Interim Results
25 July 2005
ROBUST FIRST HALF
FULL YEAR PROFIT TARGET RAISED
Results at a Glance Q2 % change % change Year To % change % change
£m actual constant Date actual constant
exchange exchange £m exchange exchange
Net Revenues £1,028m +8% +6% £2,014m +8% +6%
Operating Profit £185m +8% +6% £345m +10% +8%
Net Income £144m +13% +12% £268m +17% +15%
EPS (diluted) 19.3p +12% 35.8p +15%
* Net revenues grew by 8% (6% at constant exchange) both in Q2 to £1,028m and
in H1 to £2,014m.
* Operating profit increased by 8% in Q2 to £185m and by 10% in H1 to £345m.
Half year operating margins improved 30 basis points (bps) to 17.1% due to
tight cost control.
* Net income grew by 13% in Q2 to £144m and by 17% in H1 to £268m. EPS
diluted grew by 12% in Q2 to 19.3p, and by 15% in H1 to 35.8p.
* Strong cash generation resulted in an increase of £131m in net funds to £
763m, reflecting cash inflow offset by increased cash returned to
shareholders through progressive dividend and share buyback programs. £292m
was returned in the half year, £131m in dividends and £161m in buybacks.
* The Company will return more cash to shareholders through its progressive
dividend policy and rolling share buyback program. The interim dividend
will be increased to 18.0 pence per share, an increase of 13%. The
Company's share buyback program is expected to increase from £300m
currently to £350m for 2006.
Commenting on these results, Bart Becht, Chief Executive Officer, said
'Reckitt Benckiser turned in robust results in challenging conditions. First
half 2005 net revenue grew 6% at constant exchange which is at the top of our
full year target range and well ahead of the industry's growth rate driven by
the success of new products such as Cillit Bang, Finish 4-in-1 and Airwick
Freshmatic. Profitability improved despite the adverse input cost environment.
As a result, net income grew 17%, well ahead of the full year target.
'For the full year we continue to expect net revenue growth of 5% to 6% at
constant exchange. However we are now raising our target for net income growth
to at least the mid teens at actual exchange.'
Detailed Operating Review
Second Quarter 2005
Net revenues in Q2 grew by 8% (6% at constant exchange) to £1,028m.
Operating profit for Q2 grew 8% (6% constant) to £185m. Gross margin decreased
by 70bps to 54.8% against a particularly high base last year with cost
optimization and volume leverage not entirely offsetting substantially higher
input costs. Marketing investment increased during the period with media 7%
higher at 14.9% of net revenues (H1 2004 15.0%). Operating margins increased by
10 basis points to 18.0% benefiting from tight fixed cost control.
Net income grew 13% (12% constant) to £144m. EPS diluted increased 12% to 19.3
pence.
Half Year 2005
Net revenues grew by 8% (6% constant) to £2,014m.
Operating profit increased 10% (8% constant) to £345m. Gross margins were 20bps
behind last year at 54.4% with cost optimization savings and volume leverage
not fully offsetting substantial increases in input costs through the period.
Marketing investment was higher, with media investment increased by 8% at 13.8%
of net revenues (H1 2004 13.8%). Operating margins increased by 30bps to 17.1%
benefiting from tight fixed cost control.
Net income for the half year rose by 17% (15% constant) to £268m. Net interest
income of £15m (2004 £4m expense) was due to the full conversion of the
Convertible Bond since H1 2004 plus strong cash inflow over the past year. The
tax rate for the period is 26%. EPS diluted increased 15% to 35.8 pence.
Category Review at constant exchange rates
Fabric Care. H1 net revenues grew 2% to £541m due to strong growth on fabric
treatment and Calgon water softeners, partially offset by softness on fabric
softeners and laundry detergent. In fabric treatment, Vanish Oxi Action grew
strongly due to Vanish Oxi Action Max in Europe and the launch of Vanish Dual
Power in Europe and North America. Growth was further boosted by the roll out
of Vanish Oxi Action in Developing Markets and by a strong performance by
Vanish carpet cleaners.
Q2 net revenues grew 4% to £279m.
Surface Care. H1 net revenues grew 14% to £419m. The major category growth
driver was the roll-out of Cillit/Easy Off Bang in Europe and Developing
Markets. Disinfectant cleaners also grew strongly due to Lysol/Dettol
disinfectant spray and Neutra Air.
Q2 net revenues grew 13% to £209m.
Dishwashing. H1 net revenues grew 7% to £290m. Growth came across all regions,
with particularly strong growth in Europe following the launch of Finish /
Calgonit 4-in-1. Electrasol 2-in-1 tabs and gelpacs increased sales in North
America.
Q2 net revenues grew 8% to £140m.
Home Care. H1 net revenues grew 7% to £283m with strong growth for both air
care and pest control. Air care benefited from the launch of Airwick Freshmatic
in Europe and further growth for Airwick electrical oils and Decosphere in
North America. Mortein pest control increased across Developing Markets.
Q2 net revenues grew 5% to £139m.
Health & Personal Care. H1 net revenues grew 8% to £329m. Good growth was
achieved in all categories. Dettol antiseptics benefited from higher investment
and new additions to the personal care range. Veet depilatories benefited in
particular from higher sales in North America. Healthcare brands grew in Europe
and Developing Markets. Prescription drug Suboxone continued its substantial
expansion in North America.
Q2 net revenues grew 8% to £179m.
Core Household net revenues grew by 7% to £1,862m in H1 and by 7% to £946m in
Q2. Other household net revenues were lower, reflecting the long-term decline
or termination of these minor products.
Total Household net revenues increased 7% in H1 to £1,928m and 7% in Q2 to £
979m.
Food. H1 net revenues grew 4% to £86m with good performance particularly from
French's yellow mustard and the recently launched Cattleman's BBQ Sauce.
Q2 net revenues were level at £49m following the exceptionally strong Q1.
Geographic Analysis at constant exchange for continuing operations
Europe 53% of Net Revenues
H1 net revenues grew by 6% to £1,077m. Growth came behind key recent product
introductions. In fabric care, the increase came from Vanish Dual Power and
Vanish Oxi Action Max. In surface care, the key drivers were Cillit Bang and
Dettol surface care. Finish / Calgonit 4-in-1 spurred significantly higher
sales in automatic dishwashing. Air care growth was due to the launch of
Airwick Freshmatic.
H1 Operating margins were 40bps behind last year at 20.6% due to higher media
and marketing investment in new products, not altogether offset by tight cost
control. This resulted in a 4% increase in operating profits to £222m.
In Q2, net revenues increased 5% to £539m, and operating profits increased by
3% to £118m behind a 50bps decrease in operating margin to 21.9% reflecting
higher investment in media and marketing.
North America & Australia 29% of Net Revenues
H1 net revenues increased 3% to £576m. Key growth drivers were Spray'nWash Dual
Power in fabric care, Lysol disinfectant spray and Neutra Air in surface care,
Electrasol 2-in-1 tabs and gelpacs in automatic dishwashing, Airwick electrical
oils and Decosphere in air care, and Veet depilatories in health & personal
care. Suboxone prescription drug continued its substantial expansion. Food
growth came mainly from French's yellow mustard and the launch of Cattleman's
BBQ Sauce.
H1 Operating margins were 60bps lower at 14.1% due to substantially higher
input costs reducing gross margins, resulting in profits decreasing 1% to £81m.
Q2 net revenues grew 6% to £303m while profits were steady at £42m. Operating
margins were 70bps lower at 13.9% reflecting substantially higher input costs
in the quarter.
Developing Markets 18% of Net Revenues
H1 net revenues grew 14% to £361m. The key drivers of growth were the
geographical roll-out of key Power brands to new markets. Amongst these were
Vanish Oxi Action which was launched in further markets in fabric care, the
launch of Easy Off Bang in many new markets in surface care and the launch of
Finish automatic dishwashing products and Veet depilatories into new markets.
In addition, there was continuing growth for Mortein pest control in home care
and the Dettol personal care range in health & personal care benefiting from
higher investment.
H1 Operating margins expanded 270bps to 7.2%, resulting in operating profits
increasing by 63% to £26m.
Q2 net revenues increased by 13% to £186m, and operating margins expanding by
180bps to 8.1% resulted in operating profits increasing 36% to £15m.
New Initiatives H2 2005
The Company announces a number of new product launches today for the second
half of 2005.
* In fabric treatment, the Company is introducing Vanish Oxi Action Wow
providing stain removal even on dried in stains. Woolite ProCare is being
launched in Europe and North America offering the care of hand washing in
the washing machine.
* In surface care, Cillit Bang is being rolled out as Easy Off Bam in North
America. In lavatory care, Harpic In Cistern 2-in-1 Cleaner & Freshener,
and Harpic In Bowl 2-in-1 Max Cleaner & Freshener are being launched in
Europe.
* In automatic dishwashing, Electrasol 3-in-1 Tabs including presoakers,
detergent and rinse agent is launched in North America.
* In air care, Airwick Freshmatic automatic air freshener is being launched
in North America.
* In health & personal care, Dettol Active Deodorant Soap and Shower Gel are
being launched in Asia and Africa Middle East. This is in addition to the
ongoing innovation program in Healthcare, the latest examples of which are
Gaviscon Cool in gastrointestinal and Lemsip all night spray and 12 hour
sinus relief in cold/flu which were launched last winter.
Financial Review
Basis of Preparation
The unaudited financial information is prepared on the basis of the IFRS
accounting policies that the directors intend to use in the next annual report.
This basis is subject to amendment by the International Accounting Standards
Board (IASB) and is dependent on further endorsement by the European Commission
(EC). Accordingly, the information presented and the format of presentation may
be subject to change as new guidance is issued or as practice develops. The
group will publish its first audited IFRS Financial Statements within its
Annual Report and Accounts for 2005, in early 2006.
The group has adopted IFRS 1: First-time adoption of international financial
reporting standards and has applied all relevant optional exemptions from full
retrospective application with two exceptions. First, the group has applied the
requirements of IFRS 2: Share-based payment to all awards that had not vested
as at 1 January 2005. Second, the Group has applied IAS 32: Financial
Instruments: Disclosure and Presentation and IAS 39: Financial Instruments:
Recognition and Measurement with effect from the transition date. In adopting
current IFRS, the Group has assumed that the EC will endorse the December 2004
amendment to IAS 19: Employee Benefits.
The 2004 comparatives included within this press release are based on the 2004
financial statement extracts restated for IFRS (including explanations of the
IFRS adjustments) as published on 8th March 2005. As detailed in note 1 the
group has made a further IFRS adjustment relating to deferred tax on intangible
assets. This adjustment does not impact the income statement.
Net interest. Net interest received in H1 was £15m (2004 charge of £4m). This
resulted from the conversion of the Convertible Capital Bond in July 2004 and
March 2005, and from cash inflow increasing cash deposits and short term
investments. Q2 interest received was £8m (2004 nil).
Tax. The tax rate is 26% (2004 same).
Shares in issue. The number of shares in issue has increased during the period
following the final tranche of conversions of the Convertible Capital Bond and
other share issues, offset by shares cancelled under the Company's rolling
share buyback program (see below).
Cash flow. Cash generated from operations increased 7% to £474m due to higher
profits. Net Cash flow rose 12% to £377m, with higher interest received and
similar working capital release compared to last year but after higher capex
and tax paid.
Net working capital decreased further to minus £606m at the end of the half
year, an improvement of £85m compared to December 2004 primarily due to an
increase in accounts payable.
Net funds at the end of the half year were £763m (December 2004 £632m), an
increase in the period of £131m. This reflects strong cash inflow and the
cancellation of £31m of Convertible Capital Bond, less the £131m cost of the
final dividend for 2004 and the £161m cost of the share buyback program in the
period. The Company's net funds position consisted of cash of £700m (£308m) and
short term investments of £257m (£570m) offset by borrowings of £194m (£215m).
Financing. At the half year, the Group had shareholders funds of £1,607m (2004
year end £1,541m), an increase of 4%. Net funds were £763m (£632m). Total
capital employed in the business was £844m (£909m). The Company's key return
ratios have therefore improved further in the period.
Dividends. The Board of Directors announces an interim dividend of 18.0 pence
per share (2004 16.0 pence per share), an increase of 13% in line with the
Company's policy to increase the dividend in line with earnings once coverage
ratios reach the level of the industry peer group. The interim dividend is
covered 2.0 times by profit for the half year (2004: 2.0 times). The ex
dividend date will be 10th August and the dividend will be paid on 29th
September to shareholders on the register at the record date of 12th August.
The last date for election for the share alternative to the dividend is 8th
September.
Share buyback. Between 9th February and 24th June 2005, the Group purchased
9,585,000 shares for cancellation at a cost of £161m as part of its ongoing
share buyback program. This brings the totals for the 2004/5 program to date to
13.3m shares at a cost of £218m.
The Company today announces that it intends to complete its current program of
£300m by end Q3 2005 (implying £82m in Q3).
It will execute a further program in Q4 2005 to result in a total buyback for
financial year 2005 of £300m (implying around £57m in Q4).
Thereafter the Company intends to move the program onto a financial year basis
to coincide with its other key performance indicators and expects to increase
the size of its annual share buyback program to £350m for the 2006 financial
year.
For Further Information
Reckitt Benckiser +44 (0)1753 217 800
Tom Corran SVP Investor Relations & Corporate Communications
Mark Wilson Corporate Controller and Investor Relations Manager
PR Agency
Tim Spratt Financial Dynamics +44 (0)207 837 3113
The Group at a Glance (unaudited)
Quarter Ended June 30 Half Year Ended June 30
2005 2004# 2005 2004#
£m £m £m £m
From total ordinary
activities
1,028 953 Net revenues 2,014 1,873
8% 1% Net revenues growth 8% 5%
54.8% 55.5% Gross margin 54.4% 54.6%
207 193 EBITDA 390 359
20.1% 20.3% EBITDA margin 19.4% 19.2%
185 171 EBIT 345 315
18.0% 17.9% EBIT margin 17.1% 16.8%
193 171 Profit before tax 360 311
18.8% 17.9% PBT margin 17.9% 16.6%
144 127 Net Income 268 230
14.0% 13.3% Net Income margin 13.3% 12.3%
19.7p 18.0p EPS 36.8p 32.6p
19.3p 17.2p EPS, diluted 35.8p 31.1p
#Restated following the adoption of IFRS.
Group Balance Sheet Data June 30, December 31
2005 2004#
£m £m
Net working capital * (606) (521)
Net funds 763 632
#Restated following the adoption of IFRS.
* Net working capital is defined as inventories, short term receivables and
short term liabilities, excluding borrowings, convertible capital bonds and
provisions.
Group income statement (unaudited)
Quarter Ended June 30 Half Year Ended June
30
2005 2004# % change 2005 2004# % change
£m £m £m £m
1,028 953 8% Net revenues 2,014 1,873 8%
(465) (424) 10% Cost of sales (918) (850) 8%
563 529 6% Gross profit 1,096 1,023 7%
(378) (358) 6% Net operating expenses (751) (708) 6%
185 171 8% Total operating profit 345 315 10%
8 - Net finance income / (expense) 15 (4)
193 171 13% Profit before taxation 360 311 16%
(49) (44) 11% Taxation (92) (81) 14%
144 127 13% Profit for the period 268 230 17%
0 0 - Attributable to minority 0 0 -
interests
144 127 13% Attributable to equity 268 230 17%
shareholders
144 127 13% Profit for the period 268 230 17%
Earnings per ordinary share:
19.7p 18.0p On profit for the period 36.8p 32.6p
19.3p 17.2p On profit for the period, 35.8p 31.1p
diluted
Average common shares
outstanding:
732.1 704.3 Basic 728.5 706.1
746.7 757.4 Diluted 747.8 759.3
#Restated following the adoption of IFRS.
Group balance sheet
For the half year ended June 30, (unaudited)
30 June 31 December 30 June
2005 2004# 2004#
£m £m £m
ASSETS
Non-current assets:
Property, plant and equipment 475 481 477
Goodwill and intangible assets 1,705 1,663 1,690
Deferred tax assets 54 58 16
Other receivables 10 10 21
2,244 2,212 2,204
Current assets:
Inventories 257 258 232
Trade and other receivables 537 504 525
Short term investments 257 570 492
Cash and cash equivalents 700 308 379
1,751 1,640 1,628
Total Assets 3,995 3,852 3,832
LIABILITIES
Current liabilities:
Borrowings (61) (86) (157)
Provisions (4) (4) (3)
Other liabilities (1,400) (1,283) (1,283)
Convertible capital bonds - (31) (147)
(1,465) (1,404) (1,590)
Non-current liabilities:
Borrowings (133) (129) (135)
Deferred tax liabilities (note 1) (406) (388) (392)
Retirement benefit obligations (256) (253) (195)
Provisions (9) (11) (13)
Other liabilities (119) (126) (154)
(923) (907) (889)
Total liabilities (2,388) (2,311) (2,479)
Net assets 1,607 1,541 1,353
EQUITY
Capital and reserves:
Share capital 77 76 73
Share premium account 470 405 238
Capital redemption reserve 3 2 1
Equity component of convertible bonds - 9 45
Merger reserve 142 142 142
Hedging reserve (1) 0 0
Profit and loss account (note 1) 915 904 851
1,606 1,538 1,350
Equity minority interest 1 3 3
Total equity 1,607 1,541 1,353
#Restated following the adoption of IFRS.
Group cash flow statement
For the half year ended June 30 (unaudited)
30 June 30 June
2005 2004
£m £m
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations:
Operating profit 345 315
Depreciation 40 40
Amortisation and impairment 5 4
Fair value (gains)/losses (2) 0
Decrease/(increase) in inventories 2 (17)
Increase in trade and other receivables (31) (50)
Increase in payables and provisions 97 136
Share award expense 18 16
Cash generated from operations: 474 444
Interest paid (8) (20)
Interest received 23 14
Tax paid (82) (78)
Net cash generated from operating activities 407 360
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets (1) -
Purchase of property, plant and equipment (32) (26)
Disposal of property, plant and equipment 2 3
Acquisitions of business (8) (1)
Maturity of short term investments 313 117
Net cash generated by investing activities 274 93
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares 27 11
Share purchases (161) (137)
Repayments of borrowings (27) (9)
Dividends paid to the Company's shareholders (131) (99)
Net cash used in financing activities (292) (234)
Net increase in cash and cash equivalents 389 219
Cash and cash equivalents at beginning of period 301 163
Exchange gains/ (losses) 3 (3)
Cash and Cash equivalents at end of period 693 379
Cash and cash equivalents comprise
Cash and cash equivalents 700 379
Overdraft (7) -
693 379
RECONCILIATION OF NET CASH FLOW FROM OPERATIONS
Net cash generated from operating activities 407 360
Net purchase of property, plant and equipment (30) (23)
Net cash flow from operations 377 337
Management uses net cash flow from operations as a performance measure.
Segmental Analysis (unaudited)
Analyses by geographical area and product segment of net revenues and operating
profit are set out below. The figures for each geographical area show the net
revenues and profit made by companies located in that area.
Quarter Ended June 30 Half Year Ended June 30
2005 2004# % Change 2005 2004# % Change
£m £m exch. Rates £m £m exch rates
actual const. actual const.
Net revenues - by
geographical area
539 505 7% 5% Europe 1,077 997 8% 6%
303 288 5% 6% North America & 576 564 2% 3%
Australia
186 160 16% 13% Developing Markets 361 312 16% 14%
1,028 953 8% 6% 2,014 1,873 8% 6%
Operating profit - by
geographical area
118 113 4% 3% Europe 222 209 6% 4%
42 42 0% 0% North America & 81 83 -2% -1%
Australia
15 10 50% 36% Developing Markets 26 14 86% 63%
10 6 Corporate 16 9
185 171 8% 6% 345 315 10% 8%
% % Operating margin - by % %
geographical area
21.9 22.4 Europe 20.6 21.0
13.9 14.6 North America & 14.1 14.7
Australia
8.1 6.3 Developing Markets 7.2 4.5
Corporate
18.0 17.9 17.1 16.8
#Restated following the adoption of IFRS.
Segmental Analysis (continued)
Quarter Ended June 30 Half Year Ended June 30
2005 2004# % change 2005 2004# % exchange
£m £m exch. rates £m £m exch. rates
actual const. actual const.
Net revenues - by
product segment
979 904 8% 7% Household and Health & 1,928 1,788 8% 7%
Personal Care
49 49 0% 0% Food 86 85 1% 4%
1,028 953 8% 6% 2,014 1,873 8% 6%
Operating profit - by product
segment
166 156 6% 5% Household and Health & 317 295 7% 6%
Personal Care
9 9 0% 0% Food 12 11 9% 9%
10 6 Corporate 16 9
185 171 8% 6% 345 315 10% 8%
% % Operating margin - by % %
product segment
17.0 17.3 Household and Health & 16.4 16.5
Personal Care
18.4 18.4 Food 14.0 12.9
Corporate
18.0 17.9 17.1 16.8
Net revenues - Household and
Health & Personal Care
279 261 7% 4% Fabric Care 541 517 5% 2%
209 181 15% 13% Surface Care 419 365 15% 14%
140 128 9% 8% Dishwashing 290 268 8% 7%
139 131 6% 5% Home Care 283 264 7% 7%
179 166 8% 8% Health & Personal Care 329 304 8% 8%
946 867 9% 7% Core Business 1,862 1,718 8% 7%
33 37 -11% -11% Other Household 66 70 -6% -6%
979 904 8% 7% 1,928 1,788 8% 7%
Earnings per ordinary share
For the half year ended June 30, (unaudited)
The reconciliation between profit for the half year and the weighted average
number of shares used in the calculations of the diluted earnings per share is
set out below:
2005 2004
Profit Average Earnings Profit Average Earnings
for Number of per for number of per
the Shares share the shares share
half pence half pence#
year year#
£m £m
Profit attributable to 268 728,470,049 36.8 230 706,081,102 32.6
shareholders
Dilution for Executive 14,691,712 13,538,252
options outstanding and
Executive Restricted
Share Plan
Dilution for Employee 694,851 1,072,623
Sharesave Scheme options
outstanding
Dilution for convertible 0 3,974,038 6 38,655,773
capital bonds outstanding
*
On a diluted basis 268 747,830,650 35.8 236 759,347,750 31.1
* After the appropriate tax adjustment, the profit adjustment represents the
coupon on convertible capital bonds. The earnings per share impact reflects the
effect of that profit and the assumption of the issue of shares on the
conversion of bonds.
#Restated following the adoption of IFRS.
The Directors believe that a diluted earnings per ordinary share, adjusted for
the distorting effects of non-operating items after the appropriate tax amount,
provides the most meaningful measure of earnings per ordinary share in
comparing the performance of the business over time.
Shares in Issue
Millions
31 December 2004 724.5
Issues on Conversion of Capital Bonds 8.1
Other Issues 5.9
Cancelled (9.6)
30 June 2005 728.9
Note 1: IFRS Adjustment
Following the development of a practical interpretation of IAS 12: Income Taxes
since the Group published its initial IFRS restatement on 8th March 2005, the
Group now recognizes a deferred tax liability in respect of certain acquired
intangible assets in its IFRS balance sheet. Under IAS 12, deferred tax is
recognized in respect of nearly all taxable temporary timing differences
arising between the tax base and the book value of most balance sheet items.
The application of this principle may result in the recognition of additional
temporary differences when compared to UK GAAP. The additional temporary
difference identified by the Group relates to the difference between the fair
value of an intangible asset acquired as part of a business combination and its
equivalent tax base. Accordingly the Group now recognizes a deferred tax
liability of £164m at 1st January 2004, the date of transition. This adjustment
does not impact the income statement. The impact on net assets is set out
below.
IFRS Reconciliation of key balance sheet items
The following tables supplement the information contained within the press
release of 8th March 2005, which described the conversion of the group's basis
of accounting from UK GAAP to IFRS and contained a restatement of 2004 results,
including the restatement of the profit and loss account for Q2 and H1 2004.
Net Assets
30 June 2004
£m
Net Assets under UK GAAP 1,431
Adjustments (inclusive of taxation):
IFRS 2: Deferred taxation on share award reserve 12
IAS 19: Employee benefits (83)
IAS 32: Convertible bond 45
IAS 32: Preference shares (5)
IFRS 3: Goodwill amortisation 2
IAS 39: Fair value of derivative instruments (3)
IAS 10: Events after the balance sheet date (interim 112
dividend)
IAS 1: Reclassification of minority interest 3
IAS 12: Deferred tax on acquired intangibles (note 1) (161)
Net Assets under IFRS 1,353
31 December 2004 1 January 2004
£m £m
Net Assets under IFRS as previously reported 1,698 1,535
IAS 12: Deferred tax on acquired intangibles (157) (164)
(note 1)
Net Assets under IFRS 1,541 1,371
Net Working Capital *
30 June 2004
£m
Net Working Capital under UK GAAP (633)
IAS 19: Employee benefits (2)
IAS 39: Fair value of derivative instruments (3)
IAS 10: Events after the balance sheet date (interim 112
dividend)
Net Working Capital under IFRS (526)
* Net working capital is defined as inventories, short term receivables and
short term liabilities, excluding borrowings, convertible capital bonds and
provisions.
Net Funds
30 June 2004
£m
Net Funds under UK GAAP 403
IAS 32: Convertible bond 45
IAS 32: Preference shares (5)
IAS 17: Leases (11)
Net Funds under IFRS 432
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