+1 - Solvay

The EUR 123 million of asset impairments relates to:
– in the Chemicals Sector, the reorganization of the Fluor activities in the face of competitive pressure
on commodities (EUR 65 million corresponding to the residual value of tangible assets to be decommissioned) and
of SBU Molecular Solutions (EUR 16 million impairment loss on the acquisition goodwill of Girindus given the lower
profitability of this activity compared with expectations at the time of acquisition);
– in the Pharmaceuticals Sector, the pursual of the “INSPIRE” project (EUR 17 million to bring tangible assets into
line with their expected sales value) and the abandoning of the Odiparcil project following the reallocation of R&D
priorities (EUR 19 million of intangible fixed assets attributed to this project at the time of acquisition of Fournier).
The other non-recurring items produce a net income of EUR 154 million.
Income items include here the capital gains on the sale of the Caprolactones activities (EUR 151 million), of
Sofina S.A. shares (EUR 73 million) and of subscription rights to the Fortis S.A. capital increase (EUR 37 million).
The expenses consist essentially of restructuring costs: EUR 42 million in relation to the “INSPIRE” project and
EUR 34 million in the Fluor activities.
(10) Charges on net indebtedness
EUR Million 2006 2007
Cost of borrowings -111 -106
Interest on lending and short-term deposits 28 23
Other operating gains and losses on net indebtedness 1 2
Charges on net indebtedness -82 -82
Charges on net indebtedness are the same (EUR 82 million) in 2006 and 2007. The average net indebtedness
for 2007 amounts to about EUR 1 450 million, slightly below the average level of EUR 1 500 million in 2006.
This means that the charge on average net indebtedness is up slightly at 5.6 % in 2007 compared with 5.4 % in 2006.
The increase in the charge on average net indebtedness is explained by the increase in average interest charges
on borrowings, which rose from 5.1 % in 2006 to 5.5 % in 2007. This negative effect is partly offset by improved
returns on cash and cash equivalents. Both movements are due mainly to the rise in interest rates in the Euro zone.
The borrowing costs incorporated into the cost of assets in 2007 amounted to EUR 2 million (EUR 8 million in 2006).
The weighted average capitalization rate generally used is 4.3 % a year (5.2 % a year in 2006).
(11) Income from investments
Income from investments consists of the dividends from Fortis and Sofina. These are EUR 5 million higher than
in 2006.
(12) Income taxes and deferred taxes
(12a) Income taxes
The tax charges on earnings do not include taxes on discontinued operations.
Components of the tax charge
The tax charge on earnings consists of current tax and deferred tax.
– Current tax represents the tax paid or payable (recovered or recoverable) in respect of the taxable profit (tax
loss) for the past year, as well as any adjustments to tax paid or payable (recovered or recoverable) in relation to
previous years.
Financial
Solvay Global Annual Report 2007
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