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Tuesday - June 19, 2007

Press Conference: "Bayer MaterialScience at the K 2007"

"VisionWorks - Today and Tomorrow"

From the presentation by Ian Paterson, Member of the Board of Management of Bayer MaterialScience AG

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Ladies and gentlemen,
It gives me great pleasure to welcome you to our press conference by giving you a brief "preview" of our stand at the K 2007 trade fair. The motto for our presence at the world's largest plastics trade show reads: "VisionWorks - Today and Tomorrow". Since some of you are perhaps not yet that familiar with our company motto "Vision Works", I would like to take this opportunity to explain it to you briefly.

"VisionWorks" 'translates' our company name Bayer MaterialScience: "Material" stands for the materials that we develop for new products and new markets - materials for visions. "Science" represents the knowledge with which Bayer MaterialScience works and our experience developed over many decades. Combined with a global network of interdisciplinary thinking, this constitutes the motor for innovative and sustainable solutions - visions that become reality.

I would like to take a few examples to demonstrate to you what "VisionWorks" means in practice - Today and Tomorrow. But before I come to that, we are giving you a brief preview of our stand.


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In accordance with market demands, we have developed an entire range of innovative roof module concepts in which polycarbonate and polyurethane are used. Against the backdrop of increasing petrol prices and the need to improve climate protection, the light-weight nature of the components, in addition to a high level of functionality and design freedom, is becoming more and more important. The roof module of the new smart fortwo with a surface area of 1.2 square meters is currently the largest component of its kind in the world developed from polycarbonate for a series car. It is produced in two steps by Webasto. In the first step, the high-quality outer surface is formed from transparent polycarbonate Makrolon® AG2677. In the second step, the large surface area frame is formed from the polycarbonate ABS blend Bayblend® DP T95 MF. It is thanks to these two products that the roof module can be manufactured with only very little internal stress and minimal warpage. In contrast to a comparable construction made of glass, around 40 percent of the weight can be spared in this way.

However, the functionality requirements of roof modules go beyond this and extend from the storage space in the roof area to high-quality class A surfaces through to the integration of antennae. For these different functionalities, components based on thermoplastic films were designed which were back-filled with the glass-fiber-reinforced polyurethane foaming system Baydur® STR from Bayer MaterialScience. The photograph on the right shows the panoramic roof of the Opel Zafira in which a total of five storage boxes are fitted between the integrated glass surfaces and provide a lot of space. In this model, as in the most recent development, the R-class antenna roof module, the polyurethane foam provides superior mechanical and processing properties.


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Whilst the developments I have just mentioned have already been successfully implemented in series production, and are thus in line with the key word "Today" of our exhibition at the trade fair, these three concept cars present you with a possible future perspective of the motor car in terms of "Tomorrow". You will see all three models, which were developed by Swiss automotive mastermind Frank M. Rinderknecht in close collaboration with automotive experts from Bayer MaterialScience, exhibited together for the first time here at Meilenwerk. I feel that they offer a pleasing contrast to the somewhat older exhibits. In the case of eXasis, the latest creation, the car body and floor are made from Makrolon®. As long as 40 years ago, Bayer ventured to give a first glimpse of the future with the "K '67", the first all-plastics car, and in many respects this has now become a reality. Incidentally, you can take a look at the K '67 car again at K 2007. Thanks to light-weight plastic, the Weber engine installed in the eXasis consumes 6.3 liters of bioethanol per 100 kilometers, which corresponds to CO2 emissions of just 20 grams per kilometer.

However, the concept cars of today not only use transparent and light-weight polycarbonate, but also a whole range of our other products from our portfolio. The surfaces of the control elements in the cockpit of the eXasis have a pleasant feel and are coated with a soft-touch coating based on high-grade aqueous surface coating resins from the Bayhydrol® and the Bayhydur® ranges. The transparent polyurethane gel Technogel® ensures comfort as far as the head restraint and arm rest padding is concerned. Under the hood, cables are sheathed with the flexible, abrasion- and chemical-resistant thermoplastic polyurethane Desmopan®.

Bayer MaterialScience's development projects for the automotive industry are supported by the AutoCreative® team. The thinking behind this was to provide processors, systems suppliers and car manufacturers with a central contact person to work alongside staff on the projects from the design stage through to production. The AutoCreative® team is established worldwide. In addition, the fact that key accounts are tightly managed within the Business Units ensures close, productive and trusting cooperation with partners from the car industry.


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Our activities in the area of transportation are by no means restricted to passenger cars. We recently presented our current developments in the area of commercial vehicles at a customer conference. Moreover, our products are also found in many applications in airplanes, ships and on the railways. However, one thing of which many people are not yet aware is our involvement in track construction. I would like to give you two examples of this.

The new trackbed system Durflex® from the Frenzel construction group is characterized by outstanding noise protection properties and high longevity. With this innovative system, the cavities between the stones in the trackbed are completely filled with polyurethane foam, as you can see on the small photo. This prevents ballast stones from being moved from the track bed as a result of the dynamic force that occurs when trains travel along the track, and thereby also prevents stones from being abraded. In Uelzen in Lower Saxony, a 300-meter-long test track section is currently being fitted with the new system and should become operational this month. The partners involved hope to gain comprehensive practical experience from this. In order to reduce the amount of noise pollution for residents, rail network operators have mainly used noise protection barriers up until now. However these barriers are expensive to erect and are often viewed as blots on the landscape. However, using Durflex® could increase the interval between maintenance cycles for the track surface several times.

The extremely dimensionally-stable composite material Eslon Neo Lumber FFU, which is based on a glass fiber reinforced grade of the polyurethane system Baydur® 60 and is supplied by the Japanese company Sekisui Chemical, has proven to be a good alternative to wood as the raw material for railway sleepers. The material used to make sleepers combines all of the positive properties of the natural product with those of a modern composite material. The sleepers can be screwed, nailed, sawn and bonded, but are clearly more dimensionally-stable and durable than wood. Possible areas of application are, above all, in sections of track that require an increased level of resistance to weathering, such as for example various routes covered by the Shinkansen high-speed train in Japan.


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Of all of the materials currently available on the market, polyurethane rigid foam provides the highest degree of thermal insulation. It is therefore no wonder that the possible applications range from use in roofs and ceilings to walls and floors through to cellars and passive house construction. The planned introduction of energy efficiency certificates in Germany on January 1, 2008 should further promote the use of this material in new-builds and in the renovation of old buildings. Incidentally, other European countries also plan to introduce comparable legal measures. As an innovative composite thermal insulation system that is authorized for use in construction, the PURWALL® insulation system from Hasit Trockenmörtel GmbH can be used in applications ranging from cellars to roofs. An ultra-low-energy house in Munich is already one of our reference sources. Due to the high insulation effect, thinner external wall constructions provide the same insulation performance, thereby allowing the building owner to gain more useful space.

For the rest, we are currently in the process of setting up a team similar to the AutoCreative® group for the construction industry as well. The team is intended to function as a central contact person for processors, architects and civil engineers. Under the name VisionBuilds, the new interdisciplinary team will work closely with customers and our Business Units.

An economic power-heat-coupling requires the efficient transportation of thermal energy over long distances, generally in the form of hot water or simply water vapor. Here, it is also a question of efficient heat insulation, but this time at temperatures of up to 200 ºC. Our experts have developed a high-temperature rigid foam material based on polyisocyanurate for this purpose. It can withstand long-term service temperatures of up to 200 ºC. When used in pipelines, this rigid foam shows clear advantages compared to mineral wool, since the insulation layer takes up less space and insulating pipelines is significantly more economical than stuffing them with mineral wool.


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Photovoltaic systems are also a very important topic as far as generating energy from renewable energy sources is concerned. Unfortunately, the production of solar modules is still extremely expensive and the products do not meet all of the market requirements. Experts at Bayer MaterialScience have come up with various developments aimed at improving this situation. If films made from the thermoplastic polyurethane Desmopan® were to be used, the cycle time for insulating the sensitive solar cells could be significantly reduced, since in this case, in contrast to the conventional process, no cross-linking takes place. In addition, the films are characterized by high UV stability and transparency.

Many solar modules are equipped with an aluminum frame in order to stabilize them. Fitting such a frame is time-consuming and expensive. Insulating with the polyurethane foam system Bayflex® MP is a possibility here. The solar cell strings that are laminated onto the outer sheet are coated with a shot of foam in accordance with the RIM method. This ensures that the sensitive solar cells are protected permanently against moisture and dirt.

In the case of applications in the construction industry, a high level of design freedom is required in order to allow creative solutions to be found. Solid or multi-wall sheets made of Makrolon®, which is impact-resistant, transparent and weather-resistant, are suitable for this purpose. The sheets are manufactured by Bayer Sheet Europe GmbH.


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The development of optical data storage devices began with the audio CD. This year, the audio CD celebrates its 25th anniversary, and Bayer was at the very forefront of this development right from the start with its high-tech plastic Makrolon®. Eleven years after the introduction of DVDs in 1996, high-definition DVDs and Blu-ray disks are now being developed ready for the market. In the future they may have a storage space of up to 100 gigabytes, depending on the number of information layers. Progress has been made due to the ever greater reduction in size of the structures for storing information on the disks, known as pits. This has been done by reducing the track pitch and wave length of the sampling laser and by achieving an even higher level of purity of the plastic.

However, the demand for storage space is increasing further. Near field recording could become the buzzword for the next generation. Access to this requires, amongst other things, a special optical reader with a lens which is only 20 nanometers from the surface of the data storage device, instead of a millimeter, as was the case previously. To give you a clear idea of the order of magnitude, imagine a nozzle jet that is flying over a mown lawn at a distance of only four millimeters. The new technology could eventually lead to a storage volume of over 100 gigabytes.


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However, television companies that wish to, and are obliged to, archive daily schedules, require completely different storage capacities. Up until now, they have recorded these on magnetic tapes. However, these must be re-copied approximately every two years to ensure that they have been stored safely. New holographic data storage devices that were developed by Bayer MaterialScience in conjunction with the American start-up company InPhase Technologies, and are currently being tested on the market, are much more durable and are significantly easier to handle. Unlike conventional CDs and DVDs, in the case of holographic data storage devices, the data is no longer read bit by bit, rather entire packets of data are stored in the form of holograms on the data disk and are then read again from there. Thanks to this technology, not only has it been possible to considerably increase the storage capacity, (the products that were developed for the market bearing the TapestryTM brand name have a capacity of 320 gigabytes each), but the write and read operations have also been considerably accelerated. InPhase plans to further increase the capacity of each data storage device in the future by up to 1.6 terabytes. This is equivalent to 1,600 gigabytes, thereby transforming the database into an entire library. Then there are also plans to use this technology in applications in the private sector.


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Sports equipment is subjected to great impact, irrespective of whether it is used by amateurs or professional sportsmen/sportswomen. The manufacturers of modern skis and kiteboards, soccer boots and ski boots and the associated outerwear are faced with many demands as regards the performance of these products, which are often only met by selecting suitable materials. The materials must be very mechanically stable, resistant to solar radiation and be able to withstand other forms of weathering. Moreover, decoration and visual appearance are becoming more and more important. Special types of thermoplastic polyurethanes, or as we say, TPUs, including transparent grades, are the materials of choice here. One of our Desmopan® grades is highly suitable for use in films for textile coatings, thanks to its unusually high water vapor permeability. Jackets and other items of clothing can therefore be produced using membrane technology. Following the planned takeover of our Taiwanese competitor Ure-Tech, our small, but superb Thermoplastic Polyurethanes Business Unit, as the global market leader, will also have the most comprehensive range of specialty chemicals at its disposal.

Many people recently followed the top sporting event that is the 32nd America's Cup, which is probably the most grueling sailing race in the world. This year, battens made from TPU featured at the start line for the first time. The main attraction of these is that sailors can regulate the shape of their foresail in a targeted manner by means of the air pressure in the inflatable battens. We developed this special type of Desmopan® in collaboration with the companies Manufacturing Systems and C Tech in New Zealand.


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Carbon nanotubes are tiny, nano-scale materials, which also develop unique properties in sports equipment. They have a mere quarter of the mass of steel, but are around five times stronger when subjected to mechanical loads, and also possess other outstanding properties. In order to achieve a greater degree of impact strength, they are incorporated into ice hockey sticks and baseball bats made from plastic, for example. Meanwhile, manufacturers of skis and surfboards, as well as manufacturers of wind turbines and those in the shipping and automotive industries, also benefit from the advantage that arises when they are used in composite materials.

No wonder that there is rapidly growing interest in these additives around the world. However, there is only a handful of reputable manufacturers who are able to offer amounts of these additives at the right price and at a consistent level of quality in the long term. Researchers at Bayer made a breakthrough with the development of a new method for the synthesis of carbon nanotubes. This method enables nanotubes to be produced economically on an industrial scale with material purity levels consistently above 95 percent. Baytubes® is the brand name for the nanotubes we produce. We plan to erect an industrial plant for this product having a capacity of 3,000 metric tons per year.


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Warm and velvety surfaces are in great demand for car interiors. They make control panels, handles, columns and steering wheels pleasant to the touch. Aqueous soft-touch systems based on our surface coating resins Bayhydrol® and Bayhydur® are best-suited to the property profile required: They are abrasion- and scratch-resistant, low gloss and are available in many colors. Nowadays, soft- touch surfaces are not only to be found in almost every top of the range vehicle, but have also now made their way into the mid-range.

Newly developed surface coating resins in the Desmolux® XP 2666 range are suitable for the formulation of UV-curing coatings for external use. Once the coating has been applied, it is irradiated using a UV lamp for a very brief period and is completely cured. This is a highly cost-effective painting method. Besides being used in car repair paints, our product is also particularly recommended for resistant coatings to protect in-mold labels, for example, on drinks crates.

Both the aqueous soft-touch systems mentioned and the UV-curing coatings are generally extremely environmentally friendly due to their low content of volatile organic components.


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Creating a highly efficient connection between plastic and metal parts is an extremely common challenge in various sectors of industry. Adhesives experts at our company have developed what are known as latent-reactive adhesives, which are available as aqueous dispersions and are therefore also particularly environmentally friendly. First of all, these adhesives are applied to a metal substrate and dried. The coated metal part can be stored for months below 35 ºC. Its surface is tack-free and insensitive to moisture. When the hot thermoplastic is applied by spraying, the adhesive film heats up and becomes tacky and the cross-linking reaction takes place simultaneously in the film. In this way, plastic and metal can be joined in a highly efficient and permanent manner.


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Three-dimensional, freely formable, planar electroluminescent films represent an innovative development of an entirely different kind that satisfies the requirements of the market for ambient lighting solutions. An electroluminescent layer is pressed onto the back of a Makrofol® polycarbonate film, which, when an electric voltage is applied, emits non-dazzling light, without causing the film to heat up. The use of this film in a ladies' handbag that lights up inside made by Bree and in the Rinspeed concept car Senso (exhibited here) have caused a sensation. Innovative development opens up design possibilities that were previously undreamt of in consumer industries such as the automotive industry, telecommunications, entertainment, architecture and interior design.

In developing and marketing system solutions of this kind, Bayer MaterialScience is placing more emphasis on the founding of start-up companies, where marketable products based on technology that does not form part of the core business are concerned. On February 1, 2006, Lyttron Technology GmbH was established as a 100 percent subsidiary of Bayer MaterialScience at the chemical park in Leverkusen, in order to further develop electroluminescent films for ambient illumination. It currently employs 35 staff and has recently begun production, as planned.


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Many of the developments mentioned up to this point, e.g. concerning thermal insulation and solar modules, but also regarding increasing our efficiency through innovative production technologies, are making an important contribution to protecting the climate by promoting the conservation of fossil fuels. Carbon dioxide is just one of the products given off when burning fossil fuels and is essentially held responsible for climate change, alongside other factors.

Our commitment to protecting the climate as part of our sustainability strategy is of the utmost importance to us. The group was one on the first companies to sign the global climate protection initiative "3C: Combating Climate Change". The aim of this initiative is to support the policy of implementing a globally valid framework for the reduction of emissions. The Bayer Climate Challenge Program is aimed at the systematic development of solutions in order to meet the challenges of climate protection in the long term.

Given everything you have heard about up to this point, in particular the information regarding products and their uses, perhaps you are asking yourself how an international company like Bayer MaterialScience cooperates with its customers.


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In addition to technical expertise and our extensive specialist knowledge, working closely with customers is particularly important. For this reason, we have established a global network of innovation centers, competence centers and technical facilities, which we are consistently expanding at present, in line with the motto: think globally, act regionally. Through the rapid and flexible transfer that takes place within this network, customers all over the world can be supported in line with current state of the art technology. We opened a new innovation center in Dubai only recently and from now on, this center will deal with customers in the most important growth areas of the Middle East. Further facilities of this kind are currently planned for Russia, Korea, India and Taiwan. Through this strengthening of the global network we can better capture regional market growth.


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It goes without saying of course that these activities, including developments involving close collaboration with customers, cost money. This year, we plan to invest more than three percent of our total revenue for 2006 in research and development. As has become clear from the examples given, joint developments with customers form an essential part of our day-to-day work. Process improvements, such as the gas phase phosgenation process make an important contribution to increasing efficiency and to maintaining competitiveness. Research and development activities relating to products that create more value enable profitable growth.

Ladies and gentlemen,
I have just presented you with an extremely diverse range of innovative products and application developments. At the end of my presentation I would now like to take this opportunity to cordially invite you to form a picture for yourself of the range of products we offer under the motto "VisionWorks - Today and Tomorrow". At the K 2007 trade fair to be held here in Düsseldorf, we will be located once again in our usual position in Hall 6. Please come and visit our stand and let our experts explain the exhibits and developments to you.

Thank you for your attention.



Forward-Looking Statements
This news release contains forward-looking statements based on current assumptions and forecasts made by Bayer Group management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in our public reports filed with the Frankfurt Stock Exchange and with the U.S. Securities and Exchange Commission (including our Form 20-F). The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.