Supplier payment policy

Tomkins requires its operating companies to determine terms and conditions of payment for the supply of capital and revenue items just as keenly as they negotiate prices and other commercial matters. Suppliers are made clearly aware of the agreed terms and how any disputes are to be settled and payment is made in accordance with those terms. The number of days’ credit taken by the Company and the Group for trade purchases is analysed as follows:

Reporting in US dollars

The Group’s principal operations are based in the US and the majority of the Group’s profits is generated in US dollars. When reported in sterling, the Group’s results are therefore exposed to fluctuations in the value of the US dollar. Furthermore, because the Company’s ordinary shares are denominated in sterling, the legal form of shareholders’ investment in the Company no longer reflects its economic substance as an interest in an income stream that is now generated principally in US dollars.

In order to reduce the effect of currency fluctuations on the Group’s reported results in the future, we have decided to present the Group’s financial statements in US dollars with effect from the beginning of the 2008 financial year. In addition, subject to approval by shareholders at the 2008 Annual General Meeting, we intend to redenominate the ordinary share capital of the Company in US dollars. Subsequent to the redenomination, dividends would be declared and paid in US dollars, although unless they elect otherwise, UK shareholders would continue to receive dividends in sterling. As a result, the legal form and economic substance of shareholders’ investment in the Company would be more closely aligned.

Reporting under US GAAP

In recent years, we have filed with the SEC financial statements prepared in accordance with US GAAP in order to satisfy the reporting requirements associated with the listing of the Company’s ADRs on the New York Stock Exchange. We presented those financial statements in the Annual Report alongside the equivalent financial statements prepared in accordance with IFRS.

In November 2007, the SEC announced changes to its rules that permit foreign private issuers to file financial statements prepared in accordance with IFRS without reconciliation to US GAAP. We will make immediate use of the new rules and in respect of the 2007 financial year will file with the SEC financial statements prepared in accordance with IFRS. We therefore no longer prepare financial statements in accordance with US GAAP.

Quarterly reporting

Following changes in the rules of the UK Listing Authority, Tomkins will in future publish Interim Management Statements during the first and second half of the financial year. The Interim Management Statements will describe the Group’s performance during the relevant period and its financial position at the end of the period and will highlight the effect of any material events or transactions that have taken place. The Board believes that this change is consistent with its aim to reduce, where possible, the complexity of the Group’s financial reporting and focus on those matters that are of significance to investors.

Tomkins will continue to publish a half-yearly report that includes condensed financial statements prepared in accordance with IAS 34 “Interim Financial Statements”.