Form 20-F 2005

10.1 Other finance income and costs
In 2005, other net finance costs are primarily related to refinancing transactions and break down as follows:
€39 million in respect of the early redemption premium of €128 million and the High-Yield debt issue in the amount of
$310 million (1) ;
€15 million in respect of the accelerated amortization of the High-Yield debt issue costs in respect of the portion of High-
Yield (1) bonds that was redeemed early;
€17 million in respect of the accelerated amortization of the origination fees for the medium-term Refinancing Facilities
Agreement (RFA), pursuant to the set-up of a new syndicated credit line on June 17, 2005;
€8 million in respect of the early redemption premium regarding the European Medium-Term Notes (EMTNs) maturing in
2006.
In 2004, other finance costs included a one-time amortization charge of €(7) million recognized when the maximum amount of
the RFA credit line was reduced, €(12) million upon the early redemption of the EMTN debt issue maturing in 2005 and €(25) million
of expenses relating to the Group’s financial restructuring.
10.2. Foreign exchange gains or losses
In 2004 and 2005, foreign exchange gains or losses mainly comprise the unrealized gains or losses on the unhedged US
dollar-denominated debt.
11. Income tax expense
At December 31, 2005, the income tax expense amounts to €(49) million based on a consolidated loss before tax of
€(339) million.
The income tax expense breaks down as follows:
(in millions of euros) 2005 2004
Current income tax expense (23) (43)
Income tax for the period (23) (43)
Adjustment recognized over the period for the current income tax due for prior years - -
Deferred tax expense (26) (59)
Deferred tax for the period (2) 9
Impairment of deferred tax asset (24) (68)
Income tax expense for the year (49) (102)
The reconciliation between the statutory tax rate in France and the effective tax rate before reclassification of discontinued
operations is as follows:
2005 2004
Statutory tax rate in France 33.33% 33.33%
Foreign exchange differences between France and other countries (0.71)% 0.51%
Impact of reduced rates (3.46)% 0.48%
Other permanent differences 16.37% 7.52%
Deferred tax assets (53.07)% (69.88)%
Effective tax rate (7.54)% (28.04)%
(1) See Note 26-Borrowing and Note 35-Subsequent events.
Form 20 - F 2005 - Rhodia
F-31