APC 2006 Annual Report Download - page 111

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5
Divestments
During first-half 2006, the Group sold Num, a sub-
sidiary specialized in numerical control systems, and
Mafelec, a specialty manufacturer of onboard push-but-
ton switches. The impact of these divestments on the
consolidated financial statements was not material.
Acquisitions in progress
APC
On October 30, 2006, Schneider Electric announced a
friendly offer to purchase all outstanding shares of US-
based American Power Conversion (APC), the world
leader in critical power.
By combining APC with its subsidiary MGE UPS Sys-
tems, Schneider Electric will become the global bench-
mark in critical power.
The anti-trust regulatory review in the United States
ended on December 12, 2006 when the waiting period
under the Hart-Scott-Rodino Antitrust Improvements
Act expired.
APC's shareholders approved the proposed merger in
Extraordinary Meeting on January 16, 2007.
The European Commission's competition authorities
granted final clearance on February 8, 2007 pending
certain divestments. The Group plans to divest its
MGE-UPS Systems operations in small systems
below 10kVA. With estimated revenue of around 150
million, the divestment represents 6% of the combined
operations of APC and MGE-UPS in Critical Power.
Other acquisitions
On June 27, 2006, the Group announced its intention
to take an equity stake of 40% in SBVE (Shaanxi
Baoguang Vacuum Electronic), a leading Chinese
manufacturer of Vacuum Interrupters. Such an equity
stake may only be obtained if the equity reform plan
presented by SBVE is approved by the relevant
authorities and shareholders, and a number of other
conditions precedent are satisfied.
On December 18, 2006, Schneider Electric announced
that it had signed an agreement to create Delixi Elec-
tric, a joint venture with Chinese partner Delixi Group.
The 50-50 joint venture will manufacture, market and
distribute low-voltage products in China, pending
approval from local authorities.
Other changes
In 2006, the Group acquired a further 10.8% stake in
MGE UPS, raising its interest to 95.7%.
3.2 - Impact of changes in the scope
of consolidation on 2006 results
Changes in the scope of consolidation had the follow-
ing impact:
Impact on 2006 revenue and profit
2005 2006
Reported Excl. acquisitions Acquisitions Reported
Revenue 11,678.8 12,929.5 800.2 13,729.7
Operating profit 1,565.3 1,897.9 102.8 2,000.7
Operating margin 13.4% 14.7% 12.9% 14.6%
Profit attributable to equity holders
of the parent 994.3 1,244.1 65.3 1,309.4
The following table shows the full-year impact of these
acquisitions on 2006 revenue, operating profit and
profit attributable to equity holders of the parent (i.e. as
if the acquisitions had been made on January 1, 2006).
Impact on cash
Changes in the scope of consolidation reduced the
Group’s cash position by a net 897.8 million, as
described below:
2006
Acquisitions (891.4)
Cash and cash equivalents paid (935.8)
Cash and cash equivalents acquired 44.4
Disposals (1.1)
Other operations (5.3)
Net financial investments (897.8)
2006 2006 Incl.
Reported acquisitions
over the full
year
Revenue 13,729.7 14,058.5
Operating profit 2,000.7 2,015.9
Operating margin 14.6% 14.3%
Profit of the period 1,309.4 1,317.0
Impact on the balance sheet
at December 31, 2006
The impact of the year’s acquisitions on the main
balance sheet items at December 31, 2006 was as
follows:
Contribution Dec. 31, %
from 2006
acquisitions Reported
Goodwill 793.2 6,185.7 12.8 %
Property, plant
& equipment and
intangible assets 98.8 3,114.6 3.2 %
Working capital 226.7 2,991.9 7.6 %
Capital employed 1,118.7 12,292.2 9.1 %