Form 20-F 2005

The increase in finance costs in 2005 was mainly due to the rise in costs from €60 million to €79 million of our refinancing transactions,
which break down as follows:
€39 million in respect of the premium paid for the early redemption of €128 million and $ 310 million of High Yield Notes;
€15 million in respect of the accelerated amortization of issuance costs related to the High Yield Notes that were 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 entering of a new syndicated credit facility on June 17, 2005;
€8 million in respect of the early redemption premium regarding the European Medium-Term Notes (EMTNs)
maturing in 2006.
Foreign exchange gains or losses
A foreign exchange loss of €67 million was recognized in 2005, compared with a foreign exchange gain of €67 million in 2004. This
loss stems mainly from the appreciation of the U.S. dollar against the euro at the end of 2005, resulting in unrealized losses on
unhedged U.S. dollar-denominated debt.
Share of profit of associates
Rhodia’s share in the profit of associates in 2005 was zero, compared with a €3 million profit share in 2004.
Income tax expense
Income tax expense for 2005 totaled €49 million, compared with €102 million in 2004. In 2005, the income tax expense comprised
a current tax expense of €23 million and a deferred tax expense of €26 million, mainly including a €24 million impairment loss for
the deferred tax assets of the UK tax group existing at the beginning of the year due to new tax losses incurred during the year.
In 2004, the income tax expense took into account the probability of recovering the deferred tax assets of the UK tax group, resulting
in the recognition of an impairment loss in the amount of €61 million.
Form 20 - F 2005 - Rhodia
49