Form 20-F 2005

Other revenue includes the provision of services primarily corresponding to the rebilling of costs incurred on behalf of third parties
and commodity and utility trading transactions, or other net sales deemed as incidental by the Group (e.g. temporary contracts
following the sale of businesses).
3.20. Other operating income and expenses
Other operating income and expenses include the gains or losses on disposal of non-current assets where they do not relate
to operations sold or held for sale which are disclosed under profit or loss from discontinued operations in the consolidated income
statement. They also include environmental costs relating to closed sites or ceased activities.
3.21. Operating profit or loss
Operating profit or loss corresponds to all income and expenses not arising from financing activities, associates, discontinued
operations and income tax.
3.22. Finance income and costs
Finance costs comprise the interest on borrowings calculated using the effective interest rate method, the systematic
amortization of transaction costs relating to credit lines, borrowing prepayment or credit line cancellation costs and the discounting
cost of non-current liabilities.
Finance income comprises cash income or dividends.
Net foreign exchange gains or losses and the changes in fair value of derivatives, where the latter are recognized in the income
statement, are presented respectively in finance income or costs, with the exception of changes in fair value of derivatives which
are recognized on the same line item as the hedged transaction.
All interest on borrowings is recognized in finance costs as incurred, with the exception of interest arising from the acquisition,
construction and production of a designated intangible asset or item of property, plant and equipment that is capitalized in the cost
of the asset in accordance with the alternative treatment authorized by IAS 23 Borrowing costs.
3.23. Earnings per share
Basic earnings per share is calculated by dividing net profit or loss by the average number of ordinary shares outstanding
during the period, after deduction of the shares owned by Rhodia.
Diluted earnings per share is calculated by taking into account in the average number of ordinary outstanding shares the
dilutive effect of all existing convertible instruments (stock option plans) and the value of the goods or services receivable for each
stock purchase or subscription option.
Rhodia also discloses basic and diluted earnings per share for continued and discontinued operations.
Form 20 - F 2005 - Rhodia
F-23