TomTom 2010 Annual Report Download - page 73

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p 71 / TomTom Annual Report and Accounts 2010
Notes to the Consolidated Financial Statements
9. FINANCIAL INCOME AND EXPENSES
Financial income and expenses include the following items:
(€ in thousands) 2010 2009
Interest income 977 2,843
Interest expense -36,041 -73,658
Interest result -35,064 -70,815
Other financial result -286 -214
Exchange rate result -15,676 -40,988
Other financial result -15,962 -41,202
The foreign exchange line item is composed of results related to hedging contracts and balance sheet item revaluations. Hedging contracts
are entered to protect the group from adverse exchange rate fluctuations that may result from USD, GBP, AUD, CHF and SEK exposures.
The interest expense relates to interest paid on our borrowings and amortised transaction costs (see note 24).
10. INCOME TAX
The activities of the group are subject to corporate income tax in several countries, depending on presence and activity. The applicable
statutory tax rates vary between 12.5% and 41%. This, together with timing differences, can cause the effective tax rate to differ from the
Dutch corporate tax rate.
(€ in thousands) 2010 2009
Current tax expense 31,345 23,809
Deferred tax -4,989 1,279
Income tax expense 26,356 25,088
The effective tax rate, based on income before taxes was 19.7% (2009: 22.5%). The reconciliation between the tax charge on the basis of
the Dutch tax rate and the effective tax rate is as follows:
2010 2009
Dutch tax rate 25.5% 25.5%
Higher weighted average statutory rate on group activities 4.9% 2.7%
Income exempted from tax -7.6% -13.2%
Non tax deductible share options 1.4% 2.1%
Non tax deductible (exempted) result associates 0.0% -0.6%
Other -4.5% 6.0%
Effective tax rate 19.7% 22.5%
11. GOVERNMENT GRANTS
The group recognised as income a government grant of €9.5 million (2009: €5.9 million) in respect of research and development activities
performed by the group. The group is not obliged to refund these amounts. Government grants are reported as income within operating
expenses.