APC 2004 Annual Report Download - page 51

49
Business Review
Minority interests declined 7.9% to 69 million fol-
lowing the buyout of minority interests in Infra+, SE
Manufacturing Batam and Toshiba Schneider Inverter
Corp. This was partially offset by the recognition of
minority interests in MGE UPS Systems.
Provisions for contingencies
Provisions for contingencies came to 870 million, or
6.7% of the balance sheet total. This item primarily
comprises provisions for pensions and similar bene-
fits in an amount of 661 million. The 12 million
decrease from 2003 reflects a decline in the Group's
projected benefit obligation in the UK after benefits
were renegotiated with employee representatives, off-
set by the consolidation of MGE UPS.
Other provisions for contingencies rose to 209 mil-
lion from 157 million in 2003. Following a detailed
review of provisions carried out in preparation for the
transition to IFRS, 36 million in provisions for envi-
ronmental risks were reclassified as long-term. In
addition, technical risks increased by 20 million due
to a recall campaign for AFI Breakers in the United
States.
Long-term debt
Total long-term debt stood at 1,294 million, or 9.9%
of the balance sheet total. The 141 million decline
from 2003 reflects the amortization of perpetual
bonds, in an amount of 41 million, and repayment of
bank loans held by subsidiaries primarily located in
the UK, Australia and New Zealand, in an amount of
100 million.
Short-term debt amounted to 254 million, or 1.9%
of the balance sheet total This item declined by 999
million over the year, primarily due to redemption of a
951 million bond issue in April 2004 and a 65 mil-
lion reduction in bank overdrafts. These factors were
partially offset by a 27 million increase in other
short-term borrowings in non-French subsidiaries.
Other long-term and short-term liabilities
Other long-term liabilities totaled 104 million and
primarily include acquisition debt of 48 million for
MGE UPS (of which a 24 million earn-out payment
based on operating income at September 30, 2005
and 24 million in deferred consideration), 36 mil-
lion for Clipsal, 16 million for Magnecraft assets and
3 million for Abacus.
Other short-term liabilities primarily include trade
accounts payable, other payables and accrued liabili-
ties, accrued taxes and payroll costs, and deferred tax
liabilities. Together, they represent 22.1% of the bal-
ance sheet total. This item rose an aggregate 9.5%
over the year to 2,879 million. Trade accounts
payable increased by 11.7% and accrued taxes grew
28.1% due to the upturn in business and the resulting
improvement in the Group's earnings performance.
Consolidated statement
of cash flows
The consolidated statement of cash flows breaks
down cash used or provided by different activities dur-
ing the year.
Operating activities
Net cash provided by operating activities before
changes in operating assets and liabilities rose 10.7%
to 1,260 million, representing 12.1% of sales.
Changes in working capital represented a negative
138 million, as strong sales growth led to an
increase in inventories and accounts receivable. The
decrease in other current assets and liabilities primar-
ily reflects a 63 million change in tax assets and lia-
bilities.
Net cash provided by operating activities totaled
1,123 million, down 10.6% from 1,254 million in
2003.
Investing activities
Net cash used by investment in operating assets
amounted to 284 million versus 265 million in
2003. Purchases of intangible assets and of property,
plant and equipment declined to 2.7% of sales from
3% the year before and were more than offset by
depreciation of existing industrial assets, reflecting the
growing practice of investing in production facilities in
the Asia-Pacific region and the rest of the world.
Net financial investments used 801 million com-
pared with 596 million in 2003. The investment in
MGE UPS Systems came to 233 million, taking into
account acquired cash, convertible bonds and acqui-
sition debt, but excluding assumed debt of 328 mil-
lion. Other major transactions in 2004 included the
acquisitions of Andover Controls for 332 million,
Kavlico for 162 million, various minority interests
(notably in Infra +) for 38 million, and the subscrip-
tion of new shares worth 11 million as part of
Finaxa's capital increase.
Other new long-term investments totaled 26 million
and comprised long-term receivables and capitalized
interest. In 2003, this item primarily comprised a loan
to Clipsal in an amount of 259 million.
The change in long-term pension assets reflects a
13 million contribution to pension plans in the UK,
compared with a 143 million contribution to plans in
the US the year before.
In all, investing activities used 1,124 million in 2004
versus 1,265 million in 2003.