PROFIT AND LOSS ACCOUNT
BY DESTINATION AND
SEGMENT REPORTING
Presentation of Mr. Christian MULLIEZ
September 1st 2005
Plan
Page
¾ Recapitulation of IFRS impact: - on net sales …………………………………………………….................... 4
- on operating profit …………………………………………………………… 5
- on pre-tax profit ………………………………………………………………. 6
- on earnings per share ……………………………………………………… 7
¾ Profit and loss account: New presentation by destination …………………………………………………….. 9
¾ Definition of lines by destination :
- Net sales ………………………………………………………………………………………………………….. 10
- Cost of sales …………………………………………………………………………………………………. 11
- Research & development ……………………………………………………………………………………… 12
- Advertising and promotion…………….. …………………………………………… ………………………. 13
- Selling, general and administrative expenses ………………………………………………………………. 14
¾ Profit and loss account by destination: from net sales to operating profit …………………………….………. 16
¾ Operating profit of geographic zones ……………………………………………………………….................... 18
¾ Operating profit of branches and divisions ………………………………………………………………………...19
¾ Profit 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
-2-
September 1st 2005
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
-3-
September 1st 2005
Recapitulation of IFRS impact on net sales
(€ millions)
Net sales – French standards
Personnel costs:
reinvoicing of beauty advisors
12.31.2004
06.30.2004
14,533.9
7,396.8
-6.3
}
External costs:
sales incentives granted to customers
-437.9
-828.2
Changes in provisions for returns
Financial expense - net:
cash discounts granted to customers
Total reclassifications
Net sales – IFRS standards
-4-
-6.6
-11.2
-51.5
-26.1
-892.6
-475.2
13,641.3
6,921.6
September 1st, 2005
Recapitulation of IFRS impact on operating profit
(€ millions)
12.31.2004
Adjusted operating profit – French standards
06.30.2004
2,161.5
1,140.1
z Cash discounts granted to customers
-51.5
-26.1
z Stock option costs
-20.4
-9.2
8.4
4.1
-9.1
6.4
-72.6
-24.8
2,088.9
1,115.3
z Elimination of charge for depreciation of actuarial
gains and losses
z Impact on profit of time value of foreign
currency hedges
Total adjustments
Operating profit – IFRS standards
-5-
September 1st 2005
Recapitulation of IFRS impact on pre-tax profit
(€ millions)
12.31.2004
06.30.2004
Total adjustments of operating profit
-72.6
-24.8
Positive impact on financial expense
(reclassification of cash discounts)
+51.5
+26.1
-21.1
+1.3
Impact on pre-tax profit
-6-
September 1st 2005
Recapitulation of IFRS impact on earnings per share (1)
12.31.2004
12.31.2004
French
standards
IFRS
standards
673,547,541
649,598,404
Net income after minority interests
€5.38
€6.11
Net profit excluding non-recurrent items after minority
interests
€2.46
€2.48
Net profit excluding non-recurrent items after
minority interests, Sanofi-Aventis deconsolidated
€2.23
€2.29
Average number of shares
(1)
based on diluted number of shares
-7-
September 1st 2005
Profit and loss account: new presentation by destination
Profit and loss account:
New presentation by destination
-8-
September 1st 2005
Profit and loss account: New presentation by destination
By destination
By nature
Net sales
Net sales
Purchases and variation in inventories
Cost of sales
Personnel costs
Gross profit
External charges
Research & development
Taxes and similar payments
Advertising & promotion
Depreciation
Selling, general & administrative expenses
Charges to provisions
Operating profit
Operating profit before foreign
exchange gains and losses
Exchange gains and losses
Foreign exchange gains and losses
Adjusted operating profit
Operating profit
-9-
September 1st 2005
Definition of lines by destination
Net sales
Net sales are accounted for:
¾ net of rebates, discounts and product returns.
¾ net of sales incentives granted to distributors and consumers such as:
- commercial co-operation;
- coupons;
- cash discounts;
- loyalty programmes.
- 10 -
September 1st 2005
Definition of lines by destination
Cost of sales
Cost of sales consists of the following items:
¾ the cost price, which consists of the full cost of the products, i.e. raw materials,
packaging items, and direct and indirect manufacturing costs;
¾ royalties paid to third parties;
¾ inventory depreciation costs;
¾ physical distribution, i.e. order preparation and dispatching costs.
- 11 -
September 1st 2005
Definition of lines by destination
Research & development
Research & development expenses consist of all research & development
expenses recorded in the group’s centres, both for fundamental and applied
research.
All research & development expenses are recorded as costs in the year in which they
are incurred.
- 12 -
September 1st 2005
Definition of lines by destination
Advertising & promotion
Advertising & promotional expenses consist of:
¾ the purchase of advertising space;
¾ the fees of advertising agencies and models;
¾ sample distribution and other promotional campaigns and activities;
¾ the costs of point-of-sales advertising;
¾ the cost of consumer advice and selling services;
¾ technical training for distributors;
¾ medical visitors.
These items are recorded as costs in the year in which they are incurred.
- 13 -
September 1st 2005
Definition of lines by destination
Selling, general and administrative expenses
Selling, general and administrative expenses consist mainly of expenses
relating to:
¾ sales forces and their management;
¾ marketing teams;
¾ administrative departments;
¾ and general expenses.
- 14 -
September 1st 2005
Profit and loss account by destination: from sales to operating
profit
Profit and loss account by destination:
from net sales to operating profit
- 15 -
September 1st 2005
Profit and loss account by destination:
From sales to operating profit
2004 and 1st half 2004
(€ millions)
12.31.2004
% of sales
06.30.2004
% of sales
Net sales
13,641.3
Cost of sales
-4,101.1
30.1%
-2,055.9
29.7%
Gross profit
9,540.2
69.9%
4,865.7
70.3%
-466.6
3.4%
-222.3
3.2%
-4,176.9
30.6%
-2,152.9
31.1%
Selling, general and administrative
-2,844.3
expenses
Operating profit before foreign exchange
2,052.4
gains and losses
20.9%
-1,403.3
20.3%
15.0%
1,087.2
15.7%
36.5
0.3%
28.1
0.4%
2,088.9
15.3%
1,115.3
16.1%
Research and development
Advertising and promotion
Foreign exchange gains and losses
Operating profit
- 16 -
6,921.6
September 1st 2005
Operating profit of geographic zones, branches and divisions
Operating profit:
- of geographic zones
- of branches and divisions
- 17 -
September 1st 2005
Operating profit of geographic zones
(as % of sales)
2004
Reported
(French standards)
2004
New presentation
Western Europe
15.3%
20.2%
North America
13.5%
17.7%
Rest of the World
10.4%
13.5%
13.7%
18.0%
+1.0%*
-2.8%**
14.8%
15.3%
ZONES TOTAL
Non-allocated
COSMETICS TOTAL
* 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.
- 18 -
September 1st 2005
Operating profit of branches and divisions
(as % of sales)
2004
Professional Products
19.0%
Consumer Products
16.8%
Luxury Products
20.1%
Active Cosmetics
18.6%
COSMETICS TOTAL
18.0%
Non-allocated*
-2.8%
COSMETICS BRANCH
15.3%
DERMATOLOGY BRANCH
17.3%
GROUP
15.3%
* Non-allocated: group central expenses, fundamental research expenses, stock option costs and miscellaneous expenses
As % of total sales.
- 19 -
September 1st 2005
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
- 20 -
September 1st 2005
From operating profit to net profit
2004
(€ millions)
12.31.2004
IFRS
pro forma*
12.31.2004
pro forma*
excluding nonrecurrent items
2,088.9
-
Operating profit
Sanofi-Aventis dilution capital gain
Other income and expenses
2,088.9
-126.2
-
Operational profit
Finance costs
Other financial income (expense)
Sanofi-Aventis dividends
Share in net income of equity affiliates
1,962.7
-43.1
-3.9
145.9
-43.1
-3.9
145.9
-1.2
2,060.4
-618.6
1,441.8
-3.1
1,438.7
2.21
-1.2
2,186.6
-697.8
1,488.8
-2.9
1,485.9
2.29
Profit before tax and minority interests
Income tax
Net profit before minority interests
Minority interests
Net profit after minority interests
EPS** (€)
* 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.
- 21 -
September 1st 2005
From operating profit to net profit
1st half 2004
(€ millions)
06.30.2004
pro forma*
Operating profit
06.30.2004
pro forma*
excluding nonrecurrent items
1,115.3
Sanofi-Aventis dilution capital gain
4.5
Other income and expenses
1,115.3
-
Operational profit
Finance costs
1,119.8
-23.1
-23.1
Other financial income (expense)
Sanofi-Aventis dividends
Share in net income of equity affiliates
Profit before tax and minority interests
Income tax
Net profit before minority interests
Minority interests
Net profit after minority interests
EPS** (€)
0.3
145.9
-0.5
1,242.4
-362.0
880.4
-2.7
877.7
1.35
0.3
145.9
-0.5
1,237.9
-360.2
877.7
-2.7
875.0
1.34
* 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.
- 22 -
September 1st 2005
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