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ANNUAL REPORT 2005 | CONSOLIDATED FINANCIAL RESULTS
The wages and salaries expense for 2005 includes the severance
payment paid to the employees in accordance with the Amendment to
the Collective Labor Agreement relating the closure of Hodonín plant in
2005 described in Note 7. The total amount charged to expenses was
CZK 206 million.
The Group is legally required to make contributions to government health,
retirement benefit and unemployment schemes. During 2005 and 2004,
the Group paid contributions at a rate of 35% of gross salaries and is not
required to make any contributions in excess of this statutory rate.
The Group has a voluntary pension plan for employees under which
the Group makes contributions on behalf of the Group’s employees to
approved pension plan providers, under defined contribution schemes.
Certain members of the Group’s management participate in the Altria
Group’s stock compensation plans. As at December 31, 2005, the 2005
Performance Incentive Plan (the “2005 Plan”) was in place and as at
December 31, 2004, 2000 Performance Incentive Plan (the “2000 Plan”)
was in place. Under both 2005 and 2000 Plans, the Parent Company
granted stock options and restricted stock to eligible employees.
Compensation expenses arising in respect of these plans incurred by
Altria Group are recharged to the Group for the applicable employee’s
employment period at the Group, upon the exercise of the award by
the employee. Related expenses for 2005 amounted to CZK 37 million
(2004: CZK 33 million).
Liability in respect of the awards outstanding as at December 31, 2005
was CZK 73 million (2004: CZK 48 million).
19. OTHER OPERATING INCOME
2005 2004
Software recharges – 12
Sale of tobbaco dust 7 2
Exchange rate gain 56 103
Gain on sale of PP&E 2 –
Other 10 15
Total 75 132
20. OTHER OPERATING EXPENSE
2005 2004
Marketing prizes 71 138
Exchange rate losses 48 44
Loss on sale of materials 39 73
Insurance premium 26 36
Donation 16 24
Loss on sale of PP&E – 13
Other 12 16
Total 212 344
21. FINANCE COSTS
Finance costs include the interest expense and bank charges.
2005 2004
Interest expense - loans from related parties 1 1
Bank charges 15 14
Total 16 15
22. INCOME TAX EXPENSE
2005 2004
Current tax (1 166) (1 550)
Deferred tax 122 34
Total income tax expense (1 044) (1 516)
Reconciliation of income tax expense to tax expense calculated on the Group’s profit before tax:
2005 2004
Profit before tax 3 780 5 232
Applicable tax rate (%) 26% 28%
Tax calculated at local tax rate applicable to profit (983) (1 465)
Expenses not deductible for tax purposes (44) (53)
Income not subject to tax 1 2
Permanent differences 4 13
Effect on change of income tax rate (13) (33)
Effect on difference of income tax rate applicable in Subsidiary 12 16
Other (21) 4
Tax charge (1 044) (1 516)
The Czech corporate income tax rate for 2005 was at 26% (2004: 28%); the Slovak corporate income tax rate for 2005 and 2004 was 19%.
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