Notes to the Consolidated Financial Statements

Note 1 - Sales

Analysis of sales by major product line


	2005 € m	2004 € m
Jewellery	845	789
Watches	1 774	1 560
Writing instruments	298	273
Leather goods	259	240
Clothing and other	541	513
	3 717	3 375

Analysis of sales by geographical area


	2005 € m	2004 € m
Europe	1 607	1 458
Japan	642	625
Asia-Pacific	766	637
Americas	702	655
	3 717	3 375

Analysis of sales by category


	2005 € m	2004 € m
Sales of goods	3 701	3 357
Royalty income	16	18
	3 717	3 375

Note 2 - Net operating expenses


	2005 € m	2004 € m
Selling and distribution costs	923	854
Communication costs	414	364
Administration and other expenses	550	578
	1 887	1 796

Note 3 - Net profit

Profit of the Group includes the following items:5


	2005 € m	2004 € m
Depreciation of property, plant and equipment (note 10)	128	131
Amortisation of intangible assets (note 11)	15	14
Operating leaDistRght rentals	247	277
Cash flow hedges - transfer from unitholders' funds	2	(1)
Foreign exchange losses on monetary items	10	7
Impairment of property, plant and equipment (note 10)	2	5
Reversal of previous impairments	-	(5)
Trade receivables - impairment charge for bad debts	8	6
Research and development expenditure	6	8
Profit on disposal of fixed assets	(11)	(8)

Note 4 - Personnel

Personnel expenses


	2005 € m	2004 € m
Wages and salaries	716	700
Social security costs	129	122
Pension costs
- defined contribution plans	24	22
- defined benefit plans (note 24)	17	19
	886	863

Employees

	2005 Number	2004 Number
Average number of persons employed by the Group during the year calculated on a full-time equivalent basis:
SwitzerlandBld	4 180	4 274
Rest of world	10 850	10 597
	15 030	14 871

Note 5 - Exceptional Item


	2005 € m	2004 € m
Gain on partial indirect disposal of share of associated undertaking
	81	-

In February 2005, R&R Holdings SA (R&R), the vehicle for the Group's tobacco joint venture with Remgro Limited (Remgro), issued additional equity instruments to Remgro. Thus, indirectly, Richemont sold 0.6 per cent of its effective interest in British American Tobacco (BAT). The sale was transacted at a modest premium to the market price of BAT shares prevailing on the day of the transaction. Further details are provided in note 13.

Note 6 - Net investment income


	2005 € m	2004 € m
Interest income and similar items	22	5
Interest expense and similar items	(20)	(28)
Fair value gains on financial instruments	-	29
	2	6

Note 7 - Taxation


	2005 € m	2004 € m
Current taxation	98	78
Current taxation in respect of prior years	-	5
Deferred taxation	(6)	(19)
	92	64

Note 8 - Share of results of associated undertaking

The Group's share of the results of BAT is set out below:


	2005 € m	2004 € m
Operating profit	803	782
Goodwill amortisation	(222)	(196)
Exceptional items	245	(144)
Net interest expense	(69)	(74)
Profit before taxation	757	368
Taxation	(231)	(243)
Profit after taxation	526	125
Minority interests	(35)	(43)
Share of associate's results	491	82

Analysed as follows:


	2005 € m	2004 € m
Share of profit on an adjusted basis	468	422
Goodwill amortisation	(222)	(196)
Amortisation charge in respect of associated undertaking	(143)	(147)
Amortisation charge reflected in the Group's share of the results of BAT	(79)	(49)
Exceptional items	245	(144)
Share of profit on a reported basis	491	82

Richemont accounts for its effective interest in BAT under the equity method. Changes in the Group's percentage holding of BAT during the year reflect the conversion of the BAT preference shares into ordinary shares on 28 May 2004, the indirect sale of BAT shares to its joint venture partner Remgro in February 2005 and the share buy-back programme carried out by BAT during the year. The following table indicates the percentages applied to BAT's profits during the financial year:

For the period	Percentage
1 April 2004 to 31 May 2004	19.71
1 June 2004 to 30 September 2004	18.70
1 October 2004 to 31 December 2004	18.83
1 January 2004 to 28 February 2005	18.82
1 March 2005 to 31 March 2005	18.25

For the prior year, during the six month period to 30 September 2003, Richemont's effective interest in BAT was 19.17 per cent and for the six month period to 31 March 2004, 19.58 per cent.

Richemont's share of BAT's exceptional income for the year amounted to € 245 million (2004: exceptional charges of € 144 million).

Note 9 - Earnings per unit

a) On a reported basis: Basic earnings per unit is calculated by reference to the weighted average number of units outstanding during the period of 547.9 million units (2004: 550.2 million units), together with the net profit of the Group on a reported basis of € 985 million for the year (2004: € 320 million).
Fully diluted earnings per unit is calculated by reference to the 554.8 million units outstanding (2004: 553.3 million units) and net profit on a reported basis for the year of € 985 million (2004: € 320 million).
b) On an adjusted basis: Basic earnings per unit is calculated by reference to the weighted average number of units outstanding during the period of 547.9 million units (2004: 550.2 million units), together with the net profit of the Group on an adjusted basis of € 881 million for the year (2004: € 660 million).
Fully diluted earnings per unit is calculated by reference to the 554.8 million units outstanding (2004: 553.3 million units) and net profit on an adjusted basis for the year of € 881 million (2004: € 660 million).

Note 10 - Property, plant and equipment


	Land and buildings € m	Plant and machinery € m	Fixtures, fittings, tools and equipment € m	Assets under construction € m	Total € m
Cost
Balance at 1 April 2004	350	236	727	35	1 348
Exchange adjustments	(2)	-	(17)	-	(19)
Additions	21	14	85	41	161
Transfers and reclassifications	21	1	10	(31)	1
Disposals	(26)	(7)	(49)	(2)	(84)
Impairment	(2)	-	-	-	(2)
Balance at 31 March 2005	362	244	756	43	1 405
Depreciation
Balance at 1 April 2004	71	184	409	-	664
Exchange adjustments	-	-	(9)	-	(9)
Charge for the year	11	22	95	-	128
Transfers and tranRecl	-	-	1	-	1
Disposals	(11)	(6)	(43)	-	(60)
Balance at 31 March 2005	71	200	453	-	724
Net book amount
at 31 March 2004	279	52	318	35	684
at 31 March 2005	291	44	303	43	681

Included above is property, plant and equipment with a net book amount of € 21 million (2004: € 25 million) held under finance leases.

The fire insurance value of property, plant and equipment at 31 March 2005 was € 1 262 million (2004: € 1 455 million).

The impairment charges in respect of the current year and reversals in respect of the prior year relate to the reorganisation of certain retail and manufacturing operations.

Committed capital expenditure, for which no provision has been made in these financial statements:


	2005 € m	2004 € m
Property, plant and equipment	17	19

Note 11 - Intangible assets


	Leasehold and distribution rights € m	Software € m	Total € m
Cost
Balance at 1 April 2004	127	23	150
Additions	4	4	8
Disposals	(1)	-	(1)
Balance at 31 March 2005	130	27	157
Amortisation
Balance at 1 April 2004	75	16	91
Charge for the year	9	6	15
Disposals	(1)	-	(1)
Balance at 31 March 2005	83	22	105
Net book amount
at 31 March 2004	52	7	59
at 31 March 2005	47	5	52

The remaining amortisation periods for leasehold rights, distribution rights and software range between 1 and 10 years.

Note 12 - Deferred tax assets and liabilities


	1 April 2004 € m	Exchange adjustments € m	(Charge)/ credit for the year € m	31 March 2005 € m
Accelerated tax depreciation	5	(1)	8	12
Provision on inventories	12	-	1	13
Bad debt reserves	3	-	(1)	2
Post-retirement benefits	11	-	(1)	10
Unrealised gross margin elimination	57	-	1	58
Tax losses carried forward	54	(1)	(2)	51
Other	9	(1)	-	8
	151	(3)	6	154
Deferred tax assets	187			188
Deferred tax liabilities	(36)			(34)
	151			154

At 31 March 2005, the Company and its subsidiary undertakings had taxation losses of € 279 million (2004: € 336 million) in respect of which taxation assets had not been recognised as the future utilisation of these losses is uncertain. A majority of these losses can be carried forward more than 5 years. Based on current rates of taxation, future utilisation of these losses would result in the recognition of a taxation asset at 31 March 2005 of € 88 million (2004: € 110 million).

The Company and its subsidiary undertakings also had temporary differences of € 43 million (2004: € 36 million) in respect of which taxation assets had not been recognised as the future utilisation of these temporary differences is uncertain. Based on current rates of taxation, utilisation of these temporary differences at 31 March 2005 would result in the recognition of a taxation asset of € 13 million (2004: € 12 million).

Note 13 - Investment in associated undertaking

During the year under review, Richemont disposed of a 0.6 per cent effective interest in BAT to its tobacco joint venture partner, Remgro. This followed an approach from Remgro, which wished to increase its effective interest in BAT to 10 per cent but was precluded from buying BAT shares in the open market by the terms of the Standstill Agreement entered into between BAT, Remgro and Richemont in 1999.

The agreement with Remgro was signed on 28 February 2005 and the transaction closed on 4 March 2005. Divestment proceeds to Richemont amounted to € 179 million and the Group realised an exceptional gain of € 81 million on the transaction. As a consequence of the disposal, Richemont' s effective interest in BAT declined from 18.82 per cent immediately prior to the transaction to 18.20 per cent.

Richemont and Remgro hold their combined interests in BAT through a jointly controlled vehicle, R&R. The ordinary equity of R&R was, and continues to be, held as to two thirds by Richemont and one third by Remgro. The transfer of the effective interest in the BAT shares from Richemont to Remgro was effected by the issue, by R&R, of 19 281 686 participation securities. Each participation security entitles the holder to all of the rewards and risks of directly owning an ordinary share in BAT and may be redeemed by R&R either by delivery of one BAT ordinary share or by the payment by R&R of the disposal proceeds of a BAT share. The net effect of the transaction was to increase Remgro's interest in BAT by 12 854 457 shares and to decrease Richemont's interest by the same amount.

Richemont accounts for R&R as a joint venture, reflecting only its share of the assets and liabilities of R&R in its own balance sheet, proportionately consolidating its effective interest in the underlying BAT shareholding and the results thereof, as well as taking into account its share of the other income and expenses of R&R. Treatment of R&R as a joint venture has been considered appropriate in terms of the underlying shareholder agreement between Richemont and Remgro, which effectively provides both shareholders with joint control.

In January 2004, BAT changed its accounting policy in respect of its employee share schemes and Employee Share Option Trusts ('ESOTs'). The net carrying value of BAT's ESOTs, previously shown as an asset in the balance sheet and amounting to £ 155 million, was deducted from BAT's equity as at 31 March 2004. The amount of € 42 million shown below is Richemont's share thereof.

In the year ended 31 March 2004 the Group reappraised the method of recognising the effects of changes in its effective interest in BAT resulting from BAT's buy-back of its own shares. Previously, changes in the Group's share of the net assets of BAT were recorded as movements in retained earnings with no impact on the goodwill arising on the Group's investment in BAT. With effect from 1 April 2003, such changes in effective interest are recorded as deemed acquisitions or disposals. An adjustment increasing both goodwill and retained earnings by € 33 million was made at 31 March 2004 in respect of the previous year.

The investment in associated undertaking at 31 March is analysed as follows:


	2005 € m	2004 € m
Carrying value at 1 April	2 454	2 590
Prior year adjustment reported by BAT	-	(42)
Exchange adjustments	(1)	16
Indirect disposal of effective interest	(89)	-
Dilution in percentage holding on conversion of preference shares	90	-
Goodwill reinstated by associate on disposal of subsidiaries	60	-
Change in percentage holding	(17)	33
Net profit before goodwill amortisation	713	278
Amortisation of goodwill	(222)	(196)
Dividends paid	(242)	(225)
Carrying value at 31 March	2 746	2 454


	2005 € m	2004 € m
British American Tobacco
- Share of net tangible liabilities	(623)	(1 011)
- Goodwill	1 328	1 151
	705	140
Richemont
- Goodwill arising on the Group's investment in BAT, net of amortisation	2 041	2 314
	2 746	2 454

The market capitalisation of BAT ordinary shares at 31 March 2005 was £ 19 935 million (2004: £ 16 841 million). The fair value of the Group's effective interest of 18.25 per cent in BAT ordinary shares at that date was € 5 292 million (2004: effective interest of 19.6 per cent with a fair value of € 4 927 million).

Note 14 - Other long-term assets


	2005 € m	2004 € m
Available-for-sale investments
- Shares in unlisted undertakings	36	39
Other
- Collections	78	74
- Other	75	81
	189	194

Note 15 - Inventories


	2005 € m	2004 € m
Raw materials and consumables	133	42
Work in progress	343	349
Finished goods and goods for resale	1 046	1 011
	1 522	1 402

Note 16 - Debtors


	2005 € m	2004 € m
Trade debtors	402	399
Other debtors	133	137
BAT preference shares	-	806
Secured call warrants	-	176
BAT ordinary and preference shares - dividends receivable	166	195
Assets held for resale	-	16
Prepayments and accrued income	116	106
	817	1 835

Trade debtors are stated net of provisions of € 15 million (2004: € 19 million).

As a result of the merger of Rothmans International and BAT in June 1999, R&R held 121.9 million convertible redeemable preference shares in BAT. In January 2003, R&R issued secured call warrants, listed on the Luxembourg Stock Exchange, giving the holder of each warrant the right to receive from R&R one ordinary share in BAT on 28 May 2004, upon payment to R&R of £ 6.75. The issue of these warrants effectively crystallised the terms of the disposal of the preference shares at £ 6.75 per share, either by way of the exercise of the warrants or through the redemption of the preference shares by BAT. Accordingly, the proceeds receivable in respect of the BAT convertible redeemable preference shares and the related secured call warrants were included in debtors at 31 March 2004 given the maturity of the warrants. The Group's share of the net cash proceeds following the exercise of the warrants on 28 May 2004 amounted to € 828 million.

Included within dividends receivable at 31 March 2004 is an amount of € 32 million being the fair value of the right to receive the final dividend on the preference shares paid by BAT in April 2004.

There is no significant concentration of credit risk with respect to trade debtors due to the Group's internationally diverse customer base.

Note 17 - Other current liabilities


	2005 € m	2004 € m
Trade creditors	197	151
Secured call warrants	-	176
Other creditors	158	205
	355	532

In January 2003 the Group, through R&R, sold secured call warrants in respect of preference shares convertible into ordinary shares of BAT in May 2004. The value of these warrants at 31 March 2004 was determined by reference to their market price as at that date.

Note 18 - Share capital


	2005 € m	2004 € m
Authorised, issued and fully paid:
522 000 000 'A' bearer shares with a par value of SFr 1.00 each	304	304
522 000 000 'B' registered shares with a par value of SFr 0.10 each	30	30
	334	334

Note 19 - Participation reserve


	2005 € m	2004 € m
Reserve in respect of 574 200 000 participation certificates with no par value issued by Richemont SA	645	645

Note 20 - Unitholders' capital

In accordance with the articles of incorporation of the respective companies, the shares issued by the Company and the participation certificates issued by Richemont SA have been twinned as follows:

a) Each 'A' bearer share in the Company with a par value of SFr 1.00 is twinned with one bearer participation certificate in Richemont SA with no par value to form one 'A' unit, issued to bearer.

b) Every ten 'B' registered shares in the Company with a par value of SFr 0.10 each are twinned with one registered participation certificate in Richemont SA with no par value to form one 'B' unit, issued in registered form.

The total number of units in issue is thus made up as follows:


	2005 Units	2004 Units
a) 'A' bearer units, each comprising one 'A' bearer share in the Company and one bearer participation certificate in Richemont SA	522 000 000	522 000 000
b) 'B' registered units, each comprising ten 'B' registered shares in the Company and one registered participation certificate in Richemont SA	52 200 000	52 200 000
	574 200 000	574 200 000

In view of this indivisible twinning of shares and participation certificates, the participation reserve of Richemont SA is presented in the consolidated balance sheet of the Company as a component of unitholders' funds. For the same reason, information that would normally be stated on a per share basis is stated in these financial statements on a per unit basis.

Note 21 - Retained earnings, other reserves and treasury units


	2005 € m	2004 € m
a) Summary
Balance at 1 April	3 989	4 013
Exchange adjustments	17	(22)
Net profit	985	320
Goodwill deducted from unitholders' funds	-	(3)
Dividend paid on Richemont SA participation reserve	(219)	(176)
Movements in hedging reserve	12	(25)
Units purchased, net of units sold	90	(103)
Realised losses on treasury units sold	(21)	(8)
BAT prior year adjustment	-	(42)
BAT change in percentage holding	(17)	33
Gain on disposal of share of associate	90	-
Goodwill reinstated by associate on sale of subsidiaries	60	-
Other adjustments	(13)	2
Balance at 31 March	4 973	3 989

Retained earnings and reserves other than in respect of treasury units	5 533	4 579
Reserve for treasury units	(560)	(590)
Balance at 31 March	4973	3 989

b) Legal reserves
Legal reserves amounting to € 95 million (2004: € 95 million) are included in retained earnings and other reserves but are not available for distribution.

c) Reserve for treasury units
In order to hedge its obligations arising under the stock option plan, the Group has purchased Richemont 'A' units. Changes in the holding of this stock of units are shown as movements in unitholders' funds as follows:

Movements in treasury units

	Units millions	€ m
Balance at 1 April 2003	23.4	487
Units purchased	6.5	136
Units sold	(1.6)	(33)
Balance at 31 March 2004	28.3	590
Change in valuation method	-	60
Units sold	(4.3)	(90)
Balance at 31 March 2005	24.0	560

The cost value of the 4.3 million units sold during the year to scheme participants who exercised their options was € 90 million.

During the year the Group changed the method used to determine the cost of treasury units. Previously units sold were measured on an 'allocated cost' basis. At 31 March 2005 the Group has implemented a first-in-first-out basis which resulted in an uplift in the value of units held of € 60 million, with the corresponding entry to retained earnings.

On 1 July 2004 the Group entered into an over the counter purchased call option with a third party to purchase treasury units at the same strike price as the unit options granted to executives in June 2004. The cost of this option is recorded against other reserves.

The market value of the 24.0 million units (2004: 28.3 million units) held by the Group at the year-end, based on the closing price at 31 March 2005 of SFr 37.55 (2004: SFr 34.05), amounted to € 581 million (2004: € 619 million).

d) Goodwill deducted from unitholders' funds

Accumulated goodwill arising on the acquisition of subsidiary undertakings deducted from unitholders' funds is as follows:


	2005 € m	2004 € m

Balance at 31 March	(3 180)	(3 180)

e) Movements in hedging reserve
The table below shows movements on the hedging reserve during the year:


	2005 € m	2004 € m
Balance at 1 April	26	51
Fair value gains/(losses) on cash flow and net investment hedging instruments	10	(24)
Amount transferred to currency translation reserve	(28)	-
Amount transferred to income statement	2	(1)
Balance at 31 March	10	26

Note 22 - Borrowings


	2005 € m	2004 € m
Bank loans	141	402
Finance lease obligations	18	21
	159	423
Short-term portion of long-term loans and finance lease obligations	(4)	(359)
Long-term loans and finance lease obligations	155	64

Bank and other loans are subject to market-linked rates of interest ranging from 0.5 per cent to 6.0 per cent and are predominately denominated in euros, US dollars, GB pounds and Japanese yen.

An analysis of long-term loans and finance lease obligations by due date of repayment is set out below:


	Bank loans		Finance lease obligations		Total
	2005 € m	2004 € m	2005 € m	2004 € m	2005 € m	2004 € m
Amounts repayable within the financial year ending 31 March
2005	-	355	-	4	-	359
2006	-	-	4	5	4	5
2007	50	47	4	3	54	50
2008	91	-	2	3	93	3
Thereafter	-	-	9	8	9	8
	141	402	19	23	160	425
Interest	-	-	(1)	(2)	(1)	(2)
	141	402	18	21	159	423

Note 23 - Provisions


	2005 € m	2004 € m
Provisions	97	125
Short-term	(63)	(79)
Long-term	34	46

Movements in provisions for the year are set out below:

	Warranties € m	Restructuring € m	Other € m	Total € m
Provisions at 1 April 2004	19	15	91	125
Exchange adjustments	-	-	(2)	(2)
Additional provisions	14	10	30	54
Provisions reversed	(2)	(3)	(13)	(18)
Utilised in the year	(11)	(11)	(40)	(62)
Provisions at 31 March 2005	20	11	66	97
Short-term	(16)	(11)	(36)	(63)
Long-term	4	-	30	34

Warranties

Group companies provide warranties on certain products. A provision of € 20 million (2004: € 19 million) has been recognised for expected warranty claims based on past experience. It is expected that € 16 million of this provision will be used within the following 12 months and the balance will be utilised over the remainder of the expected lives of the products.

Restructuring

This provision represents the Group's obligations arising from committed restructuring activities, which will be completed within the next year.

Other provisions

These provisions comprise legal and constructive obligations, particularly in respect of onerous leases contracts and employee commitments. The balance at 31 March 2005 is expected to be fully utilised by 2014. It is not expected that the outcome of legal claims provided for will give rise to any significant loss beyond the amounts provided at 31 March 2005.

Note 24 - Employee benefits

Post-retirement and other benefit obligations

Movement in the liability recognised in the balance sheet:

	2005 € m	2004 € m
Net liabilities at 1 April	89	83
Transfer of provision from current liabilities	-	2
Total expense for the year	17	19
Contributions paid	(31)	(15)
Net liabilities at 31 March	75	89
Amounts in the balance sheet:
Post-retirement and other benefit assets	(21)	-
Post-retirement and other benefit obligations	96	89
	75	89

The net liabilities reflected in long-term liabilities in the balance sheet are determined as follows:


	2005 € m	2004 € m
Present value of funded obligations	196	184
Fair value of plan assets	(185)	(155)
	11	29
Present value of unfunded obligations	96	83
Unrecognised actuarial deficit	(32)	(23)
Net liabilities	75	89

The amounts recognised in the income statement are as follows:


	2005 € m	2004 € m
Current service cost	13	13
Interest cost	13	12
Expected return on plan assets	(10)	(7)
Net actuarial losses recognised	1	1
Total included in personnel expenses (note 4)	17	19

Of the total expense, € 3 million (2004: € 3 million) and € 14 million (2004: € 16 million) were included respectively in cost of sales and net operating expenses.

The actual return on plan assets was a gain of € 13 million (2004: € 18 million).

The principal actuarial assumptions used for accounting purposes reflected prevailing market conditions in each of the countries in which the Group operates and were as follows:


	2004/2005 cost	End-of-year benefit obligation	Weighted average
Discount rate	1.7% to 5.8%	1.5% to 5.5%	4.9%
Expected return on plan assets	2.0% to 6.6%	2.0% to 6.5%	6.2%
Future salary increases	1.5% to 4.9%	1.5% to 4.9%	4.4%
Future pension increases	2.0% to 2.6%	2.2% to 2.7%	2.6%

Assumptions used to determine the benefit expense and the end-of-year benefit obligations for the defined benefit plans varied within the ranges shown above. The weighted average rate for each assumption used to measure the benefit obligation is also shown. The assumptions used to determine end-of-year benefit obligations are also used to calculate the following year's cost.

The Group operates a number of defined benefit and defined contribution retirement arrangements. The major plans are the arrangements in Switzerland, the UK and Germany.

In Switzerland, benefits provided are essentially defined contribution in nature but are subject to a statutory minimum benefit. Since the defined contribution element dominates the plans' benefit structures, it has been concluded that the most appropriate accounting treatment is to consider this arrangement as if it were a defined contribution plan, subject to a continuing check that the defined benefit minimum has no realistic expectation of impacting on benefits paid. Certain other plans, because of the investment and annuity conversion guarantees contained within the benefit structure of these plans, have been accounted for on a defined benefit basis.

In the UK, benefits are related to service and final salary. The plan is funded by a separate trust, with a funding target to maintain assets equal to the value of the accrued benefits based on projected salaries.

In Germany, retirement benefits are related to service and final salary. Since no external pre-financing exists, the liabilities are recognised within the balance sheets of the relevant companies, in line with local practice.

Benefits under arrangements other than those detailed above are generally related to service and either salary or grade. They are funded in all locations where this is consistent with local practice, otherwise the liability is recognised in the balance sheet.

The Group does not have any significant liabilities in respect of any other post-retirement benefits, including postretirement healthcare liabilities.

Stock option plan

The Group has implemented a long-term unit-based compensation scheme whereby executives are awarded options to acquire units at a predetermined price. Awards under the stock option plan typically vest over periods of three to five years and have expiry dates, the date after which unexercised options lapse, of between 6 and 10 years from the date of grant. During the year ended 31 March 2005, awards were granted at a weighted average exercise price of SFr 33.14 per unit (2004: SFr 28.29 per unit). Options in respect of 4 318 652 units (2004: 1 597 850 units) were exercised during the year at an average price of SFr 24.59 per unit.

A reconciliation of the movement in the number of awards granted to executives is as follows:


	Number of options
Balance at 1 April 2003	25 826 210
Awarded	4 133 750
Exercised	(1 597 850)
Lapsed	(890 950)
Balance at 31 March 2004	27 471 160
Awarded	6 724 700
Exercised	(4 318 652)
Lapsed	(1 163 041)
Balance at 31 March 2005	28 714 167

The terms of the outstanding stock options at 31 March 2005 are as follows:


Vesting in the year ending	Weighted average exercise price	Number of options
31 March 2003	SFr 24.25	139 500
31 March 2004	SFr 24.25	2 905 916
31 March 2005	SFr 24.23	2 755 499
31 March 2006	SFr 25.19	4 145 413
31 March 2007	SFr 23.12	4 996 134
31 March 2008	SFr 26.46	5 655 170
31 March 2009	SFr 26.16	4 635 187
31 March 2010	SFr 32.10	2 334 348
31 March 2011	SFr 29.66	586 000
31 March 2012	SFr 29.53	561 000
		28 714 167

Note 25 - Financial commitments and contingent liabilities

At 31 March 2005 the Group had contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business from which it is anticipated that no material losses will arise. Details of the Group's commitments in respect of financial derivatives are given in note 29.

At 31 March 2005 the Group had signed non-cancellable operating leases in respect of which the following minimum rentals are payable:

	Land and buildings		Other assets		Total
	2005 €m	2004 €m	2005 €m	2004 €m	2005 €m	2004 €m
Within one year	130	127	6	5	136	132
Between two and five years	335	344	6	5	341	349
Thereafter	226	255	1	1	227	256
	691	726	13	11	704	737

Note 26 - Cash inflow from operating activities


	2005 € m	2004 € m