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PROFIT AND LOSS ACCOUNTBY DESTINATION ANDSEGMENT REPORTING
September 1st 2005
Presentation of Mr. Christian MULLIEZ
- 2 - September 1st 2005
Recapitulation of IFRS impact: - on net sales …………………………………………………….................... 4- on operating profit …………………………………………………………… 5- on pre-tax profit ………………………………………………………………. 6- on earnings per share ……………………………………………………… 7
Profit and loss account: New presentation by destination …………………………………………………….. 9Definition of lines by destination :
- Net sales ………………………………………………………………………………………………………….. 10- Cost of sales …………………………………………………………………………………………………. 11- Research & development ……………………………………………………………………………………… 12- Advertising and promotion…………….. …………………………………………… ………………………. 13- Selling, general and administrative expenses ………………………………………………………………. 14
Profit and loss account by destination: from net sales to operating profit …………………………….………. 16Operating profit of geographic zones ……………………………………………………………….................... 18Operating profit of branches and divisions ………………………………………………………………………...19Profit and loss account: from operating profit to pro forma net profit and pro forma net profit excluding non-recurrent items
- 2004 …………………………………………………………………………………………………………….… 21- 1st half 2004 ………..…………………..…………………………………………………………………......... 22
Plan
Page
- 3 -
Recapitulation of IFRS impact on sales, operating profit, pre-tax profit, earnings per share
Recapitulation of IFRS impact on:
- net sales- operating profit- pre-tax profit- earnings per share
September 1st 2005
- 4 -
Recapitulation of IFRS impact on net sales(€ millions)
Total reclassifications
Net sales – IFRS standards
Financial expense - net: cash discounts granted to customers
Changes in provisions for returns
External costs:sales incentives granted to customers
Personnel costs: reinvoicing of beauty advisors
Net sales – French standards
12.31.2004 06.30.2004
September 1st, 2005
-892.6
-51.5
-6.6
-828.2
-6.3
14,533.9
-475.2
}
-26.1
-11.2
-437.9
7,396.8
13,641.3 6,921.6
- 5 -
Recapitulation of IFRS impact on operating profit(€ millions)
Operating profit – IFRS standardsTotal adjustments
Impact on profit of time value of foreigncurrency hedges
Elimination of charge for depreciation of actuarialgains and losses
Stock option costs
Cash discounts granted to customers
Adjusted operating profit – French standards
12.31.2004 06.30.2004
September 1st 2005
2,088.9-72.6
-9.1
8.4
-20.4
-51.5
2,161.5
1,115.3-24.8
6.4
4.1
-9.2
-26.1
1,140.1
- 6 -
Recapitulation of IFRS impact on pre-tax profit(€ millions)
Impact on pre-tax profit
Total adjustments of operating profit
12.31.2004 06.30.2004
September 1st 2005
Positive impact on financial expense(reclassification of cash discounts)
-21.1
-72.6
+1.3
-24.8
+51.5 +26.1
- 7 - September 1st 2005
Recapitulation of IFRS impact on earnings per share (1)
Net profit excluding non-recurrent items afterminority interests, Sanofi-Aventis deconsolidated
Net profit excluding non-recurrent items after minorityinterests
Net income after minority interests
Average number of shares
IFRS standards
French standards
(1) based on diluted number of shares
12.31.200412.31.2004
€2.29€2.23
€2.48€2.46
€6.11€5.38
649,598,404673,547,541
- 8 -
Profit and loss account: new presentation by destination
Profit and loss account:
New presentation by destination
September 1st 2005
- 9 -
Profit and loss account: New presentation by destination
September 1st 2005
Cost of sales
Research & development
Operating profit before foreignexchange gains and losses
Net sales
Advertising & promotion
Selling, general & administrative expenses
Operating profit
Foreign exchange gains and losses
Gross profit
Purchases and variation in inventories
External charges
Charges to provisions
Net sales
Taxes and similar payments
Depreciation
Adjusted operating profit
Operating profit
Personnel costs
Exchange gains and losses
By nature By destination
- 10 -
Definition of lines by destinationNet sales
September 1st 2005
Net sales are accounted for:
net of rebates, discounts and product returns.
net of sales incentives granted to distributors and consumers such as:
- commercial co-operation;
- coupons;
- cash discounts;
- loyalty programmes.
- 11 -
Definition of lines by destinationCost of sales
September 1st 2005
Cost of sales consists of the following items:
the cost price, which consists of the full cost of the products, i.e. raw materials, packaging items, and direct and indirect manufacturing costs;
royalties paid to third parties;
inventory depreciation costs;
physical distribution, i.e. order preparation and dispatching costs.
- 12 -
Definition of lines by destinationResearch & development
September 1st 2005
Research & development expenses consist of all research & developmentexpenses recorded in the group’s centres, both for fundamental and appliedresearch.
All research & development expenses are recorded as costs in the year in which theyare incurred.
- 13 -
Definition of lines by destinationAdvertising & promotion
September 1st 2005
Advertising & promotional expenses consist of:
the purchase of advertising space;
the fees of advertising agencies and models;
sample distribution and other promotional campaigns and activities;
the costs of point-of-sales advertising;
the cost of consumer advice and selling services;
technical training for distributors;
medical visitors.
These items are recorded as costs in the year in which they are incurred.
- 14 -
Definition of lines by destinationSelling, general and administrative expenses
September 1st 2005
Selling, general and administrative expenses consist mainly of expensesrelating to:
sales forces and their management;
marketing teams;
administrative departments;
and general expenses.
- 15 -
Profit and loss account by destination: from sales to operatingprofit
Profit and loss account by destination:
from net sales to operating profit
September 1st 2005
- 16 -
Profit and loss account by destination:From sales to operating profit 2004 and 1st half 2004(€ millions)
Cost of sales
Research and development
Operating profit before foreign exchangegains and losses
Net sales
06.30.2004
Advertising and promotion
Selling, general and administrative expenses
Operating profit
Foreign exchange gains and losses
Gross profit
12.31.2004
September 1st 2005
% of sales % of sales
-2,055.9
-222.3
1,087.2
6,921.6
-2,152.9
-1,403.3
28.1
1,115.3
4,865.7
-4,101.1
-466.6
2,052.4
13,641.3
-4,176.9
-2,844.3
36.5
2,088.9
9,540.2
30.1%
3.4%
15.0%
30.6%
20.9%
0.3%
15.3%
69.9%
29.7%
3.2%
15.7%
31.1%
20.3%
0.4%
16.1%
70.3%
- 17 -
Operating profit of geographic zones, branches and divisions
Operating profit:
- of geographic zones
- of branches and divisions
September 1st 2005
- 18 -
Operating profit of geographic zones(as % of sales)
North America
Rest of the World
2004Reported
(French standards)
Western Europe
COSMETICS TOTAL
2004New presentation
ZONES TOTAL
Non-allocated
September 1st 2005
* Balance of central revenues and expenses - As % of total sales.** Group central expenses, fundamental research expenses, stock option costs and miscellaneous expenses
As % of total sales.
13.5%
10.4%
15.3%
14.8%
17.7%
13.5%
20.2%
15.3%
13.7% 18.0%
+1.0%* -2.8%**
- 19 -
Operating profit of branches and divisions(as % of sales)
Consumer Products
Luxury Products
COSMETICS TOTAL
Active Cosmetics
2004
Professional Products
Non-allocated*
GROUP
DERMATOLOGY BRANCH
COSMETICS BRANCH
September 1st 2005
* Non-allocated: group central expenses, fundamental research expenses, stock option costs and miscellaneous expensesAs % of total sales.
16.8%
20.1%
18.0%
18.6%
19.0%
-2.8%
15.3%
17.3%
15.3%
- 20 -
Profit and loss account :From operating profit to pro forma net profit and pro forma net profit excluding non-recurrent items
Profit and loss account :
From operating profit to:
- pro forma net profit- pro forma net profit excluding non-recurrent items
September 1st 2005
- 21 -
From operating profit to net profit 2004(€ millions)
September 1st 2005
EPS** (€)Net profit after minority interestsMinority interestsNet profit before minority interestsIncome taxProfit before tax and minority interestsShare in net income of equity affiliatesSanofi-Aventis dividendsOther financial income (expense)Finance costsOperational profit
Sanofi-Aventis dilution capital gainOperating profit
12.31.2004IFRS
pro forma*
12.31.2004pro forma*
excluding non-recurrent items
* For purposes of comparison, the pro forma profit and loss account presented has been restated to allow for the deconsolidation of Sanofi-Synthélabo on January 1st 2004:- by replacing the share in the net profit of Sanofi-Synthélabo by the dividends received,- and by neutralising the dilution capital gain, net of tax, relating to these shares.
Other income and expenses
** Earnings per share: diluted net earnings per share based on the net profit excluding non-reccurent items after minority interests.
2.292.211,485.91,438.7
-2.9-3.11,488.81,441.8-697.8-618.6
2,186.62,060.4-1.2-1.2
145.9145.9-3.9-3.9
-43.1-43.11,962.7
2,088.92,088.9- -
-126.2 -
- 22 -
From operating profit to net profit 1st half 2004(€ millions)
September 1st 2005
EPS** (€)Net profit after minority interestsMinority interestsNet profit before minority interestsIncome taxProfit before tax and minority interestsShare in net income of equity affiliatesSanofi-Aventis dividendsOther financial income (expense)Finance costsOperational profit
Sanofi-Aventis dilution capital gain
Operating profit
06.30.2004pro forma*
06.30.2004pro forma*
excluding non-recurrent items
Other income and expenses
* For purposes of comparison, the pro forma profit and loss account presented has been restated to allow for the deconsolidation of Sanofi-Synthélabo on January 1st 2004:- by replacing the share in the net profit of Sanofi-Synthélabo by the dividends received,- and by neutralising the dilution capital gain, net of tax, relating to these shares.
** Earnings per share: diluted net earnings per share based on the net profit excluding non-reccurent items after minority interests.
1.341.35875.0877.7
-2.7-2.7877.7880.4
-360.2-362.01,237.91,242.4
-0.5-0.5145.9145.9
0.30.3-23.1-23.1
1,119.8
1,115.31,115.3
- -4.5 -
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