Imperial Chemical Industries (ICI)

The Group’s net debt position has historically changed over the course of a year, and, in particular, short-term debt has generally increased in the early part of the year to fund working capital requirements. These working capital needs arise principally from the seasonality of the Paints business, which experiences higher sales of products used on the exterior of buildings, and thus working capital, during the North American and European summer (the second and third quarters of the year). The Group’s commercial paper programmes and other short-term borrowings are normally used to fund these working capital fluctuations. At 31 December 2006, the Group had £16m of short-term borrowings outstanding (as shown in note 23 relating to the Group accounts).

During 2006, the principal movement in long-term debt was the maturity of a $250m 10-year bond in November 2006.

During 2006, there have been no changes in ICI’s debt ratings, although the outlook from Moody’s Investors Service has improved from stable to positive. Standard & Poor’s Ratings Services rating is BBB/Stable/A-2 and Moody’s Investor Service rating is Baa3/Positive/P-3. Access to the range of debt markets which ICI currently enjoys requires ICI to maintain its investment grade credit rating. Any downgrade of ICI’s credit rating would reduce its funding options, significantly increase its cost of borrowings and have an adverse effect on its results of operations, cash flow and/or financial condition.