Form 20-F 2005

Available-for-sale assets are investments in non-consolidated companies as shown below:
At December 31, 2005 At December 31, 2004
(in millions of euros) % held Value % held Value
Phosphoric Fertilizers Industry (Greece) 8.41 4 8.41 9
Other (less than €5 million) - 20 - 32
Total 24 41
20. Deferred tax assets and liabilities
The deferred taxes recognized as non-current assets or liabilities break down as follows:
(in millions of euros) At December 31, 2005 At December 31, 2004
Deferred tax assets 83 99
Less than one year 40 53
More than one year 43 46
Deferred tax liabilities 34 55
Less than one year 7 24
More than one year 27 31
The deferred taxes shown on the face of the balance sheet arise from:
Assets Liabilities Net
(in millions of euros) 2005 2004 2005 2004 2005 2004
Differences between carrying and tax amounts of:
- assets 61 97 (222) (160) (161) (63)
- provisions 289 243 289 243
- other items 67 73 (186) (239) (119) (166)
Tax losses 40 30 40 30
Deferred taxes 457 443 (408) (399) 49 44
Netting effect (374) (344) 374 344
Net deferred taxes 83 99 (34) (55) 49 44
At December 31, 2005, unrecognized deferred tax assets amount to €1,246 million, of which €599 million in tax loss carryforwards
(€352 million at December 31, 2004) that may only be used within prescribed applicable limits. The tax losses of the French tax
consolidation group may be carried forward indefinitely.
At each period-end, Rhodia determines whether each tax entity is likely to generate taxable profits against which its deferred
tax assets may be offset or to benefit from unrecognized available tax credits. To assess this probability, Rhodia considers in
particular current and past results of the tax entities. In the event of recent losses not relating to non-recurring items, Rhodia
considers whether the entities are presumed not to have future taxable profits available to reverse such tax assets or credits. This
analysis led the Group not to recognize net deferred tax assets for the French tax entity. A similar approach was used for the US tax
entity. Although a return to taxable profits was scheduled in 2006, the Group considered that historical losses prevailed over this
forecast in order to assess the probability of using deferred tax assets over and above recognized liabilities. The losses incurred
by the UK tax entity over the year resulted in the recognition of an impairment loss in the amount of €24 million, thus reducing the
net deferred tax assets to zero at December 31, 2005.
F-40 Form 20 - F 2005 - Rhodia