Duration of the Mandate and Term of Office of the Auditor in Charge

KPMG Ltd, Badenerstrasse 172, 8026 Zurich 4, Switzerland, has held the mandate as the external statutory auditors of Lonza Group Ltd and the Group since 1999.

The auditing company is elected for a term of one year. Michael Blume from KPMG Ltd has been the auditor in charge since April 2014. The Board of Directors proposes that KPMG Ltd be re-elected as auditors for the 2017 business year.

Auditing Honorarium

Lonza Group paid KPMG Ltd CHF 3.4 million in 2016 (2015: CHF 3.8 million) for professional services rendered in connection with the audit of the Group’s annual financial statements and other audit-related activities.

Additional Honorarium

KPMG Ltd received a total fee of CHF 0.1 million in 2016 (2015: CHF 0.1 million) for services not related to the audit of Group’s annual financial statements. These services related to tax consulting.

Supervisory and Control Instruments vis-à-vis the Auditors

The Audit and Compliance Committee is responsible for evaluating the performance and independence of the external auditors on behalf of the Board of Directors. This evaluation occurs at least once a year. The criteria applied for the assessment include professional competence, sufficiency of resources, the ability to provide effective and practical recommendations and coordination of the external auditors with the Audit and Compliance Committee and senior management. In the reporting year, KPMG Ltd attended three Audit and Compliance meetings. In those meetings, the external auditors presented the 2016 audit strategy and their 2016 results. The Comprehensive Auditor’s Report to the Board of Directors prepared by KPMG summarizes the reports presented to the Audit and Compliance Committee throughout the year.

Within the yearly approved budget, there is an amount permissible for non-audit services that the external auditors may perform. Within the scope of the approved and budgeted amount, the Chief Financial Officer can delegate non-audit-related mandates to the external auditors, subject to all applicable auditor independence regulations.

The Board of Directors has determined the rotation interval for the auditor in charge to be seven years, as defined by the Swiss Code of Obligations.

The Audit and Compliance Committee reviews Lonza’s financial reporting process on behalf of the Board of Directors. Lonza’s management is responsible for preparing the financial statements and the reporting process, including the system of internal controls. The Audit and Compliance Committee is also responsible for overseeing the conduct of the activities by Lonza management and the external auditors.

The external auditor, KPMG Ltd, is responsible for expressing an opinion on the accounting records and the financial statements prepared in accordance with Swiss law and the Lonza Articles of Association. KPMG Ltd is also responsible for expressing an opinion on the consolidated financial statements (balance sheet, income statement, statement of comprehensive income, cash flow statement, statement of changes in equity and notes) prepared in accordance with the International Financial Reporting Standards (IFRS), which is issued by the International Accounting Standards Board (IASB), and with Swiss law.

KPMG also audited the Lonza Remuneration Report 2016 with respect to the information required by Articles 14 to 16 of the Swiss Ordinance Against Excessive Compensation in Stock-Exchange-Listed Companies.