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These excerpts taken from the ICI 6-K filed Mar 14, 2006. Overview We are pleased to report that ICI made satisfactory progress in 2005. Despite a more challenging trading environment for most of our businesses, the Group delivered a strong overall financial performance. The cost of many raw materials continued to rise throughout the year, driven by strong demand. This in turn led us to seek price increases from our customers and our efforts were successful. As a result, and combined with the further benefits of our restructuring programme, we reported a robust overall performance. Whilst trading margins were slightly lower at 9.5%, comparable sales growth of 6% helped deliver earnings growth of 5%. As a result, the full year dividend increased by 5% and with another good year for cash generation, Group net debt reduced further to £745m, down from £989m a year ago. We also made further progress toward implementing our strategic aim to become the leader in formulation science with a strong focus on profitable growth and a clear set of financial targets covering the four years from 2003 to 2007. These are based around delivering significant cumulative improvements in sales, trading margin, return on capital employed, as well as positive cash generation before divestments or acquisitions. More detail on our performance against these strategic objectives is set out on pages 7 and 8. Overall, our progress has been good, with performance against all four targets ahead of plan.
Overview
We are pleased to report that ICI made satisfactory progress in 2005. Despite a more challenging trading environment for most of our businesses, the Group delivered a strong overall financial performance. The cost of many raw materials continued to rise throughout the year, driven by strong demand. This in turn led us to seek price increases from our customers and our efforts were successful. As a result, and combined with the further benefits of our restructuring programme, we reported a robust overall performance. Whilst trading margins were slightly lower at 9.5%, comparable sales growth of 6% helped deliver earnings growth of 5%. As a result, the full year dividend increased by 5% and with another good year for cash generation, Group net debt reduced further to £745m, down from £989m a year ago. We also made further progress toward implementing our strategic aim to become the leader in formulation science with a strong focus on profitable growth and a clear set of financial targets covering the four years from 2003 to 2007. These are based around delivering significant cumulative improvements in sales, trading margin, return on capital employed, as well as positive cash generation before divestments or acquisitions. More detail on our performance against these strategic objectives is set out on pages 7 and 8 and in the commentaries on each business. Overall, our progress has been good, with performance against all four targets ahead of plan. Areas of strategic focus Our strategy focuses on actively managing our portfolio in different ways to create shareholder value. Sales, capital expenditure, head count and profitability all increased in our targeted growth activities. At the same time, ICI continued to achieve improvements in cost and capital effectiveness. As a result of this strategic focus we completed the sale of Vinamul Polymers in February, and made the modest acquisition of the Celanese redispersible powder polymers business in September. We have also made good progress towards completing the restructuring activities launched in 2003. Cumulative savings from that programme reached £106m out of an increased target of £140m – increased by £13m because we under-spent to achieve our original targets and have redeployed the resources to secure additional savings. Since the programme’s initiation, our headcount has reduced by 2,100.
Improved profitable sales growth is driven by technological innovation, and ICI has maintained a satisfactory level of investment in R&D, the long-term benefit of which is seen in new product launches. One of the most exciting has been the launch of Quest’s ‘ImpaQ Taste Technology’ platform, a new range of flavour molecules that should significantly reduce salt, sugar and fat content without reducing flavour impact in food products where it is used, for example in ice creams or snack foods. National Starch also launched an innovative new printable adhesive developed for the latest faster, more compact electronics applications. This technology increases product reliability and reduces assembly costs, creating significant savings for our customers. Sustainability has also seen significant developments with the end of ICI’s Challenge 2005 programme and the launch of the new Challenge 2010 targets. More details are available on our website (www.ici.com/sustainability). Managing sustainable development remains at the heart of the way we operate, and the Group has established itself as a leader in its industry, reflected in its membership of the Dow Jones Sustainability Index for a second successive year as well as being a member of the FTSE4 Good Index. | EXCERPTS ON THIS PAGE:
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