9th Feb 2005 07:00
9th February 2005 FIFTH STRAIGHT YEAR OF ABOVE INDUSTRY GROWTH 2005 TARGETS FURTHER GROWTH Results at a Glance Q4 % change % change Full Year % change % change ‚£m actual constant actual constant (unaudited) exchange exchange ‚£m exchange exchange Net Revenues 1,022 +7 +11 3,871 +4 +10 Operating Profit 243 +7 +11 759 +12 +18 Net Income 201 +20 +25 586 +20 +26 EPS (full dilution) 27.0p +21 78.3p +18 * Q4 Net revenues grew by 7% (11% at constant exchange) to ‚£1,022m, the first time a quarter has exceeded ‚£1 billion. Net revenues for the full year grew by 4% (10% constant) to ‚£3,871m. * Operating profit increased by 7% (11% at constant exchange) in Q4 to ‚£243m - the highest ever quarter - and by 12% (18% at constant exchange) to ‚£759m for the full year. Full Year operating margins improved 130 basis points (bps) to 19.6% behind a 150 bps gross margin improvement somewhat offset by a significant increase in marketing investment. * Net income grew by 20% in Q4 to ‚£201m and by 20% in the full year to ‚£586m, benefiting from a non-recurring tax credit of ‚£14m. Fully diluted EPS for the year grew 18% to 78.3p. * Under International Financial Reporting Standards (IFRS) reported net income and EPS would decrease by around 1% - 1.5 % compared to UK GAAP, a minor change not affecting growth rates. * Net cash flow increased to ‚£664m. After dividends of ‚£216m and share buyback of ‚£283m during the year, net funds increased to ‚£638m (‚£292m) at the year-end. * The Board is recommending a final dividend of 18 pence (+29%) to give a total dividend of 34 pence for the year, an increase of 21% over 2003, in line with policy. The dividend is covered 2.4 times by 2004 net income. Commenting on results and prospects for 2005, Bart Becht, Chief ExecutiveOfficer, said(comments in full overleaf)"Q4 was a very good quarter for Reckitt Benckiser. For the first time, theCompany broke the billion pound net revenue barrier and earned over ‚£200m netincome for the quarter - equivalent to the underlying profit for the full yearin 1999. As a result, Reckitt Benckiser exceeded raised targets on net revenueand net income growth and outperformed the industry for the fifth year in arow."In 2005 we are looking to continue our strong organic growth. Our in-goingtarget is for net revenue growth of 5% to 6% at constant exchange. The base fornet income targets excludes non-recurring tax credit (‚£14m) and will berestated for IFRS. Off this base, we are targeting low double-digit net incomeand EPS growth at constant exchange. Achieving these targets will deliveranother year of strong organic growth." Full comments by Bart Becht, CEO of Reckitt Benckiser. "Q4 was a very good quarter for Reckitt Benckiser. For the first time, theCompany broke the billion pound net revenue barrier and earned over ‚£200m netincome for the quarter - equivalent to the underlying profit for the full yearin 1999. As a result, Reckitt Benckiser exceeded the raised targets for netrevenue growth and net income growth and outperformed our industry for thefifth year in a row."It is now five years since the creation of Reckitt Benckiser. Since the 1999merger year, the Company has generated net revenue growth of over 7% per yearon a like-for-like basis, well ahead of the industry average. Net income hasalmost trebled from ‚£200m in 1999 to ‚£586m in 2004. The Company has generatedover ‚£2.5 billion in net cash flow allowing it to return over ‚£1.25 billion toshareholders through dividends and share buybacks, while completely paying offthe Company's net borrowings."I believe our ability to consistently outperform the industry is due to ourpassion for giving consumers better products, our ability to heavily invest inand select the right consumer initiatives, and our focus on controlling costsand generating cash. Clearly none of these results would have been possiblewithout the strength and passion of the Reckitt Benckiser team and thecorporate culture we built since the merger."Going forward, we will be guided by the vision and strategy that has workedfor us so well. As Reckitt Benckiser achieves margin levels in line with thebest of our industry peers, somewhat more of its profit growth will come fromtop line growth and somewhat less from margin expansion."In 2005 we are looking to continue our strong organic growth."For 2005, our in-going target is for net revenue growth of 5% to 6% atconstant exchange. For margins, it remains the Company's intention to offsetincreased input costs through cost optimization and sales mix, and so generatemodest operating margin expansion over 2005 as a whole. Given the Companybenefited from fixed price contracts especially in H1 last year, it is likelythat most of this modest margin expansion in the year will come in the secondhalf. The base for net income targets excludes the non-recurring tax creditrelating to recent tax settlements (‚£14m) and will be restated forInternational Financial Reporting Standards. Off this base, we are targetinglow double-digit net income and EPS growth at constant exchange. Achievingthese targets will deliver another year of strong organic growth." Detailed Operating Review Fourth Quarter 2004Net Revenues grew by 7% (11% at constant exchange) to ‚£1,022m due to continuingsuccess for the Company's new initiatives.Operating profit for Q4 grew 7% (11% constant) to ‚£243m. Gross margin increasedby 30 bps to 55.3% due to higher margin new products and further benefits fromcost optimization programs Squeeze and Xtrim offset to some extent by higherraw and packaging material costs. Marketing investment increased substantiallyin the quarter building on the substantial increases in earlier quarters. Mediainvestment rose by 50 bps to 10% of net revenues for the quarter. Operatingmargins were level with last year at 23.8% with gross margin improvement andreductions in fixed costs as a percentage of net revenues offset bysubstantially higher marketing investment.Net income grew 20% (25% constant) to ‚£201m. The underlying tax rate was 26%,but the charge was reduced by a non-recurring tax credit of ‚£14m relating torecent tax settlements.Full Year 2004Net revenues grew by 4% (10% constant) to ‚£3,871m as the Company benefited fromits focus on major product initiatives in its core categories.Operating profit increased 12% (18% constant) to ‚£759m. Gross margins rose 150bps to 54.8% as a result of higher margin new products and savings from thecost optimization programs Squeeze and Xtrim, plus favourable contracts on rawand packaging materials earlier in the year. Marketing investment increasedsubstantially in the year with media investment increasing by 90 bps to 12.4%of net revenues. Operating margins increased by 130 bps to 19.6%.Net income grew by 20% (26% constant) to ‚£586m. The underlying tax rate was26%, but the charge was reduced by a non-recurring tax credit of ‚£14m relatingto recent tax settlements. Net interest income of ‚£11m (2003 expense of ‚£19m)was lower due to the strong cash inflow over the past year reducing the levelof net borrowings and to the conversion of a substantial proportion of theconvertible bond in July 2004. Category Review at constant exchange rates Fabric Care. Net revenues grew 9% to ‚£1,064m largely due to the success ofVanish Oxi Action, the Company's fabric treatment franchise. Key driversincluded the formula upgrade to Vanish Oxi Action Max, and the benefits of thelaunch of Vanish Oxi Action gel and pre-treater. It also benefited from theextension of Vanish Oxi Action into carpet cleaners.Q4 net revenues grew 7% to ‚£268m.Surface Care. Net revenues grew 11% to ‚£773m. Multipurpose and specialtycleaners grew due to the success of Cillit Bang 'lime and grime power cleaner'across Europe and strong growth on the base business in Developing Markets.Lavatory cleaners grew behind the roll-out of the Lysol Ready Brush in NorthAmerica and the launch of the Harpic Ready Brush in Europe plus strong growthfor the base business in Developing Markets.Q4 net revenues grew 18% to ‚£212m.Dishwashing. Net revenues grew 5% to ‚£542m. Strong automatic dishwashing growthwas somewhat offset by a decline on hand dishwashing products. In automaticdishwashing, growth came across all regions, with particularly strong growth inNorth America due to Electrasol with Jet Dry Action gel, gelpacs and tabletslaunched earlier this year. In Europe growth came behind the launch of Calgonit/Finish 3-in-1 Extra Power in the summer.Q4 net revenues grew 3% to ‚£142m.Home Care. Net revenues grew 12% to ‚£564m with strong growth for both air careand pest control. Air care grew behind Airwick Aroma Oils and the roll-out ofAirwick Mobil'Air. Pest control grew behind the success of MorteinProfessional, Mortein Power Booster coils and a very strong pest season earlierin the year in the Southern Hemisphere.Q4 net revenues grew 10% to ‚£152m.Health & Personal Care. Net revenues grew 15% to ‚£599m. Excellent growth wasachieved in all categories. Depilatories grew behind the success of Veet Raseradespite a disappointing season in Europe due to poor summer weather. Dettolantiseptics grew behind the personal care range in Developing Markets. Healthcare products benefited from the continuing roll-out of Gaviscon in Europe andthe strength of the UK flu season for Lemsip early in the year. Suboxonecontinues to grow strongly as distribution builds in North America.Q4 net revenues grew 18% to ‚£150m.Core Household grew full year net revenues 10% to ‚£3,542m, and 11% to ‚£924m inQ4.Food. Net revenues grew 9% to ‚£190m with continued growth for French's yellowmustard, French's Gourmayo and gains for Frank's Red Hot sauce.Q4 net revenues grew 11% to ‚£62m. Geographic Analysis at constant exchange Europe 52% of Net RevenuesFull year net revenues grew by 8% to ‚£2,032m. Growth came from key recentproduct introductions. In fabric treatment, growth was due to the success ofVanish Oxi Action, including a number of new additions to the range such asgel, pre-treater, the upgrade to Vanish Oxi Action Max and the extension ofVanish Oxi Action into carpet cleaners. In surface care, growth came frommultipurpose cleaners with the success of Cillit Bang across the Area and thelaunch of Harpic Ready Brush in lavatory care. In automatic dishwashing growthcame due to the launch in the summer of Calgonit/Finish 3-in-1 Extra Power.Health & personal care grew with the launch of Veet Rasera despite adisappointing summer season for the category, and strong growth for the healthcare portfolio due to the roll-out of Gaviscon in Europe and a strong fluseason for Lemsip in the UK early in the year. Operating margins improved by50bps to 22.8% resulting in a 11% increase in operating profits to ‚£464m.In Q4, net revenues grew 11% to ‚£526m, and operating profits increased by 8% to‚£137m. Operating margin was 26.0%, 110bps below the exceptional level of lastyear, due to further substantial increase in marketing investment behind thelaunch and roll out of new initiatives.North America & Australia 31% of Net RevenuesFull year net revenues increased by 9% to ‚£1,196m. In surface care increaseswere due to the roll-out of the Lysol Ready Brush and growth for Lysoldisinfectant cleaner, particularly Lysol Neutra Air. In automatic dishwashingincreases came due to the success of Electrasol with Jet Dry Action gel,gelpacs and tablets. In Home Care, Air Care grew following the continuedsuccess of Airwick Aroma Oils and the initial success of Airwick Mobil'Air, andin health & personal care, depilatories grew strongly due to the launch of VeetRasera. Suboxone continues to grow strongly as distribution builds up in NorthAmerica. Food grew due to continued growth for French's Yellow Mustard andgains for Frank's Red Hot sauce. Operating margins grew by 130bps to 20.4%,resulting in profits increasing 16% to ‚£244m.Q4 net revenues grew 8% to ‚£328m, with profits increasing 14% to ‚£90m, anincrease of 80bps in operating margin to 27.4%.Developing Markets 17% of Net RevenuesFull year net revenues grew 16% to ‚£643m. There was strong growth in allcategories. In fabric care, growth came following the launch and roll-out ofVanish Oxi Action fabric treatment products. In surface care, increases camewith the success of Harpic behind higher investment in key markets, and strongrecovery in certain markets for multipurpose cleaners further boosted by thelaunch of Easy Off Bang in some markets. Pest control grew strongly with thelaunch of Mortein Power Booster coils. Dettol antiseptics grew due to thesuccess of the personal care range supported by higher investment. Operatingmargins expanded by 240bps to 6.8%, resulting in operating profits increasingby 76% to ‚£44m.Q4 net revenues increased by 17% to ‚£168m, and operating profits increased 50%to ‚£15m with operating margins expanding by 240bps to 8.9%.New Initiatives : H1 2005Reckitt Benckiser is today announcing a number of new initiatives for the firsthalf of 2005 including: -Fabric Care. Further expansion of Vanish Oxi Action with the launch of VanishOxi Action Dual Power. This is launched in North America as Spray 'n Wash DualPower. Launch of Resolve Dual Power for carpets in North America.Surface Care. Further expansion of Cillit Bang with the launch of Cillit BangPowder and Cillit Bang Degreaser across Europe. Launch of Cillit Bang as EasyOff Bang in markets outside Europe.Automatic Dishwashing. Finish / Calgonit 4-in-1 with glass protection launchedin Europe. Finish / Calgonit Power Booster for pots and pans launched inEurope.Home Care. Airwick Freshmatic automatic spray launched in Europe and selectedmarkets outside EuropeHealth & Personal Care. Veet 3-minute cream launched globally. Veet wax stripswith comfort spray launched in North America. Gaviscon Cool in Europe. Financial Review - Full Year Basis of Comparison: Constant Exchange. Movements of exchange rates relative tosterling affect actual results as reported. The constant exchange rate basisadjusts comparatives to exclude such movements and show the underlying growth.Convertible Capital Bonds. On 31 July the holders of 151.6m 9.5 per centConvertible Capital Bonds 2005 exercised their conversion rights to converttheir Bonds into 30.6m fully paid ordinary shares of Reckitt Benckiser plc. Theeffect of this is to reduce borrowings by ‚£151.6m (thereby increasing theCompany's net funds position) and increase the number of shares in issue by30.6m.Net Interest. The net interest income of ‚£11m (2003 expense of ‚£19m) was due tostrong cash generation over the past year reducing the group's indebtedness andthe impact of conversion of the Convertible Bonds reducing interest payable by‚£11m.Tax. The underlying tax rate for the period was 26% but the charge was reducedby the non-recurring credit of ‚£14m relating to recent settlements.Net Working Capital (defined as net current liabilities excluding current assetinvestments, cash and short term borrowings) decreased further at the year endby ‚£67m compared to year-end 2003 to minus ‚£645m.Cash Flow. Operating cash flow increased to ‚£914m, due to higher operatingprofit. Net working capital improvements were lower than 2003 as many of thegroup's businesses reached optimal levels.Net cash flow from ordinary operations increased to ‚£664m. Net interestreceived was ‚£8m (2003 net payment of ‚£25m) while tax payments increased from ‚£146m to ‚£189m.Gross capital expenditure was slightly higher than prior year at ‚£78m (‚£71m).This was offset by proceeds from disposal of fixed assets of ‚£9m (‚£12m) to givenet capital expenditure of ‚£69m against ‚£59m last year.Net Funds at the year-end were ‚£638m (2003 ‚£292m), an improvement of ‚£346m dueto strong operating cash inflow and the conversion of ‚£152m of ConvertibleBonds, but after higher dividend payments and share buyback. The Company's netfunds position consisted of cash of ‚£51m (‚£59m) and short-term investments of ‚£827m (‚£724m) offset by the Convertible Bond of ‚£40m (‚£192m) and otherborrowings of ‚£200m (‚£299m).Balance Sheet. At the end of 2004, the Group had shareholders' funds of ‚£1,676m(‚£1,470m), an increase of 14%. Net funds were ‚£638m (2003 ‚£292m). Total capitalemployed in the business was ‚£1,041m (‚£1,182m) a decrease of 12%.The Company's financial ratios improved significantly during the year.DividendsThe Directors recommend a final dividend of 18 pence per share, an increase of29%, to give a full year dividend of 34 pence per share, an overall increase of21%. This is in line with the previously communicated policy to increase thedividend once the dividend cover of the group reached the average of theindustry peer group. This dividend will be covered 2.4 times by 2004 netincome, broadly in line with the peer group. The dividend, if approved byshareholders at the AGM on 5th May 2005, will be paid on 26th May toshareholders on the register on 4th March. The ex dividend date will be 2ndMarch 2004.Share BuybackDuring 2004, the group purchased 19,355,000 shares for cancellation at a costof ‚£283m as part of its ongoing share buyback program.International Financial Reporting StandardsReckitt Benckiser will adopt International Financial Reporting Standards (IFRS)from 1st January 2005. The group expects the impact of this change on the UKGAAP 2004 results to be a decrease of 1% - 1.5 % on Net Income and Earnings PerShare.The Company will publish a detailed restatement of 2004, including quarterlyanalysis and accompanying explanation, during March prior to releasing itsfirst quarter results under IFRS on 26th April 2005.For Further Information Tom Corran Reckitt Benckiser plc +44 (0)1753 217 800 Senior Vice President, Investor Relations & Corporate Communications Mark Wilson Reckitt Benckiser plc +44 (0)1753 217 800 Corporate Controller and Investor Relations Manager Tim Spratt Financial Dynamics +44 (0) 207 831 3113 The preliminary results for the year ended 31 December 2004, including the IFRSreferences, are unaudited. The unaudited financial statements for 2004 areprepared using accounting policies consistent with the audited financialstatements for 2003. The financial information set out in the announcement doesnot constitute the Company's statutory accounts for the years ended 31 December2004 or 31 December 2003. The financial information for the year ended 31December 2003 is derived from the statutory accounts for that year which havebeen delivered to the Registrar of Companies. The auditors reported on thoseaccounts; their report was unqualified and did not contain a statement undereither Section 237 (2) or Section 237 (3) of the Companies Act 1985. Thestatutory accounts for the year ended 31 December 2004 will be finalised on thebasis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the Company's Annual General Meeting.The Group at a Glance (unaudited) Quarter Ended Dec 31 Year Ended Dec 31 2004 2003 2004 2003 ‚£m ‚£m ‚£m ‚£m From total ordinary activities 1,022 953 Net revenues 3,871 3,713 7% 8% Net revenues growth 4% 7% 55.3% 55.0% Gross margin 54.8% 53.3% 275 249 EBITDA 856 768 26.9% 26.1% EBITDA margin 22.1% 20.7% 243 227 EBIT 759 679 23.8% 23.8% EBIT margin 19.6% 18.3% 250 224 Profit before tax 770 660 24.5% 23.5% PBT margin 19.9% 17.8% 201 167 Net Income 586 489 19.7% 17.5% Net Income margin 15.1% 13.2% 27.7p 23.6p EPS 82.0p 69.2p 27.0p 22.4p EPS, diluted 78.3p 66.2p Group Balance Sheet Data December 31, December 31 2004 2003 ‚£m ‚£m Net working capital * (645) (578) Net funds 638 292 * Defined as stock, short term debtors and short term creditors excludingborrowings.Shares in Issue Fourth Full Year Quarter Millions Millions As at 1 October 2004 / 1 January 2004 727.6 707.7 Issues on Conversion of Capital Bonds - 30.6 Other Issues 0.6 5.6 Cancelled (3.7) (19.4) 31 December 2004 724.5 724.5 Group profit and loss account(unaudited) Quarter Ended Dec 31 Year Ended Dec 31 2004 2003 % change 2004 2003 % change ‚£m ‚£m ‚£m ‚£m 1,022 953 7% Total net revenues 3,871 3,713 4% (457) (429) 7% Cost of sales (1,750) (1,735) 1% 565 524 8% Gross profit 2,121 1,978 7% (322) (297) 8% Net operating expenses (1,362) (1,299) 5% 243 227 7% Total operating profit 759 679 12% 7 (3) Net interest income/(expense) 11 (19) 250 224 12% Profit on ordinary activities 770 660 17% before taxation (49) (57) (14%) Tax on profit on ordinary (184) (171) 8% activities 201 167 20% Profit on ordinary activities 586 489 20% after taxation 0 0 Attributable to equity minority 0 0 interests 201 167 20% Profit for the period 586 489 20% (131) (99) 32% Ordinary Dividends (248) (198) 25% 70 68 3% Retained profit for the period 338 291 16% Earnings per ordinary share: 27.7p 23.6p 17% On profit for the period 82.0p 69.2p 18% 27.0p 22.4p 21% On profit for the period, 78.3p 66.2p 18% diluted Average common shares outstanding (millions): 726.3 708.3 Basic 714.9 706.9 747.4 760.0 Diluted 754.5 758.1 Group balance sheetAs at December 31 (unaudited) 2004 2003 ‚£m ‚£m Fixed assets: Intangible assets 1,660 1,746 Tangible assets 473 502 2,133 2,248 Current assets: Stocks 258 224 Debtors due within one year 494 480 Debtors due after more than one year 79 85 Investments 827 724 Cash at bank and in hand 51 59 1,709 1,572 Current liabilities: Creditors due within one year: Borrowings (82) (172) Other (1,397) (1,282) Convertible capital bonds (40) - (1,519) (1,454) Net current assets 190 118 Total assets less current liabilities 2,323 2,366 Non-current liabilities: Creditors due after more than one year: Borrowings (118) (127) Other (136) (165) Convertible capital bonds - (192) (254) (484) Provisions for liabilities and charges (390) (408) Equity minority interests (3) (4) Net Assets 1,676 1,470 Capital and reserves: Called up share capital (including non-equity capital 81 79of ‚£5m) Share premium account 405 227 Capital Redemption Reserve 2 0 Merger reserve 142 142 Profit and loss account 1,046 1,022 Total shareholders' funds (including non-equity 1,676 1,470shareholders' funds of ‚£5m) Group cash flow statementFor the year ended December 31 (unaudited)Reconciliation of operating profit to operating cash flow 2004 2003 ‚£m ‚£m Operating activities: Operating profit 759 679 Non-cash items: Depreciation and amortisation 97 89 Loss on sale of fixed assets 8 3 Other non cash movements 4 - (Increase)/decrease in stocks (36) 6 (Increase)/decrease in debtors (11) 16 Increase in creditors 93 93 Cash flow from operating activities 914 886 Cash Flow Statement Cash flow from operating activities 914 886 Return on investments and servicing of finance 8 (25) Taxation (189) (146) Capital expenditure and financial investment Purchase of intangible fixed assets (5) (85) Purchase of tangible fixed assets (78) (71) Disposal of tangible fixed assets 9 12 (74) (144) Acquisitions and disposals Acquisition of businesses (1) (8) Equity dividends paid (216) (189) Cash inflow before use of liquid resources and 442 374 financing Management of liquid resources (105) (348) Financing Share Repurchases (283) (25) Other Financing (57) 15 (340) (10) (Decrease)/increase in cash in year (3) 16 Reconciliation of net cash flow to movement in debt(Decrease)/increase in cash in year (3) 16 Cash outflow from decrease in debt 86 15 Cash outflow from increase in liquid resources 105 348 Changes in net debt resulting from cash flows 188 379 Conversion of convertible capital bonds 152 1 Exchange differences 6 17 Movement in net debt in year 346 397 Net funds/(debt) at beginning of year 292 (105) Net funds at end of year 638 292 Reconciliation of operating cash flow to net cash flow from ordinary operationsOperating cash flow 914 886 Return on investments and servicing of finance 8 (25) Taxation (189) (146) Capital expenditure (net, excluding intangible assets) (69) (59) Net cash flow from ordinary operations 664 656 Segmental Analysis (unaudited)Analyses by geographical area and product segment of net revenues and operatingprofit are set out below. The figures for each geographical area show the netrevenues and profit made by companies located in that area. Quarter Ended Dec 31 Year Ended Dec 31 2004 2003 % change 2004 2003 % change ‚£m ‚£m Exch. rates ‚£m ‚£m Exch. rates Actual Const. Actual Const. Net revenues - by geographical area 526 472 11% 11% Europe 2,032 1,909 6% 8% 328 327 0% 8% North America & 1,196 1,197 0% 9% Australia 168 154 9% 17% Developing Markets 643 607 6% 16% 1,022 953 7% 11% 3,871 3,713 4% 10% Operating profit - by geographical area 137 128 7% 8% Europe 464 425 9% 11% 90 87 3% 14% North America & 244 229 7% 16% Australia 15 10 50% 50% Developing Markets 44 27 63% 76% 1 2 Corporate 7 (2) 243 227 7% 11% 759 679 12% 18%% % Operating margin - by % % geographical area 26.0 27.1 Europe 22.8 22.3 27.4 26.6 North America & 20.4 19.1 Australia 8.9 6.5 Developing Markets 6.8 4.4 23.8 23.8 19.6 18.3 Segmental Analysis (continued) Quarter Ended Dec 31 Year Ended Dec 31 2004 2003 % change 2004 2003 % change ‚£m ‚£m Exch. rates ‚£m ‚£m Exch. Rates Actual Const. Actual Const. Net revenues - by product segment 960 891 8% 11% Household and Health & 3,681 3,519 5% 10% Personal Care 62 62 0% 11% Food 190 194 (2%) 9% 1,022 953 7% 11% 3,871 3,713 4% 10% Operating profit - by product segment 219 202 8% 13% Household and Health & 709 639 11% 15% Personal Care 23 23 0% 5% Food 43 42 2% 13% 1 2 Corporate 7 (2) 243 227 7% 11% 759 679 12% 18%% % Operating margin - by % % product segment 22.8 22.7 Household and Health & 19.3 18.2 Personal Care 37.1 37.1 Food 22.6 21.6 23.8 23.8 19.6 18.3 Net revenues - Household and Health & Personal Care 268 251 7% 7% Fabric Care 1,064 1,017 5% 9% 212 191 11% 18% Surface Care 773 748 3% 11% 142 139 2% 3% Dishwashing 542 535 1% 5% 152 146 4% 10% Home Care 564 540 4% 12% 150 128 17% 18% Health & Personal Care 599 539 11% 15% 924 855 8% 11% Core Business 3,542 3,379 5% 10% 36 36 0% 13% Other Household 139 140 (1%) 6% 960 891 8% 11% Net Revenues - 3,681 3,519 5% 10% continuing operations Earnings per ordinary share For the year ended December 31, (unaudited) The reconciliation between profit for the year and the weighted average number of shares used in the calculation of the diluted earnings per share is set out below: 2004 2003 Profit Average Earnings Profit Average Earnings for the number of per for number of per year ‚£m shares share the shares share pence year ‚£ pence m Profit attributable to 586 714,855,797 82.0 489 706,887,749 69.2shareholders Dilution for Executive 12,960,413 11,307,188 options outstanding and Executive Restricted Share Plan Dilution for Employee 937,121 1,247,501 Sharesave Scheme options outstanding Dilution for convertible 5 25,791,345 13 38,655,773 capital bonds outstanding* On a diluted basis 591 754,544,676 78.3 502 758,098,211 66.2 * After the appropriate tax adjustment, the profit adjustments represent the coupon on the convertible capital bonds. The earnings per share impact reflects the effect of that profit and the assumption of the issue of shares on conversion of the bonds. 1312ENDRelated Shares:
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