Accounting policy

In accordance with IAS 1 Presentation of Financial Statements, the Group elected to present two statements, i.e. a consolidated income statement immediately followed by a consolidated statement of comprehensive income. The components of other comprehensive income (OCI) are presented before related tax effects with one amount shown for the aggregate amount of income tax relating to those components. Tax impacts are further disclosed in this note.

Presentation of the tax effect relating to each item of other comprehensive income

Note: the below table presents the total other comprehensive income items for the aggregate of the shares of Solvay and the non-controlling interests.

In € million

 

2018

 

2017

 

Before-tax amount

 

Tax expense(–)/income (+)

 

Net-of-tax amount

 

Before- tax amount

 

Tax expense(–)/income (+)

 

Net-of-tax amount

Recyclable components

 

 

 

 

 

 

 

 

 

 

 

 

Gains and losses on available-for-sale financial assets

 

 

 

 

 

 

 

(1)

 

(2)

 

(3)

Effective portion of gains and losses on hedging instruments in a cash flow hedge

 

(61)

 

5

 

(57)

 

49

 

6

 

55

Recycling to the income statement

 

14

 

 

 

14

 

(33)

 

 

 

(33)

Gains and losses on hedging instruments in a cash flow hedge (see note F35)

 

(47)

 

5

 

(42)

 

15

 

6

 

22

Currency translation differences arising during the year

 

241

 

 

 

241

 

(893)

 

 

 

(893)

Recycling of currency translations differences relating to foreign operations disposed of in the year

 

13

 

 

 

13

 

118

 

 

 

118

Other movement of currency translation differences (NCI) relating to foreign operations disposed of in the year

 

 

 

 

 

 

 

(24)

 

 

 

(24)

Currency translation differences - Subsidiaries and joint operations

 

255

 

 

 

255

 

(799)

 

 

 

(799)

Currency translation differences arising during the year

 

(34)

 

 

 

(34)

 

(40)

 

 

 

(40)

Recycling of currency translations differences relating to foreign operations disposed of in the year

 

 

 

 

 

 

 

9

 

 

 

9

Currency translation differences - Associates and joint ventures

 

(34)

 

 

 

(34)

 

(31)

 

 

 

(31)

Currency translation differences

 

220

 

 

 

220

 

(830)

 

 

 

(830)

Non recyclable components

 

 

 

 

 

 

 

 

 

 

 

 

Gains and losses on equity instruments measured at fair value through other comprehensive income

 

3

 

 

 

4

 

 

 

 

 

 

Remeasurements of the net defined benefit liability (see note F34)

 

26

 

(4)

 

22

 

95

 

32

 

127

Other comprehensive income

 

203

 

1

 

204

 

(721)

 

37

 

(684)

In 2017 taxes in other comprehensive income included adjustments resulting from tax reforms and the statutory reorganization in France that impacted the balance of deferred taxes relating to actuarial gains and losses on defined benefit pension plans.

Currency translation differences

Accounting policy

For the purpose of presenting consolidated financial statements at the end of each reporting period, the assets and liabilities of the Group’s foreign operations are expressed in euros using closing rates. Income and expense items are translated at the average exchange rates for the period, except when the impact of applying the average rate is materially different from applying the spot rate at the date of the respective transactions, in which case the latter is applied. Exchange differences arising, if any, are recognized in other comprehensive income as “currency translation differences”.

Currency translation differences are reclassified from equity to profit or loss, on:

  • a disposal of the Group’s entire interest in a foreign operation, or a partial disposal involving loss of control over a subsidiary that includes a foreign operation. In this case, all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss. Any exchange differences that have previously been attributed to non-controlling interests are derecognized, but they are not reclassified to profit or loss;
  • a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation, when the retained interest is a financial asset. In this case, all of the accumulated exchange differences in respect of that operation attributable to the Group are reclassified to profit or loss;
  • a partial disposal of an interest in a joint venture or an associate that includes a foreign operation and that continues to be accounted for as a joint venture or an associate. In this case, a proportionate share of the accumulated exchange differences is reclassified to profit or loss.

In the case of a partial disposal of a subsidiary (i.e. no loss of control) that includes a foreign operation, the proportionate share of accumulated exchange differences is reattributed to non-controlling interests and is not recognized in profit or loss.

In the case of (a) a capital decrease of a subsidiary without loss of control, or (b) a capital decrease of an equity method investee or a joint operation without modification of the share of equity interest held in that investee, no accumulated exchange differences are reclassified from equity to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated into the Group’s presentation currency at the closing rate.

The total currency translation gains amount to € 220 million in 2018, and include:

  • € 207 million currency translation gain, of which € 202 million for the Group’s share; and
  • the recycling of € 13 million currency translation loss relating mainly to the sale of Soda Ash business in Egypt, of which € 15 million for the Group’s share.

The € 207 million currency translation gains are linked to the revaluation of the US dollar (€ 289 million) and to the devaluation of the Brazilian real (€ (30) million), the Chinese renminbi (€ (24) million), and the Russian ruble (€ (25) million), against the euro.

The total currency translation losses amounted to € (830) million in 2017, and included:

  • € (932) million currency translation losses, of which € (921) million for the Group’s share;
  • the recycling of € 126 million currency translation loss related mainly to the sale of Acetow (€ 27 million) and Emerging Biochemicals (€ 26 million) and the deconsolidation of the investment in Venezuela (€ 60 million); and
  • the derecognition of € (24) million currency translation gains for Emerging Biochemicals non-controlling interests.

The € (932) million currency translation losses are linked to the devaluation of the US dollar (€ (811) million), the Brazilian real (€ (45) million), the Saudi Arabia riyal (€ (30) million), and the Russian ruble (€ (17) million), against the euro.