2009 Reference document - Solvay

Rhodia has adopted the option offered by the amendment to IAS 19.
Hence, the actuarial gains and losses on obligations or assets relating
to post-employment benefits arising from experience adjustments
and/or changes in actuarial assumptions are recognized directly in
equity for the period in which they occur in consideration of the
increase or decrease in the obligation. They are disclosed in the
consolidated statement of income and expenses for the period.
The actuarial gains and losses relating to other long-term benefits
such as long service awards are fully recognized in profit or loss for
the period in which they occur.
The interest expenses arising from the reverse discounting of
retirement benefits and similar obligations and the financial income
from the expected return on plan assets are recognized in profit or
loss from financial items.
The amendment or introduction of a new post-employment or other
long-term benefit plan may increase the present value of the defined
benefit obligation for services rendered in previous periods, otherwise
known as past service cost. This past service cost is recognized in
profit or loss on a straight-line basis over the average period until
the corresponding benefits are vested by employees. The benefits
vested upon adoption or amendment of the plan are immediately
recognized in profit or loss.
Regulatory amendments without any compensation for beneficiaries
are accounted for in actuarial gains and losses and not past service
cost.
The actuarial calculations of retirement obligations and other longterm
benefits are performed by independent actuaries.
2.18 Share-based payment
Rhodia has set up various compensation plans for employees offering
free shares, preferential stock subscription and stock purchase and
subscription options.
The fair value of services rendered by employees in consideration for
the granting of shares or options represents an expense. This expense
is recognized on a straight-line basis in the income statement over
the vesting periods relating to these shares or options with the
recognition of a corresponding adjustment in equity.
The fair value of services rendered is measured in reference to the fair
value of the shares or options on the grant date. Where appropriate,
the cost of the non-transferability of shares by the holder, determined
using observable market data on the grant date and the specific
market characteristics of the Rhodia share, is taken into account.
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Financial and Accounting Information
Financial Statements
At each balance sheet date, the Group re-estimates the number
of shares or options likely to be vested. The impact of the revised
estimates is recognized in profit or loss against a corresponding
adjustment in equity.
2.19 Provisions
A provision is recognized when Rhodia has a legal or constructive
obligation as a result of a past event, which can be reliably measured,
and whose settlement is expected to result in an outflow of economic
resources for Rhodia.
Provisions are discounted in order to take into account market
assessments of the time value of money using risk free rates net of
inflation and specific to the relevant geographical areas. The impact of
interest rate fluctuations and changes to estimated future cash flows
is recognized in other operating expenses in the income statement.
The interest expense (reverse discounting) is recognized in finance
costs in the income statement.
Environmental liabilities
Rhodia periodically analyzes all its environmental risks and the
corresponding provisions. Rhodia measures these provisions to the
best of its knowledge of applicable regulations, the nature and extent
of the pollution, clean-up techniques and other available information.
Restructuring
Restructuring comprises all measures designed to permanently
adapt structures, production and employees to economic changes.
A provision for restructuring is recognized when the Group has
approved a detailed formal plan and has either started to implement
the plan, or announced its main features to the public.
2.20 Net sales and Other revenue
Net sales and other revenue are measured at the fair value of the
consideration received or receivable, net of returns, rebates and trade
benefits granted and sales tax.
Net sales comprise the sales of goods (goods and goods for resale)
and value-added services corresponding to Rhodia’s know-how.
Other revenue primarily includes commodity and utility trading
transactions and other revenue deemed as incidental by the Group
(e.g. temporary contracts following the sale of businesses).
Reference Document Rhodia 2009 141
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