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 |
2019 |
2018 |
||||
Before-tax amount |
Tax expense(–) / |
Net-of-tax amount |
Before-tax amount |
Tax expense (–)/ |
Net-of-tax amount |
|
Effective portion of gains and losses on hedging instruments in a cash flow hedge |
(53) |
1 |
(52) |
(61) |
5 |
(57) |
Recycling to the income statement |
58 |
|
58 |
14 |
|
14 |
Gains and losses on hedging instruments in a cash flow hedge (see note F35) |
5 |
1 |
6 |
(47) |
5 |
(42) |
Currency translation differences arising during the year |
141 |
|
141 |
241 |
|
241 |
Recycling of currency translations differences relating to foreign operations disposed of in the year |
(1) |
|
(1) |
13 |
|
13 |
Currency translation differences – Subsidiaries and joint operations |
140 |
|
140 |
255 |
|
255 |
Share of other comprehensive income of associates and joint ventures accounted for using equity method that will be reclassified to profit or loss |
24 |
|
24 |
(34) |
|
(34) |
Recyclable components |
169 |
1 |
170 |
173 |
5 |
179 |
Gains and losses on equity instruments measured at fair value through other comprehensive income |
3 |
(2) |
1 |
3 |
|
4 |
Remeasurements of the net defined benefit liability (see note F34) |
(163) |
49 |
(113) |
26 |
(4) |
22 |
Share of comprehensive income of associates and joint ventures accounted for using equity method that will not be reclassified to profit or loss |
(2) |
|
(2) |
|
|
|
Non recyclable components |
(162) |
47 |
(115) |
29 |
(4) |
26 |
Other comprehensive income |
7 |
48 |
55 |
203 |
1 |
204 |
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 respective transactions’ dates, 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 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 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, then 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 € 164 million in 2019, and only relate to the Group’s share. They are linked to the revaluation of the US dollar (€ 115 million), the Russian ruble (€ 26 million), the Mexican peso (€ 12 million), and to the devaluation of the British pound (€ (15) million), compared to the euro.
The total currency translation gains amounted to € 220 million in 2018, and included:
- € 207 million currency translation gain, of which € 202 million for the Group’s share; and
- the recycling of € 13 million currency translation loss mainly related to the sale of Soda Ash business in Egypt, of which € 15 million for the Group’s share.
The € 207 million currency translation gains were 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), compared to the euro.