Accounting policy

Following the ESMA Guidelines on Alternative Performance Measures issued on June 30, 2015 and effective as from July 3, 2016, Solvay has split the non-recurring items into two items: (a) Results from portfolio management and reassessments, and (b) Results from legacy remediation and major litigations. The sum of these two items is equal to what was previously labeled “non-recurring items”, before reclassification to discontinued operations.

Results from portfolio management and reassessments include:

  • gains and losses on the sale of subsidiaries, joint operations, joint ventures, and associates that do not qualify as discontinued operations;
  • acquisition costs of new businesses;
  • gains and losses on the sale of real estate not directly linked to an operating activity;
  • restructuring charges driven by portfolio management and reassessment, including impairment losses resulting from the shutdown of an activity or a plant; and
  • impairment losses resulting from testing of CGUs.

Results from legacy remediation and major litigations include:

  • the remediation costs not generated by on-going production facilities (shut-down of sites, discontinued productions, previous years’ pollution); and
  •  the impact of significant litigations.

Results from portfolio management and reassessments

In € million

 

2016

 

2015

Restructuring costs and impairment

 

(239)

 

(111)

M&A costs and gains and losses on disposals

 

75

 

(94)

Results from portfolio management and reassessments

 

(164)

 

(205)

Results from legacy remediation and major litigations

In € million

 

2016

 

2015

Major litigations

 

(14)

 

8

Remediation costs and other costs related to non-ongoing activities

 

(42)

 

(45)

Results from legacy remediation and major litigations

 

(56)

 

(36)

In 2016, these items relate primarily to:

  • restructuring costs and impairment relating to:
    • the mothballing of the Soda Ash plant in Egypt (€ (112) million);
    • the divestment decision of the US torrefied biomass electricity generation project (€ (39) million);
    • the resizing of Solvay’s shared services due to the changes in the Group’s portfolio (€ (40) million); 
    • the impact of adverse market conditions on the Brazilian electricity cogeneration assets (€ (28) million);
  • M&A costs and gains and losses on disposals:
    • gain on Inovyn divestment (€ 71 million);
    • loss on the disposal of a peroxide business in Bussi (Italy) (€ (13) million);
    • gain following additional reversal of the holdback included in the Chemlogics purchase price and subject to performance conditions not reached in 2016 (€ 49 million); and
    • M&A acquisition costs for € (25) million.

In 2015, these items related primarily to:

  • restructuring costs and impairment relating to:
    • restructuring costs (€ (57) million), due mainly to the resizing of Solvay Functions following the changes in the Group’s portfolio (€ (35) million);
    • the fluorite mine in Bulgaria (€ (25) million); 
    • the divestment of Plextronics (€ (8) million);
  • M&A costs and gains and losses on disposals:
    • Cytec acquisition-related expenses (€ (130) million) mainly composed of advisory services (see note F22 Goodwill and business combinations); and
    • M&A costs impacted mainly by a partial reversal of the holdback (€ 25 million) included in the Chemlogics purchase price and subject to performance conditions not reached in 2015.

In addition, an amount of € 3 million was transferred to discontinued operations, so that the sum of the above mentioned items relating to 2015 is equal to what was previously presented as non-recurring in the 2015 IFRS consolidated financial statements.