This excerpt taken from the ICI 6-K filed Mar 21, 2007.
stronger balance sheet.
2006, we made major progress in focusing our business portfolio, with
the sales of Uniqema, completed in September, and Quest, with completion
expected during the first quarter of 2007. These disposals enable ICI
to focus on its coatings, adhesives, starch and synthetic polymer businesses.
The restructuring of ICI continues and in May we announced a further transformation
programme that will take the Company through to 2011.
Furthermore, we continued to deliver the
operating performance improvements set out in our last strategic plan.
Against a backdrop of mixed trading conditions, the Group delivered good
overall results, with solid sales growth, sustained trading margins and
a 17% increase in adjusted earnings per share. These were achieved despite
further rises in raw material costs and weakness in the North American
market for decorative paint.
Our focus on emerging markets continues
to deliver good results with sales from our Paints and National Starch
businesses in developing countries in Asia growing over 14%. National
Starch and Paints opened a new manufacturing centre in China for resins
and other polymers. Construction of a second Paints plant in Vietnam was
also completed. In addition, we continue to develop our businesses in
Latin America, Eastern Europe and the Middle East.
We are also pleased to report a significant
strengthening of ICIs balance sheet. Including the Uniqema disposal
proceeds, Group net debt over the year fell from £763m to £329m
a major change from the late 1990s when year-end net debt peaked
at over £4bn. Additionally, ICIs overall post-retirement benefit
deficit fell from £1.7bn to £1.3bn, on an IFRS basis, during
2006. We expect further reduction in net debt and the pension fund deficit
following the completion of the Quest disposal.
Major business portfolio
developments As a result of the Quest and
Uniqema disposals, ICI will have a focused portfolio of market-leading
coatings, adhesives, starch and synthetic polymer businesses combined
with a significantly stronger balance sheet.
Uniqema disposal to Croda International Plc was completed in September for
a gross consideration of £410m. We would like to thank all Uniqema
employees for their great service to ICI, and their endeavours to improve
the performance of the business during a challenging period.
November, we announced the agreed sale of Quest to Givaudan SA for £1.2bn.
The consideration obtained by ICI reflects the strategic value of Quest
to Givaudan as it enables them to increase their leadership in the global
flavours and fragrance industry. It also reflects the positive trend of
Quests performance in recent quarters.
We would like to thank the Quest team
for their outstanding efforts in rebuilding the performance and value
of the business over the past three years.
From Turnaround to
Transformation As a result of these recent
developments combined with the performance improvements delivered through
restructuring, ICI has moved from a turnaround strategy, which
we embarked on in 2003, to one of transformation, which we signalled
in part with our restructuring plans announced in May 2006. Delivery of
our transformation strategy will focus on three important levers
sustaining our improvements in operational
effectiveness and developing a culture
of sustainable improvement.
We will focus on accelerating
profitable growth by:
Peter B Ellwood CBE Chairman
John D G McAdam Chief Executive
the focus on the successful development of
our core businesses in developing markets in Asia,
Eastern Europe and Latin America;
on technology: our research resources
will concentrate on 14 science pillars, which will
support ICIs innovation programmes across all our
paints, adhesives, polymer and starch businesses. This
will help deliver a more significant contribution from
new products to future revenues; and
our target market positions through selected
acquisitions, innovative technology alliances
and other investments.
the first plastic,
is created by ICI scientists as a
result of a laboratory mistake.
ICIs Board grants
a modest five-year £15,000 budget for pharmaceutical research, paving
the way for some of the centurys
greatest medical treatments.
Scientists J R Whinfield and JT Dickson
joined ICI where, in 1941, they complete their earlier work on Terylene,
the first polyester fibre.