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This excerpt taken from the ICI 20-F filed Mar 31, 2006. Review of 2005 business results Basis of presentation The tables on pages 18 and 19 of this Annual Report on Form 20-F provide comparisons between the IFRS performance measures of movements in “revenue” and “operating profit before special items” and the non-GAAP performance measures that ICI uses of movements in “constant currency revenue” and “constant currency operating profit before special items”. The tables detail the amounts excluded from the most directly comparable IFRS financial measure. “Reported” relates to the figures included in the financial statements prepared under IFRS. “Constant currency” excludes the effect of currency translation differences and is a non-GAAP financial measure. ICI management use the “constant currency” financial measure for purposes of making decisions about allocating resources across the business and assessing its underlying performance. A more detailed description of “constant currency” performance, how it is calculated, why it is considered useful for investors and the limitations of non-GAAP financial measures are set out on pages 13 and 14 of this Annual Report on Form 20-F. This excerpt taken from the ICI 6-K filed Mar 14, 2006. Review of 2005 business results
Basis of presentation
National Starch National Starch’s sales were 5% ahead of 2004 on a comparable basis, with growth in all businesses except Specialty Starch and in all the principal regions, notably in Latin America and Asia, which delivered 15% and 7% comparable growth, respectively. Raw material and energy costs increased significantly in the year and whilst the absolute monetary value of the cost increases was recovered through higher selling prices, gross margin percentages were lower than last year. Despite higher costs below gross margin than last year, trading profit for the year was 5% ahead of 2004 on a comparable basis. Trading margin was unchanged at 11.4% . As reported sales and trading profit were in line with 2004, with underlying business growth broadly offset by the impact of the divestment of the Vinamul business. The following commentaries on the four business groupings within National Starch refer to performance measured on a comparable basis. Adhesives sales were 9% ahead of last year with double-digit growth in North America, Latin America and in Asia, notably China and India. In the latter part of the year demand weakened in Europe. There was good growth for sales of adhesives for paper and disposable products and in Asia, Dongsung NSC also performed well. Higher raw material costs were countered with increased selling prices, but gross margin percentages were lower than last year. Trading profit was well ahead of 2004. Sales for Specialty Starch were 2% lower than 2004 with higher sales for food starches more than offset by lower sales into the paper industry. There was modest sales growth in Europe, Asia and Latin America, but sales were lower in North America. Raw material costs were particularly impacted in the first half of the year by tapioca costs which were significantly higher than 2004 as a result of a drought in Thailand. However, product mix was stronger and overall, gross margin percentages were ahead of last year. Costs below gross margin were higher than 2004 due in part to higher energy and manufacturing costs in the USA. Consequently, trading profit was lower than 2004. Specialty Synthetic Polymers sales were 9% ahead of 2004. Sales were well ahead in all regions, with strong growth in Europe and Asia, especially for the Alco and Personal Care businesses. Gross margin percentages were markedly lower than 2004 due to the impact of high raw material costs which could not be fully recovered through higher selling prices and a less favourable sales mix. However, trading profit was ahead of last year. Sales for Electronic and Engineering Materials were 3% higher than last year. Ablestik and Emerson & Cuming both delivered solid growth but sales for Acheson were lower due to reduced demand for internal coatings for cathode-ray tubes, and shielding materials. Sales in Latin America grew strongly and North America was well ahead whilst Asia and Europe were broadly similar to 2004. Gross margin percentages improved slightly compared with last year and trading profit was well ahead.
Quest Quest’s sales were 3% ahead of 2004 on a comparable basis, with growth for both the Fragrance and Flavours businesses. Sales growth was strong in both Asia and Latin America. Sales in Europe were in line with 2004 but in North America, sales were lower. Overall gross margin percentages were broadly unchanged despite rising raw material costs. With costs below gross margin slightly lower than last year, trading profit was 28% ahead on a comparable basis. Trading margin improved to 9.3% (2004 8.1%) . Sales on an as reported basis were 4% lower than 2004, mainly due to the Food Ingredients divestment last year, but trading profit as reported was 11% ahead. The following commentaries on Quest’s strategic businesses refer to performance measured on a comparable basis. Flavours sales were 2% up on last year with good growth in Asia and Latin America partially offset by lower sales in Europe and North America. Sales mix was stronger and gross margin percentages were higher than 2004. Consequently, with costs below gross margin slightly lower, trading profit was significantly above 2004. Sales for the Fragrance business were 5% ahead of 2004. Sales to the household, fabric, oral care and personal care sectors were all ahead. Raw material, packaging and transport costs increased sharply in the second half of 2005 and despite increased selling prices, gross margin percentages were lower than last year. Trading profit was well ahead of 2004.
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