Etex-AR2017-WEBSITE

6.1
Financial report
Consolidated financial statements
Etex Annual Report 2017
Financial report
Consolidated financial statements
Note 5 – Finance income and expense
IN THOUSANDS OF EUR 2016 2017
Interest income from receivables, deposits and cash and cash equivalents (loans and receivables) 3,356 4,141
Positive impact of change in discount rate of long term provisions - 526
Other interest related income 106 20
Interest income 3,462 4,687
Interest expense on financial liabilities measured at amortised cost -47,735 -35,190
Net interest expense on employee benefits -8,175 -8,383
Unwinding of discount long term provisions -133 -210
Negative impact of change in discount rate of long term provisions -3,731 -428
Negative fair value adjustments of interest rate contracts (held for trading at fair value through profit and loss) -1 -1
Other interest related charges -3,824 -2,938
Interest expense -63,599 -47,150
Dividend income from shares in non consolidated companies (available-for-sale) 85 136
Net foreign exchange gains (loans and receivables) 46 8,592
Other 310 58
Other finance income 441 8,786
Net foreign exchange losses (liabilities at amortised cost) -10,533 -18,919
Other -1,282 -1,003
Other finance expense -11,815 -19,922
Net finance costs -71,511 -53,599
The lower interest expense on financial liabilities
measured at amortised cost is mainly explained by
the refund of the retail bond in March 2017, and the
refinancing at a lower cost. It includes the effect of
interest rate swaps hedging the Group’s interest rate
risk: €7,667 thousand paid in 2017 (€7,462 thousand
paid in 2016).
The other interest related charges mainly include
upfront fee expenses for €2,607 thousand
(€3,416 thousand in 2016) in connection with external
financial debt which are amortised over the duration of
the loan.
Foreign exchange gains and losses are presented net of
the effect of foreign exchange derivative instruments.
The net exchange loss is the result of the Group’s
foreign exchange exposure in Argentina, Brazil, Peru
and Indonesia, on the current financial asset and
liabilities in these countries.
The reconciliation between the effective income tax
expense and the theoretical income tax expense is
summarised below. The theoretical income tax expense
is calculated by applying the domestic nominal tax rate
IN THOUSANDS OF EUR 2016 2017
Profit before income tax and before share of profit in equity accounted investees 104,879 215,023
Theoretical income tax expense (nominal rates) -22,217 -56,859
Weighted average nominal tax rate % 21.2% 26.4%
Tax impact of
of each Group entity to their contribution to the Group
profit before income tax and before share of the profit
in equity accounted investees.
Non deductible expenses -11,750 -11,284
Tax on profit distribution inside the Group -2,566 -3,647
Tax-free gains/losses on investments - 12,856
Other tax deductions 8,712 7,493
Unrecognised deferred tax assets on current year losses -19,404 -17,190
Recognition of previously unrecognised deferred tax assets 23,985 14,913
Derecognition of previously recognised deferred tax assets -4,088 -10,835
Net effect of changes in tax rates on deferred tax 11,674 1,515
Adjustments to prior year income tax -1,261 1,902
Other tax adjustments -111 -1,774
Income tax expense recognised in the income statement -17,027 -62,909
Effective tax rate % 16.2% 29.3%
In 2017 and 2016, the unrecognised deferred tax
assets on current year losses are mainly impacted
by restructuring. The recognition of previously
unrecognised deferred tax assets relates mainly to
improved profitability expectation in some companies.
In 2017 the net effect of changes in tax rates is mainly
impacted by the decrease in tax rate applied to most
of the Belgian deferred tax liability. In 2016 the net
effect changes in tax rates were mainly impacted by
the decrease in tax rate applied to most of the French
deferred tax liability.
Income tax recognised directly in equity is related to:
Note 6 – Income tax expense
IN THOUSANDS OF EUR 2016 2017
Current income tax charge for the year -59,264 -64,238
Adjustments to current income tax of previous years -1,261 1,902
Current income tax expense -60,525 -62,336
Origination and reversal of temporary differences 37,765 11,024
Net effect on deferred tax assets -5,941 -13,112
Net effect of changes in tax rates on deferred tax 11,674 1,515
Deferred income tax expense 43,498 -573
Total income tax expense -17,027 -62,909
IN THOUSANDS OF EUR 2016 2017
Actuarial gains (losses) on post employment benefit plans 21,187 -14,247
Gains (losses) on financial instruments - cash flow hedging -316 -3,353
Total 20,871 -17,600
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