Address Telephone Registration Number 2004 Annual Report SSL International SSL International plc +44 (0)20 7367 5760 388828 35 New Bridge Street Facsimile London +44 (0)20 7367 5790 EC4V 6BW Web www.ssl-international.com

Annual Report 2004 International plc 1This is SSL International 2 Chairman’s Message £602.4m Designed and produced by 4Chief Executive’s Review williams and phoa 6 Operating Review Turnover (2003:£608.9m) 14 Corporate Social Responsibility Stated in accordance with FRS 5 Printed in the UK on paper 16 Financial Review made from 50 per cent pulp, 20 Group Board 50 per cent recycled fibres 22 Corporate Governance which is biodegradable. 24 Directors’ Report 25 Remuneration Report 31 Directors’ Responsibilities 31 Independent Auditors’ Report £74.5m to the Members of SSL International plc 32 Consolidated Profit and Loss Account Operating profit (2003:£82.0m) 33 Consolidated and Company Before charging exceptional items Balance Sheets 34 Consolidated Cash Flow Statement 35 Consolidated Statement of Total Recognised Gains and Losses 35 Reconciliation of Movements in Shareholders’ Funds 36 Notes to the Financial Statements £(7.5)m 65 Five Year Record 66 SSL Directory (Loss)/profit before tax 68 Company Information (2003:£39.1m) 68 Financial Calendar After charging exceptional items

(4.2)p Basic (loss)/earnings per share (2003:13.1p) After charging exceptional items

8.1p Dividend per share (2003:12.3p)

£227.5m Net debt (2003:£292.0m)

£85.2m Free cash flow (2003:£39.1m) This is SSL International A focused global consumer healthcare company

Consumer division Medical and industrial glove Manufacturing The Consumer division represented divestment programme Our manufacturing facilities are £408.2 million or 68 per cent As part of our stated strategy primarily located in the Far East of Group sales. to divest the medical division, and the UK. All condoms are we have successfully completed manufactured in-house at facilities, Our core branded consumer the divestment of the Marigold which are located mainly in the products accounted for £371.7 industrial gloves and UK wound Far East in Thailand and in our joint million or 91 per cent of total management businesses. In venture operations in India and consumer sales, which includes the addition, we have exchanged China. We also have in-house global brands of Durex and Scholl contracts for the sale of the Regent facilities in Spain. footcare and footwear, Over-The- Infection Control business. The Counter products sold in the UK remaining medical business is In the UK, there are five (eg Syndol, Meltus and Full Marks) Silipos, a mineral gel technology manufacturing facilities, which and the Sauber and Mister Baby based in the US. manufacture a wide range of brands sold in Southern Europe. products from Syndol to Scholl Flight Socks. During the year, Our other consumer business we closed the Remegel factory in represented £36.5 million or nine Liverpool and moved production per cent of total consumer sales to the pharmaceutical plant at and includes products under licence Peterlee. The Oldham factory that SSL distributes, for example, was sold as part of the sale of the Wilkinson Sword in Australia and wound management business. Coppertone in Japan, unbranded condom sales to governments and The manufacturing and packing global health organisations and facilities in Malaysia will be sold income from Scholl retail stores as part of the divestment of the in Scandinavia. Regent Infection Control business.

Consumer — 68% Manufacturing — 60%

Commercial — 40%

Medical/Industrial — 32%

Europe — 54% Europe — 18% Europe — 16% Europe — 28% Asia Pacific — 10% Asia Pacific — 2% Asia Pacific — 42% Asia Pacific — 3% Americas — 4% Americas — 12% Americas — 2% Americas — 9%

Geographical analysis of turnover Employees by location

SSL International plc Annual Report 2004 01 This is SSL International Chairman’s Message Financial performance Ian Martin Results for the year are complicated by our soon to be completed disposal programme. In the key area of consumer brand sales, however, there were a number of noteworthy achievements. Durex sales As a focused consumer growth continued with 7.4 per cent recorded for the full year, in line with the trend seen at the half year healthcare company, and ahead of last year. Scholl footcare grew 7.4 per cent in the second half generating a full year performance growth in the value of of 3.7 per cent. A similar trend was evident in OTC where second half sales growth of 1.5 per cent our brand portfolio is of reduced the decline of 5.4 per cent in the first half to a1.9 per cent decline on a full year basis. The footwear paramount importance business is now being prepared for growth with two specialist senior appointments and innovative to shareholders. product introductions.

Our overall operating margin expectations were realised with an operating profit before exceptionals of £74.5 million generating a 12.4 per cent margin. This is lower than last year reflecting the dilutive effect of the Marigold industrial gloves disposal. The subsequent medical disposals will also reduce margins. Our on-going consumer business achieved an operating profit before exceptionals of £26.1 million at a margin of 6.4 per cent. This margin is expected to improve in the future as the effect of anticipated sales growth and continual cost control feed through.

Our cash position continues to improve; free cash flow of £85.2 million was generated in the year, of which £61.1 million resulted from disposals. Working capital management improved further to 19.6 per cent of sales compared with 21.3 per cent last year.

Notwithstanding the encouraging operating performance, we have recorded a loss per share of 4.2 pence in the period, compared with a profit last year of 13.1 pence. This results from losses on disposal of the Marigold industrial glove and wound management businesses, including recycling of goodwill previously written off against reserves, and the writedown of certain assets in anticipation of the forthcoming Regent Infection Control disposal.

SSL International plc Annual Report 2004 02 Chairman’s Message — Ian Martin Dividends Board The Directors have reviewed the dividend policy in Garry Watts was appointed Chief Executive on light of the disposal programme, with particular 1 April 2004. He has been with SSL since February attention to the cash flow needs of the smaller business 2001 as Group Finance Director and since April 2003 – for example to fund brand development expenditure. has also been Managing Director of the Group’s The Board believes that dividends should be set so as European operations. to allow future dividend growth once an appropriate level of dividend cover has been achieved. Its present On 12 February 2004, Mike Pilkington, Group view is that cover of 2.5 times would be appropriate. Supply Chain Director was appointed to the Board. Mike joined SSL in April 2002, having previously Accordingly, the Board has decided to reduce its been Head of European Distribution and Supply historical levels of distribution and is recommending Chain Development at Kelloggs. a final dividend of 4.2p – 50 per cent of last year’s level. Taken with the interim dividend paid on 2 March Subsequent to the year end on 14 April 2004, of 3.9 pence, which was not reduced as it was declared Ian Adamson, previously Managing Director of the before the medical disposals had been effected, UK and Northern & Eastern Europe, was appointed the total payable for the year would be 8.1 pence. to the Board and to the position of Managing Director The final dividend will be paid on 2 September 2004 of the Group’s European operations. Ian has been with to shareholders on the register on 6 August 2004. SSL in a variety of management positions since 1991.

Future direction Richard Adam joined in November 2003 as Non- As a focused consumer healthcare company, growth Executive Director and Chairman of the Audit in the value of our brand portfolio is of paramount Committee. He is currently Group Finance Director importance to shareholders. Accordingly our strategy of Associated British Port Holdings plc. is to focus on increasing the variable contribution generated by sales of core brands and, to the extent At the AGM to be held on 20 July, Bernd Beetz and consistent with this objective, to reduce the Group’s Tim Howden, both Non-Executive Directors are to cost base. step down from the Board to pursue other business interests. I would like to thank Bernd and Tim for their Sales growth, driven by effective advertising, will be contributions to SSL and wish them well in the future. sought through a concentration on higher margin products and the development of the Group’s current Outlook portfolio of leading brands such as Durex and Scholl. The current year brings with it certain transitional The Board therefore intends to maintain the Group’s service obligations in respect of the medical disposals advertising and promotional expenditure at broadly its which will initially constrain our cost reduction existing level of 15 to 16 per cent of sales. The simpler programme. We do not plan any other activity to structure of the Group will bring increased focus onto distract us from our objective of growing the value advertising, promotion and new product development. of our brand portfolio. The new year has begun satisfactorily and we believe that the outlook for Following completion of the proposed disposal, the remainder of the year and beyond is promising. overheads of the Group will be higher than necessary. The Board has conducted a detailed review of the Ian Martin, Chairman current cost base and has prepared a programme to 26 May 2004 reduce overheads, with particular emphasis on central costs. This will start shortly after the completion of the Regent disposal but its full impact will not be reflected in the results before the year ending 31 March 2006. We estimate that the cash cost of this programme will be between £15 and £20 million and will be incurred during the twelve months following completion.

SSL International plc Annual Report 2004 03 Chairman’s Message — Ian Martin Chief Executive’s Review At the time of writing this, I’ve been an employee Garry Watts of SSL for a little over three years and Chief Executive for some two months. The three years have seen a catharsis and change within the Company and based upon eight weeks as Chief Executive, I want to see SSL’s four priorities: that change continue.

— Complete medical All new Chief Executives are faced with a range of choices, opportunities and problems; they are mindful disposal programme of the need to set an agenda and aware of the risk — Grow consumer brand of too quickly choosing an ill considered course. With that in mind, I set four priorities for SSL in contribution early April:

— Our people — Complete the medical divestitures — Grow brand contribution — Challenge the cost base — Re-energise and invigorate our employees — Challenge the cost base

Let me explain each in turn:

Disposals Our disposal programme is nearing completion. Once done we will have sold four businesses for gross proceeds of approximately £260 million, generated net cash of approximately £175 million and reduced our core borrowings to £100 million, (which compares with c£450 million three years ago).

In this process our employee count has fallen from 7,000 to 4,000. Our manufacturing facilities have fallen from 20 to 12. In the UK, we are also currently in the process of condensing our four office locations in the Northwest of England into one.

The disposals bring with them a number of transitional service obligations which will run for the majority of this fiscal year; we will continue to service these whilst completing the transition of SSL into a focused consumer healthcare company.

Brand contribution After the completion of the disposals our focus will be on growing the value of our retained portfolio of brands by increasing the variable contribution generated by sales of our consumer brands, which in 2003/04 amounted to £162.5 million.

Sales growth, driven by effective advertising, will be sought through a concentration on higher margin products and the development through innovation of the Group’s current portfolio of leading brands such as Durex and Scholl. We intend to maintain the Company’s advertising and promotional expenditure at broadly its existing level of 15 to 16 per cent of sales, and investment in the development of new products will continue in order to improve the overall product offering. We believe that investment in these areas, even for established brand names such as Durex and Scholl is critical in driving organic sales growth in a competitive market environment and in the creation of brand value.

SSL International plc Annual Report 2004 04 Chief Executive’s Review — Garry Watts We are already seeing this on Durex. The results on Challenge the cost base this brand over the past 12 months have been strong. Notwithstanding the objective of growing brand We have provided the innovation in terms of products, value, we recognise that the level of overheads within marketing and distribution that has captured the the Group is inappropriate to the reduced scale of imagination of our consumers. We have executed our activities. We have completed a detailed internal well and we have been rewarded by improved brand review of the current cost base and have begun to contribution. In the current year, we will do the same implement a restructuring programme to reduce for Scholl, inherently a more complicated brand. overheads which is consistent with our primary goal of brand value creation. It is intended that this There are literally thousands of different products programme will reduce the Group’s overhead cost being sold around the world and the brand has lacked base, with particular emphasis on central costs and a consistent image and approach with consumers. on those costs which have no direct contribution This is being addressed by the ‘Colossus’ project which either to growth in sales or improvement in operating is halving the total number of individual items in the performance. This programme has begun, but due to range and using the same design across the range, its nature, the full impact of the programme will not be a design that is much fresher and captures better the reflected in the Group’s financial results before the year strength of Scholl as the foot specialist. The programme ending 31 March 2006. will take up to 12 months to roll out, but coupled with our footcare innovations and improved footwear I am confident that the combination of growth in brand ranges, I expect to see increased brand contribution contribution, the release of the potential of our human in the current year. resource and cost reduction will result in growth in the value of our brand portfolio and, over time, in the Our people recovery of operating margins towards the double SSL has been through enormous change in the last digit levels of the recent past. six years and has had to deal with a range of issues – yet we retain high levels of commitment. We will 2004/5 will begin to show SSL in a new light; finally ensure that SSL employs highly motivated, well free of the distractions that have existed since the remunerated and success oriented people throughout Seton Scholl/LIG merger in 1999, we will focus the organisation. In part this will be achieved by setting the reinvigorated resources of the organisation and communicating clear objectives and by focusing on exploiting the considerable potential of our the organisation on some common operating brand assets. principles. These principles have been established under an ‘A, B, C’ banner, representing Attitude, Garry Watts, Chief Executive and Finance Director Behaviour and Culture, and are a key part of my early 26 May 2004 presentations to our businesses around the world.

Attitude — Healthcare companies and quality are synonymous — Best products generally win — Make the regulatory requirements work for us.

Behaviour — Communication —Teamwork — Balanced risk assessment

Culture — Harness entrepreneurialism to professionalism — Openness, honesty and frankness —Win… but not at all costs, avoid short-termism

These are intended to underpin a culture change in SSL by building on strengths whilst highlighting recognised areas for improvement.

We are further underpinning the change by rebuilding the management structure with an emphasis on freshness of approach and recognition of talent from around the organisation.

SSL International plc Annual Report 2004 05 Chief Executive’s Review — Garry Watts Operating Review Focused approach Our strategy for growth continues to focus on recruiting new users to the brand by targeted advertising and distribution at the 16-24 age range. For the first time Durex joined forces with Topman, Durex aUKfashion retailer for young men, to provide a new distribution channel for quality condoms. The condoms were specifically packaged to appeal to the fashion- Durex continues to be the market leader of conscious young male. branded condoms with a global market share of 24 per cent. For 75 years, Durex has represented Exploiting brand potential quality and reassurance for consumers, but over Through consumer research, we know that modern the past year, the brand has grown to represent attitudes have changed and today’s sexual even more – moving to provide not only expert enlightenment means that consumers are seeking protection for safer sex but also the confidence products to enhance their sex lives as well as to provide and freedom to enjoy better sex. protection against pregnancy and sexually transmitted infections. Durex Play is positioned as a sexual enhancement product, challenging the traditionally held view that lubricants are solely intended to remedy medical problems. This innovative launch into the lubricants market provides the opportunity to grow the Durex brand name and capture new users. Durex Play is proving popular with consumers and is being launched in all major markets.

SSL International plc Annual Report 2004 06 Operating Review — Durex Consumer driven innovation Expanding success The Durex brand continues innovation in condoms, We have been able to increase our level of success by launching two new condoms during the course by taking existing products and rolling them out to of this year: Pleasuremax with a uniquely positioned other markets. Durex Love, previously only sold in ribbed and dotted texture to maximise stimulation, Germany, was launched in Italy and more recently in and Comfort XL, a new extra long and wide condom. the US. The product’s packaging appeals to the youth Both are proving appealing to both existing and market, emphasising passion and irreverence and new users. defying the image of condoms as routine and boring.

Creative marketing Social responsibility To appeal to our target age group, we have deliberately We are strongly committed to our role of helping been provocative in our advertising. In the recent OTC prevent unplanned pregnancies and sexually Magazine awards in the UK, Durex was given the best transmitted infections worldwide. Our work in this ‘OTC Consumer Advertising in Press’ award for Durex area is highly diversified, incorporating education Performa, a product designed to prolong lovemaking, in schools and other youth-focused organisations, which was promoted with a variety of slogans such as such as the Outward Bound Trust. We support ‘roger more’, ‘more secs’ and ‘ejaculater’ and began health programmes in developing countries both using a poster featuring an elongated woodscrew. through active involvement in local communities, such as Programme H in Brazil and the provision of unbranded condoms to governments and other global organisations.

Award winning advertising Our provocative advertising won us acclaim. The main photo shows the ‘long screw’ and opposite is ‘more secs’ both from a campaign promoting the Durex Performa condom which is designed to prolong lovemaking.

Product innovation focusing on consumer needs Two new condoms were launched during the year. Pleasuremax shown here has a uniquely positioned ribbed and dotted texture to maximise stimulation.

Exploiting brand potential Durex Play challenges the traditionally held view that lubricants are solely intended to remedy medical problems.

SSL International plc Annual Report 2004 07 Operating Review — Durex Operating Review Focused approach We have embarked upon a major rejuvenation programme for the footcare product portfolio to simplify the existing product range, revitalise the brand identity and pack design and offer new performance Scholl footcare products. The new Scholl range was launched in the UK in April 2004 and will be rolled-out to other European and Far Eastern markets over the course The Scholl brand celebrates its centenary this of the next 12 months. year. Its founder, Dr William Scholl was profoundly interested in the anatomy and By implementing this programme, we are developing physiology of the foot with a view to improving a solid foundation for future growth, as the strategy people’s health, comfort and well-being through is focused on enhanced consumer benefits, roll-out their feet. This ethos lies at the heart of Scholl. of new products and an improved supply chain.

Scholl has come a long way since Dr Scholl’s original invention in 1904, the ‘Foot-eazer’ designed to correct weakness in the foot arch; and the range now includes products for blisters and corns, foot odour and aching feet as well as exfoliating and moisturising foot skincare products.

SSL International plc Annual Report 2004 08 Operating Review — Scholl footcare Exploiting brand potential Creative marketing Using our expertise in footcare, we have created a new To appeal to younger consumers, our advertising category within the insoles range. Scholl Party Feet to support Party Feet had to be impactful and well combats the problem of the burning sensation in the targeted. In the UK, the Scholl Party Feet advert balls of the feet, often experienced by party-goers ‘Sore Balls Girls?’ won the award for ‘Best OTC wearing high heels. Party Feet has provided a fun and Campaign on a Small Budget’ at the OTC Magazine’s modern approach to the traditional insoles market, prestigious annual awards ceremony. an approach which is more appealing to younger consumers and is illustrative of our aim of supplying Combining this strong ‘edgy’ advertising with products both to enhance consumer enjoyment as a high profile campaign in consumer broadcast well as solving acknowledged problems. and print media reached a new, younger, fashion conscious audience. Party Feet was launched in the UK and significantly exceeded initial forecasts, especially in the pre- The new Scholl campaign ‘yellow wellies’ has been Christmas party season. We are now introducing very well received in consumer focus groups. The Party Feet throughout Europe and working to expand campaign is based on a series of occasions or lifestyle the range of products sold under this banner. triggers that reflect times where people are more aware of their feet, for example holidays, nights out or exercise classes.

In addition to the success in the UK, our Australian business won an Australian Design Award for the Scholl Gel Arch Support.

Creating an impact Our ‘Sore Balls Girls?’ advert, aimed at younger consumers, won us acclaim at the OTC Magazine’s annual awards.

Exceeding forecasts Party Feet, a fun and modern approach to the insoles market, has exceeded initial sales forecasts in the UK and is now being introduced throughout Europe.

Brand identity and pack design Examples of our new packaging with stronger brand identity – part of a major rejuvenation programme.

New Scholl advertising Our forthcoming ‘yellow wellies’ campaign, which highlights times when people become more aware of their feet, has been well received by focus groups.

SSL International plc Annual Report 2004 09 Operating Review — Scholl footcare Operating Review The Footwear Development Group The Footwear Development Group (FDG), based near Milan, Italy, is a unique facility within SSL. It is responsible for the design, development, production (by third parties) and delivery of the Scholl footwear Scholl footwear range across Europe.

Exploiting brand potential Scholl footwear represents 47 per cent of The opportunity for Scholl is to extend the brand total revenues derived from the Scholl brand position so as to widen its appeal and increase its and as such represents a significant element prominence. As a result, a strategic review of Scholl of our branded consumer product portfolio. footwear is currently identifying the best way to exploit We are now placing an increased importance the opportunities in both traditional strength areas on its development worldwide. We have of the brand and in new segments. Achieving this will recently appointed an International Footwear rely upon a new approach to range segmentation Director for the first time to direct our growth and development based on consumer needs. in this category.

SSL International plc Annual Report 2004 10 Operating Review — Scholl footwear Development of distribution channels The iconic wooden exercise sandal continues the Increasing distribution of Scholl footwear is critical to heritage of the brand values with a modern day brand growth. Scholl footwear needs to become more solution to current lifestyle trends. We have promoted accessible to a broader set of consumers by being this style to celebrate the centenary of the Scholl brand represented in more than one type of distribution internationally. channel in each market across pharmacy, shoe trade and image positioning accounts. These initiatives In addition over the past year, Scholl has collaborated have already generated the reintroduction of Scholl with brands, such as Burberry and more recently, footwear into Boots, Schuh, Sole Trader, Office and Celine, which has received wide PR coverage in Galeries Lafayette. women’s fashion media across Europe. Linking Scholl with such fashionable brand names creates ‘Who said healthy can’t be stylish?’ interest and heightens awareness of the Scholl The underlying philosophy of Scholl footwear is to footwear brand. provide health benefits through comfort and improved posture. However we also believe that we can offer the Integrated brand brand across different market segments by meeting It is critical that footwear and footcare products sold fashion and lifestyle needs. under the Scholl brand are perceived by consumers as a fully integrated brand providing solutions to foot problems and improving the care of feet.

Improving brand awareness Our iconic wooden exercise sandal was chosen to promote Scholl’s centenary. Scholl has also been collaborating with luxury brands like Burberry and Celine, receiving media coverage across Europe as a result.

SSL International plc Annual Report 2004 11 Operating Review — Scholl footwear Operating Review Syndol Syndol is the UK’s fastest growing adult oral analgesic and is particularly effective in easing muscle tension. Recently, Syndol’s sales performance has been very responsive to a humorous TV advertising campaign, Other Consumer Brands such that we have re-run the campaign to capitalise on the popularity of the product.

SSL has a range of branded OTC products sold Meltus in the UK and Southern Europe. Examples of our Meltus cough medicine has recently been subject key brands in these markets are as follows: to a major re-launch programme in the UK, which has seen excellent growth in turnover and market share. The new, modern packaging, received very positively by both our customers and our consumers, has been supported by an amusing and effective TV advertising campaign featuring ‘Max Meltus’and the evil ‘Chestikov’.

Sauber Sauber is a long established brand in our Southern European markets and comprises compression hosiery and deodorant products. In Italy, Sauber hosiery is market leader in the compression therapy area with very high distribution throughout pharmacies.

SSL International plc Annual Report 2004 12 Operating Review — Other Consumer Brands Recent consumer research in Italy reinforced our belief completed by the end of the current year when other that there is increasing interest in the prevention and new products will be launched. care of leg problems but consumers do not want to compromise comfort and style. Our other consumer business includes:

In response to this, the Sauber hosiery range is being Retail re-launched using a new multi-fibre texture, which In Scandinavia and Switzerland, we continue to operate makes the product soft, comfortable and easy to a small chain of retail stores through which Scholl wear whilst continuing to provide the benefits of footwear and footcare products are sold and chiropody compression. The re-launch is supported by modern, treatment is provided. clear packaging and an effective consumer education programme, which focuses on the benefits of product Distributor brands performance, comfort and style. We distribute other brands on behalf of third parties, for example, Wilkinson Sword in Australia and Mister Baby Coppertone in Japan. In addition, we continue Mister Baby is a range of mother and baby products to distribute Marigold household gloves through sold in Southern Europe. The product range is diverse our consumer distribution channels. including feeding bottles, dummies and toys. Unbranded condoms Our Spanish market has begun to re-invigorate As part of our commitment to sexual health on the Mister Baby product range and has recently a worldwide basis, we sell unbranded condoms completed the first stage of their plan, which was to governments and global health organisations. the introduction of an infra-red thermometer and new creams and lotions. The re-launch will be

Responding to market research The Sauber hosiery range is being relaunched, combining compression technologies, comfort and style.

Growing turnover and market share The newly re-invigorated Meltus range is being received positively by both customers and consumers.

New product launch in Spain A new infra-red thermometer is part of Mister Baby’s re-launch plan which will see the introduction of more new products by the end of the year.

Successful TV advertising Syndol’s sales have been improved by a humorous advertising campaign, helping us to capitalise on the product’s popularity.

SSL International plc Annual Report 2004 13 Operating Review — Other Consumer Brands Corporate Social Responsibility Social marketing SSL is strongly aware of its role in the areas of helping prevent unplanned pregnancies and as protection against sexually transmitted infections (‘STI’) worldwide. An example of one of our programmes Corporate social is Programme H in Brazil: responsibility plays an We have successfully implemented a social intervention, which focuses on promoting safer sex important role in every among the young people in the favelas of Brazil. Here the incidence of teenage pregnancies and transmission aspect of our business, of sexually transmitted infections, including HIV/Aids is high. A condom brand, manufactured by SSL, creating benefits and value ‘Hora H’, translated as ‘in the heat of the moment’ has been introduced which is sold within the low for all stakeholders. income communities in outlets where young people can access condoms when they need them.

However, simply providing high quality, but inexpensive condoms is not enough. Educating young people on the risks associated with unprotected sex was critical to the success of this project. The potential pitfall could have been the machismo attitude of young men. This was avoided by involving them in the creation of the brand name and packaging design of the Hora H condoms, and by enlisting the support of Brazilian rap artists, with whom the young people relate. These rappers have been active in explaining the importance of safer sex to their audiences and by speaking at seminars and workshops. The result of all the activity has seen a significant increase in condom usage and areduction in reported STI symptoms.

Relating to young audiences Gaining acceptance of young people is vital to the education process. In Brazil we did this by using rap artists at seminars and workshops.

Developing skills We work with Manchester Business School on a series of programmes for managers across Europe.

ISO 14001 Many of our sites have ISO 14001 accreditation like this condom manufacturing one in Virudhunagar.

SSL International plc Annual Report 2004 14 Corporate Social Responsibility Employees The implementation of formal environmental Training and development management systems during the year has enabled We are fully committed to the ongoing training us to set measurable objectives for the next three and development of all of our employees. A range years, which focus on further reductions in water of approaches is being used such as on-job skills consumption in addition to reductions in solid waste based training, internally held training courses led and energy consumption. by appropriate external consultants and industry specialists, attendance at external seminars and tailor- Further information on our environmental performance made business school programmes for middle and can be found in the Environmental Report 2003/04 on senior managers. SSL’s website www.ssl-international.com.

We have recently entered our third year of working CSR indices with Manchester Business School on a series of SSL has been a member of the Dow Jones Sustainability programmes for middle and senior managers based Indices (DJSI) for the last two years. DJSI benchmarks across Europe. The programmes are designed the financial performance of companies that lead their specifically for SSL and focus on developing the skills sector in terms of corporate sustainability, looking at of our international management to meet our business a number of factors including corporate governance, needs going forward. labour practices, and environmental performance.

Equal opportunities In addition, SSL is a member of FTSE4Good Index which Diversity in the workplace is valued and SSL strongly has been designed to measure the performance of believes in equality of opportunity for all employees companies that meet globally recognised corporate regardless of gender, race or age. In addition, we responsibility standards. ensure that people with disability or who become disabled whilst in our employment are offered the same opportunities for employment, training and career progression as other employees. Policies and procedures are in place to encourage a high level of employee involvement.

Environment The avoidance of pollution and other forms of environmental care in our operations is an integral part of SSL’s commitment to health in the community. It is our policy to comply with all environmental legislation that covers our activities and products and to measure and record data relating to significant environmental impacts. Our key achievements this year include reductions in water consumption and waste per production unit. In addition, a further three of our sites gained ISO 14001 accreditation.

SSL International plc Annual Report 2004 15 Corporate Social Responsibility Financial Review Divestment programme Garry Watts The Marigold industrial gloves business was sold on 31 October 2003 and in the seven months of trading Overall results in the financial year ended 31 March 2004, generated SSL’s results for the year ended 31 March 2004 are sales of £17.6 million and an operating profit of £1.1 laid out on page 32. We have reported these results million. This compares to sales and operating profit last and restated the prior year results to comply with the year of £32.5 million and £4.0 million respectively. The revised provisions of FRS 5 ‘Reporting the Substance of disposal of Marigold industrial gloves generated gross Transactions’. The impact of FRS 5 was to reduce sales in proceeds of up to £22 million consisting of cash of 2003/04 by £16.6 million and £15.0 million in 2002/03. £15 million, a vendor loan note of £5 million and an The restatement has no impact on the operating profit, earn-out of up to £2 million. retained profits or net assets of the Group. All figures stated in these results are after adjusting for the revised The wound management business was sold on provisions of FRS 5. 31 March 2004. Wound management sales were £46.5 million generating an operating profit of In line with our stated strategy to focus on our £18.8 million which compares to sales of £44.6 million consumer healthcare brands, during the year we and an operating profit of £16.7 million last year. successfully completed the disposal of two of our Gross cash proceeds from the disposal of the wound businesses. management business were £55 million.

The Marigold industrial gloves division was sold on Conditional contracts for the sale of the Regent 31 October 2003, so only seven months sales of Infection Control business were exchanged on this division are included in the 2003/04 numbers. 22 May 2004. The business was valued at £173 million The results also include full year results from the of which £163 million will be paid in cash or cash wound management business sold on 31 March equivalents upon completion, with approximately 2004 and the Regent Infection Control business, £10 million in debt assumed by the purchaser. for which divestment contracts were exchanged Subject to shareholder approval and certain regulatory on 22 May 2004. approvals, we expect completion of this transaction will occur on 26 June 2004. Sales from the Regent Sales were £602.4 million compared to £608.9 million Infection Control business were £118.2 million and last year. A pre-exceptional operating profit of £74.5 operating profit was £28.0 million which compares million was generated (2003: £82.0 million). Sales of to £121.1 million sales and £32.0 million operating the on-going consumer business were £408.2 million profit last year. (2003: £397.5 million) and operating profit was £26.1 million (2003: £27.4 million). The operating margin Discussions for the sale of the US Silipos business, which before exceptional items was 12.4 per cent of sales manufactures and distributes products based on a gel compared with 13.5 per cent last year. After accounting technology to cushion and moisturise the skin, remain for exceptional items including losses on disposal, a on-going. Silipos sales in the year amounted to £11.9 pre-tax loss of £7.5 million was generated against a million compared with sales of £13.2 million last year. pre-tax profit of £39.1 million last year. The loss per share was 4.2 pence against earnings per share of The net proceeds from our disposal programme, after 13.1 pence last year. the payment of tax, specific transaction expenses and other related costs and licence fees are used to reduce Free cash flow was £85.2 million (2003: £39.1 million), Group borrowings. after recognising net cash proceeds from the sale of the Marigold industrial gloves and wound management Sales businesses of £61.1 million. Net debt at the year end SSL’s sales amounted to £602.4 million, £6.5 million was £227.5 million (2003: £292.0 million). below last year. Eliminating sales attributable to Marigold industrial gloves, sales were £584.8 million, £8.4 million above last year’s sales of £576.4 million. Sales adjusted for currency movements are summarised in the table on page 17.

Our branded consumer business, comprising Durex, Scholl footcare and footwear, and our portfolio of branded OTC products sold in the UK, Southern Europe and Asia Pacific, grew by 2.1 per cent to £371.7 million after adjusting for currency movements. This was offset by a 16.5 per cent decline to £36.5 million in our other consumer business comprising unbranded condom sales, third party distribution and retail sales.

SSL International plc Annual Report 2004 16 Financial Review — Garry Watts Sales table Our other branded consumer business consists mainly 31.03.04 31.03.03 change £m £m £m of the UK OTC portfolio, the Southern European Sauber Durex 140.8 131.1 7.4% and Mister Baby brands and the Medi Qtto hosiery Scholl Footcare 82.1 79.2 3.7% brand in Japan. Overall, currency adjusted sales in this Scholl Footwear 73.1 76.6 (4.6%) category have declined by 1.9 per cent to £75.7 million, Other Brands 75.7 77.2 (1.9%) due to a combination of factors. In the UK, OTC sales Total Branded Consumer 371.7 364.1 2.1% have grown by 5.7 per cent, resulting largely from Other Consumer 36.5 43.7 (16.5%) the success of the oral analgesic portfolio (Syndol, Total Consumer 408.2 407.8 0.1% Cuprofen and Paramol) and the relaunch of the Medical Business(1) 130.1 129.4 0.5% Meltus cough medicine range. This growth, however, Discontinued Business(2) 64.1 77.7 (17.5%) has been offset by the decline of hosiery in Italy and Japan. We believe there is unexploited potential in Total 602.4 614.9 (2.0%) our overseas portfolio and are moving to address 1. Includes Regent surgical gloves, Hibi antiseptics and Silipos this through personnel changes, improved Group 2. Includes Marigold industrial gloves and wound management support and revised bonus incentives.

Sales of the Durex brand were £140.8 million, The other consumer business generated sales of representing growth of 7.4 per cent against last year £36.5 million and declined by 16.5 per cent after after adjusting for currency movements. This growth adjusting for exchange rate movements, as a result was fuelled by the continued success of the Performa of fewer government and international unbranded condom and Play personal lubricant in addition to condom contracts undertaken in the year. Other the new product introductions of Pleasuremax and revenue in this category was flat overall; it includes Comfort XL. We continue to see increases in market products under licence that SSL distributes, for example share across European territories, particularly in the Wilkinson Sword in Australia and sales of Marigold mass market sector, reflecting the continuing shift consumer housegloves and income from the Scholl in the purchasing habits of consumers from pharmacy retail stores in Scandinavia. to mass market retailers. Gross margin Scholl footcare sales amounted to £82.1 million, The gross margin for the Group increased to 58.6 growing by 3.7 per cent against last year after adjusting per cent, compared to 56.8 per cent last year. Gross for currency movements. The UK market achieved a margin improvements are resulting from cost control notable success with the introduction of new insoles, and a change in sales mix toward higher value products Scholl Party Feet, launched in advance of the Christmas such as Performa and Party Feet. party season. Our Asia Pacific division achieved encouraging results for footcare as the result of sales Market development expenditure of Eulactol and the launch of gel products such as The Group incurred market development expenditure Gel Arch Support in Australia. of £69.6 million, representing a £3.6 million increase over last year. As part of our stated strategy, the Group Sales of Scholl footwear were £73.1 million, declining is committed to maintaining its investment in marketing by 4.6 per cent compared with last year, after adjusting and advertising of both our global Durex and Scholl for currency movements. As we reported in the first brands and the local OTC brands such as Syndol and half, the Asia Pacific region, in particular Thailand and Meltus in the UK and Sauber and Mister Baby in Malaysia have experienced a decline in footwear sales, Southern Europe. The Group has seen the benefit of resulting initially from the impact of SARS. In the second effective and targeted advertising, particularly on Durex half there was further decline resulting from increased and Scholl Party Feet. local competition in mass market channels. Partially offsetting this, was a growth in UK footwear sales, albeit Brand contribution off a small base, as a result of our improved product Last year, the Group established brand contribution as offering and increased distribution in fashion stores. a key measure of our success in growing the value of our brands. Brand contribution is defined as sales less Footwear has recently become a key focus of the cost of sales, advertising and promotion expenditure Group; we have, for the first time, appointed an and variable selling costs. International Footwear Director to drive the growth in sales and profitability of this category on a global Brand contribution in the year was £248.6 million, basis and an International Footwear Supply Director. 41.3 per cent of sales which compares favourably to £247.8 million, 40.6 per cent of sales, despite the sale of Marigold industrial gloves part way through the year and the increase in investment in advertising and promotional spend. We are pleased to see growth in brand contribution despite the challenges the Group has faced throughout the divestment programme.

SSL International plc Annual Report 2004 17 Financial Review — Garry Watts Financial Review continued Financing costs Garry Watts The net interest charge incurred was £21.2 million (2003: £22.5 million), which was covered 3.5 times Selling, General & Administration (SG&A) by operating profit before exceptional items (2003: SG&A costs for the Group rose from £169.9 million 3.6 times). to £178.8 million in the year. These include research and development costs of £11.4 million (2003: £13.0 Taxation million). In anticipation of the disposal of the Regent The tax charge of £14.9 million before exceptional Infection Control business, we have recently re- items represents a rate of 28 per cent, lower than organised our R&D function to align product innovation the last year’s rate of 30 per cent as the result of more closely with brand marketing whilst placing our the utilisation of certain tax losses and the non- regulatory and technical functions alongside our recognition of certain deferred tax assets. Exceptional manufacturing and product supply functions. Salary costs generated a tax credit of £14.4 million (2003: inflation and increases in central IT and pension costs £3.6 million). exceeded the effect of our cost savings in this category of £5 million. Taken together with an estimated £11 Earnings million of cost savings included within gross margin, The loss after tax was £8 million which generated a loss management believe £16 million of costs have been per share of 4.2 pence. This compares with a profit after eliminated during the year. tax last year of £24.8 million and earnings per share of 13.1 pence. Operating profit Operating profit before exceptional items was Cash flow and investing activities £74.5 million compared to £82.0 million last year. The Group generated an increased free cash flow The decrease of £7.5 million is attributable to a number (ie before payment of dividend), of £85.2 million of factors including the disposal of the Marigold compared with £39.1 million in the previous year. industrial gloves business part way through the year This improvement is primarily driven by the net cash and increased investment in advertising and marketing. proceeds from the businesses sold, partially offset by The operating margin was 12.4 per cent compared with higher exceptional cash costs, but also reflects improved 13.5 per cent last year. The effect of disposals is dilutive working capital management. on Group net margins. On a pro forma basis the remaining consumer business achieved a net margin Operating cash flow, which comprises earnings in the year to 31 March 2004 of 6.4 per cent. before interest, taxation, depreciation and amortisation and includes working capital movements, amounted Exceptional costs amounted to £60.8 million, of to £96.9 million (2003: £104.2 million); capital which £25.0 million relates to our organisation and expenditure was £14.9 million (2003: £18.1 million); restructuring programme and £35.8 million from our the cash element of exceptional items was £31.6 million disposal activity. The restructuring charge comprises (2003: £16.4 million) and interest and tax payments business process review and associated consultancy amounted to £26.3 million (2003: £30.5 million). costs of £14.9 million, manufacturing restructuring Cash inflow from the disposal of the Marigold industrial costs of £2.9 million, Group and commercial gloves and the wound management business restructuring costs of £6.2 million and £1 million of amounted to £61.1 million. other costs. The disposal related charge comprises £15.7 million of asset impairment and other costs Net working capital at 31 March 2004 was £107.5 together with the loss on disposal of the Marigold million compared with £129.9 million previously. industrial gloves business of £15.1 million and the loss on the wound management business of £5.0 million. Cash flow, after dividend payments of £23.2 million The pre-tax profit on disposal of the Regent Infection and cash receipts from the sale of the Marigold Control business is expected to be in the region of industrial gloves and UK wound management £50 million and will be accounted for in 2004/05. businesses were applied to reduce net indebtedness. The Group net debt position at 31 March 2004 was As anticipated, the expenditure on the restructuring £227.5 million reduced from £292.0 million at the programme is allowing us to continue to reduce previous year end. We expect to receive cash proceeds operating costs. Following the completion of the from the disposal of the Regent Infection Control disposal programme, it is likely that further exceptional business in the first half of the current year. costs will be incurred in the current year. Financial condition Profit before finance charges, after charging The retained loss after dividends amounted to £23.4 exceptional items was £13.7 million compared million after writing off goodwill on disposals previously with £61.6 million last year. taken to reserves of £33.9 million (2003: £0.4 million) which compares to retained profits of £1.5 million in the previous year. Shareholders’ funds at 31 March 2004 were £95.8 million compared with £92.2 million at 31 March 2003.

SSL International plc Annual Report 2004 18 Financial Review — Garry Watts Half year performance Interest rate exposure Sales in the second half of the year were £293 million, The aim of the Board-approved policy relating to compared with £308 million for the comparative interest rate risk management is to reduce to acceptable period. However, eliminating sales attributable to levels the impact of interest rate fluctuations on the Marigold industrial gloves, which was sold part way Group’s net interest expense. This is achieved through through the year, sales in the second half were £290 balancing the ratio of fixed or hedged debt to those million compared to £291 million in the comparable financial liabilities with floating interest rates. Board- period. Reported operating profit before exceptional approved instruments available to hedge this exposure items was £42 million compared with £51 million. include interest rate swaps, interest rate options and forward rate agreements. Details of the interest rate Sales for the first half of the year were £309 million and analysis are given in note 31. excluding Marigold industrial gloves, were £295 million. Operating profit before exceptional items was £33 Liquidity risk million and £32 million respectively. The primary objective of the Group Treasury Policy is to ensure that the Group is able at all times to meet Litigation its financial commitments as they fall due. To facilitate In common with most suppliers of latex medical this, the Group Treasury department is responsible gloves, the Group is engaged in litigation in the USA for the management of cash and liquid resources for in relation to allegations regarding the development of the whole Group, and ensures that the Group has sensitivity to natural rubber latex. Responsibility for the sufficient liquidity to meet any reasonable change consequences, if any, of such litigation including legal in funding requirements. As detailed in note 31, liability and fees will remain with the Group for products the Group’s cash, liquid resources and central undrawn manufactured and/or sold prior to legal completion committed facilities as 31 March 2004 amounted to of the proposed divestment of the surgical gloves £129.6 million. business. The Board has confidence in both the high quality of SSL’s surgical gloves and the Group’s defences International Financial Reporting Standards available against allegations. In recent months, a International Financial Reporting Standards (IFRS) number of cases have been settled for nominal are due to become mandatory for all listed companies amounts, and there have been no new case filings within the European Union from 2005. The Group for over twelve months. will prepare the financial statements for the year ending 31 March 2006 in compliance with IFRS. The process of The Group is also defendant in a number of other evaluating the impact of the changes has already begun lawsuits incidental to its operations, and is involved and preparatory work will continue over the coming in investigations by certain regulatory authorities. year given the requirement for the Group to report In aggregate, these are not expected to have a material under IFRS for the first time when it announces the adverse financial effect on the Group. Further details interim results for the period to 30 September 2005. are given in note 28. Garry Watts, Chief Executive and Finance Director Capital structure and treasury policy 26 May 2004 Financial Reporting Standard 13 FRS 13 requires that certain disclosures relating to financial instruments are given in the financial statements, in order to provide information on the impact of such instruments on the Group’s risk profile, how this may affect the Group’s performance and financial position and how those risks are being managed. The impact of financial instruments is considered in note 31.

Foreign exchange risk The nature of the Group’s trading activities generates transactional foreign exchange rate risks. These arise from the sourcing of raw materials from different countries, the location of Group production facilities throughout the world and the sale and distribution of finished goods in many locations. The Group’s foreign exchange policy requires that all trading related exposures should be centralised in accordance with prescribed procedures and timetables under the direction of the Group Treasury function, which hedges the major exposures using forward contracts and options, usually for a period of 12 months.

SSL International plc Annual Report 2004 19 Financial Review — Garry Watts Group Board

Executive Directors Non-Executive Directors Garry Watts Ian Adamson Ian Martin Chief Executive & Managing Director – Europe Non-Executive Chairman Group Finance Director Joined Seton Healthcare plc in 1991 Chairman of SSL since September Appointed as Chief Executive on as Director of Marketing and has 2001, Ian is also Executive 1 April 2004 after joining as Group subsequently held a number of Chairman of Heath Lambert Finance Director in February 2001. senior sales and marketing positions Holdings Ltd and has held a number He was previously an Executive in the organisation, most recently of other Chairmanships including Director of Celltech plc and Finance as Managing Director of the UK Baxi Group plc and Uniq plc. Ian Director of Medeva plc. Garry is and Northern & Eastern Europe was Group Managing Director and Non-Executive Director of the businesses. Ian previously held Deputy Chairman of Grand Medicines and Healthcare Products marketing positions at Johnson Metropolitan plc. Age 69. Regulatory Agency (MHRA) and & Johnson and W. L.Gore. On his also of Protherics plc. Age 47. appointment to the Board in April Tim Howden 2004, Ian became Managing Senior Non-Executive Director Director – Europe. Age 45. Appointed as a Non-Executive Director of Scholl plc in 1994 and Mike Pilkington continued to hold this position Group Supply Chain Director throughout the subsequent Appointed as Executive Director in mergers. Tim is Chairman of the February 2004, after joining SSL Remuneration Committee. He in April 2002. Previously, Mike was previously CEO of Albert Fisher was Head of European Distribution Europe and MD of Rank Hovis and Supply Chain Development McDougall plc. Tim is currently and Director of Manufacturing at Non-Executive Director of Finning Kelloggs having previously worked International Inc Canada, Hyperion at Mars Inc. Age 43. Insurance Group Ltd and Non- Executive Chairman of Benchmark Dental Laboratories Ltd. Age 67.

SSL International plc Annual Report 2004 20 Group Board Peter Read Bernd Beetz Non-Executive Director Non-Executive Director Appointed in March 2002, Peter Appointed in March 2001. Bernd is Chairman of the Nomination is Executive Director and CEO of Committee. He is a member of the Coty Inc based in New York. He Board of the South East of England was previously President and CEO Development Agency and holds of Parfums Christian Dior and prior non-executive directorships in to that a Regional Vice-President Celltech Group plc, Vernalis Group of Proctor & Gamble plc. Age 53. plc and Innogenetics SA. Formerly a senior executive with Hoechst Company Secretary and past President of ABPI. Age 65. Jonathan Jowett Appointed in June 1999. Richard Adam Qualified as a solicitor in 1989, Non-Executive Director and has previously worked for Appointed Non-Executive Director Avon Cosmetics and Alumasc and Chairman of the Audit Group plc. Age 41. Committee of SSL in November 2003. Richard is currently Group Finance Director of Associated British Ports Holdings plc. He is a Fellow of the Institute of Chartered Accountants of England & Wales. Age 46.

SSL International plc Annual Report 2004 21 Group Board Corporate Governance

Combined code The Board, which met seven Board committees The Nomination Committee, which The Board is committed to high times in the year, has a schedule The Board has established three is chaired by Peter Read, comprises standards of corporate governance. of matters reserved for its approval, committees. The terms of reference all the Non-Executive Directors and Following the publication of the including determination of strategy, of each committee are currently the Chief Executive. This committee new Combined Code on Corporate the financial statements, annual being reviewed against the makes recommendations for Governance (the New Code) and budget, treasury policy, major criteria of the New Code and appointments to the Board. guidance on audit committees (the acquisitions and disposals, capital will be updated as appropriate. Smith Guidance), the Board has expenditure and monitoring They will shortly be available on In addition, the Executive Team, reviewed its corporate governance of operational and financial the Company’s website: consisting of the Executive Directors procedures and is making changes performance. There is an www.ssl-international.com and certain senior executives are as appropriate. The New Code established code of practice for responsible for the day-to-day applies to accounting periods the calling of meetings and pre- The Audit Committee is chaired by management of the Company. beginning on or after 1 November circulation of board papers. Richard Adam and comprises all the 2003. This report has been prepared Non-Executive Directors1 with the The number of scheduled Board on the basis of the previous The Non-Executive Directors, exception of the Chairman who meetings attended by each Director Combined Code on Corporate including the Chairman, meet resigned on 18 March 2004 (but during the year was as follows: Governance (the Code), although independently of management who has a standing invitation to some additional disclosures have on an occasional basis. attend meetings). This committee Attendance been made. Throughout the year, reports its findings to the Board. I. Martin 7 the Company complied with the All Directors joining the Board are Following each meeting, the Non- G. Watts 7 Code with the exception of certain required to submit themselves for Executive Directors met with M. Pilkington provisions relating to Directors’ election at the AGM following their external auditors without (appointed 12 February 2004) 2 service contracts. This report, appointment and at least every management present. The Audit R. Adam together with the Remuneration three years thereafter. Non- Committee is authorised to: (appointed 13 November 2003) 3 Report set out on pages 25 to 30, Executive Directors are appointed explains how the Company has for a specified term. Details of the — Monitor the integrity of the B. Beetz 5 applied the Code. current Directors appear on pages financial statements; T. Howden 7 20 to 21. Details of changes to the — Review the Company’s internal P. Read 7 The Board Board during the period are detailed financial controls and internal B. Buchan The Board consists of a Non- on page 24. control and risk management (resigned 23 March 2004) 7 Executive Chairman, four other systems; S. Eastwood Non-Executive Directors and three A procedure is in place for Directors — Review the effectiveness of the (resigned 12 March 2004) 6 Executive Directors. There is a clear to receive independent professional Company’s internal audit E. Anstee division of responsibility between advice in respect of their duties. function; and (resigned 11 September 2003) 1 the Chairman, who leads the Board They also have access to the — Oversee the relationship with the A. Strasser and the Chief Executive, who is advice and services of the Company external auditor. (resigned 16 May 2003) 1 responsible for running the Secretary. The Company Secretary business. All of the Non-Executive arranges for appropriate ongoing After making appropriate enquiries, Directors are considered training and an induction the Audit Committee is satisfied independent of management and programme tailored to meet the as to the objectivity and free from any relationship which needs of the individual. The independence of the external could materially interfere with their Directors receive regular updates auditors – in particular, that independent judgement. The on changes and developments to additional non-audit related independence of Non-Executive the business, legislative and services does not threaten this Directors has been considered regulatory matters. independence. against the criteria of the New Code and it was determined that The mix of skills and experience The Remuneration Committee each was independent, with the ensures that an effective Board comprises all the Non-Executive exception of Tim Howden, the leads the Company and that no one Directors and is chaired by Tim Senior Non-Executive Director, who Director or group dominates the Howden. Peter Read will become has served for more than nine years. Board’s decision making process. Committee Chairman after Mr Mr Howden was appointed a Non- Howden steps down at the Executive Director of Scholl PLC in forthcoming AGM. The role of this 1994 and subsequently became a committee and details of how it Non-Executive Director of the applied the principles of the Code Company, following the merger are set out in the Remuneration of Seton and Scholl in 1998. Mr Report on pages 25 to 30. Howden will retire from the Board at the forthcoming AGM. Subject to his re-election by shareholders, Peter Read will become the Senior Independent Director.

SSL International plc Annual Report 2004 22 Corporate Governance Internal control — An effective Internal Audit Relations with shareholders Going concern The Board is responsible for the function providing independent The Company has a programme After making enquiries, the Board Company’s system of internal scrutiny of internal control of communication with its has a reasonable expectation that control and for reviewing its systems and risk management shareholders, including regular the Company and the Group have effectiveness. The system of internal procedures; meetings with, and presentations adequate resources to continue in control is designed to manage — Annual compliance statements to, institutional shareholders, fund operational existence for the rather than eliminate the risk of from all statutory business units managers and analysts. The foreseeable future. For this reason, failure to achieve business within the Company, stating Company website contains share we continue to adopt the going objectives and can provide only compliance with Company price information, copies of annual concern basis in preparing the reasonable, and not absolute policies, identification of reports, press releases and analyst financial statements. assurance against material business risks and internal presentations. misstatement or loss. Key elements control confirmation; and 1 Eric Anstee, the previous of the Company’s system of internal — Assessing the year end reporting The AGM provides an important chairman of the Audit control include: process throughout the opportunity for shareholders to Committee, resigned as a Non- Company including visits to raise questions with the Board. Executive Director on 11 — Regular Board meetings with selected locations by the Internal Those shareholders whose shares September 2003. Richard Adam a formal schedule of matters Audit function to assist in year are held within Crest, the electronic became chairman upon his reserved to the Board for end close and issue resolution. share settlement system will have appointment as a Non-Executive decision; the opportunity to vote Director on 13 November 2003. — The Company’s strategic The Board reviews the effectiveness electronically for this year’s AGM. Alain Strasser was a member of direction is regularly reviewed of the system of internal control at Instructions are given in the AGM the Audit, Remuneration and by the Board; least annually, and is confident that notice of meeting. Nomination committees until his — Clearly defined organisational it complies fully with the Internal resignation as a Non-Executive structures and appropriate Control: Guidance for Directors on Director on 16 May 2003. delegated authorities for the the Combined Code (the ‘Turnbull Company’s businesses; Report’). The effectiveness of this — Ensuring Company policies and process has been reviewed by the procedures are in place for all Audit Committee. Key elements of areas considered at risk; the review include: — Regular monitoring of performance to assess progress — Discussions with management towards objectives; on risk areas identified by — Procedures for control over management and/or the audit capital expenditure and process; investments; — The review of internal and — Centralised treasury operations external audit plans; and operating within defined limits; — The review of significant issues — Businesses are responsible for arising from the internal and meeting defined reporting external audits. timetables and compliance with Group accounting manuals which set out accounting policies, controls and definitions;

SSL International plc Annual Report 2004 23 Corporate Governance Directors’ Report

Directors’ report Board of Directors Annual General Meeting Employment policies The Directors present their report The Group Board section on The Annual General Meeting will The Group’s policies reflect it’s and the audited financial pages 20 to 21 gives biographical be held at the Barber Surgeons Hall, commitment to equality and statements for the year ended details of the current Directors Monkwell Square, London EC2Y diversity in all aspects of 31 March 2004. and the Company Secretary. All 5BD, beginning at 10.30am on employment. Further details of Directors served throughout the 20 July 2004. policies and initiatives are given in Principal activities year except Richard Adam who was the Corporate Social Responsibility The activities of the Group are the appointed a Non-Executive Director Share capital Review on pages 14 and 15. manufacture and distribution of on 13 November 2003 and Mike Details of shares issued during consumer healthcare products Pilkington and Ian Adamson who the year and outstanding options Creditor payment policy and medical products. More detail were appointed Executive Directors are given in note 20 to the The Group does not follow any on these activities during the year on 12 February 2004 and 14 April financial statements. specific external code or standard and likely future developments are 2004 respectively. on payments practice. Payments given in the Chairman’s Message, Authority to purchase shares to suppliers are made in accordance Chief Executive’s and Operating During the year, the following The Directors were authorised at with agreed terms. The Company Reviews on pages 2 to 13 and in Executive Directors resigned; the 2003 AGM to purchase the itself had no trade creditors at the Financial Review on pages Andrew Slater on 30 April 2003, Company’s own shares, within 31 March 2004. 16 to 19. Steve Eastwood on 12 March 2004 certain limits. Although no such and Brian Buchan on 23 March purchases have been made to Charitable and Results and dividend 2004. Eric Anstee resigned as a date, the Directors will seek to political donations The Group’s profit before tax was Non-Executive Director on 11 renew this authority at the The Group made charitable £53.3 million before exceptional September 2003. Tim Howden 2004 AGM. donations of £0.1m (2003: £0.1m) items and a loss of £7.5 million after and Bernd Beetz will stand down No political donations were made exceptional items. An interim at the end of the AGM. Material shareholdings in this or the previous year. dividend of 3.9p per share was As at 26 May 2004, the following paid on 6 February 2004. The In accordance with the articles of material shareholdings were Auditors Directors recommend a final association, Richard Adam, Mike recorded in the register KPMG Audit Plc has expressed its dividend of 4.2p per share, which, Pilkington and Ian Adamson will maintained in accordance with willingness to remain in office as subject to approval at the Annual stand for election at the AGM the Companies Act 1985: auditor and a resolution proposing General Meeting (AGM) on 20 July having been appointed as Directors its re-appointment will be put to 2004, will be paid on 2 September since the last AGM. Ian Martin shareholders at the 2004 Annual 2004 to shareholders on the and Peter Read will retire by General Meeting. After proper register as at on 6 August 2004. rotation at the AGM. Upon the consideration, the Audit Committee This would make a total dividend recommendation of the Nomination is satisfied that KPMG Audit Plc for the year of 8.1p per share Committee, these Directors are continues to be objective and (2003: 12.3p per share). recommended for re-election. independent of the Group.

Number of shares % of shares By order of the Board Barclays PLC 10,942,361 5.78 Jonathan Jowett, Cater Allen International Limited 9,304,885 4.91 Company Secretary Prudential plc and certain subsidiaries 8,165,427 4.31 26 May 2004 Fidelity International Limited and its direct and indirect subsidiaries 7,418,106 3.92 Legal and General Investment Management Limited 6,067,522 3.2 The Goldman Sachs Group Inc 6,063,687 3.2

SSL International plc Annual Report 2004 24 Directors’ Report Remuneration Report

Remuneration report The Committee uses the services of would be 50 per cent, which would Additional options are subject to This report sets out the Company’s external consultants. During the be paid upon achieving 104 per performance conditions that must policy on the remuneration of year the Committee received advice cent of targets. On target be satisfied over a three-year period, Executive and Non-Executive from, but did not formally appoint performance would result in a although limited re-testing is Directors and details Executive the following: payment of 30 per cent. Pro rata allowed for a further two years Directors’ remuneration packages amounts would be paid for (after the initial three-year period). and service contracts. — Mercer Human Resource achieving a level of performance The performance conditions are in Consulting (‘Mercer’) – provided between the minimum and two parts: This report will be put to a vote of advice on actuarial matters and maximum targets. the Company’s shareholders at the pay and pension provision for a. The growth in normalised EPS AGM on 20 July 2004. the Executive Team; and Deferred Bonus Scheme: This must exceed the growth in — Ernst & Young LLP – provided is a one-off arrangement and is RPI by at least an average of Remuneration committee advice on the Group’s employee designed to retain and motivate three per cent per annum. The Remuneration Committee (the share schemes. senior management during the b. The Company’s Total ‘Committee’) is established by the current period of significant change. Shareholder Return (‘TSR’) Board. The Committee’s terms of Remuneration policy Under this scheme, the Executive shall, when ranked against reference are currently being The Committee’s policy is to provide Team and other senior executives the TSR of constituent reviewed against the criteria of the competitive rewards for the can receive in December 2005 a companies of the FTSE250, New Combined Code and will Executive Team, taking into account further cash amount up to 100 per have reached at least the sixth shortly be available on the the Group’s performance and the cent of the bonus awarded to them decile. Between the sixth and Company’s website www.ssl- markets in which it operates with for 2004/05. Leavers prior to this eighth decile, the options international.com. The Committee the overall objective of balancing date will forfeit any entitlement, would vest on a sliding scale comprises all the Non-Executive the interests of the shareholders, although the Committee retains between 50 per cent and Directors, namely: the Company and its employees. the discretion to make awards to 100 per cent. ‘good’ leavers. — Tim Howden, The Committee reviews its policy at Limited re-testing is allowed for a Committee Chairman least annually to ensure that it aligns Executive Share Option further two years (after the initial — Richard Adam with the Group’s business strategy. Schemes: No options were granted three years) to allow the Executive — Bernd Beetz The Committee continues to believe to Executive Directors during the to benefit from driving up — Ian Martin that a significant proportion of year ended 31 March 2004. Details shareholder value. The re-testing — Peter Read remuneration should be linked of outstanding options and LTIP is levered and Executives will to individual and Company interests are given on pages 29 and need to perform exceptionally Tim Howden and Bernd Beetz will performance. 30. The performance conditions well in years four or five to increase not stand for re-election at the attaching to those Executive Share the percentage vesting. The options AGM on 20 July and Peter Read This is a time of radical change for Option Schemes in which the will lapse unless exercised within will become Chairman of the the Group. Consequently, the current Executive Directors seven years. Committee. current year (to 31 March 2005) will participate are as follows: be an interim year in the context of 2. Grants made under the 1991 The Committee determines the remuneration arrangements which 1. 1996 scheme: Standard options scheme are conditional upon individual remuneration packages the Committee expects to revise may only be exercised if over growth in EPS exceeding the for the Executive Directors and to reflect the Group’s focus on the period of three years from growth in RPI by two per cent certain senior executives (collectively consumer healthcare. 1 April 2002, the growth in per annum over the period ‘the Executive Team’) and agrees normalised earnings per share between grant and exercise. the overall Remuneration Policy Remuneration components (‘EPS’) exceeds the growth in including annual bonus and long Base salary: Base salaries are the retail price index (‘RPI’) by 3. SSL 1990 Scheme term incentive plans for the Group’s determined annually, by reference at least two per cent per annum Grants made under this scheme management as a whole, with the to individual performance and in respect of options granted in prior to 1999 were not subject aim of securing the talent that the market salary levels obtained from July 2002, and by three per cent to performance conditions. Ian Company needs to meet its independent sources, including the per annum for options granted Adamson was granted an option business aims and driving superior ‘Directors’ Pay Report’, published in November 2002. The over 12,500 shares in 1993. performance. from time to time by IDS (Incomes Committee has discretion to Data Services Ltd). This is the only waive these conditions in The performance conditions were The Committee’s meetings are element of remuneration which exceptional circumstances. chosen because they require a attended by the Chief Executive is pensionable. continuous improvement in the (Garry Watts) and the Company If conditions have not been met Company’s performance for options Secretary (Jonathan Jowett) Annual bonus plan: The in full after three years, there will to become exercisable. although neither is present when Committee reviews the bonus be no re-testing and the options their own arrangements are under scheme annually and agrees will lapse. In anticipation of the completion discussion. Brian Buchan, the performance targets for the of the divestment of the Group’s previous Chief Executive and Bob Executive Team. For the year to Full details of performance medical business, the Committee Dwyer, Group HR Director until 31 March 2005, Executive Directors criteria are given in the notes is currently considering a change 31 May 2003, attended meetings can receive a percentage of their to the table on pages 29 and 30. to the performance conditions prior to their resignations from base salary on achievement of attaching to the 1996 scheme the Company. a number of targets, including to reflect the size of the business sales, brand contribution and following the divestment. It is the management operating profit. Committee’s intention that the The maximum bonus payable revised performance conditions would be no less stretching than the current performance conditions.

SSL International plc Annual Report 2004 25 Remuneration Report Remuneration Report

The Committee is not proposing Garry Watts is not a member of as the original letter of appointment Peter Read was appointed pursuant to make any share option awards the SSL Scheme, but operates a and subject to Mr Martin being re- to a letter dated 28 February 2002, in the financial year ending personal pension plan, to which elected at the 2004 AGM. with the appointment taking 31 March 2005, other than in the Company contributes 25 per effect on 21 March 2002. The strictly limited instances, where it cent of basic salary. Contributions Mr Martin is entitled to fees appointment was for an initial is considered appropriate for that cannot be paid into his personal totalling £175,000 pa, a company period of one year but has been recruitment or retention. pension plan as a result of current car, fuel and the services of a driver renewed for subsequent legislation are paid as additional to which he contributes 50 per cent periods of one year and his Long Term Incentive Plan (‘LTIP’) salary less tax and an amount to of the cost. current appointment expires on The Executive Team and certain cover the Company’s additional 21 March 2005 other senior executives have National Insurance liability. Other Non-Executive Directors previously been eligible to receive a basic fee of £26,000, External appointments participate in the LTIP. No awards Steve Eastwood’s pension with an additional amount of The Company recognises that were made in the year ended 31 contributions were paid into a £4,000 awarded to Committee Executive Directors may be invited March 2004 and no further awards personal Superannuation Scheme Chairmen. Non-Executive fees are to become Non-Executive Directors are currently envisaged. Details in Australia. reviewed annually. of other companies. These of existing awards to Executive appointments can be beneficial to Directors are given on page 30. Service contracts Tim Howden was originally both the individual and the It is Company policy that the notice appointed pursuant to an Company in providing further Other benefits period in Executive Directors’ service appointment letter dated 4 August experience and knowledge. Fees are The Company provides other contracts should not exceed one 1994. His appointment expires at normally retained by the individual benefits to the Executive Team and year and that position will be the close of the AGM to be held on Director. Currently, Garry Watts is senior executives. These include a achieved for all current Executive 20 July 2004. the only Executive Director holding company car or car allowance, Directors by April 2005. However, such directorships. Details of these life assurance, permanent health the Committee retains the discretion Richard Adam was initially are given in the Group Board insurance and private medical to offer service contracts to a new appointed pursuant to a letter section on pages 20 and 21. insurance. director that contain an initial notice dated 21 October 2003. His period in excess of one year, should appointment was effective from In common with other employees, market conditions require this. 13 November 2003 for an initial the Executive Team are also eligible period of three years. to participate in the Company’s All The Executive Directors’ contracts Employee Sharesave plans. have no fixed term but provide that Bernd Beetz was initially appointed either the Director or the Company pursuant to a letter dated 22 Pension may terminate the employment by September 2000 for a period of one The Company operates a giving one year’s written notice, year commencing on 1 November contracted-in defined contribution subject to the table below. 2000. This period has subsequently scheme, the SSL UK Pension been renewed and Mr Beetz’s Scheme (‘the SSL Scheme’) for UK If the employment of an Executive appointment expires at the end of employees. It is Company policy Director is terminated, the the forthcoming AGM. to contribute 25 per cent of basic Committee’s policy is to apply salary into the SSL Scheme for mitigation to compensation Executive Directors, subject to payments at a level determined Inland Revenue limits. The level of by reference to the individual Director Date of contract Notice period contributions was determined in circumstances of the Executive G. Watts 5 February 2001 One year rolling 1 2002 based on advice from WM Director. Appropriate external legal I. Adamson 17 June 1996 One year rolling 2 Mercer on market practice and and HR advice would be obtained M. Pilkington 11 January 2002 One year rolling 3 taking account of the difference in each case. Notes: between Defined Benefit and 1. Garry Watts’ base salary is £480,000. He is currently on a one year rolling contract with Defined Contribution schemes. Non-Executive Directors an arrangement that in the event of a change of control occurring before 1 March 2005, Executive Directors who participate Save as disclosed below, none of the notice period will be increased to two years from the date of change of control, such increase remaining in effect for one year. If within one month of a change of control, Mr in the SSL Scheme contribute five the Non-Executive Directors have Watts’ employment has not been confirmed, or if as a result of such change his status per cent of their basic salary. Current service contracts. and duties materially diminish and Mr Watts resigns within two months of a change of legislation in the UK restricts the control, he will be entitled to receive the equivalent of 1.5 times the sum of: basic salary, amount of benefits that can be Ian Martin was appointed as bonus based on the average paid over three years, pension benefits, any other benefits in kind and the cost to the Company of providing all other benefits. provided from approved pension Non-Executive Chairman on 1 2. Ian Adamson’s base salary is £225,000. Prior to his appointment as an Executive Director plans. Consequently contributions September 2001 for a term of three on 14 April 2004, Mr Adamson’s service agreement contained a clause entitling him to to the SSL Scheme may have to be years, terminable by 12 months two years’ notice of termination in the event of a change of control of the Company. In restricted if it is calculated that the notice from the Company and six light of the Board’s policy, Mr Adamson agreed that if such change of control occurs after 13 April 2005 he will not be entitled to an extended notice period, and his notice maximum permitted benefits will months notice by himself. The of termination will remain at 12 months. be exceeded. In such circumstances Nomination Committee 3. Mike Pilkington’s base salary is £225,000. Prior to his appointment as an Executive the balance is paid as additional recommended to the Board that the Director on 12 February 2004, Mr Pilkington’s service agreement contained a clause salary less tax and an amount to term of the appointment be entitling him to two years’ notice of termination in the event of a change of control of the Company. In light of the Board’s policy, Mr Pilkington agreed that if such change cover the Company’s additional extended and it was agreed that the of control occurs after 31 January 2005 he will not be entitled to an extended notice National Insurance liability. appointment be extended for a period, and his notice of termination will remain at 12 months. In the event that fixed period to 28 February 2005, Mr Pilkington gives notice and is not joining a competitor his notice requirement is but otherwise upon the same terms reduced to six months.

SSL International plc Annual Report 2004 26 Remuneration Report Directors’ emoluments (audited information) Salaries 2004 2003 and fees Bonus Benefits Total Total £’000 £’000 £’000 £’000 £’000 Non-Executive Chairman I. Martin 175 – 47 222 225

Executive G. Watts 368 115 92 575 391 M. Pilkington (from 12.2.04) 30 8 7 45 –

Non-Executive R. Adam (from 13.11.03) 12 – – 12 – B. Beetz 26 – – 26 25 T. Howden 30 – – 30 28 P. Read 26 – – 26 25

Former Directors B.J. Buchan (to 23.3.04) 447 – 141 588 719 S. Eastwood (to 12.3.04) 172 – 18 190 219 A. Slater (to 30.4.03) 46 – 2 48 291 E.Anstee (to 11.9.03) 14 – – 14 28 A. Strasser (to 16.5.03) 4 – – 4 25 Total 1,350 123 307 1,780 1,976

Notes: 1. Remuneration shown above relates to the period for which each Director served during the year. 2. Benefits include all taxable benefits arising from employment with the Company. 3. The Executive Directors are subject to the Inland Revenue pension earnings ‘cap’ (£99,000 at 31 March 2004) which is reviewed by the Government from time to time. As a result they also receive a cash supplement which is included in benefits. The amounts paid were as follows: Garry Watts – £71,525 Mike Pilkington – £5,651 Brian Buchan – £94,059

Brian Buchan resigned as a Director on 23 March 2004 and left the Company on 31 March 2004. He had a contract with a one-year notice period. Under the terms of his settlement agreement, Mr Buchan received £338,691 compensation. In seeking to mitigate the overall level of payment, the Company has agreed that the balance of Mr Buchan’s entitlement will be paid in six monthly instalments of £53,607 from October 2004 if he has not found alternative employment. However, if Mr Buchan has secured alternative employment, the Company will only make a payment to the extent that there is a shortfall between the salary earned in any new employment and what Mr Buchan would have received if he had continued with the Company until March 2005.

The trustees of the Long Term Incentive Plan agreed that the 7,990 deferred shares (the purchase of which was funded by Mr Buchan from previous bonus payments) held under the LTIP should be released to Mr Buchan. All executive share options lapsed upon Mr Buchan leaving the Company.

Steve Eastwood resigned as a Director on 12 March 2004 and left the Company on 9 April 2004. He had a contract governed by Australian law with a two-year notice period. Under the terms of his settlement agreement, Mr Eastwood received a total payment of: A$1,633,648 (£669,665) which is made up of 24 months salary and benefits; A$100,000 (£40,984) as consideration for entering into restrictive covenants; and A$218,000 (£89,334) representing a long service award and payment for untaken leave to which Mr Eastwood is entitled under Australian employment regulations.

The trustees of the Long Term Incentive Plan agreed that the 4,041 deferred shares (the purchase of which was funded by Mr Eastwood from a previous bonus) held under the LTIP should be released to Mr Eastwood. All executive share options lapsed upon him leaving the Company.

The Company has concluded a consultancy arrangement with Mr Eastwood for a period of six months to 12 September 2004 under which he will receive A$121,500 (£49,795) payable in return for 45 days consultancy services to the SSL business.

Andrew Slater resigned as a Director on 30 April 2003 and left the Company on 31 May 2003. He had a contract of service with a two-year notice period. Under the terms of the settlement agreement, Mr Slater can receive a maximum payment of £811,800 which is the equivalent of 24 months salary and benefits under his service agreement. Of this amount, £50,000 was paid as consideration for Mr Slater entering into restrictive covenants. Of the remainder, 50 per cent was paid to Mr Slater on leaving the Company on 31 May 2003. In seeking to mitigate the overall level of payment, the balance will be payable in 12 monthly instalments on the first anniversary of Mr Slater leaving the Company if he has not secured alternative employment. However, if Mr Slater has secured alternative employment, the Company will only make a payment to the extent that there is a shortfall between the salary earned in any new employment and what Mr Slater would have received if he had continued in employment with the Company until November 2004.

It was agreed that, conditional upon performance criteria having been achieved, Mr Slater would be entitled to exercise mature options held by him for a period being the later of six months from the date of leaving the Company and 42 months from the date of the individual option grant.

SSL International plc Annual Report 2004 27 Remuneration Report Remuneration Report continued

Directors’ pensions (audited information) Andrew Slater, who resigned as a Director on 30 April 2003 and left the Company on 31 May 2003, has entitlements under the London International Group UK Pension Scheme. The pension entitlement shown is that which would be paid annually on retirement based on service to 1 February 2001 when pensionable service for all members of this Scheme ceased.

Transfer value Transfer value Increase in Transfer value of of increase in of accrued transfer value net Total accrued Increase in Total accrued accrued pension accrued pension pension at Contributions of Directors’ pension at accrued pension pension at at 31.03.03 (net of inflation) 31.03.04 from Director contribution 31.03.03 during the year 31.03.04 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 A. Slater 1,210 (28) 1,323 0 114 120 1 120

Note: As a result of the timing of Mr Slater’s departure from the Company, the calculation of the increase in the transfer value of the accrued pension was negative.

The following Directors received contributions as detailed below.

2004 2003 Company Company contribution contribution £’000 £’000 G. Watts 25 19 M. Pilkington (from 12.2.04) 2 B. Buchan (to 23.3.04) 16 30 S. Eastwood (to 12.3.04) 41 38 A. Slater (to 30.4.04) 11 69

Notes: Pension contributions were paid as follows: 1. Garry Watts – paid into a personal pension plan. 2. Mike Pilkington, Brian Buchan and Andrew Slater – paid into the SSL UK Pension Scheme. 3. Steve Eastwood – paid into a personal superannuation scheme in Australia.

Directors’ interests in shares (audited information) Shareholdings The following table shows the beneficial interests of the Directors who held office at the end of the year in the ordinary shares of the Company:

Shareholdings as at Shareholdings 31 March 2003 as at (or date of 31 March 2004 appointment) Directors as at 31 March 2004 R. Adam – – B. Beetz 5,000 5,000 T. Howden 5,816 5,816 I. Martin 8,000 8,000 M. Pilkington – – P. Read 3,200 3,200 G. Watts 40,000 40,000

Note: No director held a non-beneficial interest in any shares.

SSL International plc Annual Report 2004 28 Remuneration Report Directors’ interests in shares continued Option schemes Full details of the options over ordinary shares in the Company held by Executive Directors who served during the year and any movements in those options are shown below:

As at Granted in Lapsed in As at Exercise Exercisable Exercisable Note 31.03.03 the period the period 31.03.04 price (p) from to Current Directors G. Watts 1996 Scheme 1.1,8 75,698 – – 75,698 483.5 19.03.04 19.03.08 1.1 72,260 – – 72,260 506.5 17.07.04 17.07.11 1.2 98,305 – – 98,305 295.0 18.07.05 18.07.12 1.3 116,232 – – 116,232 249.5 28.11.05 28.11.09 362,495 – – 362,495 M. Pilkington 1996 Scheme 1.2* 62,711 – – 62,711 295.0 18.07.05 18.07.12 1.3* 55,611 – – 55,611 249.5 28.11.05 28.11.09 SAYE Scheme * 7,896 – – 7,896 208.0 01.04.08 01.10.08 126,218 – – 126,218 Former Directors B. J. Buchan 1996 Scheme 1.1# 171,664 – – 171,664 483.5 19.03.04 19.03.08 1.1# 163,869 – – 163,869 506.5 17.07.04 17.07.11 1.2# 148,474 – – 148,474 295.0 18.07.05 18.07.12 1.3# 175,551 – – 175,551 249.5 28.11.05 28.11.09 SAYE Scheme # 3,727 – – 3,727 444.0 01.04.07 01.10.07 663,285 – – 663,285 S. Eastwood 1996 Scheme 1.1,8# 12,000 – – 12,000 770.0 21.06.02 21.06.06 1.1,8# 35,000 – – 35,000 742.5 14.06.03 14.06.07 1.1# 32,000 – – 32,000 500.0 02.07.04 02.07.08 1.2# 51,771 – – 51,771 295.0 18.07.05 18.07.12 1.3# 61,213 – – 61,213 249.5 28.11.05 28.11.09 Global Share Savings Plan # 4,279 – – 4,279 208.0 28.01.06 28.07.06 196,263 – – 196,263 A. Slater 1991 Scheme # 2,521 – – 2,521 413.8 15.12.96 15.12.03 # 105 – – 105 346.1 25.07.97 25.07.04 # 17,042 – – 17,042 363.1 14.12.97 14.12.04 # 16,650 – – 16,650 522.4 06.02.99 06.02.06 # 16,264 – – 16,264 707.0 04.12.99 04.12.06 1996 Scheme 1.1,8# 14,903 – – 14,903 783.5 04.01.03 04.01.07 1.1# 51,200 – – 51,200 500.0 02.07.04 02.07.08 1.2# 89,406 – – 89,406 295.0 18.07.05 18.07.12 1.3# 105,711 – – 105,711 249.5 28.11.05 28.11.09 SAYE Scheme # 1,584 – 1,584 0 426.0 01.04.06 01.10.06 # 4,543 – – 4,543 208.0 01.04.06 01.10.06 319,929 – 1,584 318,345

Notes: 1. Under the 1996 Scheme, for those options marked (1.1) exercise is subject to not less than three consecutive years of growth in normalised earnings per share exceeding the growth in the retail price index by at least an average two per cent per annum. For those marked (1.2) exercise is subject to growth in normalised earnings per share for three years commencing on 1 April 2002 exceeding the growth in the retail price index by no less than two per cent per annum. For those marked (1.3) exercise is subject to performance conditions that must be satisfied over initially a three-year period although this may be extended up to five years. The exercise is subject to growth in normalised earnings per share exceeding the growth in the retail price index by at least an average of three per cent per annum and Total Shareholder Return of the Company, when compared to Total Shareholder Return of companies of the FTSE250 reaching sixth decile for 50 per cent of the option to become exercisable, between sixth and eighth for a pro-rate between 50 per cent and 100 per cent of the option to become exercisable and eighth decile and above for 100 per cent of the option to become exercisable. 2. From February 1996, grants made under the 1991 Scheme are conditional upon growth in earnings per share exceeding by two per cent per annum the growth in the retail price index over the period between grant and exercise. 3. Options marked (*) indicates the number of options at date of appointment to the Board – 12 February 2004 in the case of Mr. Pilkington. 4. Options marked (#) indicates the number of options up to date of leaving the Board – 23 March 2004 in the case of Mr. Buchan, 12 March 2004 in the case of Mr Eastwood and 30 April 2003 in the case of Mr Slater. 5. No options were exercised in the period or the previous period.

SSL International plc Annual Report 2004 29 Remuneration Report Remuneration Report continued

Directors’ interests in shares continued 6. There are no performance criteria for exercise of options under the SAYE schemes. 7. The market price of the Company’s shares was 302.5p on 31 March 2004 and ranged from 342.5p to 171p during the year. 8. These grants are exercisable subject to the performance conditions being met. These conditions have not been met to date.

LTIP (audited information) Outstanding awards under The SSL International Long-Term Incentive Plan as at 31 March 2004 are as follows:

Performance Performance Performance Performance Deferred shares Deferred shares Deferred shares Deferred shares as at shares awarded shares lapsed shares as at as at awarded in vesting in shares as at 31.03.03 in the period in the period 31.03.04 31.03.03 the period the period 31.03.04 Current Directors M. Pilkington * 6,250 – – 6,250 6,250 – – 6,250 Former Directors B. J. Buchan # 7,990 – – 7,990 7,990 – – 7,990 S. Eastwood # 7,525 – 3,484 4,041 7,525 – 3,484 4,041 A. Slater # 9,735 – – 9,735 9,735 – – 9,735

Notes: 1. These awards were made in July 2000 and June 2002. For awards made in July 2000 the vesting of the performance shares was subject to the earnings per share increasing by inflation plus five per cent per annum over a continuous period of three years. These shares did not vest as the criteria was not been achieved. For awards made in July 2002 the vesting of the performance shares is subject to the earnings per share increasing by inflation plus two per cent per annum over a continuous period of three years. 2. For awards made in July 2000, the market price on the date of award was 717p and for awards made in June 2002, the market price on date of award was 370p. 3. Deferred awards made in July 2000 vested on 4 July 2003 and performance awards made in July 2000 lapsed on 4 July 2003 as the performance condition in note 1 was not met. Deferred awards made in June 2002 vest on 17 June 2005 as do performance awards, subject to the condition in note 1. 4. Awards marked (*) indicates the number of share awards at date of appointment to the Board – 12 February 2004 in the case of Mr. Pilkington. 5. Awards marked (#) indicates the number of share awards up to date of leaving the Board – 23 March 2004 in the case of B. Mr Buchan, 12 March 2004 in the case of Mr Eastwood and 30 April 2003 in the case of Mr. Slater.

On his appointment to the Board on 14 April 2004, Ian Adamson’s interests in shares and options over shares in the Company were as follows:

Ordinary shares:15,626

Options: A total of 12,500 options held under the SSL 1990 Share Option Scheme. A total of 135,911 ordinary options and 48,697 additional options held under the SSL International 1996 Executive Share Option Scheme.

There has been no change in interests of serving Directors between 31 March 2004 and 26 May 2004.

Performance graph The graph shows the Company’s total shareholder return (‘TSR’) performance compared with that of the FTSE350 Index. This index was selected as an appropriate comparator index because it is a broad equity market index of which SSL is a constituent.

120 100 80 60 40 20 0 Mar 99 Mar 00 Mar 01 Mar 02 Mar 03 Mar 04 –– FTSE350 –– SSL International

Approved by the Board and signed on its behalf by

Tim Howden Chairman of the Remuneration Committee 26 May 2004

SSL International plc Annual Report 2004 30 Remuneration Report Directors’ Independent Auditors’ Report Responsibilities to the Members of SSL International plc

Company law requires the Directors We have audited the financial We review whether the Corporate in the financial statements and the to prepare financial statements for statements of SSL International plc Governance statement reflects the part of the Directors’ remuneration each financial year which give a true which comprise the Profit and Loss Company’s compliance with the report to be audited. and fair view of the state of affairs Account, the Balance Sheet, the seven provisions of the Combined of the Company and of the profit Cash Flow Statement, the Code specified for our review by Opinion or loss for that period. In preparing Statement of Total Recognised the Listing Rules, and we report if In our opinion the financial those financial statements, the Gains and Losses, the Reconciliation it does not. We are not required statements give a true and fair Directors are required to: of Movements in Shareholders’ to consider whether the Board’s view of the state of affairs of the Funds, and Notes 1 to 33. We have statements on internal control cover Company and the Group as at — Select suitable accounting also audited the information in the all risks and controls, or form an 31 March 2004 and of the loss of policies and then apply them Directors’ remuneration report that opinion on the effectiveness of the Group for the year then ended; consistently; is described as having been audited. the Group’s corporate governance and the financial statements — Make judgements and estimates procedures or its risk and control and the part of the Directors’ that are reasonable and prudent; This report is made solely to the procedures. remuneration report to be audited — State whether applicable Company’s members, as a body, have been properly prepared in accounting standards have in accordance with section 235 of We read the other information accordance with the Companies been followed, subject to any the Companies Act 1985. Our audit contained in the Annual Report Act 1985. material departures disclosed work has been undertaken so that and consider whether it is consistent and explained in the financial we might state to the Company’s with the audited financial statements; and members those matters we are statements. This other information —Prepare the financial statements required to state to them in an comprises only the Chairman’s KPMG Audit Plc on the going concern basis auditor’s report and for no other Message, the Chief Executive’s Chartered Accountants unless it is inappropriate to purpose. To the fullest extent Review, the Operating Review, Registered Auditor presume that the Company will permitted by law, we do not accept the Financial Review, and the 8 Salisbury Square continue in business. or assume responsibility to anyone unaudited part of the Directors’ London EC4Y 8BB other than the Company and the remuneration report and the The Directors are responsible for Company’s members as a body, Corporate Governance statement. 26 May 2004 keeping proper accounting records for our audit work, for this report, We consider the implications for which disclose with reasonable or for the opinions we have formed. our report if we become aware accuracy at any time the financial of any apparent misstatements position of the Company and to Respective responsibilities of or material inconsistencies with Notes: enable them to ensure that the Directors and Auditors the financial statements. Our 1. The maintenance and integrity financial statements comply with The Directors are responsible for responsibilities do not extend to of the SSL International plc the Companies Act 1985. They have preparing the Annual Report and any other information. web site is the responsibility of general responsibility for taking the Directors’ Remuneration Report. the Directors; the work carried such steps as are reasonably open As described in the Statement of Basis of audit opinion out by the auditors does not to them to safeguard the assets of Directors’ Responsibilities, this We conducted our audit in involve consideration of these the Company and to prevent and includes responsibility for preparing accordance with Auditing matters and, accordingly, the detect fraud and other irregularities. the financial statements in Standards issued by the Auditing auditors accept no responsibility accordance with applicable United Practices Board. An audit includes for any changes that may have Kingdom law and accounting examination, on a test basis, of occurred to the financial standards. Our responsibilities, evidence relevant to the amounts statements or audit report since as independent auditors, are and disclosures in the financial they were initially presented on established in the United Kingdom statements and the part of the the web site. by statute, the Auditing Practices Directors’ remuneration report to 2. Legislation in the United Board, the Listing Rules of the be audited. It also includes an Kingdom governing the Financial Services Authority, and by assessment of the significant preparation and dissemination our profession’s ethical guidance. estimates and judgements made of financial statements may by the Directors in the preparation differ from legislation in other We report to you our opinion as to of the financial statements, and jurisdictions. whether the financial statements of whether the accounting policies give a true and fair view and are appropriate to the Group’s whether the financial statements circumstances, consistently applied and the part of the Directors’ and adequately disclosed. remuneration report to be audited have been properly prepared in We planned and performed our accordance with the Companies audit so as to obtain all the Act 1985. We also report to you if, information and explanations which in our opinion, the Directors’ report we considered necessary in order to is not consistent with the financial provide us with sufficient evidence statements, if the Company has to give reasonable assurance that not kept proper accounting records, the financial statements and the if we have not received all the part of the Directors’ remuneration information and explanations report to be audited are free from we require for our audit, or if material misstatement, whether information specified by law caused by fraud or other irregularity regarding Directors’ remuneration or error. In forming our opinion we and transactions with the Group also evaluated the overall adequacy is not disclosed. of the presentation of information

SSL International plc Annual Report 2004 31 Directors’ Responsibilities and Independent Auditors’ Report Consolidated Profit and Loss Account For the year ended 31 March 2004

2004 2004 2004 2003 2003 2003 Before Before Total Exceptional exceptional exceptional Exceptional Total items items items items as restated as restated (note 2) (note 2) (note 2) (note 2) Note £m £m £m £m £m £m Turnover Continuing operations – Consumer 408.2 – 408.2 397.5 – 397.5 Continuing operations – Medical 130.1 – 130.1 134.3 – 134.3 Continuing operations 538.3 – 538.3 531.8 – 531.8 Discontinued operations 3 64.1 – 64.1 77.1 – 77.1 Total turnover 3 602.4 – 602.4 608.9 – 608.9 Cost of sales 4 (252.7) (3.3) (249.4) (262.8) (1.9) (264.7) Gross profit 4 349.7 (3.3) 353.0 346.1 (1.9) 344.2 Distribution costs 4 (183.9) – (183.9) (178.4) (5.3) (183.7) Administrative expenses 4 (136.7) (37.4) (99.3) (89.8) (13.8) (103.6) Group operating profit 4–6 Continuing operations – Consumer 2.0 (19.4) 21.4 23.3 (15.9) 7.4 Continuing operations – Medical 18.3 (10.2) 28.5 33.9 (3.7) 30.2 Continuing operations 20.3 (29.6) 49.9 57.2 (19.6) 37.6 Discontinued operations 8.8 (11.1) 19.9 20.7 (1.4) 19.3 Group operating profit 29.1 (40.7) 69.8 77.9 (21.0) 56.9 Share of operating profit in associated undertakings – Consumer 4.7 – 4.7 4.1 (0.2) 3.9 Total operating profit: Group and share of associates Continuing operations – Consumer 6.7 (19.4) 26.1 27.4 (16.1) 11.3 Continuing operations – Medical 18.3 (10.2) 28.5 33.9 (3.7) 30.2 Continuing operations 25.0 (29.6) 54.6 61.3 (19.8) 41.5 Discontinued operations 8.8 (11.1) 19.9 20.7 (1.4) 19.3 Total operating profit 33.8 (40.7) 74.5 82.0 (21.2) 60.8 Exceptional items: Profit on sale of fixed assets – Continuing operations 23(a) ––––1.2 1.2 Loss on disposal of subsidiary undertakings, businesses and brands – Discontinued operations 23(b) (20.1) (20.1) – – (0.4) (0.4) Profit on ordinary activities before finance charges 13.7 (60.8) 74.5 82.0 (20.4) 61.6 Finance charges (net) 7 (21.2) – (21.2) (22.5) – (22.5) (Loss)/profit on ordinary activities before taxation (7.5) (60.8) 53.3 59.5 (20.4) 39.1 Tax on (loss)/profit on ordinary activities 8 (0.5) 14.4 (14.9) (17.9) 3.6 (14.3) (Loss)/profit on ordinary activities after taxation (8.0) (46.4) 38.4 41.6 (16.8) 24.8 Equity minority interests 24 –––––– (Loss)/profit for the financial year (8.0) (46.4) 38.4 41.6 (16.8) 24.8 Dividends paid and proposed on equity shares 9 (15.4) – (15.4) (23.3) – (23.3) Retained (loss)/profit for the year 22 (23.4) (46.4) 23.0 18.3 (16.8) 1.5 (Loss)/earnings per share (pence): 10 Basic (4.2) 20.3 22.0 13.1 Basic (adjusted) (1.0) 23.5 25.1 16.2 Diluted (4.2) 20.2 22.0 13.1

The accompanying notes are an integral part of this consolidated profit and loss account.

SSL International plc Annual Report 2004 32 Consolidated Profit and Loss Account Consolidated and Company Balance Sheets For the year ended 31 March 2004

Group Company 2004 2003 2004 2003 Note £m £m £m £m Fixed assets Goodwill 66.6 74.9 – – Brands, trademarks & patents 73.2 75.6 – – Intangible assets 11 139.8 150.5 – – Tangible assets 12 116.5 158.2 12.3 22.0 Investments 13 11.9 9.1 29.5 29.5 Investments in own shares 14 0.5 0.5 0.5 0.5 268.7 318.3 42.3 52.0 Current assets Stocks 15 83.1 106.9 – – Debtors 16 167.7 192.5 1,655.8 1,482.2 Cash and deposits 25(c) 127.7 70.0 84.0 29.7 378.5 369.4 1,739.8 1,511.9 Creditors: Amounts falling due within one year 17 (301.2) (327.3) (651.5) (404.1) Net current assets 77.3 42.1 1,088.3 1,107.8 Total assets less current liabilities 346.0 360.4 1,130.6 1,159.8 Creditors: Amounts falling due after more than one year 18 (221.7) (236.4) (213.5) (223.4) Provisions for liabilities and charges 19 (28.5) (31.8) (1.8) (3.0) Net assets 95.8 92.2 915.3 933.4 Capital and reserves – equity Called up share capital 20 18.9 18.9 18.9 18.9 Share premium account 21 40.4 40.3 40.4 40.3 Other reserves 22 136.8 136.8 783.6 783.6 Profit and loss account 22 (100.4) (103.9) 72.4 90.6 Shareholders’ funds 95.7 92.1 915.3 933.4 Equity minority interests 24 0.1 0.1 – – Total capital employed 95.8 92.2 915.3 933.4

The financial statements on pages 32 to 64 were approved by the Board of Directors on 26 May 2004 and were signed on its behalf by:

G. Watts Director

The accompanying notes are an integral part of these balance sheets.

SSL International plc Annual Report 2004 33 Consolidated and Company Balance Sheets Consolidated Cash Flow Statement For the year ended 31 March 2004

2004 2003 Note £m £m Net cash inflow from operating activities after exceptional items 25(a) 65.3 87.8 Returns on investments and servicing of finance Interest received 1.5 0.9 Interest paid (23.3) (23.6) Net cash outflow from returns on investments and servicing of finance (21.8) (22.7) Taxation (4.5) (7.8) Capital expenditure and financial investment Purchase of intangible fixed assets (0.1) (5.9) Purchase of tangible fixed assets (15.2) (18.6) Sale of OTC brands and assets – 0.1 Sale of tangible fixed assets 0.3 6.3 Sale of fixed asset investments 0.1 – Net cash outflow from capital expenditure and financial investment (14.9) (18.1) Acquisitions and disposals Investments in associated undertakings – (0.1) Deferred consideration (0.1) – Sale of product rights, businesses and brands 23(b) 61.2 – Net cash inflow/(outflow) from acquisitions and disposals 61.1 (0.1) Equity dividends paid (23.3) (23.2) Cash inflow before use of liquid resources and financing 61.9 15.9 Management of liquid resources 25(c) (2.0) 1.7 Financing Issue of ordinary share capital 0.1 0.3 Increase in loans 25(c) 6.0 64.1 Repayment of loans 25(c) (13.9) (54.2) Repayment of capital element of finance leases 25(c) (0.7) (0.6) Net cash (outflow)/inflow from financing (8.5) 9.6 Increase in cash in the year 25(c) 51.4 27.2

£17.5 million of the net cash inflows from operating activities and £0.5 million of the cash outflows in respect of purchase of fixed assets relate to discontinued activities. The net proceeds on sale of product rights, businesses and brands relate to discontinued activities.

The accompanying notes are an integral part of this cash flow statement.

SSL International plc Annual Report 2004 34 Consolidated Cash Flow Statement Consolidated Statement of Total Reconciliations of Movements Recognised Gains and Losses in Shareholders’ Funds For the year ended 31 March 2004 For the year ended 31 March 2004

2004 2003 2004 2003 Note £m £m Group Note £m £m (Loss)/profit for the financial year (8.0) 24.8 (Loss)/profit for the financial year (8.0) 24.8 Taxation on gains and losses taken Dividends paid and proposed 9 (15.4) (23.3) directly to reserves 8(d) 0.7 2.3 Retained (loss)/profit for the financial year (23.4) 1.5 Currency translation differences Currency translation differences on foreign currency net investments 22 (7.7) (0.2) on foreign currency net investments 22 (7.7) (0.2) Total recognised (losses)/gains relating to the year (15.0) 26.9 Taxation on gains and losses taken directly to reserves 8(d) 0.7 2.3 Share capital issued 21 0.1 0.3 Goodwill written back on disposals 23 33.9 0.4 Net addition to shareholders’ funds 3.6 4.3 Opening shareholders’ funds 92.1 87.8 Closing shareholders’ funds 95.7 92.1

2004 2003 Company Note £m £m (Loss)/profit for the financial year (2.8) 32.4 Dividends paid and proposed 9 (15.4) (23.3) Retained (loss)/profit for the year (18.2) 9.1 Share capital issued 0.1 0.3 Net (reduction)/addition to shareholders’ funds (18.1) 9.4 Opening shareholders’ funds 933.4 924.0 Closing shareholders’ funds 915.3 933.4

The accompanying notes are an integral part of these financial statements.

SSL International plc Annual Report 2004 35 Consolidated Statement of Total Recognised Gains and Losses Reconciliations of Movements in Shareholders’ Funds Notes to the Financial Statements

1. Accounting policies given over the fair value of the (d) Intangible assets (f) Liquid resources The principal accounting policies are identifiable assets and liabilities Intangible assets that are acquired Liquid resources are current asset summarised below. During the year acquired, is capitalised as an and which can be separately investments which are disposable an amendment was made to FRS 5 intangible asset and written off identified and valued are capitalised without curtailing or disrupting the ‘Reporting the Substance of to the profit and loss account on and amortised over their estimated business and are either readily Transactions’. The Group has a straight line basis over its useful useful economic lives, usually convertible into known amounts restated its prior year numbers to economic life, up to a maximum between 10–20 years. In of cash, at, or close to their carrying comply with the revised provisions of 20 years. The useful economic determining the useful economic values or traded in an active market. of the accounting standard. The life is determined for each separate life each asset is reviewed separately Liquid resources comprise term restatement has had no impact acquisition giving consideration to and consideration given to the deposits of less than one year (other upon the retained profit or net the period over which the Group period over which the Group than cash), government securities assets of the Group. With this expects to derive economic benefit expects to derive economic benefit and investment in money market exception all accounting policies from the asset. On the subsequent from the asset. managed funds. have been applied consistently disposal or termination of a throughout the current and business acquired since 1 March Acquired trade marks and patents (g) Investments preceding year. 1998, the profit or loss on disposal include the ownership of the Scholl Unlisted investments are stated or termination is calculated after trade name throughout the world, at cost less provisions for any (a) Preparation of financial charging/(crediting) the with the exception of the Americas. impairment in value. statements unamortised amount of any related The Scholl trade name is held at The financial statements have been goodwill/(negative goodwill). cost and is subject to an annual Investment in own shares prepared under the historical cost impairment review to identify any represent shares acquired by the convention and in accordance with Goodwill arising on acquisitions diminution in the recoverable Seton Healthcare Group Qualifying applicable accounting standards. prior to 1 March 1998 was written amount of the acquired rights. Employee Share Ownership Trust off to the profit and loss reserve in The Directors believe that the Scholl (QUEST) and Seton Healthcare (b) Basis of consolidation accordance with the accounting brand does not have a finite Group Employee Share Ownership The Group accounts include the standard then in force. As permitted economic life, because of its proven Plan (ESOP). The shares are purchased accounts of the Company and its by FRS 10, the goodwill previously value over long periods, and its on the open market and are held for subsidiary undertakings made up to written off to reserves has not been position in the market is sustainable employees participating in various 31 March 2004. Unless otherwise reinstated in the balance sheet. for the foreseeable future. share schemes as detailed in note 14. stated, the acquisition method of On disposal or closure of a accounting has been adopted. previously acquired business, the Intangible assets that are acquired (h) Stocks Under this method, the results of attributable amount of goodwill and which cannot be measured Stocks are stated at the lower of subsidiary undertakings acquired or previously written off to reserves is independently of goodwill and cost and net realisable value. In disposed of in the year are included included in determining the profit brands are included and accounted determining the cost of raw in the consolidated profit and loss or loss on disposal. for as part of goodwill. materials, consumables and goods account from the date of acquisition for resale, the FIFO method is used. or up to the date of disposal. When the Group has acquired (e) Tangible fixed assets For work in progress and finished shares in other companies by No fixed assets have been revalued. goods, cost is taken as production An associate is an undertaking in the issue of shares, and the Depreciation is provided to write cost which includes an appropriate which the Group has a long-term requirements of Section 131 of tangible fixed assets down to a proportion of overheads. interest, usually from 20 per cent the Companies Act 1985 have been residual value over their estimated to 50 per cent of the equity voting satisfied, the Group has utilised the useful economic lives at the (i) Research and development rights, and over which it exerts merger relief provisions available following annual rates: Expenditure on research and significant influence. The Group’s and the issue of shares has been development is written off against share of results of its associates is recorded at the nominal value, — Freehold land: No depreciation profits in the period in which it is included in the consolidated profit any premium being credited to is charged on freehold land incurred, except for the and loss account and its interest in the merger reserve. — Freehold and leasehold development expenditure on new their net assets is included in buildings: 2 per cent of cost or or substantially improved products investments in the consolidated Investments in subsidiaries are over the life of the lease if less which is capitalised only when balance sheet. stated at cost less provisions for than 50 years future recoverability is reasonably impairment losses. Where the — Motor vehicles: 25 per cent of assured. Provision is made for any In accordance with Section 230(4) consideration for the acquisition cost or net book value according impairment in value. of the Companies Act 1985 the of a subsidiary undertaking includes to the type of vehicle concerned Company has elected not to present shares in the Company to which — Plant and equipment: 7 per cent (j) Taxation its own profit and loss account. The the provisions of section 131 and to 25 per cent of cost or net The charge for taxation is based on loss for the financial year dealt with section 133 of the Companies Act book value according to the the profit for the period and takes in the financial statements of the 1985 apply, cost represents the circumstances of the assets into account taxation deferred parent company, SSL International nominal value of the shares issued concerned because of timing differences plc, is disclosed in the reconciliation together with the fair value of any — Assets under the course of between the treatment of certain of movement in shareholders funds. additional consideration given. construction: No depreciation items for taxation and accounting In the Group balance sheet the is charged on assets under the purposes. (c) Acquisitions and disposals excess of the fair value of the shares course of construction. Goodwill arising on the acquisition issued as consideration over the Credit is taken for advance of subsidiary undertakings and nominal value (merger relief) is corporation tax written off in businesses, representing any excess credited to a merger reserve. previous years when it is recovered of the fair value of the consideration against corporation tax liabilities.

SSL International plc Annual Report 2004 36 Notes to the Financial Statements 1. Accounting policies continued areducing balance basis, and the For a forward foreign exchange 2. Consolidated profit and In accordance with FRS 19, deferred capital element, which reduces contract to be treated as a hedge loss, exceptional items, tax is provided where a taxation the outstanding obligation for the instrument must be related discontinued operations liability will arise as a result of future instalments. to actual foreign currency assets and prior year restatement transactions or events which have or liabilities or to a probable Exceptional items occurred by the balance sheet date. (m) Pension costs commitment. It must involve the The £40.7 million operating Deferred tax assets are recognised The Group continues to operate same currency or similar currencies exceptional charge for the year to the extent that it is regarded that both defined benefit and defined as the hedged item and must also includes business process review they will be recovered. Provision is contribution pension plans. The UK reduce the risk of foreign currency and associated consultancy costs made at rates expected to be defined benefit plans are closed to exchange movements on the of £14.9 million, manufacturing applicable when the liabilities or new entrants. Group’s operations. Gains and restructuring costs of £2.9 million, assets are likely to crystallise. losses arising on these contracts Group and commercial For defined contribution schemes, are deferred and recognised in restructuring costs of £6.2 million, (k) Foreign currencies costs are charged to the profit and the profit and loss account, or as other charges of £1.0 million and Transactions in foreign currencies loss account as incurred. adjustments to the carrying disposal related charges of £15.7 are recorded using the rate of amount of fixed assets, only when million including impairment of exchange ruling at the date of For defined benefit schemes, the the hedged transaction has itself fixed assets, and costs in relation the transaction unless sale proceeds cost of providing pensions and been reflected in the Group’s to current business disposals. The are the subject of a forward sale for other employee post-retirement financial statements. non-operating exceptional charge a predetermined sum in sterling. benefits is charged to the profit and of £20.1 million relates to the Monetary assets and liabilities loss account on a systematic and For an interest rate swap to be business disposals in the year. denominated in foreign currencies rational basis over the period during treated as a hedge the instrument are translated using the rate of which benefit is derived from must be related to actual assets or The prior year exceptional charge exchange ruling at the balance employees’ service. The difference liabilities or a probable commitment related to restructuring costs sheet date. Gains or losses on between the charges to the profit and must change the nature of the (£8.4 million), business process transactions are included in the and loss account and the actual interest rate by changing the basis review and consultancy costs profit and loss account to the extent contributions paid is included as an of calculation eg from fixed to (£7.2million), manufacturing costs that they are not matched by asset or liability in the balance sheet. floating rate. Interest differentials (£1.5 million) and other charges binding forward trading contracts. under these swaps are recognised (£3.3 million) including costs in Note 32 also contains additional by adjusting net interest payable relation to the disposal of the Profit and loss accounts of foreign disclosures as required by FRS 17 over the periods of the contracts. industrial gloves business. operations are translated into ‘Retirement Benefits’. sterling at the average rate If an instrument ceases to be Discontinued operations applicable to the respective (n) Turnover accounted for as a hedge, for Discontinued operations in the year accounting period. Turnover represents the fair value example because the underlying relate to the disposal of the Group’s of the consideration received being hedged position is eliminated, the industrial glove and wound Assets and liabilities, including value of goods and services instrument is marked to market and management businesses. The losses goodwill, of foreign operations provided during the year net of any resulting profit or loss on disposal have been disclosed are translated using the rate of trade discounts, cash discounts, recognised at that time. as exceptional items. exchange ruling at the balance retrospective and other rebates, sheet date. Gains or losses on value added and sales taxes. (p) Employee share schemes Prior year restatement translations of foreign operations Turnover from the sale of goods The Group operates a number of The prior year profit and loss and on foreign currency is recognised when the control employee share schemes. The cost account and related notes have borrowings, to the extent they of goods passes to customers. to the Company of making awards been restated to adopt the hedge the Group’s investment in Sales returns are recognised as a in the form of shares or rights to provisions of Application Note G such operations, are included as a reduction to turnover as they arise. shares under these schemes is ‘Revenue Recognition’ in FRS 5 movement on reserves. Credit note reserves are provided charged to the profit and loss amended ‘Reporting the Substance at the year end to account for account over the period to which of Transactions’. This has resulted (l) Leases management estimates of customer the employee’s performance relates. in reduction in turnover of £15.0 Costs in respect of operating leases returns. The Group has complied No charge is taken to the profit and million, reduction in cost of sales are charged to the profit and loss with FRS 5 revised which has loss account in respect of awards of £0.2 million, reduction in account on a straight line basis over resulted in a prior year restatement made under SAYE schemes under distribution costs of £11.8 million the term of the lease. of results, reclassifying certain costs the exemptions of UITF 17 and a reduction in administrative as a reduction in turnover. The effect ‘Employee Share Schemes’. expenses of £3.0 million. A finance lease is a lease that of the restatement is given in note 2. transfers substantially all the risks The restatement has had no impact and rewards of ownership of an (o) Derivative financial upon the retained profit or net asset to the lessee. Assets acquired instruments assets of the Group. under hire purchase contracts and The Group uses derivative financial finance leases are capitalised and instruments to reduce exposure included in tangible fixed assets. to foreign exchange risk and The capital element of future lease interest rate movements. The obligations is recorded as a liability. Group does not hold or issue Amounts payable are apportioned derivative financial instruments between the finance element, for speculative purposes. which is charged to the profit and loss account as interest on

SSL International plc Annual Report 2004 37 Notes to the Financial Statements Notes to the Financial Statements continued

3. Segmental analysis (a) Analysis of turnover by principal class of business: 2004 2003 as restated (note 2) £m £m Continuing operations: Consumer 408.2 397.5 Medical 130.1 134.3 538.3 531.8 Discontinued operations: Industrial gloves 17.6 32.5 Wound management 46.5 44.6 602.4 608.9

(b) Analysis of turnover by principal region of origin: Total sales Inter-region Third party 2004 2003 2004 2003 2004 2003 as restated as restated (note 2) (note 2) £m £m £m £m £m £m Continuing operations: United Kingdom and Eire 290.6 376.1 149.3 228.0 141.3 148.1 Continental Europe 258.1 237.1 20.7 18.0 237.4 219.1 Americas 94.4 102.3 0.4 1.7 94.0 100.6 Asia Pacific and Rest of the World 109.6 108.2 44.0 44.2 65.6 64.0 752.7 823.7 214.4 291.9 538.3 531.8 Discontinued operations: United Kingdom and Eire 68.2 91.1 23.7 41.1 44.5 50.0 Continental Europe 15.5 21.9 5.4 8.0 10.1 13.9 Americas 4.9 9.2 – – 4.9 9.2 Asia Pacific and Rest of the World 10.7 13.7 6.1 9.7 4.6 4.0 852.0 959.6 249.6 350.7 602.4 608.9

United Kingdom and Eire figures for 2003 have been restated to include a jurisdiction previously included within Continental Europe.

Continental Europe includes Austria, Belgium, the Czech Republic, France, Germany, Greece, Hungary, Italy, Luxembourg, the Netherlands, Poland, Portugal, Romania, Russia, Scandinavia, Slovakia, Spain, Switzerland, and Turkey.

(c) Analysis of turnover by geographical destination: 2004 2003 as restated (note 2) £m £m Continuing operations: United Kingdom and Eire 123.9 123.1 Continental Europe 243.6 225.0 Americas 93.6 104.3 Asia Pacific and Rest of the World 77.2 79.4 538.3 531.8 Discontinued operations: United Kingdom and Eire 41.1 45.9 Continental Europe 12.3 17.0 Americas 4.9 9.2 Asia Pacific and Rest of the World 5.8 5.0 602.4 608.9

SSL International plc Annual Report 2004 38 Notes to the Financial Statements 3. Segmental analysis continued (d) Profit on ordinary activities before finance charges by class of business 2004 2004 2004 2003 2003 2003 Before Before Total Exceptional exceptional exceptional Exceptional Total items items items items £m £m £m £m £m £m Continuing operations: Consumer 6.7 (19.4) 26.1 27.4 (15.3) 12.1 Medical 18.3 (10.2) 28.5 33.9 (3.7) 30.2 25.0 (29.6) 54.6 61.3 (19.0) 42.3 Discontinued operations: Industrial gloves (14.4) (15.5) 1.1 4.0 (1.1) 2.9 Wound management 3.1 (15.7) 18.8 16.7 (0.3) 16.4 13.7 (60.8) 74.5 82.0 (20.4) 61.6

(e) Profit on ordinary activities before finance charges by region of origin 2004 2004 2004 2003 2003 2003 Before Before Total Exceptional exceptional exceptional Exceptional Total items items items items £m £m £m £m £m £m Continuing operations: United Kingdom and Eire 12.3 (23.5) 35.8 32.0 (12.0) 20.0 Continental Europe 4.4 (3.4) 7.8 13.6 (6.0) 7.6 Americas (3.1) (2.0) (1.1) 0.2 (0.7) (0.5) Asia Pacific and Rest of the World 11.4 (0.7) 12.1 15.5 (0.3) 15.2 25.0 (29.6) 54.6 61.3 (19.0) 42.3 Discontinued operations: United Kingdom and Eire (2.9) (19.3) 16.4 15.9 (1.0) 14.9 Continental Europe (1.7) (3.3) 1.6 2.5 (0.2) 2.3 Americas 0.2 – 0.2 1.6 (0.2) 1.4 Asia Pacific and Rest of the World (6.9) (8.6) 1.7 0.7 – 0.7 13.7 (60.8) 74.5 82.0 (20.4) 61.6

(f) Net operating assets by principal class of business 2004 2003 £m £m Continuing operations: Consumer 256.7 264.6 Medical 104.4 124.3 361.1 388.9 Discontinued operations: Industrial gloves – 23.3 Wound management – 24.1 361.1 436.3

SSL International plc Annual Report 2004 39 Notes to the Financial Statements Notes to the Financial Statements continued

3. Segmental analysis continued (g) Net operating assets by principal region 2004 2003 £m £m Continuing operations: United Kingdom and Eire 183.7 196.9 Continental Europe 86.8 89.8 Americas 30.3 38.7 Asia Pacific and Rest of the World 60.3 63.5 361.1 388.9 Discontinued operations: United Kingdom and Eire – 27.7 Continental Europe – 8.3 Americas – 3.3 Asia Pacific and Rest of the World – 8.1 361.1 436.3

Reconciliation of net operating assets to total net assets 2004 2003 £m £m Net operating assets as above 361.1 436.3 Investments 12.4 9.6 Cash at bank and in hand 127.7 70.0 Taxation recoverable 2.1 2.0 Deferred tax asset 6.0 4.2 Assets held for disposal 0.6 0.7 Borrowings (355.2) (362.0) Taxation on profits – creditors (21.8) (20.2) Deferred consideration (0.6) (0.7) Proposed dividends (8.0) (15.9) Provisions for liabilities and charges (28.5) (31.8) Net assets 95.8 92.2

SSL International plc Annual Report 2004 40 Notes to the Financial Statements 4. Analysis of continuing and discontinued operations 2004 2004 2004 2003 2003 2003 Before Before Total Exceptional exceptional exceptional Exceptional Total items items items items as restated as restated (note 2) (note 2) £m £m £m £m £m £m Cost of sales Continuing operations – Consumer (162.6) (2.9) (159.7) (161.6) (1.5) (163.1) Continuing operations – Medical (56.7) (0.4) (56.3) (57.0) (0.4) (57.4) Continuing operations (219.3) (3.3) (216.0) (218.6) (1.9) (220.5) Discontinued operations (33.4) – (33.4) (44.2) – (44.2) (252.7) (3.3) (249.4) (262.8) (1.9) (264.7) Gross profit Continuing operations – Consumer 245.6 (2.9) 248.5 235.9 (1.5) 234.4 Continuing operations – Medical 73.4 (0.4) 73.8 77.3 (0.4) 76.9 Continuing operations 319.0 (3.3) 322.3 313.2 (1.9) 311.3 Discontinued operations 30.7 – 30.7 32.9 – 32.9 349.7 (3.3) 353.0 346.1 (1.9) 344.2 Distribution costs Continuing operations – Consumer (140.5) – (140.5) (133.9) (5.2) (139.1) Continuing operations – Medical (33.1) – (33.1) (32.8) (0.1) (32.9) Continuing operations (173.6) – (173.6) (166.7) (5.3) (172.0) Discontinued operations (10.3) – (10.3) (11.7) – (11.7) (183.9) – (183.9) (178.4) (5.3) (183.7) Administrative expenses Continuing operations – Consumer (103.1) (16.5) (86.6) (78.7) (9.2) (87.9) Continuing operations – Medical (22.0) (9.8) (12.2) (10.6) (3.2) (13.8) Continuing operations (125.1) (26.3) (98.8) (89.3) (12.4) (101.7) Discontinued operations (11.6) (11.1) (0.5) (0.5) (1.4) (1.9) (136.7) (37.4) (99.3) (89.8) (13.8) (103.6)

Share of profit in associated undertakings relates to continuing operations – Consumer.

SSL International plc Annual Report 2004 41 Notes to the Financial Statements Notes to the Financial Statements continued

5. Group operating profit Group operating profit is stated after charging:

2004 2003 £m £m Depreciation of tangible fixed assets – owned 25.5 17.9 – leased 0.6 0.4 Amortisation of goodwill and intangible assets 6.1 5.9 Research and development 11.4 13.0 Operating lease rentals – plant and machinery 3.5 3.4 – other 6.2 5.5 Auditors’ remuneration – audit – Group 0.9 0.7 – taxation services 0.6 0.5 – other services 3.4 1.3

Depreciation of owned tangible fixed assets includes £8.2 million impairment of fixed assets.

Included within the 2004 auditors’ remuneration – other services were £2.7 million in relation to the business disposals and £0.3 million (2003: £0.7 million) in respect of the investigation which commenced in 2001 (see note 28).

Auditors’ remuneration in respect of the Company was less than £0.1 million.

6. Staff costs Employee costs during the year amounted to:

2004 2003 £m £m Wages and salaries 90.5 91.3 Social security costs 12.9 12.2 Other pension and health insurance costs 12.3 10.3 115.7 113.8

The average monthly number of employees, including Executive Directors, was as follows:

2004 2003 Manufacturing 3,916 4,455 Marketing and selling 1,485 1,444 Administration 1,035 1,029 6,436 6,928

Full details of Directors’ remuneration, shares and options are set out in the Remuneration Report on pages 25 to 30.

SSL International plc Annual Report 2004 42 Notes to the Financial Statements 7. Finance charges (net) Investment income 2004 2003 £m £m Income from short-term investments 1.5 0.9 Share of associated undertakings’ interest income 0.1 – 1.6 0.9

Interest payable and similar charges 2004 2003 £m £m Bank loans and overdrafts 6.9 6.2 Loan notes 15.8 17.1 Finance leases 0.1 0.1 22.8 23.4

Finance charges (net) 2004 2003 £m £m Interest payable and similar charges 22.8 23.4 Less: Investment income (1.5) (0.9) 21.3 22.5 Group 21.3 22.5 Associated undertakings (0.1) – 21.2 22.5

8. Taxation (a) Analysis of charge in the year 2004 2004 2004 2003 2003 2003 Before Before Total Exceptional exceptional exceptional Exceptional Total items items items items £m £m £m £m £m £m Current tax: UK Corporation tax on (losses)/profits for the year 0.9 (7.4) 8.3 10.3 (2.8) 7.5 Overseas taxation including £0.3 million (2003: £nil) in respect of prior periods 5.4 (0.6) 6.0 4.8 (0.8) 4.0 Total current tax 6.3 (8.0) 14.3 15.1 (3.6) 11.5 Deferred tax: Origination and reversal of timing differences (6.8) (6.4) (0.4) 1.9 – 1.9 Share of associated undertakings’ tax 1.0 – 1.0 0.9 – 0.9 Tax on (loss)/profit on ordinary activities 0.5 (14.4) 14.9 17.9 (3.6) 14.3

SSL International plc Annual Report 2004 43 Notes to the Financial Statements Notes to the Financial Statements continued

8. Taxation continued (b) Factors affecting the tax charge for the year 2004 2003 Total Total £m £m (Loss)/profit on ordinary activities before tax (7.5) 39.1 (Loss)/profit on ordinary activities multiplied by the standard rate of corporation tax for the Group of 30% (2.3) 11.7 Effects of: (Income)/expenses not (taxable)/deductible for tax purposes (2.3) 0.4 Overseas losses not tax deductible 4.3 3.3 Differences in tax rates on overseas earnings (0.5) (2.4) Asset write off not tax relievable 4.3 1.2 Goodwill on disposals 1.6 (0.1) Elimination of intra-group profit (1.2) (0.2) Capital allowances less than/(in excess of) depreciation 5.7 (0.6) Other timing differences 1.1 (1.3) Other (3.4) 0.4 Current tax charge for the year including associates tax (note 8a) 7.3 12.4

The standard rate of corporation tax for the Group has been calculated based on the UK rate of corporation tax.

(c) Factors which may affect future tax charges Deferred taxation is not provided in respect of liabilities which might arise on the distribution of unappropriated profits of overseas subsidiary undertakings.

(d) Taxation taken directly to the consolidated statement of recognised gains and losses 2004 2003 £m £m Tax on foreign currency gains and losses on retranslation of intercompany loans treated as being as permanent as equity. (0.7) (2.3)

9. Dividends 2004 2003 £m £m Attributable to equity share capital – Interim paid of 3.9p (2003: 3.9p) per ordinary share 7.4 7.4 – Final proposed of 4.2p (2003: 8.4p) per ordinary share 8.0 15.9 Total dividends 15.4 23.3

Dividends on shares owned by all employee share ownership trusts have been waived.

SSL International plc Annual Report 2004 44 Notes to the Financial Statements 10. (Loss)/earnings per share (Loss)/earnings per share has been calculated by dividing the (loss)/profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year.

An adjusted (loss)/earnings per share figure has been shown in order to achieve comparability year on year. The calculation uses the basic weighted average number of shares together with basic (loss)/earnings adjusted to exclude the impact of amortisation of goodwill and intangibles.

The (loss)/profit attributable to ordinary shareholders is calculated as follows:

2004 2004 2003 2003 Before Before exceptional exceptional items items £m £m £m £m (Loss)/profit for the year: For basic (loss)/earnings per share (8.0) 38.4 41.6 24.8 Amortisation of goodwill and intangibles 6.1 6.1 5.9 5.9 For adjusted (loss)/earnings per share (1.9) 44.5 47.5 30.7

The calculation of diluted (loss)/earnings per share uses basic (loss)/earnings, as defined above, and the basic weighted average number of ordinary shares in issue during the year adjusted as follows:

2004 2004 2003 2003 Before Before exceptional exceptional items items Weighted average number of shares (millions): For basic (loss)/earnings per share 189.2 189.2 189.2 189.2 Dilutive effect of share options – 0.6 0.2 0.2 For diluted (loss)/earnings per share 189.2 189.8 189.4 189.4

11. Goodwill and intangible assets Group Goodwill Scholl brand Other Total £m £m £m £m Cost At 1 April 2003 87.3 60.2 40.1 187.6 Exchange adjustments (2.8) (0.1) (0.5) (3.4) Additions ––0.1 0.1 Disposals (2.1) – (0.4) (2.5) At 31 March 2004 82.4 60.1 39.3 181.8 Amortisation At 1 April 2003 12.4 – 24.7 37.1 Exchange adjustments (0.6) – (0.2) (0.8) Charge for the year 4.3 – 1.8 6.1 Disposals (0.3) – (0.1) (0.4) At 31 March 2004 15.8 – 26.2 42.0 Net book value At 31 March 2004 66.6 60.1 13.1 139.8 At 31 March 2003 74.9 60.2 15.4 150.5

The Scholl brand has been subject to an impairment review in accordance with FRS 11. There has been no impairment of book value during the year.

Other intangible assets represent trademarks, purchased know-how, product licences and capitalised development costs.

SSL International plc Annual Report 2004 45 Notes to the Financial Statements Notes to the Financial Statements continued

12. Tangible fixed assets Group Plant, equipment Land and and motor buildings vehicles Total £m £m £m Cost At 1 April 2003 65.8 220.1 285.9 Exchange adjustments (2.8) (8.8) (11.6) Additions 1.5 11.8 13.3 Disposals (11.5) (42.5) (54.0) At 31 March 2004 53.0 180.6 233.6 Depreciation At 1 April 2003 9.8 117.9 127.7 Exchange adjustments (0.5) (4.9) (5.4) Charge for the year 1.4 24.7 26.1 Disposals (3.6) (27.7) (31.3) At 31 March 2004 7.1 110.0 117.1 Net book value At 31 March 2004 45.9 70.6 116.5 At 31 March 2003 56.0 102.2 158.2

Company Plant, equipment and motor vehicles £m Cost At 1 April 2003 31.5 Additions 2.4 Disposals (0.6) At 31 March 2004 33.3 Depreciation At 1 April 2003 9.5 Charge for the year 11.9 Disposals (0.4) At 31 March 2004 21.0 Net book value At 31 March 2004 12.3 At 31 March 2003 22.0

The net book values of land and buildings are analysed as:

Group 2004 2003 £m £m Freehold property 23.7 30.2 Long leasehold property 6.0 9.3 Short leasehold property 16.2 16.5 45.9 56.0

The net book value of plant, equipment and motor vehicles of the Group and Company includes an amount of £1.3million (2003: £1.6 million) in respect of assets held under finance leases. Depreciation charged during the year in respect of those assets amounted to £0.6 million (2003: £0.4million).

Group assets held under the course of construction comprise £1.5 million (2003: £3.1 million) of which £0.9 million (2003: £2.7 million) is included within plant and machinery. The remainder of assets held under the course of construction is £0.6 million (2003: £0.4 million) in respect of land and buildings.

SSL International plc Annual Report 2004 46 Notes to the Financial Statements 13. Fixed asset investments The Group’s investments are as follows:

Group Share of associated Unlisted undertakings investments Total £m £m £m Cost at 1 April 2003 2.3 0.6 2.9 Exchange adjustments 0.1 – 0.1 Cost at 31 March 2004 2.4 0.6 3.0 Share of retained profit at 1 April 2003 6.6 – 6.6 Exchange adjustments (1.0) – (1.0) Share of retained profit for the year 3.8 – 3.8 Disposals – (0.1) (0.1) Share of retained profit at 31 March 2004 9.4 (0.1) 9.3 Provisions at 1 April 2003 and 31 March 2004 – (0.4) (0.4) Net book value at 31 March 2004 11.8 0.1 11.9 Net book value at 31 March 2003 8.9 0.2 9.1

Details of the principal Group operating undertakings are set out in note 29.

Investments in subsidiary undertakings The Company’s investments are as follows:

Cost of shares in subsidiary undertakings £m Cost and net book value at 1 April 2003 and 31 March 2004 29.5

14. Investments in own shares Group Seton Seton Group QUEST ESOP Total £m £m £m Cost At 1 April 2003 and 31 March 2004 0.2 0.3 0.5

Company Seton Seton Group QUEST ESOP Total £m £m £m Cost At 1 April 2003 and 31 March 2004 0.2 0.3 0.5

The Seton Healthcare Group Qualifying Employee Share Ownership Trust (QUEST) purchases the Company’s shares in the open market. These are held for employees participating in the Company’s 1996 Executive Share Option Scheme and Company Share Option Scheme 2000. No shares were purchased during the year ended 31 March 2004.The scheme held 42,722 shares as at 31 March 2004.

The Seton Healthcare Group Employee Share Ownership Plan (ESOP) purchases the Company’s shares in the open market. These are held for employees participating in the Company’s 1996 Executive Share Option Scheme and Company Share Option Scheme 2000. No shares were purchased during the year ended 31 March 2004. The scheme held 59,055 shares as at 31 March 2004.

In accordance with the requirements of UITF 13 ‘Accounting for ESOP Trusts’, the Group has recognised the assets of each of the trusts as fixed assets of the Group. The shares in the ESOP and the QUEST are valued at 535p, the original cost.

In addition to the shares recognised by the Group in accordance with UITF 13, shares are also held by the SSL International Employee Benefit Trust (EBT). These shares are held by the EBT for those employees participating in the Company’s long-term incentive plan and have been purchased by the EBT in accordance with the conditions as set out in the Remuneration Report on pages 25 to 30. These shares have not been recognised as investments in own shares as the ownership of these shares vests with the Directors and senior management to whom they have been awarded. No shares have been subscribed for during the current year.

The share price as at 31 March 2004 was 302.5p.

SSL International plc Annual Report 2004 47 Notes to the Financial Statements Notes to the Financial Statements continued

15. Stocks Group Company 2004 2003 2004 2003 £m £m £m £m Raw materials and consumables 8.1 10.6 – – Work in progress 6.6 6.6 – – Finished goods and goods for resale 68.4 89.7 – – 83.1 106.9 – –

16(a) Debtors: amounts falling due within one year Group Company 2004 2003 2004 2003 £m £m £m £m Trade debtors 133.6 167.1 – – Amounts owed by subsidiary undertakings – – 1,652.5 1,481.2 Taxation recoverable 2.1 2.0 – – Other debtors 13.3 13.6 – – Prepayments and accrued income 6.4 4.5 1.2 1.0 Assets held for disposal 0.6 0.7 – – 156.0 187.9 1,653.7 1,482.2

Included within trade debtors are debts totalling £9.8 million (2003: £16.4 million) which are subject to an invoice discounting agreement. Amounts received from the discounter in respect of these debts are included within other creditors and total £7.8 million (2003: £13.1 million) at the year end.

16(b) Debtors: amounts falling due after more than one year Group Company 2004 2003 2004 2003 £m £m £m £m Other debtors 5.2 0.4 – – Deferred tax asset 6.0 4.2 2.1 – Prepayments and accrued income 0.5 – – – 11.7 4.6 2.1 –

17. Creditors: amounts falling due within one year Group Company 2004 2003 2004 2003 £m £m £m £m Obligations under finance leases 0.5 0.5 0.5 0.4 Bank loans and overdrafts 129.2 125.6 115.0 97.3 Loan notes 7.9 4.1 7.9 4.1 Trade creditors 54.0 69.0 – – Amounts owed to subsidiary undertakings – – 503.7 261.5 Amounts owed to associated undertakings 2.1 2.4 – – Taxation on profits – UK 19.3 18.4 2.1 1.1 – Overseas 2.5 1.8 – – Other taxation and social security 6.4 6.9 – – Other creditors and accruals 70.7 82.7 14.3 23.8 Proposed dividends 8.0 15.9 8.0 15.9 Deferred consideration 0.6 – – – 301.2 327.3 651.5 404.1

SSL International plc Annual Report 2004 48 Notes to the Financial Statements 18. Creditors: amounts falling due after more than one year Group Company 2004 2003 2004 2003 £m £m £m £m Obligations under finance leases 0.1 0.5 – 0.4 Bank loans and overdrafts 4.0 8.3 – – Loan notes 213.5 223.0 213.5 223.0 Other creditors and accruals 4.1 3.9 – – Deferred consideration – 0.7 – – 221.7 236.4 213.5 223.4

Bank loans, overdrafts and loan notes are repayable as follows:

Group Company 2004 2003 2004 2003 £m £m £m £m Within one year, or on demand 137.1 129.7 122.9 101.4 One to two years 10.2 12.0 7.9 8.2 Two to five years 25.6 29.1 23.9 24.6 After five years 181.7 190.2 181.7 190.2 354.6 361.0 336.4 324.4

Loan notes repayable by instalments amount to £47.7 million (2003: £52.5 million), of which £7.9 million falls due after more than five years (2003: £16.2 million).

The loan notes comprise US$ 7.67 per cent Guaranteed Loan Notes 2009 totalling $76.6 million which were issued in November 1999 and are repayable in 12 further equal instalments; US$ 7.84 per cent Guaranteed Loan Notes 2009 totalling $262.0 million which were issued in November 1999 and will be repaid in November 2009 and Sterling 7.52 per cent Guaranteed Loan Notes 2014 totalling £15.0 million which were issued in November 1999 and will be repaid in November 2014.

After the year end the Group repaid £33.1 million of the loan notes disclosed above. The repayment profile above does not reflect this repayment.

Obligations under finance leases are repayable as follows.

Group Company 2004 2003 2004 2003 £m £m £m £m Within one year, or on demand 0.5 0.5 0.5 0.4 One to two years 0.1 0.4 – 0.3 Two to five years – 0.1 – 0.1 0.6 1.0 0.5 0.8

Total borrowings including finance leases are repayable as follows:

Group Company 2004 2003 2004 2003 £m £m £m £m Within one year, or on demand 137.6 130.2 123.4 101.8 One to two years 10.3 12.4 7.9 8.5 Two to five years 25.6 29.2 23.9 24.7 After five years 181.7 190.2 181.7 190.2 355.2 362.0 336.9 325.2

All borrowings with the exception of finance leases are unsecured.

SSL International plc Annual Report 2004 49 Notes to the Financial Statements Notes to the Financial Statements continued

19. Provisions for liabilities and charges Group Overseas Logistics and pensions Group and business and similar Deferred Manufacturing commercial processes obligations taxation restructuring restructuring Disposals Other review Total £m £m £m £m £m £m £m £m At 1 April 2003 3.3 15.5 2.4 3.4 – 5.3 1.9 31.8 Included within debtors – (4.2) – – – – – (4.2) 3.3 11.3 2.4 3.4 – 5.3 1.9 27.6 Charged/(credited) to the profit and loss account 0.3 (6.8) 3.0 6.5 35.8 1.0 14.9 54.7 Released unused – – (0.1) (0.3) – – – (0.4) Utilised in the year (0.1) – (4.3) (5.3) (27.1) (4.6) (16.8) (58.2) Transferred as part of disposals – (0.7) – – – – – (0.7) Exchange adjustments – (0.1) (0.1) – (0.1) (0.2) – (0.5) 3.5 3.7 0.9 4.3 8.6 1.5 – 22.5 Included within debtors – 6.0 – – – – – 6.0 At 31 March 2004 3.5 9.7 0.9 4.3 8.6 1.5 – 28.5

Company Logistics and Group and business Deferred commercial processes taxation restructuring Other review Total £m £m £m £m £m At 1 April 2003 1.0 – 0.1 1.9 3.0 (Credited)/charged to the profit and loss account (3.1) 4.5 12.8 12.8 27.0 Utilised in the year – (2.7) (12.9) (14.7) (30.3) (2.1) 1.8 – – (0.3) Included within debtors 2.1 – – – 2.1 At 31 March 2004 –1.8 – – 1.8

Manufacturing restructuring Costs charged this year from the manufacturing review relate to the closure of the Millers Bridge factory in Bootle and transfer of production to Peterlee. The closing provisions relate to outstanding costs from this announcement and some other remaining site exit costs from earlier years.

Group and commercial restructuring The Group has continued during the year with its rationalisation and restructuring of Group and commercial operations. The closing provisions relate to staff costs associated with this restructuring.

Disposals Costs charged this year relate to the loss on disposals of the wound management and industrial gloves businesses, impairment of fixed assets and costs incurred in relation to future business disposals.

Other Other provisions relate to a number of pre-merger environmental provisions, surplus property provisions, and other obligations following previous acquisitions. Costs charged in the year relate to the SFO investigation and OFT investigation.

Logistics and related business processes review Costs incurred during the year relate to costs arising from the European supply chain and related business processes review which the Group commenced during the prior year. This review has now been completed and no further costs will be incurred.

Deferred taxation As at 31 March 2004 the deferred taxation provision included in debtors was £6.0 million (2003: £4.2 million).

The deferred taxation balance relates to:

Group Company 2004 2003 2004 2003 £m £m £m £m Capital allowances in excess of related depreciation 8.0 13.6 (1.5) 1.0 Other timing differences (4.3) (2.3) (0.6) – Provision for deferred tax 3.7 11.3 (2.1) 1.0

SSL International plc Annual Report 2004 50 Notes to the Financial Statements 20. Called up share capital Group and Company Group and Company 2004 2004 2003 2003 Shares Shares number £m number £m Authorised Ordinary shares of 10p each 250,000,000 25.0 250,000,000 25.0 Issued Ordinary shares of 10p each 189,359,917 18.9 189,312,954 18.9

During the year the Company allotted 46,963 shares with a nominal value of £4,696 under share option schemes for an aggregate cash consideration of £99,989.

Options outstanding at 31 March 2004, totalled 5,768,416 (2003: 9,020,366) ordinary shares granted under share option schemes at prices between 208p and 940p per share, exercisable between 1 April 2004 and 18 July 2012.

Directors’ interests in share options are disclosed in the Remuneration Report on pages 25 to 30.

21. Share premium account Group and Company £m At 1 April 2003 40.3 Share options exercised 0.1 At 31 March 2004 40.4

22. Reserves Group Profit and loss Merger account reserve Total £m £m £m At 1 April 2003 (103.9) 136.8 32.9 Currency translation differences on foreign currency net investments (7.7) – (7.7) Taxation on gains and losses taken directly to reserves 0.7 – 0.7 Goodwill on disposals previously written off to reserves 33.9 – 33.9 Retained profit for the year (23.4) – (23.4) At 31 March 2004 (100.4) 136.8 36.4

Cumulative total of goodwill written off against Group profit and loss reserves in respect of acquisitions prior to 1 March 1998 when FRS 10: Goodwill and Intangible Assets was adopted amounts to £118.1 million (2003: £152.0 million). In accordance with FRS 10, goodwill on acquisitions post 1 March 1998 has been capitalised and amortised as outlined in note 1(c).

Included within currency translation differences is £1.6 million (2003: £2.7 million loss) in respect of foreign exchange gains for external debt hedged against the Group’s overseas assets.

Company Non Profit and loss distributable account reserves Total £m £m £m At 1 April 2003 90.6 783.6 874.2 Retained loss for the year (18.2) – (18.2) At 31 March 2004 72.4 783.6 856.0

Of the reserves of the Company £72.4 million (2003: £90.6 million) is regarded as distributable.

SSL International plc Annual Report 2004 51 Notes to the Financial Statements Notes to the Financial Statements continued

23(a) Sale of fixed assets During the year ended 31 March 2003 an exceptional profit of £1.2 million was made relating to the the sale of a Holland warehouse.

Proceeds of £1.8 million compared with a net book value of £0.6 million.

23(b) Sale of business and brands In the financial year ended 31 March 2004, the Group disposed of the industrial glove and wound management businesses (disclosed as discontinued operations).

During the year ended 31 March 2003 the Group disposed of certain OTC brands.

Net assets disposed of and the related sales proceeds were as follows:

Discontinued Continuing operations operations 2004 2004 2004 2003 £m £m £m £m Wound Industrial management gloves Total OTC brands £m £m £m £m Intangible fixed assets 2.2 – 2.2 – Tangible fixed assets 10.9 8.4 19.3 – Current assets 10.6 20.3 30.9 – Creditors – (3.7) (3.7) – Provisions for liabilities and charges – (0.7) (0.7) – Net assets 23.7 24.3 48.0 – Related goodwill 28.7 5.2 33.9 0.4 Working capital adjustment 1.7 0.1 1.8 – Disposal costs 6.1 6.2 12.3 0.1 60.2 35.8 96.0 0.5 Loss on sale (5.0) (15.1) (20.1) (0.4) Sale proceeds 55.2 20.7 75.9 0.1 Satisfied by: Cash 50.5 15.7 66.2 0.1 Loan note due within one year 4.7 – 4.7 – Loan note due after more than five years – 5.0 5.0 – Net cash inflows in respect of the sales comprised: Cash consideration 50.5 15.7 66.2 0.1 Disposal costs (2.0) (2.0) (4.0) – Cash and overdrafts transferred – (0.9) (0.9) – Working capital adjustment – (0.1) (0.1) – 48.5 12.7 61.2 0.1

24. Minority interests £m At 1 April 2003 0.1 Share of profit after tax of SSL-TTK Limited – At 31 March 2004 0.1

The minority interests comprise equity shares in SSL-TTK Limited. The minority share of profit after tax for the year was less than £0.1 million (2003: less than £0.1 million).

SSL International plc Annual Report 2004 52 Notes to the Financial Statements 25. Notes to the consolidated cash flow statement (a) Reconciliation of operating profit to net cash inflow from operating activities Continuing Discontinued Total 2004 2004 2004 2003 £m £m £m £m Group operating profit, pre exceptional items 49.9 19.9 69.8 77.9 Depreciation and amortisation 23.0 1.0 24.0 24.2 Profit on sale of tangible fixed assets 0.6 – 0.6 0.1 Decrease/(increase) in stocks 9.7 (1.4) 8.3 2.7 Decrease in debtors 19.3 1.3 20.6 2.7 (Decrease) in creditors (25.6) (1.1) (26.7) (2.9) Increase /(decrease) in provisions 0.3 – 0.3 (0.5) Net cash inflow from operating activities pre-exceptional items 77.2 19.7 96.9 104.2 Cash effect of exceptional items (29.4) (2.2) (31.6) (16.4) Net cash inflow from operating activities after exceptional items 47.8 17.5 65.3 87.8

In 2004 exceptional cash charges of £31.6 million exclude the net cash proceeds on disposal of the wound management and industrial gloves businesses.The net proceeds of £61.2 million are disclosed separately on the face of the cash flow statement.

In 2003 exceptional cash charges of £16.4 million exclude the effect of proceeds from sale of fixed assets (£5.6 million) and OTC brands (£0.1 million) which were treated as exceptional items within the consolidated profit and loss account. Proceeds of £5.6 million from sale of tangible fixed assets are included within the £6.3 million disclosed within the consolidated cash flow statement. Proceeds from sale of OTC brands of £0.1 million are disclosed separately within the consolidated cash flow statement. The net exceptional cash outflow after taking into account disposal proceeds is £10.7 million.

(b) Sale of product rights, businesses and brands 2004 2003 £m £m Net assets sold Intangible fixed assets 2.2 – Tangible fixed assets 19.3 – Stocks 15.0 – Debtors 15.0 – Cash 0.9 Creditors (including loans £0.1 million) (3.7) – Provisions (0.7) – 48.0 – Profit/(loss) on disposal (20.1) – Working capital adjustment 1.8 Disposal costs 12.3 Goodwill written back on disposal 33.9 – Sale proceeds 75.9 – Satisfied by: Cash consideration 66.2 – Loan notes 9.7 –

Net cash inflows in respect of the disposals were £61.2 million (note 23(b)). £1.7 million of the working capital adjustment is included in creditors at the year end. Disposal costs of £12.3 million include accruals of £1.7 million and provisions of £6.6 million which are not included in the net cash inflows.

In 2003, the sale of certain OTC brands was disclosed within net cash flows from capital expenditure and financial investment.

SSL International plc Annual Report 2004 53 Notes to the Financial Statements Notes to the Financial Statements continued

25. Notes to the consolidated cash flow statement continued (c) Analysis of net debt Other At 1 April non-cash Disposal of Exchange At 31 March 2003 Cash flow changes businesses movement 2004 £m £m £m £m £m £m Cash in hand and at bank 57.6 57.2 – – (1.1) 113.7 Overdrafts (16.4) (5.8) –– 1.0 (21.2) 41.2 51.4 – – (0.1) 92.5 Debt due within one year (113.3) 7.7 (11.4) – 1.1 (115.9) Debt due after one year (231.3) 0.2 11.4 0.1 2.1 (217.5) Finance leases (1.0) 0.7 (0.3) – – (0.6) Liquid resources: cash deposits 12.4 2.0 – – (0.4) 14.0 Net debt (292.0) 62.0 (0.3) 0.1 2.7 (227.5)

Cash, for the purpose of the cash flow statement, comprises cash in hand and at banks repayable on demand, less overdrafts payable on demand.

(d) Reconciliation of net cash inflow to movement in net debt 2004 2003 £m £m Increase in cash in the year 51.4 27.2 Cash outflow/(inflow) from decrease/(increase) in debt 7.9 (9.9) Cash outflow from payment of finance leases 0.7 0.6 Cash outflow/(inflow) from changes in liquid resources 2.0 (1.7) Changes in net debt resulting from cash flows 62.0 16.2 New finance leases (0.3) (0.5) Debt transferred as part of disposals 0.1 – Exchange differences 2.7 0.2 Movement in net debt in the year 64.5 15.9 Net debt at 1 April 2003 (292.0) (307.9) Net debt at 31 March 2004 (227.5) (292.0)

26. Capital commitments Group Company 2004 2003 2004 2003 £m £m £m £m Contracted for but not provided 0.4 1.9 – 0.5

27. Leasing commitments Commitments in respect of non-cancellable operating lease rentals due within one year of the balance sheet date, analysed by the expiry date of the commitment, are:

Group Plant, equipment Land and buildings and motor vehicles 2004 2003 2004 2003 £m £m £m £m Within one year 1.5 0.6 0.9 1.0 Two to five years 2.1 2.1 2.3 2.5 After five years 3.3 2.9 0.3 0.3 6.9 5.6 3.5 3.8

SSL International plc Annual Report 2004 54 Notes to the Financial Statements 28. Contingent liabilities A provision exists as at 31 March The Group has been assisting the Provision has been made in the 2004 in respect of the amount competition authority in the UK Group financial statements for the of the potential self-insured with investigations into aspects environmental clean up costs in the element of existing and continuing of the Group’s condom pricing USA based on the Directors’ best claims. The Directors believe the strategy. An investigation initiated estimates of such costs according provision is adequate. However, in May 2002 by the Office of Fair to information currently available. depending on the outcome of the Trading into condom supply to the It is not possible to estimate with uncertainties described above, the NHS has been successfully resolved certainty the extent of any further Group may incur costs in excess of and the OFT has confirmed that liability that may arise. the amount provided. it will not be taking the matter further. The OFT continues to Litigation The Group is a defendant in an enquire into the Group’s UK The Group, along with most other action brought by Allegiance pricing strategy. suppliers of medical gloves, is Healthcare Corporation in the USA involved in a number of lawsuits in alleging false advertising and unfair The Directors believe that the the USA alleging the development business practices in connection Group’s pricing policies comply of sensitivities to natural rubber with the sale of Regent surgical with the appropriate legislation. latex. Responsibility for the gloves. The Group has successfully In addition, while the risk of an consequences (if any) of such defended its position at trial. adverse finding cannot be totally litigation, including legal liability Allegiance has appealed the excluded, this is unlikely to lead to and costs, will remain with the decision which was vigorously a material impact on the Group. Group for products manufactured opposed by the Group. The and/or sold prior to legal Appeal Court gave its decision in completion of the proposed the Group’s favour in April 2004. divestment of the surgical gloves The legal defence cost funding business. The Directors have arrangement agreed with the confidence in the high-quality Group’s insurers remains in place. gloves produced by the Group and believe it has defences available. In March 2003 the Group’s US In conjunction with its insurers, SSL subsidiary was named along with concluded a preliminary settlement other leading US condom suppliers of the majority of cases involving in a lawsuit in the United States Regent Biogel surgical gloves. This which alleged loss suffered by a settlement is not expected to have class of persons arising out of the a negative impact on the profit and purchase of spermicidally-treated loss account. condoms. The claim was one of loss of bargain, not personal injury. The The Group believes that a case was struck out by the Court on substantial amount of any defence 18 June 2003. costs and potential liability will be covered by insurance. Some insurers The Group is also a defendant in a have, however, reserved their rights number of other lawsuits incidental (ie neither admitted nor denied to its operations which, in the coverage), and the Group is aggregate, are not expected to have currently asserting its allocation a material adverse financial affect of lawsuits to policy years in order on the Group. that insurers can remove such reservation. Plaintiffs have also In June 2001 it was reported that alleged successor liability in sales and pre-exceptional profits respect of claims against Aladan for the 25 months ending 31 March Corporation for product 2000 had been overstated by manufactured prior to the £22 million and £19 million acquisition of a substantial respectively. As a consequence, portion of its assets by the Group areport was sent to the Serious in May 1996. Fraud Office and three former Executive Directors and two former employees have been charged with fraud-related offences.

SSL International plc Annual Report 2004 55 Notes to the Financial Statements Notes to the Financial Statements continued

29. Principal Group operating undertakings Country of registration, Country of registration, Trading incorporation and operation Trading incorporation and operation SSL Australia Pty. Limited Australia Seton Scholl Overseas Investments Limited England SSL Healthcare Oesterreich GmbH Austria Seton Scholl UK Limited England NV SSL Healthcare Belgium S.A. Belgium Seton Prebbles Limited* England SSL do Brasil Ltda Brazil Seton Investments Limited* England SSL Canada Inc Canada Scholl (Investments) Limited England SSL Czeska Republika s.r.o. Czech Republic Scholl (UK) Limited England SSL Danmark A/S Denmark SSL Healthcare GmbH Germany SSL Products Limited England Seton Scholl Ireland Holdings Limited Ireland London International Group Limited England Seton Scholl International Ireland Ireland LRC Products Limited England New Bridge Holdings BV Netherlands Scholl Limited England Scholl European Holdings BV Netherlands Scholl Consumer Products Limited England SSL Holdings, Inc USA Tubifoam Limited England LRC North America, Inc USA SSL Healthcare France SA France SSL Healthcare Deutschland GmbH & Co. KG Germany The Group holds 100 per cent of the equity capital of the above companies London International GmbH Germany with the exception of SSL-TTK Limited in which the Group holds 51 per cent and TTK-LIG holds the remaining 49 per cent. Seton Scholl Hellas SA Greece Simco Limited Guernsey Country of registration, SSL Healthcare (Hong Kong) Ltd Hong Kong Associated undertakings incorporation and operation SSL Magyarorszag Kft Hungary New Bridge Hong Kong Limited Hong Kong SSL-TTK Limited India Quingdao London International SSL Healthcare Ireland Limited Ireland Latex Company Limited People’s Republic of China Seton Scholl Italia SpA Italy TTK-LIG Limited India Hatu SpA Italy The Group holds 50 per cent of the equity capital of both New Bridge Hong SSL Healthcare Italia SpA Italy Kong Limited and Quingdao London International Latex Company Limited SSL Healthcare Japan Limited Japan and 49.87 per cent of TTK-LIG Limited. SSL Healthcare (Malaysia) Sdn. Bhd. Malaysia LRC Hospital Products Sdn. Bhd. Malaysia * Shares are held directly by SSL International plc. Scholl Mexicana S.A. de C.V. Mexico Scholl Mexico S.A. de C.V. Mexico SSL Healthcare Nederland BV Netherlands SSL New Zealand Limited New Zealand SSL Healthcare (Norge) A/S Norway London International Norway A/S Norway SSL Healthcare (Polska) Sp zoo Poland LRC Laboratorios, LDA Portugal SSL Romania SRL Romania SSL Healthcare Singapore Pte Limited Singapore SSL Slovensko spol sro Slovakia SSL Healthcare Manufacturing, S.A. Spain SSL Healthcare Brands S.A. Spain SSL Sverige AB Sweden SSL Healthcare Suisse SA Switzerland SSL Manufacturing (Thailand) Limited Thailand SSL Healthcare Thailand Limited Thailand LRC Products Ticaret ve Pazarlama Limited Sirketi Turkey SSL Americas, Inc USA SSL U.S. Manufacturing, LLC USA Silipos, Inc USA LIG China BV People’s Republic of China

SSL International plc Annual Report 2004 56 Notes to the Financial Statements 30. Related party transactions Associated companies In accordance with FRS 8 related party transactions are reported only with parties outside the consolidated Group.

The Group holds a 49.87 per cent interest (2003: 49.87 per cent) in the 1,414,300 (2003: 1,414,300) Rs 10/- issued, subscribed, called and paid up equity shares of TTK-LIG Limited. Specific transactions with TTK-LIG Limited which are considered material are as follows:

– technology transfer agreements; – marketing and managerial assistance for development of new and existing markets for TTK-LIG Limited; – during the year ended 31 March 2004, the Group purchased £12.7 million (2003: £12.9 million) of finished goods for resale from TTK-LIG Limited; and – during the year ended 31 March 2004, the Group sold £0.6 million (2003: nil) of unfinished products to TTK-LIG Limited.

31. Derivatives and other financial instruments The Group’s policies with regard to derivatives and financial instruments are set out in the Financial Review on pages 16 to 19. The Group does not trade in financial instruments. Short-term debtors and creditors have been omitted from all disclosures other than the currency exposures.

(a) Interest rate risk profile of financial assets and liabilities The Group held the following financial assets:

31 March 31 March 2004 2003 £m £m Cash deposits and liquid resources Sterling 95.4 35.7 US Dollar 3.1 1.3 Euro 15.8 21.6 Other 13.4 11.4 Total 127.7 70.0

The cash deposits and liquid resources comprise deposits placed at call and terms not exceeding three months.

The interest rate profile of the financial liabilities of the Group at the year end was:

Fixed rate financial liabilities Weighted Floating rate Fixed rate Weighted average period financial financial average for which Total liabilities liabilities interest rate rate is fixed £m £m £m % Years At 31 March 2004 Sterling 276.7 152.1 124.6 7.7 6.3 US Dollar 2.8 2.8 – – – Euro 58.3 58.3 – – – Other 17.4 17.4 – – – Total 355.2 230.6 124.6 7.7 6.3 At 31 March 2003 Sterling 265.5 141.4 124.1 7.7 7.3 US Dollar 2.8 2.8 – – – Euro 73.5 73.5 – – – Other 20.2 20.2 – – – Total 362.0 237.9 124.1 7.7 7.3

Elements of fixed rate debt maturing in less than one year are treated as floating rate debt for interest rate risk purposes. The above table takes account of the effect of interest rate swaps on the currency and interest rate nature of the Group’s exposure. The interest rates on floating rate financial liabilities in material currencies are based upon LIBOR.

SSL International plc Annual Report 2004 57 Notes to the Financial Statements Notes to the Financial Statements continued

31. Derivatives and other financial instruments continued (b) Currency exposures

The table below shows the Group’s transactional currency exposures that give rise to the net currency gains and losses recognised in the profit and loss account. Such exposures comprise the monetary assets and liabilities of the Group that are not denominated in the functional currency of the relevant local operating company involved, other than the non-sterling borrowings treated as hedges of net assets in overseas operations.

Net foreign currency monetary assets/(liabilities) in £m Sterling US Dollar Euro Other Total At 31 March 2004 Functional currency of Group operations – Sterling – 1.5 1.9 0.2 3.6 – Other 0.3 1.0 0.2 0.5 2.0 Total 0.3 2.5 2.1 0.7 5.6 At 31 March 2003 Functional currency of Group operations – Sterling ––0.3 0.3 0.6 – Other 0.2 0.6 – 1.0 1.8 Total 0.2 0.6 0.3 1.3 2.4

The amounts shown in the table above take into account the effect of any forward contracts and other derivatives entered into to manage these currency exposures.

(c) Maturity of financial liabilities and borrowing facilities The maturity profile of the Group’s financial liabilities, other than short-term creditors such as trade creditors and accruals was as follows:

2004 2003 £m £m In one year or less, or on demand 137.6 130.2 In more than one year but less than two years 10.3 12.4 In more than two years but less than five years 25.6 29.2 In more than five years 181.7 190.2 Total 355.2 362.0

The Group has various borrowing facilities available to it. The undrawn committed facilities available in respect of which all conditions precedent had been met at that date, were as follows:

2004 2003 £m £m In more than one year but less than two years 1.9 – In more than two years – 34.2 Total 1.9 34.2

SSL International plc Annual Report 2004 58 Notes to the Financial Statements 31. Derivatives and other financial instruments continued (d) Fair values of financial assets and financial liabilities

Set out below is a comparison by category of book values and fair values of the Group’s financial assets/(liabilities). The fair values of financial assets/(liabilities) are the discounted amount of future cash flows based on the Group’s current incremental rate of borrowing for a similar financial asset/(liability).

2004 2003 Book value Fair value Book value Fair value £m £m £m £m Primary financial liabilities held or issued to finance the Group’s operations: Short-term financial liabilities and current portion of long-term borrowings (137.6) (137.6) (130.2) (130.2) Long-term borrowings (217.6) (238.9) (231.8) (259.0) Cash deposits and liquid resources 127.7 127.8 70.0 70.0 Derivative financial instruments held or issued to hedge translational currency exposure: Cross-currency interest rate swaps – 17.0 – 20.9 Forward foreign currency contracts – (0.2) –0.3 Derivative financial instruments held or issued to hedge transactional currency exposure: Forward foreign currency contracts – 0.9 –(1.8)

(e) Hedges Gains and losses on instruments for hedging are not recognised until the exposure that is being hedged is itself recognised. Unrecognised gains and losses on instruments used for hedging, and the movements therein, are as follows:

2004 2003 Total net gains/ Total net gains/ Gains Losses (losses) Gains Losses (losses) £m £m £m £m £m £m Unrecognised gains and (losses) on hedges at 1 April 2003 (2002) 21.2 (1.8) 19.4 – (6.3) (6.3) (Gains) and losses arising in previous periods that were recognised in 2004 (2003) (4.2) 1.8 (2.4) –1.0 1.0 Gains and (losses) arising before 1 April 2003 (2002) that were not recognised in 2004 (2003) 17.0 – 17.0 – (5.3) (5.3) Gains and (losses) arising in 2004 (2003) that were not recognised in 2004 (2003) 0.9 (0.2) 0.7 21.2 3.5 24.7 Unrecognised gains and (losses) on hedges at 31 March 2004 (2003) 17.9 (0.2) 17.7 21.2 (1.8) 19.4 Of which: Gains and (losses) expected to be recognised in 2005 (2004) 4.7 (0.2) 4.5 4.2 (1.8) 2.4 Gains and (losses) expected to be recognised in 2006 (2005) or later 13.2 – 13.2 17.0 – 17.0

SSL International plc Annual Report 2004 59 Notes to the Financial Statements Notes to the Financial Statements continued

32. Pension costs The Group continues to operate both defined benefit and defined contribution pension plans both in the UK and overseas. All UK defined benefit schemes are closed to new entrants.

SSAP24 Disclosures UK Pensions (a) Defined contribution schemes Since 1995, the Group has operated a contracted-in defined contribution scheme which is open to UK employees. It also operates defined contribution executive pension plans for senior executives. Employer contributions are charged to the profit and loss account in the period in which they are incurred.

The total pension cost for the Group in respect of UK defined contribution schemes was £2.1 million (2003: £1.7 million).

(b) Defined benefit schemes The Group continues to operate a number of defined benefit schemes following the mergers of Seton Healthcare Group plc and Scholl PLC to form Seton Scholl in 1998, and the subsequent merger of Seton Scholl and LIG in 1999. All UK schemes have been closed to new entrants. The finances of all schemes are assessed regularly by independent actuaries and all assets of the schemes are held in separate trustee administered funds. The schemes have provided benefits for employees as outlined below:

(i) Seton Prior to 1995, the Group operated a defined benefit scheme for employees. Accrual of further service-related benefits under this scheme ceased in August 1995, but existing benefits at that date are being maintained. The latest valuation of the scheme was at 28 February 2003. The assumptions which have the most significant effect on the results of the valuation are as follows:

– Return on investments per annum 7% – Salary increases per annum 3.9% – Pension increases per annum 2.4%

The actuarial value of the scheme’s assets was £11.8 million. The valuation showed that the scheme’s assets were sufficient to cover 80 per cent of the benefits that had accrued to members after allowing for expected future increases in earnings. The total credit to the Group in respect of this scheme was £0.4 million (2003: £nil), represented by a pension charge of £0.2 million (2003: £nil) and an adjustment to reflect the required prepayment. An amount of £0.4 million (2003: £nil) is included in prepayments at year end.

(ii) Scholl Accrual of further service related benefits under this defined benefit scheme ceased in August 2000, but benefits accrued to 31 August 2000 continue to be provided from the scheme. The most recent valuation by independent actuaries was at 5 April 2003. The assumptions which have the most significant effect on the results of the valuation are as follows:

– Return on investments per annum 5.30% – Salary increases per annum 4.5% – Pension increases – Pensions accrued to 6 April 1997 – Closed section 3% – Open section 0% – Pensions accrued from 6 April 1997 – Closed section 3.25% – Open section 2.5%

The market value of the scheme’s assets was £18.2 million. The valuation showed that the scheme’s assets were sufficient to cover 83 per cent of the benefits that had accrued to members after allowing for expected future increases in earnings. The deficit will be reduced by increased employer pension contributions in the future. The pension charge to the Group in respect of this scheme was £0.4 million (2003: credit of £0.1 million). Anamount of £0.7 million (2003: £1.1 million) is included in prepayments.

SSL International plc Annual Report 2004 60 Notes to the Financial Statements 32. Pension costs continued (iii) LIG Accrual of further service-related benefits under this defined benefit scheme ceased in January 2001, but benefits accrued to 31 January 2001 continue to be provided from the scheme. The latest actuarial valuation of the scheme was at 31 March 2003. The actuarial assumptions that have the most significant effect on the results of the valuation are as follows:

– Return on investments per annum (pre-retirement) 7.0% – Return on investments per annum (post-retirement) 5.0% – Salary increases per annum 4.0% – Pension increases – Accrued before 6 April 1997 1.75% – Accrued after 6 April 1997 2.5%

The market value of the assets was £79.8 million, which was sufficient to cover 56 per cent of the benefits that had accrued to members after allowing for expected future increased in earnings. This represents a deficit of £62.4 million when compared with the scheme’s liabilities. The deficit is being charged to the profit and loss account over the assumed average service life of the members. The pension cost to the Group in respect of this scheme was £5.2 million (2003: £3.6 million) which includes a variation charge of £5.2 million (2003:£3.5 million), all of which has been charged against operating profit. An accrual of £1.6 million (2003: £0.3 million) is included in the balance sheet at 31 March 2004.

Overseas pensions and similar obligations The Group has a number of pension schemes in different countries both defined benefit and defined contribution. Defined benefit schemes are set up under separate trust funds and liabilities are generally assessed annually in accordance with the advice of independent actuaries.

FRS 17 Disclosures Whilst the Group continues to account for pension costs in accordance with Statement of Standard Accounting Practice 24 ‘Accounting for Pension Costs’ under FRS 17 ‘Retirement Benefits’, the following transitional disclosures are required for the three defined benefit schemes in the UK as disclosed above. Plans in other territories are not material.

The most recent valuation for each scheme, as at the dates disclosed above, were updated for FRS 17 purposes to 31 March 2004 by independent qualified actuaries. The principal assumptions used by the actuaries in determining the present value of the liabilities were:

2004 Seton Scholl LIG Rate of increase in salaries 4.00% 4.00% 4.00% Pensions increases per annum 2.75% – – – Pensions accrued to 6 April 1997 – Closed section – 3.00% – – Open section – 2.06% – – Pensions accrued from 6 April 1997 – Closed section – 3.25% – – Open section – 2.75% – – Pre April 1997 ––1.90% – Post April 1997 ––2.75% Discount rate applied to scheme liabilities 5.50% 5.50% 5.50% Inflation assumption 2.75% 2.75% 2.75%

2003 Seton Scholl LIG Rate of increase in salaries 3.75% 3.75% 3.75% Pensions increases per annum 2.50% – – – Pensions accrued to 6 April 1997 – Closed section – 3.00% – – Open section – 1.88% – – Pensions accrued from 6 April 1997 – Closed section – 3.25% – – Open section – 2.50% – – Pre April 1997 ––1.75% – Post April 1997 ––2.50% Discount rate applied to scheme liabilities 5.50% 5.50% 5.50% Inflation assumption 2.50% 2.50% 2.50%

SSL International plc Annual Report 2004 61 Notes to the Financial Statements Notes to the Financial Statements continued

32. Pension costs continued FRS 17 Disclosures continued 2002 Seton Scholl LIG Rate of increase in salaries 4.25% 4.25% 4.25% Pensions increases per annum 2.75% – – – Pensions accrued to 6 April 1997 – Closed section – 3.00% – – Open section – 2.06% – – Pensions accrued from 6 April 1997 – Closed section – 3.25% – – Open section – 2.75% – – Pre April 1997 ––2.00% – Post April 1997 ––2.75% Discount rate applied to scheme liabilities 6.00% 6.00% 6.00% Inflation assumption 2.75% 2.75% 2.75%

The assets in the schemes and the expected rate of return as at 31 March 2004, 2003 and 2002 were:

2004 Long-term Seton Scholl LIG rate of return £m £m £m Equities 7.25% 8.3 12.4 44.4 Corporate bonds 5.50% 2.4 – 7.5 Government bonds 4.75% 2.5 6.3 33.4 Cash 4.00% 0.1 0.4 3.6 Property 6.20% – 0.6 – Other 4.00% – – – Total market value 13.3 19.7 88.9 Present value of scheme liabilities (15.8) (23.4) (150.4) Deficit in the scheme (2.5) (3.7) (61.5) Irrecoverable surplus ––– Related deferred tax asset 0.8 1.1 18.5 Net pension liability (1.7) (2.6) (43.0)

2003 Long-term Seton Scholl LIG rate of return £m £m £m Equities 7.10% 7.0 9.5 39.2 Corporate bonds 5.50% 1.7 – 14.8 Government bonds 4.60% 2.7 7.0 21.3 Cash 3.75% 0.1 – 1.8 Property 6.10% – 0.9 – Other 3.75% – 0.6 – Total market value 11.5 18.0 77.1 Present value of scheme liabilities (14.9) (21.2) (134.3) Deficit in the scheme (3.4) (3.2) (57.2) Irrecoverable surplus ––– Related deferred tax asset 1.0 1.0 17.2 Net pension liability (2.4) (2.2) (40.0)

SSL International plc Annual Report 2004 62 Notes to the Financial Statements 32. Pension costs continued 2002 Long-term Seton Scholl LIG rate of return £m £m £m Equities 7.75% 12.5 13.6 49.6 Corporate bonds 6.00% – – 7.4 Government bonds 5.25% 3.0 7.4 31.9 Cash 4.00% – – 1.3 Property 6.70% – 0.9 – Other 4.75% – 0.4 – Total market value 15.5 22.3 90.2 Present value of scheme liabilities (13.1) (20.6) (126.8) Surplus/(deficit) in the scheme 2.4 1.7 (36.6) Irrecoverable surplus (2.4) (1.7) – Related deferred tax asset ––11.0 Net pension liability ––(25.6)

If FRS 17 had been fully adopted, the amount of the net pension liabilities and consequential effects on reserves would have been:

2004 2003 Seton Scholl LIG Seton Scholl LIG £m £m £m £m £m £m Opening deficit (3.4) (3.2) (57.2) ––(36.6) Contributions paid ––4.2 ––4.4 Other finance (cost)/income (0.1) – (2.6) 0.3 – (1.4) Actuarial gain/(loss) 1.0 (0.5) (5.9) (3.7) (3.2) (23.6) Closing deficit (2.5) (3.7) (61.5) (3.4) (3.2) (57.2)

SSL International plc Annual Report 2004 63 Notes to the Financial Statements Notes to the Financial Statements continued

32. Pension costs continued If FRS 17 had been fully adopted in these financial statements, the pension costs for these defined benefit scheme would have been:

2004 2003 Seton Scholl LIG Seton Scholl LIG £m £m £m £m £m £m Analysis of amounts included in other finance income/costs Expected return on pension scheme assets 0.7 1.1 4.6 1.1 1.2 6.0 Interest on pension scheme liabilities (0.8) (1.1) (7.2) (0.8) (1.2) (7.4) (0.1) – (2.6) 0.3 – (1.4) Analysis of amount recognised in the statement of total recognised gains and losses Actual return less expected return on scheme assets 1.5 (1.7) 8.7 (4.5) (4.3) (17.9) Experience gain/(loss) arising on scheme liabilities 0.3 (0.8) (2.2) – 0.5 – Changes in assumptions underlying the present value of scheme liabilities (0.8) 3.0 (12.4) (1.6) (1.1) (5.7) Gain on change in irrecoverable surplus ––––1.7 – Actuarial gain/(loss) recognised in the STRGL 1.0 0.5 (5.9) (6.1) (3.2) (23.6) Adjustment due to surplus cap –– 2.4 – – Net gain/(loss) recognised 1.0 0.5 (5.9) (3.7) (3.2) (23.6) History of experience gains and losses Difference between expected return and actual return on scheme assets Amount (£m) 1.5 (1.7) 8.7 (4.5) (4.3) (17.9) Percentage of year end scheme assets 11% (9)% 10% (39)% (24)% (23)% Experience gains and losses on scheme liabilities Amount (£m) 0.3 (0.8) (2.2) – 0.5 – Percentage of year end scheme present value of scheme liabilities (2)% 3% 1% 0% (2)% 0% Total amount recognised in the STRGL Amount (£m) 1.0 0.5 (5.9) (3.7) (3.2) (23.6) Percentage of year end scheme present value of scheme liabilities (6)% (2)% 4% 25% 15% 18%

If FRS 17 had been adopted in the financial statements the Group’s net assets and profit and loss reserve at each year end would be:

2004 2003 £m £m Net Assets Net Assets excluding pension liability 95.8 92.2 Net pension liability (47.3) (44.6) Net assets including pension liability 48.5 47.6

£m £m Profit and loss reserve Profit and loss excluding pension liability (100.4) (103.9) Net pension liability (47.3) (44.6) Profit and loss including pension liability (147.7) (148.5)

33. Post balance sheet events Conditional contracts for the sales of the Regent Infection Control business (comprising Biogel surgical gloves and Hibi antiseptics) were exchanged on 22 May 2004. Subject to approval from shareholders and relevant regulatory authorities, completion of the transaction is expected to occur on 26 June 2004. For more details refer to Finance Director’s Review on page 16.

SSL International plc Annual Report 2004 64 Notes to the Financial Statements Five Year Record

2000 2001 2002 2003 2004 as restated SSL SSL SSL SSL SSL Note £m £m £m £m £m Turnover 4 699.9 649.3 592.4 608.9 602.4 Operating profit before exceptional items 130.5 116.0 54.1 82.0 74.5 Finance charges (net) (19.2) (24.7) (25.6) (22.5) (21.2) Profit before taxation and exceptional items 111.3 91.3 28.5 59.5 53.3 Net cash inflow from operating activities, pre-exceptional 1 110.5 106.3 119.7 104.2 96.9 Capital expenditure 39.4 47.7 41.0 18.5 13.3 Shareholders’ funds 54.8 47.4 87.8 92.1 95.7 Cumulative goodwill written off 226.4 226.4 152.4 152.0 118.1 Operating profit on sales before exceptional items (%) 18.6% 17.9% 9.1% 13.5% 12.4% Adjusted earnings per share before exceptional items (pence) 2 45.6 38.9 13.3 25.1 23.5 Dividends per share (pence) 12.0 12.3 12.3 12.3 8.1 Dividend cover (times) 3 3.7 2.9 0.8 1.8 2.5 Average number of employees (number) 7,491 7,877 7,654 6,928 6,436 Interest cover (times) 3 6.8 4.7 2.1 3.6 3.5 Share price (period end) (pence) 554.0 480.0 541.0 166.0 302.5

In 2000 the table reflects the results of SSL for the 13 months ending 31 March 2000. In 2001 the table reflects the results of SSL for the 12 months ending 31 March 2001. In 2002 the table reflects the results of SSL for the 12 months ended 31 March 2002. The 2002 results were restated for the effect of prior year adjustments. In 2003 the table reflects the results of the year ended 31 March 2003 as restated (see note 4). In 2004 the table reflects the results of the year ended 31 March 2004.

Notes: 1. Net cash from operating activities is stated before exceptional cash flows. Exceptional cash flows in 2003 exclude disposal proceeds of £5.7million. The net cash outflow relating to exceptional items after taking into account disposal proceeds is £10.7 million. (See note 25a). 2. Earnings per share exclude the after tax effects of the exceptional items and amortisation of intangible fixed assets. 3. Interest cover and dividend cover exclude the effect of the exceptional items. 4. 2003 figures have been restated for the effects of FRS 5 Application Note G (see note 2 on page 37).

SSL International plc Annual Report 2004 65 Five Year Record SSL Directory

Commercial SSL Hellas SA SSL Healthcare Schweiz AG/ SSL-TTK Limited UK & Eire 17 Kim Spata Avenue Suisse SA 6 Cathedral Road SSL International plc PO Box 17 Sternenhofstrasse 15A Chennai 600 086 Head Office 19004 Spata Attikis Postfach 332 India 35 New Bridge Street Athens 4153 Reinach BL1 London Greece Switzerland SSL Healthcare Indonesia EC4V 6BW (Representative Office) SSL Magyarorszag Kft LRC Products Ticaret ve Gedung Menara Era Lt. 1-01 SSL International plc 1139 Budapest Pazarlama Ltd STI Jl. Senen Raya no. 135-137 Canute Court Vaci ut 95 Yanarsu Sokak Tutku Konutlari Jakarta 10410 Knutsford Hungary Tutku Konutlari Indonesia Cheshire No 32 D4 WA16 0NL SSL Healthcare Italia Spa 80690 Etiler SSL Healthcare Japan Ltd Via Marco Emilio Lepido 178/5 Istanbul URD Building SSL International plc 40132 Bologna Turkey 4th & 5th Floor Greenwich House Italy 2-7-5 Shibuya 80 Union Street Americas Shibuya-Ku Oldham SSL Healthcare Nedeland NV SSL Canada Inc Tokyo 150-0002 OL1 1DT PO Box 13 100 Courtland Avenue Japan 5201 AA’s Hertogenbosch Concord SSL Healthcare Ireland Limited The Netherlands Canada SSL Healthcare Malaysia Sdn Bhd A10, Calmont Park Ontario Level 5, Wisma Samudra Ballymount SSL Healthcare Norge A/S L4K 3T6 1 Jalan Kontraktor U1/14 Dublin 12 Nils Hansen Vei 2 Seksyen U1 NO-0607 Oslo SSL Americas Inc HICOM-Glenmarie Industrial Park Continental Europe Norway 3585 Engineering Drive 40150 Shah Alam SSL Healthcare Oesterreich GmbH Suite 200 Selangor Darul Ehsan Hutteldorfer Strasse 46 SSL Healthcare Polska Sp Z.0.0 Norcross Malaysia Postfach 36 AL Krakowska 110/114 Georgia A-1152 Wiren 02-256 Warszawa 30092-2820 SSL Mexico SA De CV Austria Poland USA Guadalupe 1 Ramirez #655 Col las Peritas NV SSL Healthcare SA SSL Romania SRL Silipos Inc Delegacion Xochimilco Bosstraat 79 SOS Dudesti Panteliman nr. 42 366 Madison Avenue Mexico DF 16020 1702 Groot Bijgaarden Bucuresti Sector 3 #1600 Belgium Romania New York SSL New Zealand Ltd NY 10017 c/-54 Carbine Road SSL Czeska Republica s.r.o LRC Products Limited USA Mt Wellington Karlovo nam 7 Moscow Rep Office Auckland 120 00 Prague 2 Radisson Slavjanskaya Hotel Asia Pacific and Rest New Zealand Czech Republic Moscow Business Plaza of the World Berezhkovskay Naberezhnaya 2 SSL Australia Pty Ltd SSL Healthcare Singapore Pte Ltd SSL Healthcare Danmark AS Room 819 Moscow 121059 225 Beach Road 34 Boon Leat Terrace Soborg Hovedgade 94B Russia Mordialloc Singapore 119866 DK-2860 Soborg Victoria 3195 Denmark SSL Slovensko Spol Sro Australia SSL Healthcare Taiwan Ltd Varasvska 29 10/F No 19 Sec 5 SSL Healthcare Suomi OY 831 03 Bratislava Qingdao London International Latex Jung Shiay E Road Harmaaparrankuja 1 Slovak Republic Company Limited Taipei FIN-02200 Espoo 103 Taidong 1st Road Taiwan Finland SSL Healthcare Brands SA Qingdao C/ de la Marina, 16-18 266022 SSL Healthcare (Thailand) Limited SSL Healthcare France SA Torre Mapfre, planta 28 People’s Republic of China 14th Floor, Ocean Tower 1 49 Avenue Georges Pompidou 08005 Barcelona 170-42 New Ratchadaphisek Road 92593 Levallois – Perret Cedex Spain SSL Healthcare (Hong Kong) Ltd Klongtoey France Rm 1201A, Admiralty Centre, Bangkok 10110 SSL Healthcare Sverige ABx Tower One Thailand SSL Healthcare Deutschland GmbH Box 1326 18 Harcourt Road & Co KG 5th Floor Hong Kong Edisonstrasse 5 Solna Torg 3 63477 Maintal 17126 Solna Scholl (Piramal) India Germany Sweden 6 Cathedral Road Chennai 600 086 India

SSL International plc Annual Report 2004 66 SSL Directory Manufacturing and Distribution Continental Europe Research & Development UK & Eire SSL Healthcare Manufacturing SA UK and Eire Simco Limited Poligono Cova Solera SSL International plc Charwell House Avda Can Fatjo 151 Oldham R&D Braye Road Industrial Estate 08191 Rubi Brook Street Vale Barcelona Oldham Guernsey Spain OL1 3HS Channel Islands Americas GY3 5XA Silipos Inc SSL International plc 7049 Williams Road 205 Cambridge Science Park SSL International plc Niagara Falls Milton Road Amberely Drive New York 14303 Cambridge Sinfin Lane USA CB4 4GZ Derby DE24 9RE Asia Pacific and Rest Continental Europe of the World SSL Healthcare Italia Spa SSL International plc Qingdao London International Via Marco Emilio Lepido 178/5 Barncoose Industrial Estate Latex Company Limited 40132 Bologna Wilson Way 103 Taidong 1st Road Italy Redruth Qingdao Cornwall 266022 Americas TR14 3RQ People’s Republic of China Silipos Inc 7049 Williams Road SSL International plc TTK-LIG Limited Niagara Falls Group Distribution Centre 35 Old Trunk Road New York 14303 Finlan Road Pallavaram USA Stakehill Industrial Estate Chennai-600 043 Middleton Asia Pacific and Rest M24 2SJ TTK-LIG Limited of the World 20 Perali Road LRC Hospital Products SDN BHD SSL International plc Virudhunagar – 626 001 Lot 9, Lorong Perusahaan 4 Unit M3 – Mullbury Way Tamilnadu State Kulim Ind Est Heywood Distribution Park India 09000 Kulim Pilsworth Road Kedah Heywood TTK-LIG Limited Malaysia Lancashire 65/2, 65/3, 63/2 K P Natham Road OL10 2TT Thiruvandar Koil Village Mannadipet Commune SSL International plc Pondicherry Cambridge Manufacturing Unit India 205 Cambridge Science Park Milton Road LRC Hospital Products SDN BHD Cambridge Lot 9, Lorong Perusahaan 4 CB4 0GZ Kulim Ind Est 09000 Kulim SSL International plc Kedah Whitehouse Business Park Malaysia Traynor Way Off Shotton Lane SSL Manufacturing (Thailand) Peterlee Limited County Durham Wellgrow Industrial Estate SR8 2RU 100 Moo 5, Bangna-Trad Rd KM#36 Bangsamak Bangpakong Chachoengsao 24180 Thailand

SSL International plc Annual Report 2004 67 SSL Directory Company Information Financial Calendar

Secretary and Registered Office Principal Bankers 2004 2005 Jonathan D. Jowett Barclays Bank plc 20 July 2004 March 2005* 35 New Bridge Street North West Large Annual General Meeting Interim Dividend Payment London Corporate Banking EC4V 6BW 51 Mosley Street 2 September 2004 May 2005* Manchester Dividend Payment Preliminary Results Stockbrokers M60 3DQ (subject to approval) Cazenove & Co July 2005* 20 Moorgate Registrars November 2004* Annual General Meeting London Capita Registrars Interim Results EC2R 6BA The Registry * Exact dates to be confirmed. 34 Beckenham Road Credit Suisse First Boston Beckenham One Cabot Square Kent London BR3 4TU E14 4OJ Public Relations Advisers Auditors The Maitland Consultancy KPMG Audit Plc 12th Floor 8 Salisbury Square Orion House London 5 Upper St. Martins Lane EC4Y 8BB London WC2H 9EA Solicitors Allen & Overy The following are trade marks One New Change of the SSL Group: London Avanti, Cuprofen Derbac, Diana, EC4M 9QQ Dr Scholl’s, Durex, Durex Play, Durex Sensation, Eulactol, DLA Full Marks, Gelactiv, Hydra-gel, 101 Barbirolli Square Indicator, Meltus, Mister Baby, Manchester Natraclear, Optifit, Paramol, M2 3DL Party Feet, Performa, Pleasuremax, Ralgex, Remegel, Resolve, Sauber, Scholl, Scholl Flight Socks, Silipos, Syndol, Woodward’s.

SSL International plc Annual Report 2004 68 Company Information and Financial Calendar 1This is SSL International 2 Chairman’s Message £602.4m Designed and produced by 4Chief Executive’s Review williams and phoa 6 Operating Review Turnover (2003:£608.9m) 14 Corporate Social Responsibility Stated in accordance with FRS 5 Printed in the UK on paper 16 Financial Review made from 50 per cent pulp, 20 Group Board 50 per cent recycled fibres 22 Corporate Governance which is biodegradable. 24 Directors’ Report 25 Remuneration Report 31 Directors’ Responsibilities 31 Independent Auditors’ Report £74.5m to the Members of SSL International plc 32 Consolidated Profit and Loss Account Operating profit (2003:£82.0m) 33 Consolidated and Company Before charging exceptional items Balance Sheets 34 Consolidated Cash Flow Statement 35 Consolidated Statement of Total Recognised Gains and Losses 35 Reconciliation of Movements in Shareholders’ Funds 36 Notes to the Financial Statements £(7.5)m 65 Five Year Record 66 SSL Directory (Loss)/profit before tax 68 Company Information (2003:£39.1m) 68 Financial Calendar After charging exceptional items

(4.2)p Basic (loss)/earnings per share (2003:13.1p) After charging exceptional items

8.1p Dividend per share (2003:12.3p)

£227.5m Net debt (2003:£292.0m)

£85.2m Free cash flow (2003:£39.1m) Address Telephone Registration Number 2004 Annual Report SSL International SSL International plc +44 (0)20 7367 5760 388828 35 New Bridge Street Facsimile London +44 (0)20 7367 5790 EC4V 6BW Web www.ssl-international.com

Annual Report 2004 International plc