6-K 1 c91713.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM 6-K ------------ REPORT OF FOREIGN PRIVATE ISSUER Pursuant to Rule 13a-16 or 15d-16 of The Securities Exchange Act of 1934 April 07, 2005 ------------ AKZO NOBEL N.V. (Translation of registrant's name into English) 76, Velperweg, 6824 BM Arnhem, the Netherlands (Address of principal executive offices) 0 - 017444 (Commission file number) ------------ Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F [X] Form 40-F [ ] Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [X] ================================================================================ SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf of the undersigned, thereto duly authorized. Akzo Nobel N.V. Name : F.H. Hensel Name : J.J.M. Derckx Title : Senior Vice President Title : Director Corporate Control Finance Dated : April 07, 2005 IFRS-based reporting for 2004 Presentation of financial information for 2004 in accordance with International Financial Reporting Standards Introduction Up to December 31, 2004, Akzo Nobel published its financial statements under Generally Accepted Accounting Principles in the Netherlands (NL GAAP). From 2005 onwards, the Company will issue its consolidated financial statements in accordance with International Accounting Standards (IAS), International Financial Reporting Standards (IFRS)*, and Interpretations. This change applies to all financial reporting for accounting periods beginning on or after January 1, 2005. Akzo Nobel's first IFRS results will be those for the first quarter of 2005, and the Company's first Annual Report under IFRS will be that for 2005. As the Company publishes comparative information for one year in its Annual Report, the transition date to IFRS will be January 1, 2004. The report "IFRS based reporting Q-1 - Q-3 2004" was published on December 14, 2004. Compared to this report, an adjustment was made to the IFRS-based balance sheets, namely an increase in deferred tax assets and shareholders' equity of EUR 17 million. The benefits receivable under the U.S. Medicare Prescription Drug, Improvement and Modernization Act of 2003 are tax free, whereas in the earlier report it was assumed that they would be taxable. This has no impact on the results for the quarters of 2004. The information originally included in the report "IFRS based reporting Q-1 - Q-3 2004" has been adjusted accordingly and is now included in this report, so that it provides full and up-to-date information on the impact of IFRS on all quarters and for the year 2004. IFRS impact - net income up; shareholders' equity down; funds balance unchanged This report gives a detailed overview of the consequences for the Company of accounting under IFRS. In summary, the impact of IFRS on the Company's accounts is an increase in net income for 2004 of EUR 89 million, but a decline in shareholders' equity, at December 31, 2004, of EUR 410 million. This is mainly attributable to the differences in the method of accounting under IFRS for pensions and other postretirement benefits, the recognition of deferred taxes on intercompany profit, the recognition of the payment received from Pfizer for the asenapine cooperation, and the recognition of goodwill. For the most part, the changed accounting is a matter of timing of the recognition of assets, liabilities, and related results. Consequently, volatility of earnings under IFRS could increase in the future. However, there is no impact on the underlying cash flows of the businesses. We currently do not expect that the changed accounting will have a significant impact on our dividend payments. * References to IFRS in this document relate to International Accounting Standards and International Financial Reporting Standards. 1 IFRS-based reporting for 2004 Presentation of IFRS-based information The purpose of this report is to provide information on the expected impact of the adoption of IFRS on the Company's reported performance and financial position. It consists of the following: - changes in accounting principles compared to NL GAAP, due to the adoption of IFRS - reconciliation of shareholders' equity at January 1, 2004 - breakdown of IFRS shareholders' equity at January 1, 2004 - IFRS-based balance sheet and segment reporting at January 1, 2004 - reconciliation of full year 2004 net income - IFRS-based statements of income for the quarters and year 2004 - IFRS-based segment reporting for the quarters and year 2004 - reconciliation of shareholders' equity at December 31, 2004 - breakdown of IFRS shareholders' equity at December 31, 2004 - IFRS-based balance sheet and segment reporting at December 31, 2004 - IFRS-based statement of changes in shareholders' equity for the full year 2004 - IFRS-based statement of cash flows for the full year 2004 The figures in this report have been prepared on the basis of the standards expected to be applicable to the Annual Report on 2005. However, IFRS is subject to ongoing review and endorsement by the EU or possible amendment by interpretative guidance from the IASB. IFRS could therefore be subject to change. As a consequence, these figures and the discussion in this report should be treated with appropriate caution as they may need to be revised in light of such changes. This report is indicative of the Company's future results and, for the reasons noted above, may not be representative of the impact of IFRS on the Company's results of operations or financial condition for fiscal year 2005, or any future period. We will update this information for any changes in standards or interpretation as and when these changes are made. The figures in this report are unaudited. Changes in accounting principles due to the adoption of IFRS Certain standards included in IFRS had already been incorporated in NL GAAP. This concerns, inter alia, accounting for intangible assets other than goodwill, which also includes accounting for development costs. As there are no differences, this has not resulted in any changes in accounting principles. For those standards not included in NL GAAP, we have adjusted our accounting principles as described below. For accounting principles which we do not expect to change, we refer to our Annual Report 2004, pages 80 to 83. Employee benefits Pensions and other postretirement benefits Until December 31, 2004, the Company accounted for pensions and other postretirement benefits in accordance with SFAS 87 and SFAS 106. For the implementation of IAS 19 Employee Benefits in respect of pensions and other postretirement benefits, the Company has to recognize the funded status, at January 1, 2004, of the projected benefit obligation (PBO) in so far as this is not covered by provisions or prepaid pension assets in the NL GAAP balance sheet. Any unvested portion of past service cost at that date is to be excluded. 2 IFRS-based reporting for 2004 On January 1, 2004, the Company had a significant deficit for its pension and other postretirement benefit plans. The deficit in excess of provisions and prepaid pension assets in the NL GAAP balance sheet has been charged against shareholders' equity in the IFRS opening balance sheet at January 1, 2004. This concerns an amount of EUR 1,342 million after taxes. At December 31, 2004, this amount was EUR 1,232 million after taxes. In the NL GAAP balance sheet, the Company has also recognized a so-called minimum pension liability for the deficit determined on the accumulated benefit obligation (ABO) level, as required under SFAS 87. This consists of an after-tax charge against shareholders' equity (January 1, 2004: EUR 824 million; December 31, 2004: EUR 759 million) and recognition of an intangible asset (January 1, 2004: EUR 165 million; December 31, 2004: EUR 137 million). As these are not allowed under IAS 19, the minimum pension liability-related entries have been reversed, partly offsetting the aforementioned recognition of the deficits on a PBO basis. The consequences of the U.S. Medicare Prescription Drug, Improvement and Modernization Act of 2003 have also been taken into account in the IFRS opening balance sheet. This has resulted in the recognition of a tax-free financial noncurrent asset of EUR 43 million (at December 31, 2004: EUR 48 million). Going forward, the full recognition of the deficit at January 1, 2004, will result in lower net period pension costs for 2004, as the deferred losses under SFAS 87 and SFAS 106 no longer have to be amortized. As a result of the improved pension funding situation at December 31, 2004, IFRS-based 2005 pension charges are expected to drop by some EUR 50 million, compared to 2004. Included in the 2004 net income effect of IAS 19 is an after-tax gain of EUR 43 million for the settlements/curtailments as a consequence of the Catalysts divestment. Other employee benefits IAS 19 requires provisioning of long-term employee benefits, such as payments on the occasion of a service jubilee of an employee. This is not specifically required under NL GAAP, where costs for such benefits often are recognized on a pay-as-you-go basis. The required provision for other long-term benefits in accordance with IAS 19 amounts to EUR 13 million, which is EUR 8 million after taxes (at December 31, 2004: also EUR 13 million and EUR 8 million, respectively). Revenues General Revenue under IFRS is defined as the revenue from the sale and delivery of goods and services and royalty income, net of rebates, discounts, and similar allowances, and net of sales tax. Revenue is recognized when the significant risks and rewards have been transferred to a third party. 3 IFRS-based reporting for 2004 The Company used to report royalty income under "Other results" in the statement of income. Under IFRS, royalty income is reclassified to "Revenues". Also proceeds for certain services rendered by the Company, which used to be deducted from cost lines in the statement of income, have now been reclassified to "Revenues". Pfizer payment In December 2003, the Company received an initial payment of EUR 88 million (EUR 70 million after taxes) from Pfizer for the codevelopment and comarketing agreement for asenapine. In accordance with the contract and the spirit thereof, this payment is a nonrefundable reimbursement of the expenses incurred by Akzo Nobel in prior years for the development of asenapine-related know-how so far. In accordance with NL GAAP, such payment was recognized as income immediately. In accordance with IFRS revenue recognition rules, nonrefundable upfront fees are initially reported as deferred income and will be recognized as revenue based on the (expected) development costs over the remaining first part of the development period, currently anticipated to be from 2004 to 2007. At December 31, 2004 an amount was deferred of EUR 56 million (EUR 45 million after taxes). This has the consequence that this payment which had already been recognized in 2003 NL GAAP income, is again recognized in IFRS revenues but now over the years 2004-2007. Income taxes As allowed under NL GAAP, the tax effect on the elimination of intercompany profit in inventories is based on the tax rate of the country of the company sending the goods, thus fully eliminating the intercompany sale in the statement of income. IFRS, however, prescribes that tax on such elimination is to be based on the tax rate of the country of the company receiving the goods. As a consequence, the deferred tax asset related to intercompany profit has increased by EUR 76 million at January 1, 2004. At December 31, 2004, this amount was EUR 33 million. Going forward, the impact on earnings will be determined by the changes in levels of intercompany inventory in the various countries. Furthermore, IFRS specifically prescribes that current and deferred tax assets and liabilities in countries which have separate tax rates for distributed and undistributed profits are measured at the tax rate applicable to undistributed profits. The income tax consequences of dividends are recognized when a liability to pay the dividend is recognized. For NL GAAP in certain circumstances such current and deferred tax assets and liabilities can be measured at the tax rate applicable to distributed profits. The impact of this difference on the Company's accounts is limited. 4 IFRS-based reporting for 2004 Business combinations Under NL GAAP, purchased goodwill is capitalized and amortized. IFRS 3 prescribes that purchased goodwill must be capitalized and not amortized, but tested for impairment annually. Akzo Nobel has elected the transition option in IFRS 1 to apply IFRS 3 prospectively from the transition date. This option was chosen rather than to restate all previous business combinations. The impact of IFRS 3 and associated transitional arrangements on Akzo Nobel is as follows: - all prior business combination accounting is frozen at the transition date; and - the value of goodwill is frozen at January 1, 2004, and amortization previously reported under NL GAAP for 2004 is removed for financial statements prepared under IFRS. Provisions Discounting IFRS, in principle, prescribes discounting of all provisions, which is not always the case in NL GAAP. The impact of discounting of provisions thus far undiscounted at January 1, 2004, is a decrease in provisions of EUR 16 million, which is EUR 11 million after taxes. At December 31, 2004, these amounts were EUR 29 million and EUR 20 million, respectively. Going forward, the interest accrued on discounted provisions will be recognized under financing charges. Under NL GAAP, such charges were included in operating income. Restructuring provisions In accordance with NL GAAP, restructuring provisions are recognized if the restructuring had been announced to the employees involved before the date of the financial statements. Under IFRS, a restructuring can only be recognized if this is announced before the balance sheet date. Restructurings for which provisions amounted to EUR 9 million (EUR 6 million after taxes) were announced in January 2004. Therefore, these provisions do not qualify for recognition under IFRS in the balance sheet at January 1, 2004, but are recognized under IFRS in the first quarter of 2004. In the quarters of 2004, certain restructuring provisions reported under NL GAAP also do not meet the IFRS recognition criteria and are deferred for recognition in the next quarter. At December 31, 2004, all provisions qualified for recognition under IFRS. Share-based payments In accordance with NL GAAP, the Company recognized expenses related to stock options as a direct charge to shareholders' equity when the related payments were incurred. In accordance with IFRS 2, the Company's stock option plans qualify as so-called cash-settled plans. As a consequence, the Company has to charge the fair value of the stock options against income (first spread over the vesting period and later over the remaining life of the options) and recognize a related liability in the balance sheet. This liability at January 1, 2004, amounted to EUR 11 million, which is EUR 8 million after taxes. At December 31, 2004, these amounts were EUR 16 million and EUR 10 million, respectively. The fair value has been calculated using the binomial options valuation model. The charge to income over the relevant option vesting periods is adjusted to reflect actual and expected levels of vesting. 5 IFRS-based reporting for 2004 Nonconsolidated companies Valuation of the Company's interest in nonconsolidated companies is based as much as possible on IFRS, as adopted by Akzo Nobel. The impact of the difference between NL GAAP and IFRS for nonconsolidated companies on the Company's accounts is limited. Jointly controlled companies For interests in jointly controlled legally incorporated companies IFRS prescribes that they must be either proportionally consolidated or equity accounted as a nonconsolidated company. The chosen method has to be applied to all such interests. Under NL GAAP, the Company equity accounts most of the jointly controlled interests. However, the joint venture with Sanofi-Synthelabo (for the antithrombotic Arixtra (R)) has been proportionally consolidated. Under IFRS, the Company has elected to equity account all jointly controlled interests. The impact of the deconsolidation in the January 1, 2004 balance sheet of the joint venture with Sanofi-Synthelabo is not significant and does not affect shareholders' equity or net income. Due to the change in setup in the first quarter of 2004, this joint venture ceased to exist and was replaced by a revenue arrangement, based on future sales from jointly developed antithrombotic products. It should be noted that the cooperation with Pfizer for asenapine is not legally incorporated. As a consequence, this cooperation is proportionally consolidated for both NL GAAP and IFRS. Nonrecurring items In its NL GAAP statements, the Company separately reported so-called nonrecurring items. These relate to income and expenses resulting from normal business operations, which, because of their size or nature, are disclosed separately to give a better understanding of the underlying result for the period. These include items such as restructurings and impairment charges, significant gains and losses on the disposal of businesses, and costs related to major lawsuits and antitrust cases, not meeting the requirements for extraordinary items. NL GAAP operating income before nonrecurring items is one of the key figures management uses to assess the performance of the Company, as these figures better reflect the underlying trends in the results of the activities. IFRS does not allow this concept. Therefore, the Company will not report IFRS earnings figures excluding nonrecurring items. However, for a better understanding of the Company's earnings development, the most important elements of nonrecurring items will now be reported on a separate line within operating income in the statement of income. 6 IFRS-based reporting for 2004 Cumulative translation differences The Company chose the option in IFRS 1 whereby cumulative translation differences in shareholders' equity are deemed to be zero at the date of transition. The negative NL GAAP balance of EUR 1,045 million at January 1, 2004, is deducted from "Other reserves", which therefore starts with a negative balance of EUR 414 million. However, as 2004 net income is higher than dividends paid during the year, the balance of "Other reserves" and "Undistributed profit" at December 31, 2004, shows a positive balance of EUR 193 million. It should be noted that if the Company would ever have negative "Other reserves", in principle, it will still be able to pay dividends but then from "Additional paid-in capital". IFRS standards with a prospective impact Financial instruments IAS 39 and IAS 32 address recognition and measurement, and disclosure and presentation for financial instruments. The Company has opted to apply the transition provision of IFRS 1 to postpone the application of these standards until January 1, 2005. Implementation of these standards will result in most financial assets being recognized at fair value and financial liabilities at amortized cost. Accounting for the movements in fair value is dependent on the designation of the relevant financial instrument; in principle such movements are to be recognized in the statement of income, unless hedge accounting can be applied. The Company in principle will not apply hedge accounting for forward foreign currency contracts, except for certain significant contracts for future commitments and cash flows. For interest derivatives, petroleum options, futures for gas and electricity, and similar contracts the Company will apply hedge accounting. Information on the impact of IAS 32 and 39 will be published together with the Report for the 1st Quarter of 2005 on April 19, 2005. Emission rights Starting in 2005, governments will grant CO2 emission allowances to certain companies. IASB and IFRIC recently issued guidance on accounting for such allowances, which will have to be applied from 2006 onwards. The Company still has to decide whether it will adopt this standard earlier for the 2005 financial statements. Arnhem, April 7, 2005 The Board of Management 7 IFRS-based reporting for 2004

R E C O N C I L I A T I O N O F S H A R E H O L D E R S ' E Q U I T Y A T J A N U A R Y 1 , 2 0 0 4 ---------------------------------------------------------------------------------------- ~~Millions of euros (EUR) Full year~~ ------------------------------------------ Capital and Minimum Shareholders' Millions of euros reserves pension liability equity ----- --------------------------------------- ~~2004 2003* change %~~ ----------- ------------------- -------------- Net income excl. nonrec. items 770 811 (5)/4*** - ~~per share, in EUR 2.69 2.84 Net income 856 602 42~~ ----- ~~per share, in EUR 3.00 2.11 Sales Pharma 3,246 3,550 (9) Coatings 5,249 5,160 2 Chemicals 4,305 4,470 (4)/1**** Other (112) (129)~~ ---------- ----------- ~~Total~~NL 12GAAP shareholders' equity at December 31,~~688~~ 132003 3,~~051~~326 (3824) ~~==========~~2,502 ~~==========~~Pensions ~~Operating~~and income**other postretirement benefits (~~EBIT~~1,299) ~~Pharma~~824 ~~522 692~~ (25475)/(14)*** ~~Coatings~~Deferred ~~421~~taxes ~~414~~on 2intercompany ~~Chemicals~~profit ~~354~~76 ~~341~~76 4/21****Pfizer ~~Other~~payment (8770) (~~100~~70) ~~----------~~Discounting ~~----------~~of ~~Total~~provisions ~~1,210~~11 ~~1,347~~11 ~~(10)~~Other ~~==========~~long-term ~~==========~~employee ~~Return~~benefits on(8) ~~sales**,~~(8) inShare-based %payments ~~9.5 10.3 Interest coverage 9.~~(8) (8.1) ~~Number~~Restructuring ofprovisions employees*****6 ~~61,450~~6 ~~64,580~~Other 12 12 -------------------- -------------------- --------------------~~----------------------------~~ IFRS shareholders' equity at January 1, 2004 2,046 2,046 ==================== ==================== ====================

~~----------------------------------------------------------------------------------------------------------------------------------~~S CH OA NR D E NH ~~S E D C~~ O ~~N S O~~ L I D ~~A T~~ E DR S T' ~~A T~~ E MQ EU NI T OY FA IT NJ CA ON MU EA ~~4th~~R ~~quarter~~Y ~~Millions~~1 of, ~~euros~~2 ~~Full~~0 ~~year~~0 4 ------------------------------------ ------------------------------------------------------ ----------~~-------------------------~~ ~~2004~~Millions ~~2003~~of ~~Ch.~~euros %IFRS ~~2004~~NL ~~2003~~GAAP ~~Ch. %~~ ------------ ---------- --------- ---------- ----------- ~~3,040 3,111 (2) Sales 12,688 13,051 (3) (2,786) (2,670) Operating costs (11,478) (11,704)~~ ------~~------~~ ---------- -------~~---~~ ----------- ~~254 441 (42) Operating income* (EBIT) 1,210 1,347 (10) (28) (38) Financing charges (123) (166)~~ ------------ ~~----------~~Subscribed ~~----------~~share ~~-----------~~capital ~~226~~572 ~~403~~572 ~~Operating~~Additional income*paid-in ~~less~~capital ~~financing charges~~ 1,~~087~~803 1,~~181~~803 ~~(72)~~Statutory ~~(130)~~reserves ~~Taxes~~85 ~~(323)~~85 ~~(366)~~Cumulative ~~------------~~translation ~~----------~~differences ~~---------- ----------- 154 273~~ (441,045) Earnings*Other ofreserves ~~consolidated~~and ~~companies,~~undistributed ~~after~~profit ~~taxes 764 815~~ (6414) 181,911 ~~6 Earnings* from nonconsolidated companies 41 36~~ ------------ -----~~-----~~ ---------- ----------- ~~172~~Capital ~~279~~and Earnings*reserves ~~before~~2,046 ~~minority~~3,326 ~~interest~~Minimum ~~805~~pension ~~851~~liability (7824) ~~(11) Minority interest (35) (40)~~ ------------ -----~~-----~~ ---------- ----------- ~~165~~Shareholders' ~~268~~equity ~~(38)~~2,046 ~~Net income excluding nonrecurring items 770 811 (5) (75) (163) Nonrecurring items~~2,502 ~~after taxes and minority interest 86 (209) ------------ ---------- ---------- ---------- 90 105 (14) Net income 856 602 42~~ ============ =====~~=====~~ ========== ========== 8.4 14.2 Return on sales*, in % 9.5 10.3 9.1 11.6 Interest coverage 9.8 8.1 Net income excl. nonrecurring items per share, in EUR 0.58 0.94 - basic 2.69 2.84 0.58 0.93 - diluted 2.69 2.83 Net income per share, in EUR 0.31 0.37 - basic 3.00 2.11 0.31 0.37 - diluted 2.99 2.10 Dividend, in EUR 1.20 1.20 EVA 430 520 389 607 (36) EBITDA 1,803 1,999 (10) 172 201 Capital expenditures 551 581 121 148 Depreciation 540 599 ----------------------------------------------------------------------------------------------------------------------------------- * Excluding nonrecurring items.=

8 IFRS-based reporting for 2004

C O N D E N S E D C O N S O L I D A T E D B A L A N C E S H E E T A T J A N U A R Y 1 , 2 0 0 4 ----------------------------------------------------------------------------------------------------------------------------------- ~~Currency~~Millions ~~Divestments/~~of Ineuros %IFRS ~~Total~~NL ~~Volume~~GAAP ~~Price translation acquisitions~~ -------------------- ----------- ------------- ----------------------------- ------------------ --------------------- ~~Pharma~~Intangible ~~(9)~~assets ~~(7)~~424 1590 (Property, plant and equipment 3),967 -3,967 ~~Coatings~~Deferred 2tax 4assets 923 429 Deferred tax asset for minimum pension liability 361 Other financial noncurrent assets 681 1,076 (Inventories 2),119 ~~(1)~~2,133 ~~Chemicals~~Receivables ~~(4)~~2,679 42,671 1Cash ~~(3)~~and ~~(6)~~cash ~~Akzo~~equivalents ~~Nobel~~727 ~~(3)~~727 1------------------- 1--------------------- (Total 11,520 11,954 =================== ===================== Capital and reserves 2,046 3),326 Minimum pension liability (2824) ------------------- --------------------- Akzo Nobel N.V. shareholders' equity 2,046 2,502 Minority interest 140 140 ------------------- --------------------- Equity 2,186 2,642 Provisions 3,863 2,581 Provision for minimum pension liability 1,342 Deferred income 88 Long-term borrowings 2,717 2,717 Short-term borrowings 441 441 Current liabilities 2,225 2,231 ------------------- --------------------- Total 11,520 11,954 =================== ===================== Gearing 1.11 0.92

9 IFRS-based reporting for 2004

~~-----------------------------------------------~~I N V E S T E D C A P I T A L A T J A N U A R Y 1 , 2 0 0 4 ----------------------------------------------------------------------------------- ~~Change from 2003 Operating~~ -------------~~------------------------------------------------------------------------~~ ~~income* for Operational Currency Lower pension~~ Millions of euros ~~2004~~IFRS ~~Total~~NL ~~performance~~GAAP ~~Divestments translation charges~~ ------------------- ------------- --------- -------------- --- ----------- ------~~-----~~ ----------------~~----~~ Pharma ~~522~~2,555 ~~(170)~~2,506 ~~(153)** - (30) 13~~ Coatings ~~421~~2,041 72,043 ~~15 (5) (16) 13~~ Chemicals ~~354~~2,586 132,604 ~~35 (27) (7) 12~~ Other~~***~~ ~~(87)~~994 13964 1 - 12 ------------- ---~~------~~ --------------- -~~--------------~~ ~~------------ ---------------------~~ Akzo Nobel 18,~~210~~176 ~~(137)~~8,117 ~~(102)~~================= ~~(32) (53) 50 -------------------------------------- ---------- ---------------------------------------------------------------------------------~~================

R E C O N C I L I A T I O N O F F U L L Y E A R 2 0 0 4 N E T I N C O M E -----------------------------------------------------------------------------~~------------------------------------------~~ ~~Restructuring~~ Millions of euros ~~Impairments~~Net ~~charges~~income ~~Total~~ ----------------------------------------------------------~~------~~ ----------------- ~~-----------------~~NL ~~-------------~~GAAP ~~Pharma~~net ~~(31)~~income ~~(20)~~856 ~~(51)~~Pensions ~~Coatings~~and ~~(16)~~other ~~(38)~~postretirement ~~(54)~~benefits ~~Chemicals~~95 ~~(27)~~Deferred ~~(63)~~taxes ~~(90)~~on ~~Other~~intercompany ~~(4)~~profit (443) ~~-----------------~~Pfizer ~~-----------------~~payment ~~-------------~~25 ~~Total~~Termination ~~restructuring~~of ~~and~~goodwill ~~impairment~~amortization ~~charges~~19 ~~(74)~~Discounting ~~(125)~~of ~~(199)~~provisions ~~=================~~9 ~~=================~~Restructuring ~~Gain~~provisions ~~on divestments* 509 Remeron~~ (R6) ~~court~~Share-based cases**payments (893) ~~Addition~~Other tolong-term ~~provision~~employee ~~for~~benefits ~~antitrust~~- ~~cases** (110)~~ Other (217) ------------ Gross nonrecurring items 90 Taxes 25*** ------~~------~~ ~~Nonrecurring~~IFRS ~~items~~net ~~consolidated~~income ~~companies~~945 115 Nonrecurring items nonconsolidated companies (29) ------------ Net nonrecurring items 86 -------------------------------------------------------------------------------------- --------------------------------==================

10 IFRS-based reporting for 2004

C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F I N C O M E ------------------------------------------------------------------------------------------------------------ Millions of euros January-December ---------- ~~December 31, Divestments/ Other December 31, 2004 Restructurings acquisitions changes 2003~~ ------------------ -------------------- ------------------ ------------ ----- ----------------------- IFRS NL GAAP ------------- ------------ ~~Pharma~~Revenues 1912,~~390~~893 12,688 Operating costs (111,~~410~~558) (8011,499) ~~200~~Restructuring ~~20,680~~and ~~Coatings~~impairment ~~29,070~~charges (~~660~~196) ~~580~~(199) ~~810~~Results ~~28,340~~on ~~Chemicals~~divestments ~~11,890~~579 ~~(530)~~509 ~~(2,110)~~Charges ~~120~~related ~~14,410~~to ~~Other~~legal ~~1,100~~and antitrust cases (50191) ~~1,150~~(199) -------------~~-------~~ ------------~~------~~ ~~-----------------~~Operating income 1,527 1,300 Financing charges (144) (123) -------------~~---~~ ------------~~-------~~ ~~Akzo~~Operating ~~Nobel~~income ~~61,450~~less ~~(2,650)~~financing (charges 1,~~610)~~383 1,~~130~~177 ~~64,580~~Taxes (412) (298) -------------~~-------~~ ------------ Earnings of consolidated companies, after taxes 971 879 Earnings from nonconsolidated companies (incl. nonrecurring items) 10 12 ------------- ------------ Earnings before minority interest 981 891 Minority interest (36) (35) ------------- ------------ Net income 945 856 ============= ============ Return on sales, in % 11.8 10.2 Interest coverage 10.6 10.6 Net income per share, in EUR - basic 3.31 3.00 -~~----------------------------------~~ diluted 3.30 2.99 EBITDA 2,097 1,893 Depreciation 542 540 Amortization 28 53

11 IFRS-based reporting for 2004

~~Pharma~~R -E ~~margin~~C ~~protection~~O ~~program~~N ~~mitigating~~C ~~effect~~I ~~top-line~~L ~~decline~~I A T I O N O F S H A R E H O L D E R S ' E Q U I T Y A T D E C E M B E R 3 1 , 2 0 0 4 ------------------------------------ ------------------------------------------- ---------------------------------------- ~~4th~~Capital ~~quarter~~and Minimum pension Shareholders' Millions of euros ~~Full~~reserves ~~year~~liability ~~----------------------------------~~equity ------------------------------------------- ---------------~~------------------------~~ ~~2004 2003 Change % 2004 2003 Change %~~ ---------- ------- ----------- -------~~---~~ --------- ---------~~-----~~ ~~Sales~~NL ~~509~~GAAP ~~582~~shareholders' ~~Organon~~equity ~~2,010~~at 2December 31,~~273~~ ~~261~~2004 ~~256 Intervet 1~~3,~~024~~795 ~~1,010 83 134 Diosynth 366 479~~ (37759) ~~(71) Intragroup sales/other (154) (212) ---------- ------- ---------- -------- 816 901 (9) Total~~ 3,~~246~~036 ~~3,550~~Pensions ~~(9)~~and ~~119~~other ~~285~~postretirement (58)/(40)**benefits Operating income* (~~EBIT~~1,184) ~~522~~759 ~~692~~ (25425)/(14)** ~~14.6~~Deferred 31.6***taxes ~~Return~~ on ~~sales*,~~intercompany inprofit %33 ~~16.1~~33 19.5***Termination ~~30.4 30.5 S&D expenses as %~~ of ~~sales~~goodwill ~~31.5~~amortization ~~31.6~~19 ~~18.2~~19 ~~14.8~~Pfizer ~~R&D~~payment ~~expenses~~(45) as(45) %Discounting of ~~sales~~provisions ~~16.0~~20 ~~15.9~~20 ~~EVA~~Other ~~189~~long-term ~~331~~employee ~~158~~benefits ~~332~~(8) (528) ~~EBITDA~~Share-based ~~690~~payments ~~868~~(10) (2110) 47Restructuring 65provisions ~~Capital~~- ~~expenditures~~- ~~158~~Other ~~210~~6 ~~Invested~~6 ~~capital**** 2,387 2,506 Return on invested capital, in % 21.3 27.8 Capital turnover 1.33 1.43 Number of employees**** 19,390 20,680~~ ----------------- ------------------ ------------------~~------------------------------------------------------------------------------~~ IFRS shareholders' equity at December 31, 2004 2,626 2,626 ================= ================== ==================

S H A R E H O L D E R S ' E Q U I T Y A T D E C E M B E R 3 1 , 2 0 0 4 ----------------------------------------------------------------------------------------------------~~--------------------~~ ~~Autonomous~~Millions ~~growth~~of ~~4th~~euros ~~quarter~~IFRS ~~relative~~NL ~~to,~~GAAP ~~% Autonomous~~ ------------------------- ~~growth relative 2004 Q~~-~~4 2003 Q~~-~~3 2004 Millions of euros or % Full year 2004 2003, %~~ ------------ ----------- --------~~---~~ -----------------~~---------~~ -------------- ------~~---------~~ 9Subscribed ~~(70)~~share 3capital ~~Remeron~~572 ~~(R)~~572 inAdditional ~~U.S. 47 (75) 72 (19) (6) Remeron (R)~~ paid-in ~~rest~~capital of1,803 ~~world~~1,803 ~~316~~Statutory -reserves ~~132~~85 ~~(2)~~85 2Cumulative ~~Contraceptives~~translation ~~522~~differences ~~4 24 76 7 - of which NuvaRing~~ (R20) ~~81 115 78~~ (81,070) 15Other ~~Puregon~~reserves (R759)~~/Follistim~~ ~~(R)~~1,635 ~~285~~Undistributed ~~(11)~~profits 41945 ~~(14)~~770 ~~4 Livial (R) 160 (17)~~ ----------------- -------------------- Capital and reserves 2,626 3,795 Minimum pension liability (759) ----------------- --------------------~~----------------------------------------------~~ Shareholders' equity 2,626 3,036 ================= ====================

12 IFRS-based reporting for 2004

~~Coatings~~C -O ~~shift~~N toD ~~growth~~E ~~mode;~~N ~~raw~~S ~~materials~~E ~~impact~~D ~~increasing~~C O N S O L I D A T E D B A L A N C E S H E E T A T D E C E M B E R 3 1 , 2 0 0 4 --------------------------------------- --------------------------------------- --------------------------------~~------~~ ~~4th quarter~~ Millions of euros ~~Full~~IFRS ~~year~~NL GAAP ------------------------------------- -------------------------------------- ---------------- ----------------~~------~~ ~~2004~~Intangible 2003*assets ~~Change~~448 %561 ~~2004~~Property, 2003*plant ~~Change~~and %equipment ~~----------~~3,535 ~~---------~~3,535 Deferred tax assets 784 351 Deferred tax asset for minimum pension liability 354 Other financial noncurrent assets 624 1,048 Inventories 1,978 1,978 Receivables 2,761 2,767 Cash and cash equivalents 1,811 1,811 ------------ ----~~-----~~ --------- --------~~------~~ ~~Sales~~Total ~~401 374 Decorative Coatings 1~~11,~~911~~941 112,~~842~~405 ~~391~~================ ~~375~~================= ~~Industrial~~Capital ~~activities~~and 1reserves 2,~~592~~626 13,~~489~~795 ~~249~~Minimum ~~211~~pension ~~Car~~liability ~~Refinishes/Nobilas 927 880 213 205 Marine & Protective Coatings 875 832~~ (14759) ~~(1) Intragroup sales/other (56) (12)~~ ---------- ------~~---~~ --------- --------- ~~1,240~~Akzo ~~1,164~~Nobel 7N.V. ~~Total~~shareholders' ~~continued~~equity ~~operations 5~~2,~~249~~626 53,~~031~~036 4Minority ~~Impregnated~~interest ~~papers~~140 ~~129~~140 ---------- ------~~---~~ --------- --------- 1Equity 2,~~240~~766 13,~~164~~176 7Provisions ~~Total 5~~3,~~249~~608 ~~5,160~~ 2 56 82 (32) Operating income** (EBIT) 421 414 2 4.5 7.0 Return on sales**,479 inProvision %for ~~8.0~~minimum ~~8.0~~pension ~~EVA~~liability ~~156 153 89 119 (25) EBITDA 556 561 (~~1),240 39Deferred 51income ~~Capital~~56 ~~expenditures~~Long-term ~~122~~borrowings 124 Invested capital*** 2,~~057~~694 2,~~043~~694 ~~Return~~Short-term onborrowings ~~invested~~258 ~~capital,~~258 inCurrent %liabilities ~~20.5 19.4 Capital turnover~~ 2~~.56~~,559 2~~.42 Number of employees*** 29~~,~~070~~558 ~~28,340~~ ---------------- -----------------~~--------------------------------------------------------------------------------------------------~~ Total 11,941 12,405 ================ ================= Gearing 0.41 0.36

13 IFRS-based reporting for 2004

~~Chemicals~~I -N ~~strong~~V ~~performance~~E ~~improvement;~~S ~~new~~T ~~strategic~~E ~~focus~~D ~~--------------------------------------------------------------------------------------------------------------------~~C ~~4th~~A ~~quarter~~P ~~Millions~~I ofT ~~euros~~A ~~Full~~L ~~year~~A T D E C E M B E R 3 1 , 2 0 0 4 ----------------------------------- ---------------------------------------- ---------------------~~------------~~ ~~2004~~Millions 2003*of ~~Change~~euros %IFRS ~~2004~~NL 2003*GAAP ~~Change %~~ ---------- ------- ------------ -------- ------- ------------ Sales 259 247 Pulp & Paper Chemicals 980 1,008 203 193 Surface Chemistry 863 858 150 143 Functional Chemicals 613 604 154 133 Base Chemicals 575 544 128 121 Polymer Chemicals 494 492 75 67 Salt 274 267 44 44 Energy 175 171 (76) (65) Intragroup sales/other (286) (290) --~~--------~~ ------- -------- --~~----~~ ~~937 883 6 Total continued operations 3,688 3,654 1 70 192 Divested operations 617 816~~ ---------- ------- ~~--------~~Pharma ~~------ 1~~2,~~007~~430 12,~~075~~387 ~~(6)~~Coatings ~~Total 4~~2,~~305~~067 42,~~470~~057 ~~(4)~~Chemicals 892,047 722,043 24Other ~~Operating~~710 income**740 ~~continued operations 315 261 21 (1) 17 Divested operations 39 80~~ ---------- ------- -------- -------- 88Akzo 89Nobel ~~(1) Total operating income** (EBIT) 354 341 4 9.5 8.2 Return on sales** continued operations, in % 8.5~~ 7.1 8.7 8.3 Return on sales**,254 ~~in % 8.2~~ 7~~.6 EVA 101 64 147 167 (12)/4*** EBITDA 634 659 (4)/6*** 88 88 Capital expenditures 269 241 Invested capital**** 2~~,~~043~~227 ~~2,604~~================= Return on invested capital, in % 15.2 12.4 Capital turnover 1.85 1.63 Number of employees**** 11,890 14,410 -------------------------------------------------------------------------------------------------------------------------================

S T A T E M E N T O F C H A N G E S I N S H A R E H O L D E R S ' E Q U I T Y ------------------------------------------------------------------------------------------------~~---------------------~~ ~~C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S~~ Millions of euros ~~Millions~~IFRS ofNL ~~euros~~GAAP ~~(EUR) 2004 2003~~ ------------------------- -------------------------- ~~Total earnings before minority interest 891 651 Depreciation and amortization 593 652~~ -------~~----~~ ----------- Cash flow 1,484 1,303 Pretax gain on divestments (509) (30) Changes in working capital 156 (119) Impairments 74 138 Changes in provisions, deferred tax assets and accrued prepaid pension costs (1) 116 Retained income of nonconsolidated companies 71 3 Other changes (2) (14) ------ ----- ----------- ~~Net~~Shareholders' ~~cash~~equity ~~provided~~at byJanuary ~~operations~~ 1,~~273~~ 12004 2,~~397~~046 ~~Capital~~2,502 ~~expenditures~~Net ~~(551)~~income ~~(581)~~945 ~~Expenditures~~856 ~~for~~Dividend ~~intangible assets~~ (28343) (27343) ~~Acquisitions~~Changes ~~(80)~~related ~~(101)~~to ~~Proceeds~~minimum ~~from~~pension ~~divestments~~liability ~~1,036~~65 ~~203~~Share-based payments (~~Investments~~2)~~/repayments~~ ~~nonconsolidated companies~~ (292) 78Delivery ~~Other~~of ~~changes~~purchased 6shares ~~(23)~~ -~~----------~~ -~~----------~~ ~~Net~~Changes ~~cash~~in ~~generated~~exchange ~~by/(used~~rates ~~for)~~in ~~investing~~respect ~~activities~~of ~~354~~affiliated ~~(451)~~companies ~~Dividends paid~~ (~~366~~20) (~~370~~42) ------- ---------- ~~Funds balance 1,261 576 Net cash used for financing activities (169) (342) Effect of exchange rate changes on cash and cash equivalents (8) (27)~~ ------- --------- ~~Change~~Shareholders' inequity ~~cash~~at ~~and~~December ~~cash~~31, ~~equivalents~~2004 12,~~084~~626 ~~207~~3,036 ======= ========== ~~--------------------------------------------------------------------------------------------------------------------~~================

14 IFRS-based reporting 2004

~~----------------------------------------------------------------------------------------------------------------------~~ C O N D E N S E D C O N S O L I D A T E D BS AT L A NT C E SM H E EN T ~~Millions~~O ofF ~~euros~~C ~~December~~A ~~31,~~S ~~2004~~H ~~December~~F ~~31,~~L ~~2003~~O W S ----------------------------------------------------------- ------------------------- ------------------------------ ~~Intangible~~Millions assets*of ~~561~~euros ~~590~~January ~~Property,~~- ~~plant~~December and equipment 3,535 3,967 Deferred tax assets 351 429 Deferred tax asset for minimum pension liability 354 361 Other financial noncurrent assets 1,048 1,076 Inventories 1,978 2,133 Receivables 2,767 2,671 Cash and cash equivalents 1,811 727 --------------------------- -------------------------- ~~Total 12,405 11,954 =========================== ========================== Capital and reserves 3,795 3,326 Minimum pension liability** (759) (824)~~ ------- -------------------- ----------------------------- ~~Akzo~~IFRS ~~Nobel~~NL ~~N.V.~~GAAP ~~shareholders' equity 3,036 2,502 Minority interest 140 140~~ ---------------------- ----- ----------------- Total earnings before minority interest 981 891 Depreciation and amortization 570 593 -------- -------- ~~Equity~~Cash 3flow 1,~~176~~551 21,~~642~~484 ~~Provisions~~Pretax ~~2,479~~gain ~~2,581~~on ~~Provision~~divestments ~~for~~(579) ~~minimum~~(509) Changes in working capital 164 156 Impairments 74 74 Changes in provisions and deferred tax assets and accrued prepaid pension ~~liability~~costs ~~1,240~~(42) (1~~,342~~) ~~Long-term~~Retained ~~borrowings~~income ~~2,694~~of ~~2,717~~nonconsolidated ~~Short-term~~companies ~~borrowings~~71 ~~258~~71 ~~441~~Other ~~Current~~changes ~~liabilities~~ (2~~,558~~) (2~~,231~~) --------~~-------------------~~ --------~~------------------~~ ~~Total~~Net ~~12,405~~cash ~~11,954~~provided ~~===========================~~by ~~==========================~~operations ~~Gearing 0.36 0.92 Invested capital 7~~1,~~227~~237 81,~~117~~273 ~~Return~~Capital onexpenditures ~~investment,~~(551) in(551) %Expenditures ~~15.8~~for ~~16.0~~intangible ~~Capital~~assets ~~turnover~~(28) ~~1.65~~(28) ~~1.55~~Acquisitions ~~Shareholders'~~(80) ~~equity~~(80) ~~per~~Proceeds ~~share,~~from indivestments ~~EUR~~1,036 ~~10.62~~1,036 ~~8.76~~Investments ~~Number~~nonconsolidated ofcompanies ~~shares~~11 ~~outstanding,~~(29) inOther ~~millions~~changes ~~285.8~~2 ~~285.7~~6 -------- -------- Net cash generated by investing activities 390 354 Dividends paid (366) (366) -------- --------~~------------------------------~~ Funds balance 1,261 1,261 Net cash used for financing activities (169) (169) Effect of exchange rate changes on cash and cash equivalents (8) (8) --------~~--------------------~~ --------~~-----------------~~ Change in cash and cash equivalents 1,084 1,084 ======== =========

15 IFRS-based reporting 2004

C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F I N C O M E ------------------------------------------------------------------------------------------------------------------ Millions of euros 1st quarter 2nd quarter 3rd quarter ------------------------------------ C----------------------- H------------------------ A------------------------ NIFRS GNL EGAAP SIFRS INL NGAAP EIFRS QNL UGAAP I---------- T----------- Y---------- ~~Minimum~~----------- ~~Share~~--------- ~~Capital~~----------- Revenues 3,169 3,138 3,363 3,325 3,222 3,185 Operating costs (2,844) (2,846) (2,992) (2,990) (2,857) (2,856) Restructuring and ~~pension~~impairment ~~holders'~~charges ~~Minority~~(69) ~~Millions~~(61) of(34) ~~euros~~(64) ~~reserves~~(68) ~~liability~~(42) Results on divestments 4 4 458* ~~equity~~458 ~~interest~~Charges ~~Equity~~related to legal and antitrust cases (50) (50) (58) (58) ---------- ----------- ---------- ----------- --------- ----------- Operating income 256 231 291 225 697 687 Financing charges (38) (32) (40) (36) (33) (27) ---------- ----------- ---------- ----------- --------- ~~Balance~~----------- atOperating ~~December~~income ~~31,~~less ~~2003~~financing ~~3,326~~charges ~~(824)~~218 ~~2,502~~199 ~~140~~251 ~~2,642~~189 ~~Income~~664 ~~856~~660 ~~856~~Taxes 35(83) ~~891~~(64) ~~Dividends~~ (~~343~~87) (~~343~~61) (23144) (~~366~~129) ~~Changes~~---------- in----------- ~~exchange~~---------- ~~rates~~----------- ~~(42)~~--------- ~~(42)~~----------- ~~(4)~~Earnings ~~(46)~~of ~~Employee~~consolidated ~~and~~companies, ~~Board~~after ~~share~~taxes ~~plan~~135 135 164 128 520 531 Earnings from nonconsolidated companies (2incl. nonrecurring items) 6 6 (24) (25) ~~Change~~(1) in(1) ~~minimum~~---------- ~~pension~~----------- ~~liability~~---------- 65----------- 65--------- 65----------- ~~Changes~~Earnings inbefore minority interest in141 ~~subsidiaries~~141 160 123 519 530 Minority interest (8) (8) (11) (11) (9) (9) ----------- ----------- ---------- -- --------- --------- ----------- ~~Balance~~Net atincome ~~December~~133 ~~31,~~133 ~~2004~~149 ~~3,795~~112 ~~(759)~~510 ~~3,036~~521 ~~140 3,176~~ =========== =========== ========== == ========= ========= =========== Return on sales, in % 8.1 7.4 8.7 6.8 21.6 21.6 Interest coverage 6.7 7.2 7.3 6.3 21.1 25.4 Net income per share, in EUR - basic 0.47 0.47 0.52 0.39 1.78 1.82 - diluted 0.46 0.46 0.52 0.39 1.78 1.82 EBITDA 406 388 440 380 838 833 Depreciation 144 144 144 143 133 132 Amortization 6 13 5 12 8 14

* The impact of IAS 19 for pensions and other postretirement benefits on the results of divestments of Catalysts and Phosphorus Chemicals was determined in the fourth quarter of 2004. 16 IFRS-based reporting 2004

~~Key~~C ~~Figures~~O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F I N C O M E ------------------------------------------------------------------------------------------------------------------------ Millions of euros 4th quarter January-June January-September --------------------------------------- ------------------------ ------------------------- ------------------------ ~~2004~~IFRS 2003*NL ~~Change~~GAAP %IFRS NL GAAP IFRS NL GAAP --------- ------------ ----------- ------------ ~~Net~~--------- ~~income~~------------ ~~excl.~~Revenues ~~nonrec.~~3,139 ~~items~~3,040 ~~165~~6,532 ~~268~~6,463 9,754 9,648 Operating costs (382,865)/ (172,807)~~***~~ -(5,836) ~~per~~(5,836) ~~share~~(8,693) in(8,692) ~~EUR~~Restructuring ~~0.58~~and ~~0.94~~impairment ~~Net~~charges ~~income~~(25) 90(32) ~~105~~(103) (14125) -(171) ~~per~~(167) ~~share,~~Results inon ~~EUR~~divestments ~~0.31~~117* ~~0.37~~47 ~~Sales~~4 ~~Pharma~~4 ~~816~~462 ~~901~~462 ~~(9)~~Charges ~~Coatings~~related ~~1,240~~to ~~1,164~~legal 7and ~~Chemicals~~antitrust ~~1,007~~cases ~~1,075~~(83) (691)/6**** ~~Other~~(50) (2350) (29108) (108) --------- ------------ ~~Total~~---------- 3------------ --------- ------------ Operating income 283 157 547 456 1,~~040~~244 31,143 Financing charges (33) (28) (78) (68) (111) (295) ~~========~~--------- ~~======~~------------ ---------- ------------ --------- ------------ Operating income** ~~(EBIT)~~less ~~Pharma~~financing ~~119~~charges ~~285~~250 (58)/(40)***129 ~~Coatings~~469 56388 821,133 1,048 Taxes (3298) ~~Chemicals~~(44) 88(170) 89 (1125)/24**** ~~Other~~ (9314) (15254) --------- ------------ ~~Total~~---------- ~~254~~------------ ~~441~~--------- ~~(42)~~------------ ~~========~~Earnings ~~=======~~of ~~Return~~consolidated on sales**companies, inafter %taxes ~~8.4~~152 1485 299 263 819 794 Earnings from nonconsolidated companies (incl.2 ~~Interest~~nonrecurring ~~coverage~~items) 9. 12 2 1 ~~11.6~~1 --------- ------------ ---------- ------------ --------- ------------ Earnings before minority interest 161 97 301 264 820 794 Minority interest (8) (7) (19) (19) (28) (28) --------- ------------ ---------- ------------ --------- ------------ Net income 153 90 282 245 792 766 ========= ============ ========== ============ ========= ============ Return on sales, in % 9.0 5.2 8.4 7.1 12.8 11.8 Interest coverage 8.6 5.6 7.0 6.7 11.2 12.0 Net income per share, in EUR - basic 0.54 0.31 0.99 0.86 2.77 2.68 - diluted 0.53 0.31 0.98 0.85 2.76 2.67 EBITDA 413 292 846 768 1,684 1,601 Depreciation 121 121 288 287 421 419 Amortization 9 14 11 25 19 39

* Includes the impact of IAS 19 for pensions and other postretirement benefits on the results of divestments of Catalysts and Phosphorus Chemicals. 17

S E G M E N T R E P O R T I N G ----------------------------------------------------------------------------------------------------------------------- ~~Currency~~Millions ~~Divestments/~~of Ineuros %1st ~~Total~~quarter ~~Volume~~2nd ~~Price~~quarter ~~translation~~3rd ~~acquisitions~~quarter ------------------------------------- ------------------------ ------------------------- ------------------------- IFRS NL GAAP IFRS NL GAAP IFRS NL GAAP ---------- ------------ ---------- ------------ ---------- ------------ Revenues Pharma 841 821 825 808 826 801 Coatings 1,238 1,231 1,405 1,397 1,388 1,381 Chemicals 1,121 1,118 1,152 1,147 1,037 1,033 Other (931) (832) 2(19) (327) (29) (30) --------- ~~Coatings~~------------ 7---------- ------------ ---------- ------------ Akzo Nobel 3,169 23,138 ~~(2)~~3,363 43,325 3,222 3,185 ========= ============ ========== ============ ========== ============ Operating income Pharma 154 150 71 49 84 69 Coatings 91 82 131 101 118 136 Chemicals 101 93 84 76 510 499 Other (690) 8(94) 5 (1) (315) (1217) --------- ------------ ---------- ------------ ---------- ------------ Akzo Nobel (256 231 291 225 697 687 ========= ============ ========== ============ ========== ============ Invested capital, at end of quarter Pharma 2),708 32,633 12,707 ~~(3)~~2,638 ~~(3)~~2,536 2,484 Coatings 2,264 2,260 2,215 2,208 2,204 2,193 Chemicals 2,630 2,629 2,662 2,657 2,212 2,206 Other 820 798 894 863 868 811 --------- ------------ ---------- ------------ ---------- ------------ Akzo Nobel 8,422 8,320 8,478 8,366 7,820 7,694 ========= ============ ========== ============ ========== ============ Depreciation and amortization Pharma 44 45 40 41 42 43 Coatings 31 34 32 35 30 33 Chemicals 72 75 76 78 67 68 Other 3 3 1 1 2 2 --------- ------------ ---------- ------------ ---------- ------------ Akzo Nobel 150 157 149 155 141 146 ========= ============ ========== ============ ========== ============

18 IFRS-based reporting 2004

S E G M E N T R E P O R T I N G -------------------- ----------------- -------------------------------------------------------------------------~~----------~~ ~~Change~~Millions ~~from~~of euros 4th quarter ofJanuary-June ~~2003 Operating~~ ------------------------------------------------- ---------------------------~~-------~~ ~~income* for 4th Operational Currency Lower pension Millions of euros quarter of 2004 Total performance Divestments translation charges~~ ------------------- ----------- IFRS NL GAAP IFRS NL GAAP ---- -------- ----------- ------------ ----------- ----~~---------~~ Revenues Pharma ~~119~~909 ~~(166)~~816 (164)**1,666 -1,629 ~~(6)~~Coatings 41,247 ~~Coatings~~1,240 562,643 ~~(26)~~2,628 ~~(28)~~Chemicals -1,007 (1,007 2),273 42,265 ~~Chemicals~~Other 88 (124) 14 (1523) (350) 3 Other*** (959) ~~6 3~~ - 3 -----------~~-----~~ -------- ---~~--------~~ ------------ ----------- ----~~---------~~ Akzo Nobel ~~254~~3,139 3,040 6,532 6,463 ============ =========== ============ =============== Operating income Pharma 146 130 225 199 Coatings 56 41 222 183 Chemicals 174 94 185 169 Other (~~187~~93) (~~175~~108) (1585) (1195) 14 ------------ ----------- ------------ --------------- Akzo Nobel 283 157 547 456 ============ =========== ============ =============== Depreciation and amortization Pharma 39 39 84 86 Coatings 30 33 63 69 Chemicals 57 59 148 153 Other 4 4 4 4 ------------ ----------- ------------ --------------~~---------------~~ Akzo Nobel 130 135 299 312 ============ =========== ============ ==============

19 IFRS-based reporting 2004

~~Additional~~S ~~Information~~E ~~The~~G ~~explanatory~~M ~~sheets~~E ~~used~~N byT ~~the~~R ~~CEO~~E ~~during~~P ~~the~~O ~~press~~R T I N G ------------------------------------------------------------------------------------------------------------ Millions of euros January-September January-December ------------------------------------------------- -------------------------- ---------------------------- IFRS NL GAAP IFRS NL GAAP ------------ ----------- ------------ ------------- Revenues Pharma 2,492 2,430 3,401 3,246 Coatings 4,031 4,009 5,278 5,249 Chemicals 3,310 3,298 4,317 4,305 Other (79) (89) (103) (112) ------------ ----------- ------------ ------------ Akzo Nobel ~~N.V.~~9,754 ~~conference~~9,648 ~~can~~12,893 be12,688 ~~viewed~~============ on=========== ============ ============ Operating income Pharma 309 268 455 398 Coatings 340 319 396 360 Chemicals 695 668 869 762 Other (100) (112) (193) (220) ------------ ----------- ------------ ------------ Akzo Nobel's ~~Internet~~1,244 ~~site~~1,143 ~~at:~~1,527 ~~Velperweg~~1,300 76============ ~~www.akzonobel.com/news/presentations.asp~~=========== ~~P.O.~~============ ~~Box~~============ ~~9300~~Depreciation ~~6800~~and SBamortization ~~Arnhem~~Pharma ~~The~~126 ~~Netherlands~~129 ~~Tel.~~165 +168 31Coatings 2693 ~~366~~102 ~~4433~~123 ~~Fax~~135 +Chemicals 31215 26221 ~~366~~272 ~~3250~~280 EOther 6 6 10 10 -~~mail~~----------- ~~ACC@akzonobel.com~~----------- ~~Internet~~------------ ~~www.akzonobel.com~~------------ Akzo Nobel 440 458 570 593 ============ =========== ============ =============

20 IFRS-based reporting 2004

21 IFRS-based reporting 2004 Safe Harbor Statement* This unaudited report contains certain forward-looking statements which address such key issues as Akzo Nobel's future financial results following the transition from NL GAAP to IFRS, including, in particular, the expected impacts of such change on employee benefit and pension accounting, revenue recognition, the method of accounting for income taxes and business combinations, provisions, share-based payments, investments in nonconsolidated companies, nonrecurring items, translation differences and certain other prospective changes related to the transition from reporting in NL GAAP to reporting under IFRS. Such statements are subject to change and should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, changes in regulations or interpretations related to the implementation and reporting under IFRS, decisions to apply a different option of presentation permitted by IFRS, and various other factors related to the implementation of IFRS. For a more complete discussion of the risk factors affecting our business please refer to our Annual Report on Form 20-F filed with the United States Securities and Exchange Commission. The financial information presented contains details of the transitional adjustments required to present certain historical financial results of the Company under IFRS. Future presentation of this historical financial information may be in a different format or the figures presented could differ from those in this report. The transitional adjustments presented have been calculated on the basis of the specific facts of the transaction and should not be used as indicators of future adjustments between NL GAAP and IFRS that will be required, due to the risk and uncertainty surrounding events in the future. This report should not be used as a projection of future results or financial condition. * Pursuant to the U.S. Private Securities Litigation Reform Act 1995. Akzo Nobel N.V. Velperweg 76 P.O. Box 9300 6800 SB Arnhem The Netherlands Tel. + 31 26 366 4433 Fax + 31 26 366 3250 E-mail ACC@akzonobel.com Internet www.akzonobel.com 22

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