Philips 2005 Annual Report Download - page 81

Philips Annual Report 2005 81
Other Activities
Key data
in millions of euros 2003
1) 2004 1) 2005
Sales 2,218 2,482 2,041
Sales growth
% increase (decrease), nominal (25 ) 12 (18 )
% increase (decrease), comparable (5 ) 18 (5 )
EBIT Corporate Technologies (293 ) (323 ) (219 )
EBIT Corporate Investments (63 ) 35 (62 )
EBIT Other 93 654 125
Total earnings before interest and tax (263 ) 366 (156 )
as a % of sales (11.9 ) 14.7 (7.6 )
Net operating capital (NOC) 150 117 272
Cash fl ows before fi nancing activities (769 ) 741 2,584
Employees (FTEs) 27,086 23,869 19,050
1) Restated to present the MDS activities as a discontinued operation
For a reconciliation to the most directly comparable US GAAP measures, see the
section that begins on page 120.
Introduction
This sector comprises the following groups of activities:
Corporate Technologies (such as Philips Research,
Intellectual Property & Standards, Philips Applied
Technologies and the Technology Incubator), Corporate
Investments (such as Assembléon and Philips Enabling
Technologies Group) and Other (such as Global Service
Units for IT, Finance, Purchasing, Human Resources
Management and Real Estate, Philips Design and Optical
Storage). Most of the activities in Corporate Investments
are being redesigned or disentangled and prepared for
divestment.
Corporate Technologies
EBIT of Corporate Technologies in 2005 amounted to
a loss of EUR 219 million, compared to a loss of EUR 323
million in 2004. The closure of Liquid Crystal on Silicon
(LCoS) activities in the fourth quarter of 2004 and the
divestment of PolyLED in the third quarter of 2005
reduced costs by EUR 77 million compared to 2004.
The Technology Incubator initiated a number of new
products whose development accelerated during 2005,
resulting in higher costs. New incubators for healthcare
and lifestyle were established.
Corporate Investments
EBIT showed a loss of EUR 62 million in 2005, compared
to earnings of EUR 35 million in 2004. This was due to
lower earnings at the main businesses as well as restructuring
and impairment charges (totaling EUR 28 million) in
connection with the repositioning of activities.
Sales of the main businesses Assembléon and Philips Enabling
Technologies Group decreased in 2005 by 12% and 17%
respectively on both a nominal and comparable basis. Sales
and earnings at Assembléon were negatively impacted by
quality problems, since resolved, with the introduction of
a new system. Sales of Philips Enabling Technologies Group
decreased in line with market developments.
In 2005, HTP Automotive, Philips Aerospace and CMS
Louviers were successfully divested, resulting in a positive
cash fl ow of EUR 19 million and a transaction loss of
EUR 5 million.
Other
The Finance Shared Services, People Services, Purchasing
Services, Real Estate Services and IT Services organizations
were key contributors to the effi ciencies achieved in 2005.
EBIT fell from EUR 654 million in 2004 to EUR 125 million
in 2005. The decline is primarily due to the net book gain
in 2004 of EUR 635 million relating to the initial public
offering of NAVTEQ.
EBIT in 2005 was positively impacted by the result of the
Real Estate Service Unit, with various gains on real estate
transactions amounting to EUR 122 million. The sale of
the Philips Pension Competence Center in 2005 resulted
in a gain of EUR 42 million, which was offset by lower EBIT
from Optical Storage, which decreased from EUR 68 million
in 2004 to EUR 4 million in 2005.