Annual report 2005 - Dexia.com

DexiaFinancial resultsConcerning the situation of Dexia BankNederland, an update on the share-leasingcontracts is made on page 86 of the AnnualReport - Accounts and Reports.Non-operating taxes amounted to a creditof EUR +40 million in 2005 (compared toEUR +230 million in 2004) and stemmed,aside from the tax impacts of the nonoperatingitems discussed above, from variousevents, the main ones being the settlementof a tax dispute (EUR +28 million) andthe positive tax incidence of impairmentsmade on a subsidiary of Dexia BIL(EUR +17 million).Overall financial performanceThe profit margin (net income beforeminority interests related to total revenues)stood at 35.0% in 2005, higher than in 2004(33.6%).Return on equity (ROE) stood at 20.0%(compared to 17.2% in 2004), well aboveGroup’s medium-term objective, partly underthe influence of the non-operating items.Earnings per share (EPS) reached EUR1.87 in 2005 (non diluted), up 14.5% overthe previous year. Of note, the share buybackprogram was pursued, with 32,707,600 sharespurchased during the year, amounting tonearly EUR 600 million.Group Tier 1 ratio continued to go up andstood at 10.3% at year end (10.0% at January 1,2005). This stems from the combined effects, inopposite directions, of several factors, the mainones being: the increase of risk-weightedassets (+11.3% in the year); the issuance ofhybrid Tier 1 capital by Dexia Crédit Localin the fourth quarter, and finally the sharebuybacks discussed above.Proposed dividendIn view of the good 2005 results, the Boardof Directors will propose a gross dividend ofEUR 0.71 per share. Subject to shareholders’meeting approval thereon, the dividend will bepaid on May 24, 2006.Post-balance-sheet eventOn January 4, 2006 Dexia and Royal Bank ofCanada announced the completion of the jointventure to combine their institutional investorservices businesses. RBC Dexia InvestorServices is a joint venture equally ownedby Royal Bank of Canada and Dexia. Dexiawill consolidate 50% of the joint venture byproportional method from January 1, 2006.Dexia’s proportionate share of RBC’scontribution will be recorded at fair value inDexia’s consolidated financial statements. Asa result, Dexia will recognize both an after-taxprofit of over EUR 200 million in Dexia’s netasset contribution to the joint venture andEUR 100 million in intangible assets.42