) (3 802) 

Change in actuarial gains / (losses) (7 900) 5 963 

Paid benefits 6 395 8 028 

Commitments satisfied - (771) 

Effect of acquisitions or divestments - (14 200) 

Net liability in the balance sheet at the end of the year (127 092) (116 832) 

(e) Changes in the fair value of assets of the scheme 

in CHF 1 000 


Net asset in the balance sheet at the beginning of the year 164 803 152 624 

Employer contribution - (21) 

Employee contribution 1 911 1 163 

Expected return on plan asset 7 422 6 868 

Change in actuarial gains / (losses) 838 (1 995) 

Paid benefits (6 395) (7 257) 

Effect of acquisitions or divestments - 13 421 

Net asset in the balance sheet at the end of the year 168 579 164 803 

(f) Analysis of the amounts included in the equity capital 

in CHF 1 000 


Balance at the beginning of the year 2 521 - 

Actuarial gains and (losses) on liabilities (7 900) 5 963 

Actuarial gains and (losses) on assets 838 (1 995) 

Impact of limits according article 58b (655) (1 447) 

Balance at the end of the year (5 196) 2 521 

51


(g) Asset allocation 

in CHF 1 000 

52 



Equity securities 20 663 19 355 

Debt securities 38 879 41 942 

Insurance surrender value 96 155 92 729 

Others 1 460 1 181 

(h) Parameters 

The following weighted parameters were chosen as effective basis: 


Discount rate 3.25% 3.50% 

Expected return on plan asset 4.50% 4.50% 

Expected rate of salary increase 2.00% 2.00% 

Expected rate of pensions increase 1.00% 1.00% 

Actuarial assumptions EVK 2000 EVK 2000 

Expected average age at retirement 62/62 62/62 

The objective of the strategic allocation of the assets of the pension schemes is to achieve investment income, 

which makes it possible to cover – together with the employer and employee contributions paid – the ongoing 

increase in the pension obligations and the benefits from the pension schemes. The expected average return on 

assets was calculated on the basis of the long-term target rate of return of the individual investment categories. 

The allocation of the assets to the individual investment categories can vary as a result of current market conditions 

and estimations of future expectations. 

(i) Estimated employee contributions for the year 2006 

As in the previous periods, the plan for the reporting period 2006 is also to settle the employer’s contributions 

from the employer’s contribution reserves of the pension schemes. As such, no employer’s contributions will be 

paid into the schemes. The regulatory employer’s contributions will total around CHF 3.7 million.


16 Associated companies 

As of December 31, 2005, participating interests in associated companies comprised goodwill totaling 


The Group share in the non-listed company Glochem Industries Ltd. is as follows: 

in CHF 1 000 


Balance at the beginning of the year - - 

Investments in associated companies 2 520 - 

Balance at the end of the year 2 520 - 

Thereof goodwill 1 531 - 

in CHF 1 000 


Assets 1 375 - 

Liabilities 386 - 

Share % 20% - 

Glochem Industries Ltd. is the only participating interest in associated companies and was acquired in September 

2005. Due to the short period, the pro-rata profits for the period under review were not taken into consideration. 

17 Financial investments 

Available At fair value 

for through profit 

in CHF 1 000 sale and loss Total 

Balance as of January 1, 2004 27 801 93 775 121 576 

Additions - 3 589 3 589 

Disposals (5 180) (42 944) (48 124) 

Transfer to marketable securities - (5 513) (5 513) 

Fair value adjustments 731 (2 025) (1 294) 

Balance as of December 31, 2004 23 352 46 882 70 236 

Additions - 893 893 

Disposals (5 154) (21 768) (26 922) 

Transfer to marketable securities - (3 570) (3 570) 

Fair value adjustments (9 651) 7 873 (1 778) 

Balance as of December 31, 2005 8 547 30 310 38 857 

For most of the participating interests, there are differently formulated shareholder-binding contracts or rights of 

preemption of the companies. 

17.1 Financial assets available for sale 

The entire investment consists of Aceto Corp., USA shares, which are listed at the stock exchange (NASDAQ: 

ACET, NASDAQ). In the year 2001, Schweizerhall obtained an important participating interest in Aceto for the 

sale of its international pharmaceutical trading activities. The adjusted acquisition price of the share is USD 2.61. 

The portfolio as of December 31, 2005 is 987 995 shares (previous year 1 620 861 shares). 

53


17.2 Financial assets valued at fair value through profit or loss 

Angaben in CHF in 1 000 

54 


S.A.M. Healthcare/Biotech Equity Fund Ltd. - 6 806 

Xenogen Corp. - 569 

GeneData AG 973 1 946 

Affinium Pharmaceuticals, Inc. - 967 

Agensys, Inc. 4 536 3 923 

Conforma Therapeutics, Inc. 1 242 1 075 

Intarcia Therapeutics, Inc. 991 1 083 

Paratek Pharmaceuticals, Inc. 5 219 4 514 

Perlegen Sciences, Inc. 5 953 4 385 

Nura, Inc. (ex Primal, Inc.) 289 250 

Syrrx, Inc. - 2 929 

TransForm Pharmaceuticals, Inc. - 4 578 

XenoPort, Inc. - 3 855 

Zyomyx, Inc. 444 384 

Aravis Venture I, L.P. 4 490 3 224 

Irix Pharmaceuticals, Inc. 6 173 6 396 

Financial assets at fair value through profit and loss 30 310 46 882 

The participating interests in S.A.M. Healthcare/Biotech Equity Fund Ltd., Syrrx, Inc. and TransForm Pharmaceuticals, 

Inc. were sold during the reporting year. CHF 2.1 million of the selling price were withheld by the 

buyers in an Escrow account for any warranty claim and are not due for payment until the year 2006. 

The participating interest in Affinium Pharmaceuticals, Inc. had to be written off in the year under review. 

Xenogen Corp. had its initial public offering in 2004 and XenoPort, Inc. in 2005. Following expiry of the 

qualifying period, the participating interests were reclassified into the marketable securities item. 

All other companies are non-listed. 

In the year 2002, Schweizerhall made a commitment to Aravis Venture I, L.P. for a participating interest of 

USD 7.4 million. USD 0.7 million were called off in the year 2005 (previous year USD 1.1 million). The residual 

obligation amounts to USD 3.3 million.


18 Deferred taxes 

(a) Deferred taxes concern the following balance sheet items: 

in CHF 1 000 

Assets Liabilities 

2005 2004 2005 2004 

Tangible fixed assets - - (6 006) (4 507) 

Intangible fixed assets 311 783 (8 468) (9 933) 

Pension schemes 1 332 328 (4 719) (5 374) 

Financial Investments 1 937 1 410 (2 384) (8 039) 

Inventories - - (1 841) (2 068) 

Other current assets - - (563) (557) 

Provisions - - (263) (245) 

Other liabilities 4 105 3 425 (15) - 

Net operating losses carryforward 2 045 9 183 - - 

Investments in subsidiaries and associated companies - - (3 026) (3 599) 

Total deferred tax 9 730 15 129 (27 285) (34 322) 

Offsetting (8 791) (14 618) 8 791 14 618 

Total deferred tax assets 939 511 

Total deferred tax liabilities (18 494) (19 704) 

Net - - (17 555) (19 193) 

Deferred tax assets and liabilities are balanced out if an actionable right exists to offset the current tax assets 

against the current tax liabilities, and if the deferred taxes apply with respect to the same tax authority. 

(b) Due date of deferred taxes 

in CHF 1 000 


Deferred tax assets: 9 730 15 129 

Deferred tax assets, realized after more than 12 months 9 517 13 249 

Deferred tax assets, realized within 12 months 213 1 880 

Deferred tax liabilities (27 285) (34 322) 

Deferred tax assets, realized after more than 12 months (25 380) (32 510) 

Deferred tax assets, realized within 12 months (1 905) (1 812) 

Net deferred tax (17 555) (19 193) 

55


c) Changes in the deferred taxes (net) 

in CHF 1 000 

56 


Balance as of January 1 (19 193) (8 639) 


Effect recognized in profit and loss statement (111) (989) 

Effect recognized in equity - pension plan 1 688 (621) 

Effect recognized in equity - treasury shares 61 (43) 

Balance as of December 31 (17 555) (19 193) 

(d) Maturity of tax losses carried forward without active deferred tax accrual 

In the USA, as of December 31, 2005, a total of USD 18.0 million (previous year USD 5.7 million) of tax losses 

carried forward existed at State level and USD 62.0 million (previous year USD 50.2 million) of tax losses carried 

forward at Federal level, for which no deferred tax accrual was capitalized. The losses carried forward at State 

level mature in the years 2009 and 2010, those at Federal level as from the year 2018. 

In Switzerland, as of December 31, 2005, CHF 0 (previous year CHF 1.9 million, maturity in the year 2008) of tax 

losses carried forward existed, for which no deferred tax accrual was capitalized. 

19 Inventories 

in CHF 1 000 


Raw material and trade goods 20 791 22 956 

Packaging material 1 691 760 

Finished products 3 477 3 857 

Work in progress - 14 

Total inventories 25 959 27 587 

Inventory write-offs recognized in profit and loss statement 989 1 184 

20 Trade account receivables 

Angaben in CHF 1 000 


Trade receivables 42 603 34 965 

Less: provision for doubtful debts (589) (296) 

Net trade receivables 42 014 34 669 

Provision for doubtful debts recognized in profit and loss statement (16) (266) 

There is no credit risk concentration in the trade account receivables, as the Group has a large number of 

customers.


21 Other current assets 

in CHF 1 000 


Short-term financial receivables 2 436 274 

Other short-term receivables 3 315 4 217 

Prepaid expenses and accrued income 913 702 

Other current assets 6 664 5 193 

22 Marketable securities 

in CHF 1 000 

Balance as of January 1, 2004 42 007 

Additions 22 023 

Disposals (44 202) 

Transfer from financial assets 5 513 

Fair value adjustments (2 152) 

Balance as of December 31, 2004 23 189 

Additions - 

Disposals (21 970) 

Transfer from financial assets 3 570 

Fair value adjustments 1 561 

Balance as of December 31, 2005 6 351 

The marketable securities are classified as financial assets valued at fair value through profit or loss. Marketable 

securities are held in purpose of liquidity management and not for active trading. Accordingly, the earnings from 

the securities are shown in the profit and loss statement under financial expenditure or financial income, and in 

the cash flow statement as cash flow from operating activities; the changes to the marketable securities portfolio 

are shown as cash flow from investment activities. 

23 Share capital 

As of December 31, 2005 and 2004, the share capital was CHF 1 215 million. As of December 31, 2004, this was 

made up of 121 502 registered shares with a nominal value of CHF 10 each. In May 2005, these shares were 

split in the ratio 1:25. Since then and as of December 31, 2005, the share capital has been divided up into 3 037 

550 registered shares with a nominal value of CHF 0.40 each. 

57


24 Own shares 

58 

Number 


Balance as of January 1 215 725 129 650 

Additions 2 105 121 100 

Disposals (217 830) - 

Payment of acquisitions - (35 025) 

Balance as of December 31 - 215 725 

In the year under review, 2 105 shares were acquired each at an average price of CHF 74.72 (previous year 

121 100 shares each at an average price of CHF 71.52) and 217 830 shares were sold at an average price of 

CHF 73.45 (previous year sale of 35 025 own shares, valued at CHF 72.00/share, as part of the purchasing price 

for the Cimex Group). 

No repurchase or contingent obligations exist whatsoever in connection with own shares. No own shares were 

issued in connection with share-related remuneration, either in the year under review or in the previous year. 

12 500 registered shares of the company were held by the Welfare Fund of Schweizerhall Chemie AG as of 

December 31, 2005 (December 31, 2004: 16 900 shares). 

25 Reserves 

The changes in the reserves are as follows: 

Fair value Amounts for Reserves/ 

adjustments of pension Deferred Retained 

in CHF 1 000 financial assets schemes tax earnings Total 

Balance as of January 1, 2004 18 964 - - 264 009 282 973 

Income and expenses 

recognized in equity (2 846) 2 521 (621) - (946) 

Change in treasury shares - - - (705) (705) 

Dividends - - - (6 075) (6 075) 

Dividends on treasury shares - - - 258 258 

Net profit - - - 7 246 7 246 

Balance as of December 31, 2004 16 118 2 521 (621) 264 733 282 751 

Income and expenses 

recognized in equity (11 980) (7 717) 1 688 - (18 009) 

Change in treasury shares - - - (715) (715) 

Dividends - - - (6 075) (6 075) 

Acquisition of minority interests - - - (20 293) (20 293) 

Net profit - - - 16 368 16 368 

Balance as of December 31, 2005 4 138 (5 196) 1 067 254 018 254 027 

The dividend paid in 2005 for the previous financial year was CHF 6.1 million (CHF 2.00 per share; 2003 

CHF 5.8 million, CHF 2.00 per share). For 2005, a dividend of CHF 2.00 per share and a total of CHF 6.1 million 

will again be proposed at the General Meeting of Shareholders on April 28, 2006. This dividend liability is not 

taken into consideration in these Group Financial Statements. The amount envisaged for the dividend payout is 

based on the available profit reserves of Schweizerhall Holding AG and is fixed in accordance with the regulations 

of the Swiss Code of Obligations. 

The reserves / retained earnings were debited with CHF 20.3 million as a result of minority interest acquisition of 

Cimex Pharma AG (details pt. 31).


26 Minority shares 

in CHF 1 000 


Balance as of January 1 (12 508) - 


Investment in minority interests 12 348 - 

Net profit share 96 42 

Balance as of December 2005 (64) (12 508) 

Details on the minority interest acquisition are contained in pt. 31. 

27 Financial liabilities 

in CHF 1 000 


Towards banks 3 625 19 660 

Total long-term financial liabilities 3 625 19 660 

Towards banks 12 907 3 802 

Towards associates - 1 000 

Total short-term financial liabilities 12 907 4 802 

Total financial liabilities 16 532 24 462 

The interest rate fluctuation risks and contractual interest adjustment dates associated with the interest-bearing 

liabilities are as follows: 

in CHF 1 000 


1–5 years 3 625 19 660 

more than 5 years - - 

Total long-term financial liabilities 3 625 19 660 

Due dates of long-term interest-bearing liabilities: 

in CHF 1 000 


2006 n/a 16 035 

2007 3 625 3 625 

2008 - - 

Later on - - 

Total financial liabilities 3 625 19 660 

All financial liabilities are in Swiss Francs. 

59


The effective interest rates as of the balance sheet key date are: 

60 


CHF CHF 

Towards banks 2.82% 2.83% 

28 Deferred revenue 

in CHF 1 000 


Balance as of January 1 21 951 - 

Effect of acquisition - 21 951 

Received payments 8 946 - 

Refunded payments (190) - 

Revenue recognized in profit and loss statement (4 221) - 

Balance as of December 31 26 486 21 951 

Thereof short-term 4 783 3 659 

Thereof long-term 21 703 18 292 

29 Trade and other payables 

in CHF 1 000 


Trade and other payables 31 481 28 455 

Thereof towards associates - - 

30 Other short-term liabilities 

in CHF 1 000 


Towards pension plan 235 225 

Towards 3 rd parties 1 612 26 594 

Prepayments from customers - 9 

Any other duties and taxes 2 849 3 310 

Accruals 7 839 5 786 

Other short-term liabilities 12 535 35 924 

31 Acquisition of companies 

On December 10, 2004, the Group acquired 80.4% of Cimex Pharma AG, Binningen. 78.5% of the shares of 

Cimex Pharma AG were taken over from the previous majority shareholders Jean Lüchinger, Eduard Kny and 

Cathey World Investment Ltd. against payment of CHF 98.5 million in cash and 35 025 Schweizerhall shares. 

A further 1.7% of the shares of Cimex Pharma AG were held by Cimex Pharma AG itself and were bought from 

the latter against payment of CHF 2.2 million in cash. The remaining 0.2% were already held by the Schweizerhall 

Group prior to the acquisition.


Between March and May 2005, the Group submitted a voluntary tender offer to the public shareholders of Cimex 

Pharma AG and acquired a further 19.5% of Cimex Pharma AG at a total price of CHF 32.6 million. CHF 12.3 mil- 

lion thereof were already deposited as minority shares, CHF 20.3 million was debited to the reserves. 

Had the acquisition taken place as early as January 1, 2004, the Group turnover would have been around 

CHF 287 million. As the Group profits for 2004 were influenced to a large extent by the financial results, no 

statement is possible as to how high the Group profits would have been, had the acquisition been made as early 

as January 1, 2004. 

The acquired net assets and the goodwill are as follows: 

in CHF 1 000 

Purchase price: 

2005 2004 Total 

- cash 30 988 98 725 129 713 

- cash out costs, directly attributable to acquisition 1 653 402 2 055 

- fair value of shares - 2 521 2 521 

Total purchase price 32 641 101 648 134 289 

Fair value of acquired net assets - (50 350) (50 350) 

Goodwill - 51 298 51 298 

The fair value from the own portfolio of shares sold was calculated on the basis of the stock exchange price. 

The goodwill results from the high profitability and the major growth opportunities of the company acquired. 

The following assets and liabilities were acquired within the scope of the acquisition: 

2005 2004 Total 2004 

Acquiree's 

fair fair fair carrying 

in CHF 1 000 value value value amount 

Tangible fixed assets 40 550 37 326 

Contractual and non-contractual customer relations 72 479 34 161 

Software and other intangible assets 738 738 

Inventories 8 678 8 145 

Trade receivables 8 743 8 743 

Other current assets 1 979 1 979 


Financial liabilities (27 370) (27 370) 

Deferred tax liabilities (8 902) (4 128) 

Pension liabilities (779) (779) 

Deferred revenues (21 951) (21 951) 

Trade payables (5 684) (5 684) 

Current tax (1 560) (1 560) 

Other current liabilities (5 283) (5 283) 

Net assets 62 900 25 598 

(continued on next page) 

61


(continued) 

62 

2005 2004 Total 2004 

Acquiree‘s 

fair fair fair carrying 

in CHF 1 000 value value value amount 

Net assets 62 900 25 598 

Minority interests per 10.12.2004 (12 550) 

Acquired net assets 50 350 

Goodwill 51 298 

Total purchase price 32 641 101 648 134 289 

Paid in treasury shares - (2 521) (2 521) 

Less acquired liquidity - (1 262) (1 262) 

Purchase price due in the following year 24 864 (24 864) - 

Net cash drain from acquisition 

of subsidiary 57 505 73 001 130 506 

32 Business transactions with associates 

Shareholders, the personnel pension facilities and affiliated companies are considered associates. 

The following business transactions were carried out with affiliated companies and persons: 

(a) Purchase of goods and services 

in CHF 1 000 


- to associated companies 65 - 

Total 65 - 

(b) Compensation of the Management 

Associated persons of the Group include members of the Board of Directors, members of the Group Management 

as well as members of their family. Compensation within the scope of normal business activities is as follows: 

in CHF 1 000 


Short-term employee benefits 3 172 1 784 

Termination benefits - - 

Post employement benefits 297 242 

Total 3 469 2 026 

No compensation is paid to family members. 

(c) Outstanding items from the purchase/sale of goods/services at year end. 

in CHF 1 000 


Receivables from associated companies - - 

Liabilities towards associated companies 6 -


(d) Loans from associated companies and persons 

in CHF 1 000 


At the beginning of the year 1 000 - 

Effect of acquisition - 1 000 

Calculated interests - - 

Refunds (1 000) - 

At the end of the year - 1 000 

33 Disinvestments 

Schweizerhall Investment Ltd., Jersey was liquidated in 2004. 

There were no sales of subsidiary companies in the years 2005 and 2004. 

34 Derivative financial instruments 

(a) Foreign currency futures contracts 

in CHF 1 000 


Contract value 38 577 70 843 

Positiv replacement value 139 153 

Negativ replacement value 72 92 

The fair value of the derivative financial instruments is included in other current assets or in the short-tem financial 

liabilities. 

The year end contract value is calculated on the overall volume of the individual contracts using year end exchange 

rates. The positive replacement value constitutes the theoretical profit, if the open currency contracts 

had been closed out as of December 31. Accordingly, the negative replacement value constitutes the theoretical 

loss in the event of closing out as of December 31. The change in the fair value was recognized in the profit 

and loss statement, as the corresponding instruments do not fulfill the preconditions for recognizing as hedging 

transactions. 

All foreign currency futures contracts have a term of less than 3 months. 

Derivative financial instruments concern the following currencies: 

in CHF 1 000 


USD 26 296 57 140 

EUR 12 281 13 703 

Total 38 577 70 843 

63


35 Additional information 

35.1 Development costs 

The following development costs are included in the profit and loss statement: 

in CHF 1 000 

64 


Employee benefits 2 858 - 

Other operational expenses 1 963 - 

Total developement costs 4 820 - 

Work performed by the entity and capitalized (2 261) - 

Total recognized in profit and loss statement 2 559 - 

35.2 Pending legal cases 

Within the scope of ordinary business activities, certain Group companies are accused parties in dispute procedures, 

through which obligations could result. It is possible that the potential obligations may not or not completely 

be covered by insurance benefits. 

Nevertheless, the Group Management is of the opinion that no consequences can result from these pending 

legal cases, which could have any fundamental influence on the financial situation of the Group. As soon as the 

outcome of proceedings can be estimated to an appropriate extent, corresponding provisions will be made. 

35.3 Contingent liabilities 

No contingent liabilities exist. 

35.4 Assets pledged for own liabilities 

in CHF 1 000 


Properties 3 446 12 127 

Cimex AG shares - 14 099 

Total 3 446 26 226 

As of December 31, 2005, one item of real property was still encumbered with a certificate of indebtedness of 

CHF 2 million, whereof CHF 1.3 million were claimed. 

35.5 Long-term rental agreements 

Future payments to be made from long-term, non-terminable rental agreements are: 

in CHF 1 000 


Total amount of future rents 3 254 965 

Up to 1 year 818 280 

Between 1 and 5 years 2 436 685 

After more than 5 years - - 

Rent / Leasing expenses included in the profit and loss statement 724 313


35.6 Capital obligations 

The investment expenditure, for which contractual obligations exist as of the balance sheet key date, but which 

has not yet been accrued, is: 

in CHF 1 000 


Tangible fixed assets 849 943 

Intangible fixed assets 890 519 

Total Commitments 1 739 1 462 

Capital obligations for financial assets are explained under pt. 17.2. 

35.7 Events subsequent to the balance sheet key date 

The Group Financial Statements were approved by the Board of Directors of Schweizerhall Holding AG on March 

3, 2006. By this time, the Schweizerhall Group was in advanced negotiations with the owners of a privately held 

pharmaceuticals company. Successful conclusion of these negotiations would lead to a significant business combination. 

36 Principal Group subsidiaries and associated companies 

36.1 Consolidated investments in subsidiaries 

Paid-in Direct Indirect 

Functional Capital equity equity 

As of December 31, 2005 currency (in CHF 1 000) interest interest 

Switzerland 

Schweizerhall Chemie AG, Basle CHF 12 550 100.0% - 

Schweizerhall Management AG, Zurich CHF 3 600 100.0% - 

Cimex Pharma AG, Binningen CHF 12 300 99.9% - 

Cimex AG, Liesberg CHF 400 - 99.9% 

Cimex Development AG, Binningen CHF 250 - 99.9% 

Cimex Supply AG, Binningen CHF 100 - 99.9% 

USA, New Jersey 

Schweizerhall, Inc., Bridgewater CHF 0 100.0% - 

36.2 Investments in associates consolidated at equity 

Paid-in Direct Indirect 

Functional Capital equity equity 

As of December 31, 2005 currency (in CHF 1 000) interest interest 

India 

Glochem Industries Ltd. INR 500 - 20.0% 

65

SCHWEIZERHALL GROUP | REPORT OF THE GROUP AUDITORS 

Report of the Group Auditors 

to the General Meeting of 


Basle 

As auditors of the group, we have audited the consolidated financial statements (income statement, balance 

sheet, statement of cash flows, statement of recognized income and notes included on pages 24 

to 65) of Schweizerhall Group for the year ended 31 December 2005. 

These consolidated financial statements are within the responsibility of the Board of Directors. Our responsibility 

is to express an opinion on these consolidated financial statements based on our audit. We 

confirm that we meet the legal requirements concerning professional qualification and independence. 

Our audit was conducted in accordance with Swiss Auditing Standards and with the International Standards 

on Auditing, which require that an audit be planned and performed to obtain reasonable assurance 

about whether the consolidated financial statements are free from material misstatement. We have 

examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial 

statements. We have also assessed the accounting principles used, significant estimates made and the 

overall consolidated financial statement presentation. We believe that our audit provides a reasonable 

basis for our opinion. 

In our opinion, the consolidated financial statements give a true and fair view of the financial position, 

the results of operations and the cash flows in accordance with the International Financial Reporting 

Standards (IFRS) and comply with Swiss law. 

We recommend that the consolidated financial statements submitted to you be approved. 

Without qualifying our opinion, we would like to draw your attention to explanation 2.10.4 “the valuation 

principles of the financial investments“(page 34) and the explanation 17 (pages 53 and 54) in the notes 

to the consolidated financial statements. There are investments in non-listed healthcare companies in 

the amount of approximately CHF 30.3 million, included in the financial investments of the group. The 

assessment of these investments was performed by the Valuation Committee and approved by the 

Board of Directors. We have reviewed the methods applied by the Valuation Committee to assess these 

investments and inspected the supporting documents. While the methods applied and the documentation 

seem to be adequate, assumptions and estimates were necessary to define the values. Due to 

the uncertainty caused by these assumptions and estimates and due to liquid markets not existing in all 

cases, the determined values may differ substantially from the realizable values. 

PricewaterhouseCoopers AG 

D. Suter R. Maiocchi 

Basle, 3 March 2006 

[this is a translation, the original letter was issued in german only] 

66

SCHWEIZERHALL HOLDING AG | TABLE OF CONTENTS 

FINANCIAL STATEMENTS 2005 

Financial Statements 




Notes to the Financial Statements 70 



67

SCHWEIZERHALL HOLDING AG | INCOME STATEMENT 

in CHF 

68 


Financial income 20 383 172 24 592 370 

Reversal of depreciation on investments in subsidiaries 1 260 920 981 074 

Non-operating income - 35 946 

Total revenue 21 644 092 25 609 390 

Staff expenses 295 795 306 011 

Administration expenses 1 467 660 1 151 390 

Financial expenses 18 014 427 18 374 552 

Depreciation on investments in subsidiaries 4 250 709 - 

Capital tax 105 668 112 159 

Total expenses 24 134 259 19 944 112 

Net profit / (loss) for the year (2 490 167) 5 665 278

SCHWEIZERHALL HOLDING AG | BALANCE SHEET 

in CHF 

Assets 

31.12.2005 31.12.2004 

Cash and cash equivalents 6 868 141 3 030 735 

Marketable securities 5 983 123 38 499 602 

Liquid funds 12 851 264 41 530 337 

Short-term loans to Group companies 29 082 236 40 017 663 

Receivables 2 266 466 131 733 

Total current assets 44 199 966 81 679 733 

Financial investements in subsidiaries 164 937 199 135 282 307 

Financial assets / minority intreests 22 063 094 39 723 985 

Tangible assets 1 1 

Total assets 187 000 294 175 006 293 

Total assets 231 200 260 256 686 026 

Liabilities and shareholders‘ equity 

Financial liabilities 3 000 000 - 

Other liabilities 72 899 25 155 701 

Short-term loans from Group companies 5 169 303 - 

Accruals 113 000 120 000 

Total current liabilities 8 355 202 25 275 701 

Share capital 1 215 020 1 215 020 

Share premium 3 000 000 3 000 000 

Reserves 221 114 781 204 493 439 

Treasury shares - 16 621 342 

Retained earnings 5 424 415 246 

Net profit / (loss) for the year (2 490 167) 5 665 278 

Balance sheet profit / (loss) (2 484 743) 6 080 524 

Total shareholders‘ equity 222 845 058 231 410 325 

Total liabilities 231 200 260 256 686 026 

69

SCHWEIZERHALL HOLDING AG | NOTES TO THE FINANCIAL STATEMENTS 

1 Profit and loss statement 

1.1 Financial income 

The financial income includes interest and dividend earnings and from realized and non-realized foreign currency 

and exchange rate profits on securities, financial assets and derivative financial instruments (foreign 

currency futures transactions for hedging purposes). 

1.2 Reversal of depreciation on investments in subsidiaries 

Previous depreciation of of the participating interest in Schweizerhall Management AG was reinstated in the 

years 2004 and 2005. In the year 2004, this item includes the difference between book value and liquidation 

proceeds from the liquidation of Schweizerhall Investment Ltd. 

1.3 Administration expenses 

The administration expenses correspond to the management fee charged by Schweizerhall Management AG. 

1.4 Financial expenses 

The financial expenses include realized and non-realized foreign currency and exchange rate losses on securities, 

financial assets and derivative financial instruments (foreign currency futures transactions for hedging purposes). 

1.5 Depreciation on investments in subsidiaries 

The value of the participating interest in Schweizerhall, Inc., New Jersey was adjusted in the year 2005. 

2 Balance sheet 

2.1 Liquid funds 

This item includes short-term realizable securities and cash funds. 

2.2 Short-term loans to Group companies 

These are loans to Schweizerhall Chemie AG, to Schweizerhall, Inc., to Schweizerhall Management AG (only as 

of December 31, 2004), to Cimex AG and to Cimex Pharma AG (only as of December 31, 2005). 

2.3 Financial investments in subsidiaries 

The participating interests have been included in the balance sheet at acquisition value less value adjustments 

and are shown in note 36 on page 65. The value adjustment to the participating interest in Schweizerhall 

Management AG was partly dissolved. The most fundamental change is the purchase of the Cimex Group and 

the liquidation of Schweizerhall Investment Ltd. 

2.4 Financial investments 

The financial investments directly held by Schweizerhall Holding AG are divided up as follows: 

2.4.1 Healthcare companies listed directly/indirectly 

This category includes the shares in listed healthcare companies through non-listed associated companies 

(S.A.M. Healthcare/Biotech Equity Fund Ltd.) as well as directly-held participating interests in listed healthcare 

companies which are not tradable in the short term and therefore are not included in the balance sheet under 

securities. 

Associated companies are included at acquisition value or at the pro-rata equity capital as of the balance sheet 

key date if the latter is the lower. Directly held companies are valued at current market values (stock exchange 

closing price on the balance sheet key date). 

As of December 31, 2005, no more financial assets were held which belong to this category. 

70


2.4.2 Non-listed healthcare companies 

Non-listed healthcare companies are valued at acquisition value or at the lower current market value. The 

determination of the current market value is described under pt. 2.10.4 in the notes to the Group Financial 

Statements. 

In 2002, Schweizerhall made a commitment to Aravis Venture I, L.P. for a participating interest of USD 7.4 mil- 

lion. USD 0.7 million were called off in the year 2005. The residual obligation amounts to USD 3.3 million. 

2.5 Receivables 

As of the end of 2005, receivables include the warranty withholdings from the sale of the participating interests 

in Syrrx, Inc. and TransForm Pharmaceuticals, Inc. (as described under point 4.2.1 in the Notes to the Group 

Fiancial Statements). 

2.6 Financial liabilities 

Short-term, interest-bearing liabilities with respect to banks are shown under this item. 

2.7 Short-term loans to Group companies 

These are loans of Schweizerhall Management AG. 

2.8 Other liabilities 

This item includes the shares of the purchasing price for the Cimex Group due at the end of February 2005 and 

at the end of April 2006. 

2.9 Accruals 

Comprises basically reserves for owed taxes. 

2.10 Share capital 

This is made up of 3 037 550 registered shares with a nominal value of CHF 0.40 per share. 

2.11 Reserves 

The increase is due to the dissolution of the reserve for own shares. 

2.12 Reserve for treasury shares 

All own shares were sold in 2005; thus, the reserve was dissolved. 

3 Other information 

3.1 Guarantee commitments and collateral pledged in favor of Group companies 

As of 31.12.2005: CHF 18.7 million. Previous year: none. 

3.2 Assets pledged for own liabilities 

None. 

3.3 Leasing liabilities 

None. 

3.4 Fire insurance value of the tangible fixed assets 

As the tangible fixed assets concern an undeveloped real estate, there is no insurable value. 

3.5 Liabilities with respect to pension facilities 

None. 

71


3.6 Outstanding loan obligations 

None. 

3.7 Revaluations 

None. 

3.8 Net dissolution of undisclosed reserves 

None. 

3.9 Treasury stock 

As per December 31, 2005, the company held no own shares – neither directly nor via its consolidated subsidiary 

companies (previous year 215 725 registered shares with a nominal value of CHF 0.40 each). 

There are no shares reserved for specific purposes. 

In the year under review, 2 105 shares were acquired at an average price of CHF 74.72 (previous year 

121 100 shares at an average price of CHF 71.52) and 217 830 shares sold at an average price of CHF 73.45 

(previous year sale of 35 025 own shares, valued at CHF 72.00/share, as part of the purchasing price for the 

Cimex Group). 

No repurchase or contingent obligations exist whatsoever in connection with own shares. No own shares were 

issued in connection with share-related remuneration neither in the year under review nor in the previous year. 

12 500 registered shares of the company were held by the Welfare Fund of Schweizerhall Chemie AG as of 

December 31, 2005 (December 31, 2004: 16 900 shares). 

3.10 Significant shareholders 

The following groups of shareholders or shareholders exceeded the five percent threshold as of the 

balance sheet key date: 

Share on Share on 

Groups of shareholders or shareholders 31.12.2005 31.12.2004 

Jean Lüchinger, Wollerau; Eduard Kny, Kehrsiten; 

Cathey World Investment Ltd., Hong Kong 29.1% 29.1% 

Sven Hoffmann, Riehen; Alexander Knapp Voith, 

St. Moritz; Hans J. Löliger, Basle - 14.6% 

Alexander Knapp Voith, St. Moritz 14.8% - 

Marianne Schär, Dr. Hans-Peter Schär, Basle 8.6% 8.9% 

Schweizerhall Holding AG (own shares) - 7.1% 

As of the balance sheet key date, 384 771 shares or 12.7% of the total shares were in dispo portfolios. 

72

SCHWEIZERHALL HOLDING AG | PROPOSAL OF THE BOARD OF 

DIRECTORS 

Proposal of the Board of Directors for the appropriation of the balance sheet profit: 

in CHF 

Balance sheet profit 1.1.2005 6 080 524 

Paid dividend (6 075 100) 

Retained earnings 2005 (2 490 167) 

Net loss for the year 8 559 843 

Debiting the reserves 31.12.2005 6 075 100 

Payment of a gross dividend of CHF 2.00 per registered share (6 075 100) 

Balance sheet profit 2005 - 

On approval of this proposal by the General Meeting of Shareholders a 

gross dividend per share will be paid 2.00 

Less 35% Federal Withholding Tax (0.70) 

Net amount payable, value date May 3, 2006 1.30 

On behalf of the Board of Directors of 


The Chairman: Luzi Andreas von Bidder 

73

SCHWEIZERHALL HOLDING AG | REPORT OF THE AUDITORS 

Report of the statutory Auditors 

to the General Meeting of 


Basle 

As statutory auditors, we have audited the accounting records and the financial statements (income 

statement, balance sheet and notes included on pages 68 to 73) of Schweizerhall Holding AG for the 

year ended 31 December 2005. 

These financial statements are within the responsibility of the Board of Directors. Our responsibility is 

to express an opinion on these financial statements based on our audit. We confirm that we meet the 

legal requirements concerning professional qualification and independence. 

Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be 

planned and performed to obtain reasonable assurance about whether the financial statements are free 

from material misstatement. We have examined on a test basis evidence supporting the amounts and 

disclosures in the financial statements. We have also assessed the accounting principles used, 

significant estimates made as well as the overall financial statement presentation. We believe that our 

audit provides a reasonable basis for our opinion. 

In our opinion, the accounting records and financial statements and the proposed appropriation of 

available earnings comply with Swiss law and the company‘s articles of incorporation. 

We recommend that the financial statements submitted to you be approved. 

Without qualifying our opinion, we would like to draw your attention to the explanations 2.4 (pages 70 

and 71) on the financial investments in the notes to the financial statements. There are investments in 

non-listed healthcare companies in the amount of approximately CHF 22.1 million included in the financial 

investments of the holding company. The assessment of these investments was performed by the 

Valuation Committee and approved by the Board of Directors. We have reviewed the methods applied 

by the Valuation Committee to assess these investments and inspected the supporting documents. 

While the methods applied and the documentation seem to be adequate, assumptions and estimates 

were necessary to define the values. Due to the uncertainty caused by these assumptions and estimates 

and due to liquid markets not existing in all cases, the determined values may differ substantially 

from the realizable values. 

PricewaterhouseCoopers AG 

D. Suter R. Maiocchi 

Basle, 3 March 2006 

[this is a translation, the original letter was issued in german only] 

74

SCHWEIZERHALL | CORPORATE GOVERNANCE 

Group structure and shareholders 78 

Capital structure 79 

Board of Directors 81 

Group Management 86 

Compensation, shareholdings and loans 87 

Shareholders’ participation 88 

Disclosure of shareholdings 88 

Change of control and defense measures 89 

Auditors 89 

Information policy 89 

The basis of the following part is the “Guideline 

Concerning Information on Corporate Governance” 

introduced by the SWX Swiss Exchange on 

July 1, 2002. As in the past, parts of this infor- 

mation are in other sections of this Annual Report 

or on the company website; therefore they will not 

be repeated explicitely. 

77


GROUP STRUCTURE AND SHAREHOLDERS 

Group structure of the Schweizerhall Group 

Basis of consolidation 

Basis of consolidation are the companies as shown in the Notes to the Financial Statements of 

Schweizerhall Holding AG (pt. 36.1). 

78 

Pharmaceuticals Committee 

Chemicals Committee 

Business Unit 

Pharma 

Corporate entities as of December 31, 2005: 

Board of Directors of Schweizerhall Holding AG 

Luzi Andreas von Bidder, Chairman 

Dr. René Muttenzer, Vice-Chairman 

Dr. Staffan O. Bjöörn, Member 

Sven Hoffmann, Member 

Eduard Kny, Member 

Dr. Dr. h.c. François L’Eplattenier, Member 

Jean Lüchinger, Member 

Jürg Michel, Member 

Board of Directors of Schweizerhall Holding AG 

Schweizerhall Management AG 

Audit Committee 

Finance Committee 

Valuation Committee 

Business Unit 

Chemicals 

Honorary Chairman Schweizerhall Holding AG 

Dr. Hans-Peter Schär 


Luzi Andreas von Bidder, Chairman 

Marcel von Ah, CFO 

Schweizerhall Chemie AG 

Ivan Vollenweider, CEO 

Cimex Pharma AG 

Dr. Axel Müller, CEO as of August 2005 

Auditors 

PricewaterhouseCoopers AG, Basle


Shareholders 

As of December 31, 2005, Schweizerhall Holding AG had 811 registered shareholders. The shareholder 

structure was as follows: 

Private Institutional 

Shareholders 91% 9% 

Shares held 78% 22% 

Approximately 36 non-Swiss shareholders held about 20.5% of the shares. 

Shareholders who held more than 5% of the equity and voting rights: see page 72. 

With regard to the acquisition of Cimex Pharma AG, there is a so-called lock-up agreement between 

Schweizerhall Holding AG and the sellers of Cimex Pharma AG. The deposited Schweizerhall shares will 

be released in stages over a period of three years counting from the closing date of the contract 

(December 10, 2004), i.e. for the first time on December 10, 2005. 

Crossholdings 

No crossholdings exceeding 5% of the voting rights or equity capital exist with other incorporated 

companies. 

CAPITAL STRUCTURE 

Shareholders’ equity and shares 

As of December 31, 2005 and 2004, the share capital totaled CHF 1.215 million. As of December 31, 

2004 of the share capital was divided into 121 502 registered shares of CHF 10 nominal value each. In 

May 2005, these shares were split in the ratio 1:25. Since then and as of December 31, 2005, the share 

capital has been divided into 3 037 550 registered shares of CHF 0.40 nominal value each. The share 

capital of Schweizerhall Holding AG is fully paid-in. Each share is entitled to dividend payments and has 

one vote at the General Meeting of Shareholders. 

Conditional and authorized capital 

As of December 31, 2005 the Schweizerhall Group had neither conditional nor authorized capital. 

Changes in share capital 

No changes to the capital structure were implemented in 2005. 

For a detailed development of the shareholders’ equity, please refer to pt. 25-26 in the Notes to the 

Financial Statements. 

79


Limitations in transferability and nominee registrations 

In accordance with Article 6 of the Article of Incorporation, the company may deny shareholder 

registration with voting rights and rights associated to the voting power in the share register if the 

purchaser of shares fails to declare that the shares were acquired in his own name and for his own 

account. The Board is responsible for the acknowledgment of and permission to register shareholders 

in the shareholder register; the Board delegated this duty to its Chairman. 

The Board may register nominees in the company’s share register with the right to vote up to 3% of the 

issued share capital as reflected in the commercial register. In excess of that limit, the Board may register 

nominees with voting rights if such nominee discloses name, address and shareholding of any person in 

whose account the nominee holds 0.5% or more of the issued share capital. 

Convertible bonds and options 

No convertible bonds or share-ownership programs (options etc.) exist within the Group. 

80


BOARD OF DIRECTORS 

The Board Directors of Schweizerhall Holding AG defines the strategic direction and supervises the over- 

all affairs of the Group. The number of Board Members has increased to eight. 

The Group Management is responsible for the implementation of the strategies and for the day-to-day 

business activities. 

Luzi Andreas von Bidder 

Chairman of the Board, Graduate in Economics, HSG (University of St. Gallen), Swiss citizen, born 9.4.1953 

Board membership and executive mandates within the Schweizerhall Group 

■ Member of the Board of Schweizerhall Holding AG since 1997 and its Chairman since 2003 

■ Current term of office expires 2006; standing for reelection 

■ Chairman of the Board of Directors of Schweizerhall Management AG since 2003 

Professional background, other activities and vested interests 

■ 1992 to 2002 Chairman and CEO of Novartis Ophthalmics AG, Bulach 

■ Member of the Novartis Pharma Executive Committee 

■ Previously held various management functions with Ciba-Geigy and Novartis 

René Muttenzer 

Vice-Chairman of the Board, Doctor of Law, Lawyer, Swiss citizen, born 5.5.1943 


■ Member of the Board of Schweizerhall Holding AG since 2003 and its Vice-Chairman since 2004 

■ Current term of office expires in 2006; standing for reelection 


■ 1969 to 2003 Legal advisor (Geigy, Ciba-Geigy, Novartis) for international businesses and affairs 

■ 1996 to 2003 Head of Business Development and member of the Management Committee of Novartis 

Animal Health 

■ Member of the Board of Directors of Cardiosafe International AG (Volketswil); Vice-Chairman of the 

Board of Genova AG ( Muttenz) 

Staffan O. Bjöörn 

Member of the Board, Doctor of Political Sciences, Swiss/Swedish dual citizenship, born 8.9.1944 


■ Member of the Board of Schweizerhall Holding AG since 1986 

■ Current term of office expires in 2007 

■ Chairman of the Board of Directors of Schweizerhall Chemie AG since 2002 


■ For many years managed a firm trading in fiber raw materials (paper industry) and water treatment 

chemicals 

■ Chairman of the Board of Directors of Cell International SA 

81


François L’Eplattenier 

Member of the Board, Doctor of Technical Sciences, ETH Zurich (Swiss Federal Institute of Technology), 

Chemist, Swiss citizen, born 24.1.1939 

Board membership and executive mandates in the Schweizerhall Group 




■ Since 1996 Chairman of the Novartis Venture Fund 

■ 1989 to 2001 Chairman of the Research Commission of Economiesuisse 

■ 1987 to 1999 Member of the ETH Council 

■ 1988 to 1996 Member of the Group Management of Ciba-Geigy AG, responsible for Group R&D 

■ Member of Aravis Venture Associates AG, Zurich 

■ Chairman of the Board of Cytos Biotechnology AG (Schlieren); Member of the Board of Bachem AG 

82 

(Bubendorf); Chairman of the Board of the Centre Suisse d’Electronique et de Microtechnique AS (CSEM) 

(Neuenburg); Member of the Board of GeneData AG (Basle); Member of the Board of NovImmune SA 

(Geneva) 

Sven Hoffmann 

Member of the Board, Licentiate in Law, Lawyer, Swiss citizen, born 29.6.1953 





■ Since 1992 freelance consultant and legal advisor primarily in the areas of contract, corporate, succession 

and building law and asset management 

■ 1983 to 1991 various positions held at F. Hoffmann-La Roche AG, Pharma Division, lastly as Regional 

Manager, Pharma Division, Roche Hong Kong 

■ Chairman of the Board of Sallfort AG (Basle), Member of the Board of the following companies: Tivona 

Group; Bockstecherhof Immobilien AG; Bären Apotheke AG; Massellaz AG; Cruba Holding AG; 

Holdges AG; Luxury Trading AG; 

Jürg Michel 

Member of the Board, Banker, Swiss citizen, born 6.9.1951 

Board membership and executive mandates in the Schweizerhall Group 




■ Since 1991 Würth Group, responsible for finance worldwide 

■ 1969 to 1991 international experience in the financial centers Zurich, Frankfurt and New York 

■ Member of the Board of Management of the Würth Group 

■ Chairman of the Board of Würth Reinsurance Company S.A. (Luxembourg) and of Tunap AG (Märstetten) 

■ Various other mandates as Board Member within the Würth Group


Jean Lüchinger 

Member of the Board, Graduate in Civil Engineering, Swiss Federal Institute of Technology (ETH), Swiss 

citizen, born 2.7.1944 


■ Member of the Board of Schweizerhall Holding AG since 15.4.2005 

■ Current term expires in 2008 

■ Chairman of the Board of Cimex Pharma AG since 1998 


■ Since 1998 Member of the Board of Cimex Pharma AG; up until end of July 2005 Member of the 

Group Management 

■ 1989 to 1997 Managing Partner of Consulting- & Management Associates AG 

■ Responsible for marketing and sales in the area of pharmaceuticals, marketing and sales management 

worldwide for vitamins and fine chemicals; Member of the Management in the area of business 

consulting in a trust company. 

Eduard Kny 

Member of the Board, Swiss certified accountant, Swiss citizen, born 27.1.1942 


■ Member of the Board of Schweizerhall Holding AG since 15.4.2005 


■ CEO of Cimex Pharma AG until end of July 2005 


■ Since 1998 Member of the Board of Cimex Pharma AG; until end of July 2005 Member of the 

Group Management 

■ 1989 to 1997 Managing Partner of Consulting- & Management Associates AG 

■ 1983 Executive functions in leadership, organization and management consulting 

■ 1977 to 1982 Executive advisory activity 

■ 1969 to 1976 Audits in international companies 

The Members of Group Management do not assume any other management or consultany functions for 

Swiss or foreign interest groups and do not hold any significant official functions or political posts. 

During the year under review no Members of the Board resigned from his function. 

Elections and terms of office 

According to Art. 16 of the Articles of Incorporation, the Board of Directors consists of at least three 

members being shareholders of the Group. The General Meeting of Shareholders elects the Members of 

the Board for a term of three years; reelection is possible. 

At the forthcoming General Meeting of Shareholders on April 28, 2006 the terms of office of Luzi Andreas 

von Bidder and Dr. René Muttenzer expire; both are standing for reelection for a further term of office. 

83


Internal Organization 

The Board elects its Chairman and Vice-Chairman from its members; furthermore the Board elects a 

Secretary who does not need to be a Board member. Minutes are taken of the Board discussions and 

resolutions and signed by the Chairman and the keeper of the minutes. In order for the Board to pass 

resolutions, the majority of its Members must be present in person. Resolutions are passed with a simple 

majority of the votes; in case of equal votes the Chairman shall have a casting vote. Resolutions by 

notational voting using written circulations may be permissible unless a Board Member requests a verbal 

debate. In the year 2005, the Board met at least once per quarter. 

Since January 1, 2003, the Group has been headed by the Chairman of Schweizerhall Management AG, 

Luzi Andreas von Bidder. 

In addition to the Group Management and the Board, committees have been formed for the management 

of the Business Units Pharmaceuticals and Chemicals. 

Members of the Pharmaceuticals Committee 

■ Luzi Andreas von Bidder, Chairman 

■ Jean Lüchinger 

■ Sven Hoffmann 

■ Marcel von Ah 

■ Members of the Company Management of Cimex Pharma AG 

Members of the Chemicals Committee 

■ Dr. Staffan O. Bjöörn, Chairman 

■ Luzi Andreas von Bidder 


■ Members of the Company Management of Schweizerhall Chemie AG 

The Board has appointed a Finance Committee to determine the investment policy and to monitor the 

financial investment. The Finance Committee of Schweizerhall meets once per month (with taking 

minutes) and develops the general guidelines for the asset allocation. In addition to the Finance 

Committee, the Valuation Committee meets on a monthly basis (with taking minutes) to assess the 

current valuations of the non-listed financial investments on behalf of the Board. In addition, an Audit 

Committee exists responsible for the diligent assessment of the individual and corporate accounts and 

the supervision and evaluation of the external auditors. The Audit Committee reports to the Board of 

Directors of Schweizerhall Holding AG. 

84


Members of the Finance Committee 

■ Luzi Andreas von Bidder, Chairman 

■ Jürg Michel 

■ Eduard Kny 


■ Andres Huber 

■ Dr. David Kägi 

Members of the Valuation Committee 

■ Dr. David Kägi, Chairman 



Members of the Audit Committee 

■ Jürg Michel, Chairman 


■ Eduard Kny 

Areas of responsibility 

The areas of responsibility and allocation of duties between the Board and Group Management are laid 

down in an Organizational Regulation, that was last revised and approved by the Board on July 14, 2005. 

Information and control instruments with respect to the Group Management 

The Group Management informs the Board on a monthly basis about the financial performance and 

provides progress reports on specific projects. Once a month,the minutes of the meetings of the Finance 

Committee and of the Valuation Committee are submitted to the Board for discussion and approval. 

Once per year, the Board discusses and approves the budget for the fothcoming year. 

Management contracts 

Effective January 1, 2003, Schweizerhall Holding AG contractually delegated the management of the 

Group to Schweizerhall Management AG. 

85


GROUP MANAGEMENT 

Luzi Andreas von Bidder, Graduate in Economics HSG (University of St. Gallen), Swiss citizen, born 

9.4.1953 

Function in the Group Management 

■ Chairman of the Board of Schweizerhall Management AG since 2003 

■ See Board of Directors 

Professional background 

■ See Board of Directors 

Marcel von Ah, Swiss certified expert for accounting and controlling, Swiss citizen, born 8.8.1970 


■ CFO of the Schweizerhall Group since 2003 


■ 1999 to 2003 Head of Finance of the International Distributor Markets Division, 

86 

Novartis Ophthalmics AG, Bulach 

■ 1994 to 1999 Various positions with IKEA AG, Spreitenbach, most recently as Head of Financial 

Accounting and Member of the Company Management 

Axel Müller, Doctor of Pharmacology (University of Tubingen), German citizen, born 15.2.1957 


■ CEO of Cimex Pharma AG and Member of the Company Management since 1.8.2005 


■ 2004 to 2005 Head of Generics Siegfried AG, Zofingen 

■ 2001 to 2004 Managing Director and Head International with Aceto Holding GmbH, Germany (Waldshut) 

■ 1999 to 2001 Head of Pharma/Fine Chemicals Division with Schweizerhall Pharma, Basle 

■ 1998 to 1999 Head of Healthcare Switzerland Arthur D. Little, Zurich 

■ 1994 to 1998 Head of Worldwide Licensing & Business Development with Ciba Vision 

Ophthalmics, Bulach 

■ 1985 to 1994 Various senior functions with Dispersa GmbH, Germany (Munich) 

Ivan Vollenweider, Graduate in Chemical Engineering ETH Zurich (Swiss Federal Institute of Technology) 

and Economics, HSG (University of St. Gallen), Swiss citizen, born 4.9.1954 


■ CEO of Schweizerhall Chemie AG since 2003 


■ 2001 to 2003 COO BT&T Technology Group, Asset Management AG 

■ 1998 to 2000 Head of Technical Thermoplasts Division EMS Chemie AG and Member of the 

Company Management 

■ 1981 to 1998 Various positions with Ciba-Geigy AG, lastly as Head of Technical Operations & 

Co-projectleader Ophthalmics R&D


Dr. Axel Müller, Marcel von Ah, Ivan Vollenweider, Luzi A. von Bidder 

The Members of Group Management do not assume any other management or consultancy functions for 

Swiss or foreign interest groups and do not hold any significant official functions or political posts. 

In the year under review, Jean Lüchinger and Eduard Kny resigned from their function as members 

of the Group Management. However, they continue to be active as Board Members of Schweizerhall 

Holding AG. 

COMPENSATION, SHAREHOLDINGS AND LOANS 

The Board as a whole determines Directors’ fees and compensation of Group Management on an annual 

basis. No share-ownership programs (options etc.) exist within the Group. No loans to Directors or 

Members of Group Management are outstanding. No retirement remuneration is paid to former members 

of the Board. 

Compensation for acting members of governing bodies 

■ Sum of total compensation to the executive Members of the Board and Group Management: amounted 

to CHF 2 229 484, including performance related bonuses of CHF 896 222 and pension contributions 

of CHF 220 767. 

■ Sum of total compensation to the non-executive Members of the Board: amounted to CHF 1 239 700. 

87


■ The Member of the Board with the highest total compensation received CHF 979 635, of which 

88 

CHF 500 000 were paid as a basic salary, CHF 369 635 as a performance-related bonus, and 

CHF 110 000 as company pension contributions. 

■ Termination payments made in the year under review: none. 

■ Consulting fees to Members of the Board amounted to CHF 5 450. 

Compensation for former members of governing bodies 

■ None. 

Loans to members of governing bodies 

■ None. 

Share allotment in the year under review 

■ None. 

Share ownership as of December 31, 2005 

■ Executive Members of the Board and of Group Management held 3 725 titles or 0.1% of the share capital. 

■ Non-executive members of governing bodies owned 592 925 titles or 19.5% of the share capital. 

SHAREHOLDERS’ PARTICIPATION 

Each registered share entitles to one vote at the General Meeting of Shareholders. There are no restric- 

tions with regard to voting rights. Shareholders with voting rights, who are registered at least 7 days prior 

the General Meeting of Shareholders, may participate at the meeting. Shareholders have the right to be 

represented by another shareholder by proxy. 

The General Meeting of Shareholders is held, once per year, at the latest six months after the end of the 

financial year. It is called by the Chairman, or if necessary, by the Auditors, no later than 20 days prior to 

the date of the meeting. 

Written shareholder demands to include items on the agenda of the General Meeting must be submitted 

to the company at the latest 60 days prior to the date of the General Meeting of Shareholders. 

Extraordinary General Meetings take place upon resolution of the General Meeting of Shareholders, the 

Board of Directors, at the request of the Auditors, or upon written request by one or more shareholders 

jointly representing at least 10% of the share capital. The request must include the subject matter for the 

debate and the relevant proposals. 

The General Meeting of Shareholders may pass resolutions irrespective of the number of shareholders 

present or the number of shares represented.


DISCLOSURE OF SHAREHOLDINGS 

As per Article 20 of the Swiss Stock Exchange Law, each shareholder of Schweizerhall Holding AG, 

acquiring or selling shares directly or indirectly or in concert with third parties for his own account and 

thus reaching, exceeding or falling below the threshold percentages of 5%, 10%, 20%, 33 1/3%, 50% 

or 66 2/3% of the voting rights – whether exercisable or not – must notify Schweizerhall Holding AG and 

the disclosure body of the SWX Swiss Exchange. As per Article 21 of the Stock Exchange Law, the 

company is required to publish the information upon receipt. 

CHANGE OF CONTROL AND DEFENSE MEASURES 

Schweizerhall Holding AG has renounced inclusion of a so-called “opting out” or “opting up” clause in its 

Articles of Incorporation, which limit or waive the duty of a potential acquirer to make an offer as per 

SESTA, (Article 32). According to SESTA, Article 32, any shareholder is – upon reaching the legally pre- 

scribed threshold of 33 1/3% of the voting rights (whether exercisable or not), either directly, indirectly 

or through a voting trust agreement – required to make a full tender offer to all shareholders. In addition, 

SESTA rules with regard to minimal offer prices apply. 

As of the reporting date of December 31, 2005, an employment contract was in existence with a change- 

of-control clause relating to a change in the composition of the Board of Directors of Schweizerhall 

Holding AG following a “unfriendly take-over“. The one-off settlement amounts to three years’ remuneration. 

In addition, three further employment contracts existed with a change-of-control clause, relating to a 

change in the composition of the Group Management following an “unfriendly take-over“. The one-off 

settlements amount to six months’ compensation each. 

AUDITORS 

PricewaterhouseCoopers AG (PwC), Basle has acted as company and group auditor in an indirect 

succession since 1910. The responsible partner is a Graduate Auditor and has been responsible for 

Schweizerhall since 2004. The sum of the audit fees amounted to CHF 317 300. Additional fees paid to 

PwC for tax and legal advising totaled CHF 276 800. On average, the Audit Committee held a meeting 

with representatives of the external auditors at least once per quarter. 

INFORMATION POLICY 

Current information on the Schweizerhall Group is available at any time at the website 

www.schweizerhall.com. This also includes the full contact details of the person responsible for investor 

relations. Ad hoc announcements can be accessed at www.schweizerhall.com/de/pressreleases.htm. 

Under the same website link, interested parties can register (and deregister) to receive company 

announcements via e-mail. Furthermore, the Articles of Incorporation of Schweizerhall Holding AG can 

also be downloaded from the website (www.schweizerhall.com/de/statutes.htm). In addition to the 

Annual Report, Quarterly Reports and Press Releases are also available in printed form. The company’s 

official publication instrument is the Swiss Official Gazette of Commerce (Schweizerisches Handels- 

amtsblatt SHAB). 

89

SCHWEIZERHALL | INVESTOR INFORMATION 

Strategy and Profile 


The Business Unit Pharma is specialized in the development, registration and approval, production and 

packaging of pharmaceuticals, which are no longer under patent protection. With a focus on solid pharma- 

ceutical forms, the Business Unit Pharma supplies leading generics firms throughout Europe. 

The Business Unit Chemicals is the leading Swiss supplier of chemical raw materials, intermediates, 

specialty chemicals and customized mixtures within comprehensive supply chain solutions. Leveraging 

its in-depth experience and state-of-the-art infrastructures, the business unit offers global sourcing, 

optimal storage, packaging, quality assurance, just-in-time delivery, disposal and recycling. 

Schweizerhall Group is headquartered in Basle, currently employs approximately 380 staff and generates 

annual sales of about CHF 300 million. Schweizerhall Holding AG, the Group’s parent, is listed on SWX 

Swiss Exchange (Swiss security number 2119090; Telekurs/Bloomberg SWHN; Reuters SWHN.S). 

Pay-out and dividends 

While profit distribution is based on revenues generated in the previous year, the company strives to 

distribute a basic dividend annually. The Board of Directors recommends at the General Meeting of 

Shareholders on April 28, 2006, that a dividend of CHF 2.00 per registered share with a nominal value of 

CHF 0.40 be paid. 

Investment policy and financing of growth 

Schweizerhall intends to achieve earnings-oriented growth in its core business areas pharmaceuticals and 

chemicals. 

The Business Unit Pharma is focusing on widening its product portfolio and galenical drug forms, on 

opening up off new geographic markets and on enlarging of its customer base. In this respect, 

options are constantly checked on the strategic and operational level, in order to further increase the 

performance range for the market growth of pharmaceuticals/generics. The Group has a healthy balance 

sheet and sufficient reserves to actively push the expansion of activities of its Business Unit Pharma. 

Today’s structure and market position of the Business Unit Chemicals give reason to expectations of a 

constant, positive contribution to the overall results of the Schweizerhall Group in the foreseeable future. 

Focusing on qualitative growth and customer segments from regulated industries with high standards in 

terms of quality and documentation, Schweizerhall Chemie AG intends to further expand its leadership 

role in the coming years from own funds and with very good financial results. 

Schweizerhall Holding AG’s stock is particularly suited for investors who are looking for a regular income 

while seeking exposure to the growth markets for generics. 

91


Listing 

The registered shares of Schweizerhall Holding AG are listed on the SWX Swiss Exchange and are 

included in the Swiss Performance Index. At the end of the reporting period, the stock’s weighting in the 

index was 0.017%. 

Treasury stock 

The company held no own shares as of December 31, 2005. 

Trading data, volume, free float 

As of December 31, 2005, the free float, i.e. the number of titles in free circulation at the end of the 

reporting period, amounted to 47.5%, equivalent to a market capitalization of CHF 169.3 million. With a 

cumulative trading volume of CHF 131.8 million, the turnover of free float was in the same period 

approximately 0.8 times. This trading data suggests relatively low liquidity of Schweizerhall Holding’s 

shares. As even middle-sized transactions may impact share price substantially, it is recommended to 

enter echelon transactions. 

Securities number, ticker symbols, prices and publications 

Securities number: 2119090 

Telekurs/Bloomberg SWHN 

Reuters SWHN.S 

Calendar 

April 28, 2006 General Meeting of Shareholders 

May 3, 2006 Dividend payment date 

July 27, 2006 Half-year figures as of June 30, 2006 

October 26, 2006 Nine-months figures as of September 30, 2006 

Investor Relations 


Luzi Andreas von Bidder, 

Chairman of the Board of Schweizerhall Holding AG 

P O Box 

CH-8023 Zurich 

Telephone +41 43 344 74 74 

Fax +41 43 344 74 75 

info@schweizerhall.com 

www.schweizerhall.com 

92


5-YEAR OVERVIEW 

In accordance with In accordance with 

Swiss GAAP FER IFRS 

Registered shares: nominal value CHF 0.40 2001 2002 2003 2004 2005 

Number of shares issued 4 000 000 3 037 550 3 037 550 3 037 550 3 037 550 

Treasury shares 476 925 129 650 129 650 215 725 0 

Shares issued net 3 523 075 2 907 900 2 907 900 2 821 825 3 037 550 

Key figures per registered share 1) 2001 2002 2003 2004 2005 

Operating profit before 

depreciation (EBITDA) CHF 0.9 (3.6) 7.2 2.7 12.1 


amortization (EBITA) CHF (1.2) (5.8) 4.6 1.1 9.3 


interest and tax (EBIT) CHF (1.5) (6.1) 4.3 0.3 4.6 

Net profit (loss) CHF (4.4) (5.5) 5.6 2.5 5.4 

Cash flow from 

operating activities CHF (4.7) (0.2) 7.1 5.7 10.2 

Shareholders‘equity CHF 90.9 87.6 91.1 97.6 85.8 

Return on equity % (3.9%) (5.0%) 6.4% 2.6% 6.0% 

Distributions 2001 2002 2003 2004 2005 

Consolidated net result CHF Mio. (15.4) (15.9) 16.4 7.2 16.3 

Pay-out ratio % (72%) (521%) 36% 85% 37% 

Dividend per share CHF 1.6 1.6 2.0 2.0 2.0 2) 

Nominal share capital 

repayment per share CHF 1.6 - - - - 

Trading data 2001 2002 2003 2004 2005 

Share price 

High CHF 98.2 79.5 68.0 75.6 122.0 

Low CHF 64.0 50.4 44.2 63.2 70.0 

Year-end CHF 79.6 51.0 67.2 71.4 117.4 

Market capitalization (31.12.) CHF Mio. 318.4 154.9 204.1 216.9 356.6 

Market capitalization in % 

of shareholders‘ equity (31.12.) % 99% 61% 77% 77% 138% 

Price-Earnings-Ratio (31.12.) Factor (18.2) (9.3) 11.9 28.8 21.8 

1) Swiss GAAP FER: based on number of shares as of 31.12. / IFSR: based on average number of issued shares 

2) Proposal of the Board of Directors to the General Meeting of Shareholders of April 28, 2006 

93

SCHWEIZERHALL | ADDRESSES 


Elsässerstrasse 229 

P O Box 

CH-4013 Basle 


Nüschelerstrasse 30 

P O Box 


www.schweizerhall.com 


Elsässerstrasse 229 - 245 

P O Box 

CH-4013 Basle 

www.schweizerhall.ch 

Schweizerhall Chimie SA 

Succursale Avenches 

1, route Industrielle 

CH-1580 Avenches 


Filiale Flawil 

Burgauerstrasse 17 

CH-9230 Flawil 


Filiale Bätterkinden 

Lohnmatte 1 

CH-4573 Lohn-Ammannsegg 

Schweizerhall, Inc. 

380 Foothill Road 

Bridgewater, New Jersey 08807-0483 

USA 

94 

Cimex Pharma AG 

Hauptstrasse 67 

CH-4102 Binningen 

www.cimex.ch 

Cimex AG 

Pharmazeutika 

Birsweg 2 

CH-4253 Liesberg 

Cimex Development AG 


CH-4102 Binningen 

Cimex Supply AG 


CH-4102 Binningen

SCHWEIZERHALL HOLDING AG 

Imprint 

Editorial: Schweizerhall Management AG, Zurich 

Concept and realization: Weber-Thedy AG, Corporate & Financial Communications, Zurich 

Photos: Claude Giger, Basle; Illustrations: Simon Brun, Giger & Partner, Zurich 

Design and typesetting: Giger & Partner, Zurich 

Print: Schwabe AG, Muttenz 

The Annual Report is published in German and English. The German version is binding in all matters of interpretation. 

95

SCHWEIZERHALL HOLDING AG 

Investor & Media Relations 


Luzi Andreas von Bidder 

Chairman of the Board of Directors 

of Schweizerhall Holding AG 

Nüschelerstrasse 30 

P O Box 


Phone +41 (0)43 344 74 74 

Fax +41 (0)43 344 74 75 

info@schweizerhall.com 

www.schweizerhall.com

ANNUAL REPORT 2005 - Acino

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