The Group performs annual impairment tests on (groups of) CGUs to which goodwill has been allocated, and each time there are indicators that their carrying amount might be higher than their recoverable amount. This analysis requires management to estimate the future cash flows expected to be generated by the CGUs and a suitable discount rate in order to calculate present value.

Further details are provided in note F28 Impairment of tangible assets, intangible assets, and equity method investees.

Deferred tax assets

The carrying amount of the deferred tax assets is reviewed at each reporting date. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that the Group will earn sufficient taxable profits against which the deductions can be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Deferred tax assets other than tax loss carryforwards are analyzed on a case-by-case basis, taking into account all relevant facts and circumstances. For example, a zero taxable profit, after deducting the amounts paid to retirees under a defined benefit plan and for which a deductible temporary difference existed, can justify the recognition of the underlying deferred tax assets. Recognition of deferred tax assets for tax loss carryforwards require a positive taxable profit during the year that enables the utilization of tax losses that originated in the past. Because of uncertainties inherent to predicting such positive taxable profit, recognition of deferred tax assets from tax loss carryforwards is based on a case-by-case analysis, which is usually based on five-year profit forecasts, except with respect to financial companies for which ten-year financial profit forecasts are considered highly predictable and are consequently used.

The corporate tax reporting team, which has the overview of the Group deferred tax positions, is involved in assessing deferred tax assets.

Further details are provided in note F7.B. Deferred taxes in the consolidation statement of financial position.

Employee benefits obligations

The actuarial assumptions used in determining the defined benefit obligations at December 31, as well as the annual cost, can be found in note F31 Provisions. All main employee benefits plans are assessed annually by independent actuaries. Discount rates and inflation rates are defined centrally by management. The other assumptions (such as future salary increases and expected rates of medical care cost increases) are defined at a local level. All plans are supervised by the Group’s central Human Resources department with the help of a central actuary to check the acceptability of the results and ensure consistency in reporting.

Further details are provided in note F31.A. Provisions for employee benefits.

Environmental provisions

Environmental provisions are managed and coordinated jointly by the Environmental Rehabilitation department and the Finance department.

The forecasts of expenses are discounted to their present value.

The discount rates fixed by geographical area correspond to the average risk-free rate on 10-year government bonds. These rates are set annually by the Finance department and can be revised based on the evolution of economic parameters of the country involved.

To reflect the passage of time, the provisions are increased each year at the discount rates described above.

Further details are provided in note F31.B. Provisions other than for employee benefits.

Provisions for litigations

Any significant litigation (tax and other, including threat of litigation) is reviewed by Solvay’s in-house lawyers with the support, when appropriate, of external counsels at least every quarter. This review includes an assessment of the need to recognize provisions and/or remeasure existing provisions together with the Finance department and the Insurance department.

Further details are provided in note F31.B. Provisions other than for employee benefits.

Fair value adjustments for business combinations

In accordance with IFRS 3 Business Combinations, the Group measures the identifiable assets acquired and (contingent) liabilities assumed in a business combination at fair value. Fair value adjustments are based on external appraisals or valuation models, e.g. for contingent liabilities and intangible assets which were not recognized by the acquiree. Internal benchmarks are often used for valuing specific production equipment. All of these valuation methods rely on various assumptions such as estimated future cash flows, remaining useful economic life, etc.

Further details are provided in note F22 Goodwill and business combinations.

Classification as held for sale

Assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Amongst other conditions, management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. However, in some cases, an asset may remain classified as held for sale for a period exceeding one year if it remains unsold due to events or circumstances beyond the Group’s control.

Solvay Indupa

As a disposal within 12 months was considered highly probable on December 31, 2015, Solvay Indupa remained classified as non-current assets held for sale and discontinued operations at that date. On December 7, 2016, Solvay obtained clearance from the Brazilian antitrust authority, CADE, for the agreed sale of its 70.59% stake in Solvay Indupa to chemical group Unipar Carbocloro. Completion of the transaction, at a total enterprise value of US$ 202.2 million, took place on December 27, 2016. The related impairment has been derived from the expected net cash flows.


On December 7, 2016, Solvay reached an agreement to sell its cellulose acetate tow business, Acetow, to private equity funds managed by Blackstone. Completion of the transaction is expected in the first half of 2017 and is subject to the customary social procedures and approval by the relevant antitrust authorities.

Emerging Biochemicals

On December 14, 2016, Solvay signed a definitive agreement to sell its 58.77%  stake in its Thai subsidiary Vinythai PCL to Japanese company AGC Asahi Glass, thereby exiting its Asian polyvinyl chloride (PVC) activities. Completion of the transaction was subject to customary closing conditions, including antitrust approvals, and was closed on February 22, 2017.

Further details are provided in note F25 Assets held for sale.

Fair value level 3 assessment


Solvay contributed its chlorovinyls business in the joint venture Inovyn on July 1, 2015.

The fair value of the derivative financial instrument representing the additional performance-based payment that Solvay would receive for its exit from Inovyn amounted to € 244 million at December 31, 2015. Its fair value was based largely on level 3 inputs, namely contractually defined REBITDA multiples, comparing the expected exit price against the fair value of Solvay’s 50% equity share held in Inovyn. It increased to € 335 million following the binding agreement signed with INEOS on March 31, 2016 for an early exit. It was settled on July 7, 2016.

Further details are provided in note F32 Financial instruments and financial risk management.

Control assessment

Solvay considers that it continues to control the key relevant activities of its Venezuelan operations. In case of a loss of control over the Venezuelan legal entity, currency translation adjustments of € (60) million would be recycled to the consolidated income statement.