This information was prepared in accordance with European Regulation (EC) 1606/2002 on the application of international accounting standards dated July 19, 2002. The Group’s consolidated financial statements for the year ended December 31, 2018 were prepared in accordance with IFRS (International Financial Reporting Standards) as published by the International Accounting Standards Board (IASB), and endorsed by the European Union.

The accounting standards applied in the consolidated financial statements for the year ended December 31, 2018 are consistent with those used to prepare the consolidated financial statements for the year ended December 31, 2017, except for the adoption of new Standards effective as of January 1, 2018, which are discussed hereinafter. The Group has not early adopted any other Standard, interpretation or amendment that has been issued but is not yet effective.

Standards, interpretations, and amendments applicable for the first time in 2018

As of January 1, 2018, the Group applied, for the first time, IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

IFRS 9 Financial Instruments

As from January 1, 2018, the Group no longer applies IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 is applicable for annual periods beginning on or after January 1, 2018, and brings together all three aspects of the accounting for financial instruments: classification and measurement, impairment, and hedge accounting. Except for hedge accounting, retrospective application is required, but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

The Group adopted IFRS 9 on January 1, 2018, and did not restate comparative information.

Overall, there is no significant impact on the Group’s statement of financial position and equity. The Group observed an increase in the loss allowance resulting in a negative impact on equity as discussed below. In addition, the Group has implemented changes in classification of certain financial instruments.


IFRS 9 requires the Group to recognize expected credit losses on all of its trade receivables: the Group applies the simplified approach and recognizes lifetime expected losses on all trade receivables, using the provision matrix in order to calculate the lifetime expected credit losses for trade receivables as required by IFRS 9, using historical information on defaults adjusted for the forward looking information. Impacts related to debt securities, loans, financial guarantees, and loan commitments provided to third parties, as well as cash and cash equivalents, are immaterial. The impact on the trade receivable allowances is as follows, while the impact on the Group’s equity (net of deferred taxes of € 1 million) amounts to € (5) million:



Allowances on trade receivable

Carrying amount as of December 31, 2017 – IAS 39



Remeasurement – From incurred to expected loss model



Carrying amount as of January 1, 2018 – IFRS 9



Classification and measurement

The application of the classification and measurement requirements of IFRS 9 does not have a significant impact on the Group’s consolidated statement of financial position or equity. It will continue measuring at fair value all financial assets previously held at fair value. The equity shares in non-listed companies, previously presented as available-for-sale financial assets, are intended to be held for the foreseeable future. The Group applies the option to present fair value changes in OCI, and therefore the application of IFRS 9 does not have a significant impact. The fair value gains or losses accumulated in OCI will no longer be subsequently reclassified to profit or loss, which is different from the previous treatment. Loans as well as trade receivables are held to collect contractual cash flows and give rise to cash flows representing solely payments of principal and interest. Thus, the Group will continue to measure those financial assets at amortized cost under IFRS 9. The effect of applying IFRS 9’s classification and measurement requirements on financial assets is as follows:

Financial assets



IAS 39
December 31, 2017


Transition to IFRS 9


January 1, 2018


At date of transition



Carrying amount






Carrying amount


Impact on retained earnings(1)


Net of deferred tax assets

Loans and receivables (including cash and cash equivalents, trade receivables, loans and other current and non-current assets except pension fund surpluses)











Financial assets measured at amortized cost











Available-for-sale financial assets











Equity instruments measured at fair value through other comprehensive income











Regarding financial liabilities, the Group did not make any reclassifications or remeasurements.

Hedge accounting

In accordance with IFRS 9’s transition provisions for hedge accounting, the Group applies the IFRS 9 hedge accounting requirements prospectively from the date of initial application on January 1, 2018. The Group’s qualifying hedging relationships in accordance with IAS 39 in place as at January 1, 2018 also qualify for hedge accounting in accordance with IFRS 9 and were therefore regarded as continuing hedging relationships. No rebalancing of any of the hedging relationships was necessary on January 1, 2018.

Further details are provided in note F35 Financial instruments and financial risk management.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other Standards. The new Standard establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer.

The Group adopted IFRS 15 on January 1, 2018, using the modified retrospective approach.

Sale of goods

As the Group is in the business of selling chemicals, contracts with customers generally concern the sale of goods. As a result, revenue recognition generally occurs at a point in time when control of the chemicals is transferred to the customer, generally on delivery of the goods.

Distinct elements

The revenue of the Group consists mainly of sales of chemicals, which qualify as separate performance obligations. Value-added services – mainly customer assistance services – corresponding to Solvay’s know-how are rendered predominantly over the period that the corresponding goods are sold to the customer. At transition date, the Group did not have a more than insignificant adjustment compared to its previous practice.

Variable consideration

Some contracts with customers provide trade discounts or volume rebates. In accordance with IAS 18, the Group recognized revenue from the sale of goods measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts, and volume rebates. Trade discounts and volume rebates give rise to variable consideration under IFRS 15, and are required to be estimated at contract inception. IFRS 15 requires the estimated variable consideration to be constrained to prevent overstatement of revenue. The Group assessed individual contracts to determine the estimated variable consideration and related constraints. At transition date, the Group did not have a more than insignificant adjustment compared to its previous practice on its retained earnings.

Moment of recognition of revenue

The Group sells its chemicals to its customers, (a) directly, (b) through distributors, and (c) with the assistance of agents. The Group analyzed whether the moment control of the goods passes, as described in IFRS 15, would result in a different moment to recognize the revenue. At transition date, the Group did not have a more than insignificant adjustment compared to its previous practice.

Presentation and disclosure requirements

IFRS 15 provides presentation and disclosure requirements, which are more detailed than under previous IFRSs. The presentation requirements represent a change from previous practice and increase the volume of disclosures required in the Group’s financial statements. The Group has analyzed those disclosure requirements, including the need for policies, procedures, and internal controls necessary to collect and disclose the required information.

Further details are provided in note F1 Revenue and segment information.

Standards, interpretations, and amendments applicable for the first time in 2019

IFRS 16 Leases

IFRS 16 sets out the principles for the recognition, measurement, presentation, and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model, similar to the accounting for finance leases under IAS 17. At the commencement date of a lease, lessees will recognize a lease liability (i.e. a liability to make lease payments), and a right-of-use asset (i.e. an asset representing the right to use the underlying asset over the lease term). The right-of-use asset will be depreciated over the term of the lease, unless the lease transfers ownership of the underlying asset to Solvay at the end of the lease. In latter case, it will be depreciated over the useful life of the underlying asset. Interest expense will be recognized on the lease liability. The lease liability will be remeasured upon the occurrence of certain events (e.g. a change in the lease term or a change in future lease payments resulting from a change in index). Such remeasurements of the lease liability will generally be recognized as an adjustment to the right-of-use asset. Lessor accounting under IFRS 16 Leases is substantially unchanged from previous accounting under IAS 17 Leases. Finally, disclosure requirements under IFRS 16 Leases are more extensive when compared with IAS 17 Leases.

In 2018, as part of its preparation of IFRS 16 Leases, the Group continued its implementation efforts and undertook an extensive review of its operating lease contracts, challenging the non-cancellable period of the leases, especially with respect to buildings. It developed processes, IT tools, and internal controls so to ensure IFRS 16 compliance.

The Group will apply IFRS 16, using the modified retrospective approach and will exclude services from its lease liabilities. On January 1, 2019, the right-of-use assets was measured at an amount equal to the respective lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statement of financial position immediately before January 1, 2019.

The Group used the practical expedient available on transition to IFRS 16 related to onerous contracts, adjusting the right-of-use assets at January 1, 2019 by the amount of any provision for onerous leases recognized in the consolidated statement of financial position immediately before January 1, 2019. Such positively impacted the retained earnings as of January 1, 2019 by € 8 million.

It also used the practical expedient not to reassess whether a contract is or contains a lease. Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to apply to those leases entered into or modified before January 1, 2019. However, the new definition in IFRS 16 will not significantly change the scope of contracts that meet the definition of a lease for the Group.

As of January 1, 2019, lease liabilities recognized in accordance with IFRS 16 Leases amount to € 433 million (excluding those that are part of liabilities associated with non-current assets held for sale, in this case Polyamides). Leased assets relate mainly to buildings, transportation equipment, and industrial equipment. The expected repayments of operating lease liabilities during 2019, which will no longer be recognized as an operating lease expense as was the case in accordance with IAS 17 Leases but rather as a repayment of lease liabilities, amount to € 95 million. Depreciation and finance expense in 2019 are expected to increase by € 94 million and € 16 million respectively. See note F23 Leases for more information on existing operating leases.

No significant impacts are expected where the Group is currently a lessee under a finance lease, or where the Group is currently a lessor.

IFRIC 23 Uncertainty over Income Tax Treatment

The interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes and does not apply to taxes or levies outside the scope of IAS 12 Income Taxes, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses the following:

  • whether an entity considers uncertain tax treatments separately;
  • the assumptions an entity makes about the examination of tax treatments by taxation authorities;
  • how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and
  • how an entity considers changes in facts and circumstances.

An entity must determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. The interpretation is effective for annual reporting periods beginning on or after January 1, 2019, but certain transition reliefs are available. The Group applies the interpretation since its effective date, but did not identify a more than immaterial impact on its consolidated financial statements, including presentation.

Other standards, interpretations and amendments applicable for the first time in 2019 are not expected to have a material impact on the Group’s consolidated financial statements.

Standards, interpretations, and amendments applicable for the first time after 2019

Other Standards, interpretations, and amendments applicable for the first time after 2019 are not expected to have a more than insignificant impact on the Group’s consolidated financial statements.