This excerpt taken from the ICI 20-F filed Mar 31, 2006.
Profit before taxation
After special items, Group profit before taxation was £500m, 18% lower than for 2004 (2004 £606m), due mainly to lower profits on sale of operations. Profit before taxation and special items was £444m for 2005 compared to £422m for 2004.
Taxation on profit before special items was £92m, £4m higher than 2004 (2004 £88m), reflecting the increase in operating profit before special items.
Special items are those items of financial performance that management believe should be separately disclosed to assist in the understanding of the financial performance achieved by the Group and in making projections of future results. Special items may include items relating to both continuing and discontinued businesses. Management believes that the identification of special items is helpful for decision-making as management considers this to be a non-operational item.
The Groups presentation of the Group income statement for the two years ended December 31, 2005, which appears on page 60 under Item 18 Financial Statements of this Annual Report on Form 20-F, separately disclosing special items, has been prepared in accordance with IAS 1. This presentation provides a sufficient degree of prominence in respect to the special items necessary, under IFRS, to give a fair presentation of the results of the Group in the two years ended December 31, 2005.
After taxation, special items amounted to a profit of £68m (2004 £174m) and mainly relates to gains arising on changes to post-retirement benefit schemes, profits less losses on the sale of operations and to charges related to the restructuring programme first announced in 2003.
Gains on special items in operating profit of £34m related to a £40m benefit associated with changes to the terms of the Noblesse pension and post-retirement healthcare schemes in the Netherlands, and £7m profit on disposal of fixed assets, partly offset by £13m of costs associated with restructuring programmes. Delivery of cost savings from the restructuring initiatives first announced in 2003 remained on track. The restructuring programme is expected to deliver total benefits of £140m in 2007, £13m higher than for the original programme.
The cumulative charge to the income statement for the programme to the end of 2005 was £222m, including £138m relating to termination costs. Further charges of £9m are expected in 2006. The cumulative cash expenditure on the programme at the end of 2005 was £142m, comprising primarily termination costs. Headcount across the Group was around 2,100 lower at the end of 2005 than at the start of the programme; and as a consequence, the programme delivered £106m of cost benefit in 2005.
The £20m profit on sale of operations for the year included gains arising on the disposal of the Zweihorn wood finish business in Germany (£3m) and the Vinamul Polymers business (£6m) and a loss on the disposal of 51% of the Regional and Industrial rubber chemicals business in India (£3m). Such profit also included increases in provisions relating to long-term residual activities, including pension administration costs (£23m), increased employer liability costs (£10m) and a further provision for the costs of divestment of the Chlor-Chemicals, Klea and Crosfield businesses (£10m), offset by the release of provisions following a land transaction in the north of England (£28m), credits arising from changes to post-retirement healthcare plans in the US (£23m) and a receipt from the Ineos Group (£4m).
In 2004, the profit on sale of operations (£175m) related mainly to the gain on the sale of the Quest Food Ingredients business.
Special items under IFRS do not represent extraordinary items under US GAAP.
Net profit was £420m compared to £508m last year. Net profit before special items attributable to equity holders of the parent was £321m, 5% ahead of 2004 (2004 £306m).
Earnings per share
Basic earnings per share were 32.9p, compared to 40.1p for 2004. Diluted earnings per share were 32.8p, compared to 40.1p for 2004. Adjusted earnings per share were 27.1p for 2005, compared to 25.8p for 2004.