2019 Annual Integrated Report

Accounting policy

A contingent liability is:

  1. a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
  2. a present obligation that arises from past events but is not recognized because:
    (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or
    (ii) the amount of the obligation cannot be measured with sufficient reliability

Contingent liabilities are not recognized in the consolidated financial statements, except if they arise from a business combination. They are disclosed unless the possibility of an outflow of economic benefits is remote.

Financial guarantees are contracts that require the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

In order to avoid double counting, only financial guarantees in excess of liabilities recognized or disclosures made elsewhere in the Group’s financial statements are disclosed in this note.

In € million



Financial guarantees RusVinyl



Financial guarantees pensions



Contingent liabilities






During 2019, the Group undertook an in-depth review of its disclosures of contingent liabilities and financial guarantees in the amount of € 1,126 million as reported in its 2018 annual consolidated IFRS financial statements, clarifying the distinction between Financial guarantees (€ 364 million), and Contingent liabilities (€ 762 million).

Financial guarantees related to RusVinyl, the joint venture with SIBUR for the operation of a PVC plant in Russia, amount to € 84 million at December 31, 2019 (€ 85 million at the end of 2018). Those guarantees have been given on a several basis by both shareholders, SolVin/Solvay and Sibur, proportionate to their equity interest (50/50). In light of RusVinyl’s demonstrated capacity to honor its debt obligations, the probability of the guarantees being called is considered to be highly remote.

The financial guarantees related to pensions are mainly related to the UK Rhodia Pension Fund (€ 430 million) – See note F34.B.2. Description of obligations. Such corresponds to the amount by which the guarantee exceeds the recognized pension liability. This guarantee applies to the pension liability measured based on a local UK regulatory basis (prudential basis) plus an allocation for market risk, which is higher when compared to the liability measured based on the methodology as prescribed by IAS 19 Employee Benefits. The increase of the excess when compared to the end of 2018 is mainly explained by the voluntary contribution (€ 114 million) that decreased the provision. The probability of the guarantees being called is considered to be highly remote.

The contingent liabilities decreased mainly following changed estimates as to probability of an outflow of economic benefits. Contingent liabilities primarily relate to environmental remediation matters.