+1 - Solvay

Financial
(2) Financial data by region
Group sales by market location are as follows:
EUR Million 2006 % 2007 %
Europe 5 241 56 % 5 400 56 %
NAFTA 2 441 26 % 2 272 24 %
Mercosur 731 8 % 793 8 %
Asia-Pacific and other 986 10 % 1 106 12 %
Total 9 399 100 % 9 572 100 %
Invested capital and capital expenditure by geographical segment are shown below.
Invested capital
Capital expenditure
EUR Million 2006 % 2007 % 2006 % 2007 %
Europe 5 923 75 % 5 987 77 % 573 68 % 578 74 %
NAFTA 1 295 17 % 1 117 14 % 139 16 % 74 10 %
Mercosur 350 4 % 395 5 % 29 3 % 74 10 %
Asia-Pacific and other 300 4 % 335 4 % 109 13 % 50 6 %
Total 7 868 100 % 7 834 100 % 850 100 % 777 100 %
Invested capital includes the non-current assets and working capital as defined in the financial data per Sector above.
77
(3) Gross margin
Expressed as a percentage of sales, gross margin remained unchanged at 34.8 % from 2006 to 2007.
Gross margin includes the balance of the settlement of a dispute with Global Pharmaceuticals Impax Laboratories
(EUR 8 million, EUR 10 million had already been received in 2006 in respect of the same dispute). In 2006 the gross
margin includes EUR 50 million of major milestone payments received in the Pharmaceuticals Sector, which was not
the case in 2007.
(4) Commercial and administrative costs
The Group’s commercial and administrative costs decreased overall by 2.4 % between 2006 and 2007.
In the Pharmaceuticals Sector, they decreased by 5.4 % or EUR 55 million, due mainly to the positive effects of
the “INSPIRE” project and the reversal of a EUR 11 million writedown on trade receivables from the Russian
authorities. In the Chemicals and Plastics Sectors, they increased by 6.9 % and 1.8 % respectively. However, this
increase is due essentially to the reclassification in 2007 of the administrative costs of plants from cost of sales to
commercial and administrative costs.
(5) Research and development costs
These have decreased by 1.2 % on last year.
Research costs increased by 14.3 % in the Chemicals Sector and reduced by 1.7% in the Plastics Sector and by
2.2 % in the Pharmaceuticals Sector.
For the Pharmaceuticals Sector, which represents 75 % of the Group’s R&D expense budgets, the 2.2 % reduction
is explained by the payment in 2006 of EUR 30 million of milestones, in part to Abbott under a research agreement
aimed at accelerating efforts in the cardiometabolics field and in part to Quintiles upon one of our compounds
entering clinical research phase II.
Solvay Global Annual Report 2007