Pharmaceuticals Sector - Solvay

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56 Solvay Global Annual Report 2005 The Pharmaceuticals Sector produces most of the active ingredients needed for manufacturing the drugs in its portfolio. In the Plastics Sector, the situation differs between Specialties and Vinyls. The vinyl activities are largely integrated in terms of chlorine but not for the ethylene needed for producing PVC. Fluctuations in the price of ethylene affect the margins of this activity to a greater or lesser extent depending on the market situation and the possibility of passing on these fl uctuations in PVC sales prices. Specialties (Specialty Polymers and Inergy Automotive Systems), with their technology content and high added value, are less sensitive to raw materials prices. Fluorinated polymers enjoy a high degree of upstream integration, high performance polymers less so. PARENT COMPANY RESULTS EUR million 2004 2005 Net profi t for the year available for distribution 226 387 Carried forward 347 363 Total available to the General Shareholders’ Meeting 573 750 Allocations: Gross dividend 210 *221 Carried forward 363 *529 Total 573 750 * These amounts may increase slightly owing to the exercise of share options covered by earlier share purchases. Comments The company recorded a net current loss before taxes of EUR 23 million, compared with a profi t of EUR 87 million in 2004. The net extraordinary gain was EUR 377 million as against EUR 151 million in 2004. The reorganization of pharmaceutical activities with the Solvay group has produced major changes in the investments held by Solvay S.A. These movements have been recorded at market value as required by Belgian accounting law. The company has decided, however, to maintain its investment in its pharmaceutical holding company at the historical value of the contributed investments, so as not to excessively impact the parent company earnings with internal capital gains. Taking into account a EUR 33 million tax credit (compared with a EUR 12 million tax charge in 2004), the net profi t of Solvay S.A. in 2005 amounted to EUR 387 million, compared to EUR 226 million in 2004. In the absence of transfers to untaxed reserves, net income of EUR 387 million is available for distribution (71% more than in 2004). STATUTORY AUDITOR’S EXAMINATION OF THE ACCOUNTS On June 3, 2004 the General Shareholders’ Meeting appointed Deloitte as Statutory Auditor. The Statutory Auditor’s report can be found on page 105. In 2005 Deloitte & Touche received additional fees of EUR 268 thousand. Deloitte’s fees in 2004 for all consolidated Group companies together amounted to - account auditing fees EUR 4 184 thousand - other auditing and other services EUR 420 thousand - consulting and tax advice EUR 121 thousand
Financial Statements The following fi nancial statements were approved by the Board of Directors meeting on February 15, 2006. They have been drawn up in accordance with the IFRS valuation rules which are set out in the coming pages. Information on related parties required by IAS 24 can be found in the «Corporate governance» insert to the annual report. The 2004 accounts have been restated in line with the new IFRS 5 on discontinued operations, which requires the earnings from these activities to be presented on a single line. Net income for 2004 remains unchanged. Consolidated income statement (Notes 1-2) EUR million Notes 2004 2005 Net sales 7 271 8 562 Cost of goods sold -4 777 -5 724 Gross margin (3) 2 494 2 838 Commercial and administrative costs (4) -1 252 -1 417 Research and development costs (5) -408 -472 Other operating gains and losses (6) -52 -4 Other fi nancial gains and losses (7) -41 -33 REBIT (8) 741 912 Non-recurring items (9) -67 -357 EBIT 674 555 Charges on net indebtedness (10) -89 -85 Income taxes (11) -125 -153 Discontinued activities (12) 66 476 Income from investments (13) 15 23 Net income of the Group (14) 541 816 Minority interests -52 -27 Net income (Solvay share) 489 789 Earnings per share 5.92 9.51 Diluted earnings per share (15) 5.90 9.46 RATIOS Gross margin as a% of sales 34.3 33.1 Times charges earned* 8.3 10.7 Income taxes / Earnings before taxes (%) ** 20.8 31.0 * Times charges earned = REBIT / Charges on net indebtedness. ** Earnings before taxes = Group net income - income from discontinued operations + income taxes Explanatory notes are found after the fi nancial statements. Solvay Global Annual Report 2005 57
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Driven by the future Growth, Compet
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Highlights January 2005 Solvay fi n
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Activities Group sales 2005 = EUR 8
Page 7 and 8:
Our Vision - Independent industrial
Page 9 and 10: here to stay, in our view irreversi
Page 11 and 12: Board of Directors and Corporate Go
Page 13 and 14: 4 Executive Committee and General M
Page 15 and 16: Such a strategy is possible only wi
Page 17 and 18: Specialities Solvay Specialties fro
Page 19 and 20: Key fi gures [EUR million] Pharmace
Page 21 and 22: Cardiometabolic Cardiovascular dise
Page 23 and 24: Cardiometabolics Fenofi brate, TRIC
Page 25 and 26: “ DUODOPA® entered Solvay’s pr
Page 27 and 28: Pharmaceuticals Sector Therapeutic
Page 29 and 30: Key fi gures [EUR million] Chemical
Page 31 and 32: Growth To speed up its growth, the
Page 33 and 34: Initiatives have also been launched
Page 35 and 36: “ The ‘Soil Remediation Reagent
Page 37 and 38: Key fi gures [EUR million] Plastics
Page 39 and 40: Innovation “Twin-Sheet Blow Mould
Page 41 and 42: Plastics 37 Solvay Global Annual Re
Page 43 and 44: which it was able to take advantage
Page 45 and 46: New Business Development Priority t
Page 47 and 48: Meeting The Science Days organized
Page 49 and 50: Human Resources The Group’s fi ve
Page 51 and 52: “ At the end of this seminar, all
Page 53 and 54: Sustainable Development 2005 saw th
Page 55 and 56: Accident frequency rate Persons wor
Page 57 and 58: Management Report New records for S
Page 59: Expenditure on the future by Sector
Page 63 and 64: Consolidated balance sheet EUR mill
Page 65 and 66: IFRS valuation rules The main accou
Page 67 and 68: 9. Impairment Every year the Group
Page 69 and 70: Notes to the fi nancial statements
Page 71 and 72: (2) Financial data by region These
Page 73 and 74: and the estimated fi nancial conseq
Page 75 and 76: The deferred taxes recorded in the
Page 77 and 78: 2005 Millions EUR Acquisitions Disp
Page 79 and 80: Neopharma On January 19, 2005 the S
Page 81 and 82: (around 300 persons) with a view to
Page 83 and 84: In 2005 the impairment tests on goo
Page 85 and 86: Solvay Group purchased 100% of the
Page 87 and 88: Post-employment benefi t plans are
Page 89 and 90: Actuarial assumptions used in deter
Page 91 and 92: Analysis of total fi nancial debt b
Page 93 and 94: In this way, at the end of 2005, th
Page 95 and 96: The following amounts relating to J
Page 97 and 98: PORTUGAL Fournier Farmaceutica Port
Page 99 and 100: List of fully consolidated Group co
Page 101 and 102: Solvay Salz Holding GmbH, Hannover
Page 103 and 104: CANADA Fournier Pharma, Inc., Montr
Page 105 and 106: GREAT BRITAIN Inergy Automotive Sys
Page 107 and 108: Summary fi nancial statements of So
Page 109 and 110: Statutory auditor’s report to the
Page 111 and 112:
The Solvay share compared with the
Page 113 and 114:
Contacts: The Investor Relations Te
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Shareholders’ Diary - May 9, 2006
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Pharmaceuticals Sector - Solvay

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