Form 20-F 2005

At December 31, 2005, a sudden 10% increase in the U.S. dollar compared with these reporting currencies would generate
an exchange loss of €107 million.
As part of the hedging of its long-term debt denominated in U.S. dollars, Rhodia has entered into foreign exchange option
contracts maturing in May 2007. These contracts are not recognized as hedges for accounting purposes, even if they are used for
hedging purposes.
Foreign exchange derivatives portfolio
The nominal amounts as well as the fair values of forward purchase and sale contracts and foreign exchange options are
detailed below:
(in millions of euros) At December 31, 2005 At December 31, 2004
Forward purchases Currency Nominal Fair value Nominal Fair value
USD 335 5 61 (3)
GBP 73 2
JPY 9 44
BRE 45 26
Other 73 64
Total 535 5 197 (3)
Forward sales USD 251 28
GBP 296 3 162 2
JPY 28 35
BRE 46
Other 46 33
Total 621 3 304 2
Call purchases USD 362 22
Other
Call sales
Total 362 22
USD
Other
Total
Put purchases USD 59 1 59 2
Other
Total 59 1 59 2
Put sales USD 362 (4)
Other
Total 362 (4)
Total 1,939 27 560 1
The purpose of foreign exchange options is to hedge exposure to U.S. dollar-denominated debt.
At December 31, 2005, a sudden 10% increase in the U.S. dollar compared with the euro would generate an exchange gain
of approximately €32 million on these options.
Forward currency purchase and sale contracts are mainly entered into by Rhodia S.A. to hedge its inter-company loans
and borrowings denominated in foreign currencies in order to obtain a net exchange position at Rhodia S.A. close to zero.
At December 31, 2005, the change in such currencies compared with the euro on this net exchange position would have little impact
on the Group’s net foreign exchange gains and losses.
Furthermore, in connection with the hedging of Rhodia’s ordinary business transactions, a future transaction exchange
hedge was set up in 2005. At December 31, 2005, this hedge was recognized in equity under “Fair value reserve” in an amount of
€(1) million. The financial expense relating to the ineffective portion of this hedge recognized in 2005 was immaterial.
Form 20 - F 2005 - Rhodia
F-53