Annual report 2005 - Dexia.com

Annual Report 2005below). If those are excluded, the underlyingtax charge went down, from EUR 658 millionin 2004 to EUR 642 million in 2005, but thisvariation of EUR -16 million is partly due tothe positive impact of the arbitrage productsdiscussed above (down EUR 21 million withinthe variation), and partly due to an adjustmentmade in 2004 of the tax charge (on accountof derivative products), with no equivalentin 2005 (down EUR 13 million within thevariation). The tax rate in 2005 evolved asfollows: it was 23.1% (compared to 19.0% in2004) on the basis of reported earnings, and itwas 26.8% (compared to 29.1% in 2004) onthe basis of underlying earnings.Focus on the main non-operatingitemsIn 2005, the contribution of non-operatingitems to the net income – Group shareamounted to EUR +251 million while it wasEUR +214 million during the previous year.Over the year, the main evolutions are asfollows.In the incomeInterest payments were collected on the shareleasingcontracts of Dexia Bank Nederland,from those clients who have accepted the DexiaCommercial Offer. This offer included interestdiscounts, whose value was included in the totalgeneric provision decided in 2002. Since thisprovision was treated as a non-operating item,its utilization is treated in the same manner:related non-operating revenues amounted toEUR 31 million in 2005, vs. EUR 41 million in2004, or a EUR -10 million variance for the fullyear.Capital gains were crystallized in 2005 inthe amount of EUR 166 million, comparedto EUR 141 million in 2004. The main onesare a EUR 70 million gain on the sale of Eural,EUR 27 million on the sale of a participationin SPE, and EUR 13 million on the sale ofa participation in Veolia.The marking to market of the credit defaultswap (CDS) portfolio insured by FSAamounted to EUR 9 million in 2005, with noequivalent in 2004 (see page 36).In the costsThe closure of Rekord in Germany in 2005has caused a charge of EUR 13 million.The creation of the joint venture with RBC hadan effect of EUR 3 million.Cost of risk at Dexia Bank Nederland,treated as a non-operating item, amountedto a total net reversal of EUR 7 million overthe year. As previously reported, an additionalcharge of EUR 97 million was made duringthe first quarter of 2005 in the context ofthe Duisenberg mediation. Besides the netnew charges and reversals amounted toEUR +104 million. This compares to a chargeof EUR +177 million in 2004.41