APC 2005 Annual Report Download - page 57

55
renewed capital spending. Operations in Eastern
Europe maintained organic growth at a high 11.8%,
while Spain saw organic growth rise to 9.2%. In France,
revenue rose 3.1% in uneven business conditions.
Full-year revenue declined slightly in Italy, reflecting a
difficult first half followed by a noticeable upturn in the
second part of the year. All the other countries in the
region reported higher revenue in 2005.
In North America, revenue rose 21.8% on a current
basis, to 3,047 million, and 7.8% on a constant
structure and currency basis. Backed by a very favor-
able economy, the Group achieved strong growth
across its businesses. Energy management recorded
a significant increase while revenue from building
automation rose at a slower pace.
Revenue in the Asia-Pacific Division increased 11.1%
on a current basis, to 2,031 million, and 9.3% on a
constant structure and currency basis. Growth in this
region reflects the Group’s very good performance in
India (up 26.4%) and China (up 14.3%), as well as its
strong momentum in Southeast Asia (up 16%).
In the Rest of the World, reported revenue rose 27%
to 958 million. On a constant structure and currency
basis, growth came to 23.5%. In particular, the equip-
ment business had a very good year, notably in the
Middle East. Operations in South America also per-
formed well thanks to high capital spending fueled by
growth in the oil and mining industries.
Breakdown by business
Electrical Distribution revenue totaled 7,307 million,
or 63% of the consolidated total. This represents an
increase of 12.3% on a current basis and 9.7% on a
constant structure and currency basis (the main
changes in scope during the year being the acquisi-
tions of Power Measurement and Juno Lighting).
Automation & Control revenue rose a reported 6.4% to
2,892 million, or 4.6% on a constant structure and
currency basis.
The Growth Platforms are new activities under devel-
opment that are managed separately from Schneider
Electric’s core businesses:
Building automation and security.
Secured power.
Sensors for repetitive machines.
Revenue from these activities increased 31.8% to
1,480 million, lifted by the year’s acquisitions. These
included BEI Technologies in customized sensors and
ABS EMEA, which enhanced TAC’s building automa-
tion lineup. On a constant structure and currency
basis, Growth Platform revenue rose 6.1%.
Operating profit
Data by region includes the contribution from the
Growth Platforms.
Operating profit grew 21.7% on a current basis, to
1,565.3 million from 1,286.4 million in 2004, and
17.1% on a constant structure and currency basis.
Operating margin widened by one point, to 13.4%
from 12.4% the year before.
Application of IFRS had a very limited impact on oper-
ating profit (2 million), reflecting the reclassification of
restructuring costs formerly recorded under net
exceptional income/(expense) and the positive effect
of capitalizing research and development projects.
Operating profit under IFRS includes 107 million in
costs stemming from industrial redeployment (primari-
ly in Europe), and 8.4 million in goodwill impairment
for some fifteen entities. Capitalization of development
costs had an impact on operating profit of 100 mil-
lion in 2005, net of amortization, versus 46 million in
2004.
Operating margin by region
Operating margin in Europe grew by 0.7 point to
13.5% thanks primarily to a slightly higher gross mar-
gin and tight control over administrative and general
costs.
In North America, operating margin also widened by
0.7 point, to 13.3%.
Operating margin in the Asia-Pacific region improved
by 1.6 point to end the year at 12.9%.
The Rest of the World reported an operating margin of
14.0%, versus 12.5% in 2004.
Operating margin by business
Electrical Distribution operating margin increased by
1.1 points to 13.9%. Newly consolidated companies
and exchange rate fluctuations did not have any
impact.
The Automation & Controls business achieved an
operating margin of 12.7%, up 0.7 point from 2004. On
a constant structure and currency basis, operating
margin was 12.9%.
Together, the Growth Platforms contributed an operat-
ing margin of 12.2%, an increase of 0.6 point from the
year before.
Finance costs and other financial income
and expense, net
Finance costs and other financial income and
expense, net totaled (104.6) million compared with
(59.3) million in 2004. Substantially all of the increase
came from growth in borrowings, notably to finance
acquisitions.The Group carried out a 1.5 billion bond
issue in August 2005.
Application of IAS 32 and IAS 39, two accounting
standards concerning financial instruments, as from
January 1, 2005 had a marginally positive impact of
0.6 million.
Income tax
The effective tax rate stood at 29.1% compared with
29.8% at December 31, 2004.
Business Review