Financial Statements - Solvay

• IFRIC 15
Agreements for the construction of real estate
(applicable for accounting years beginning on or after
1 January 2009);
• IFRIC 16
Hedges of a net investment in a foreign operation
(applicable for accounting years beginning on or after
1 October 2008);
• IFRIC 17
Distributions of Non-cash Assets to Owners (applicable
for accounting years beginning on or after 1 July 2009);
• IFRIC 18
Transfers of assets from customers (applicable for
accounting years beginning on or after 1 July 2009).
Adoption of these new standards and interpretations in
subsequent years will have the following main impacts:
– the disclosure of comprehensive income will lead to
the separate presentation of a table reconciling net
income (as currently presented) with total comprehensive
income, which in 2008 represents an additional expense
of EUR 29 million (IAS 1);
– acquisition costs and subsequent milestones, if any, will
have to be recognized in the income statement (IFRS 3);
– some additional disclosures in the fi nancial statements.
2. Consolidation
Companies controlled by the Group (i.e. in which
the Group has, directly, or indirectly, an interest of
more than one half of the voting rights or is able to
exercise control over the operations) have been
fully consolidated. Separate disclosure is made of minority
interests.
All signifi cant transactions between Group companies
have been eliminated on consolidation.
Companies over which the Group exercises joint
control with a limited number of partners (joint
ventures) are consolidated using the proportionate
consolidation method.
Investments in companies over which the Group exercises
signifi cant infl uence, but which it does not control, are
accounted for using the equity method.
3. Goodwill
Goodwill represents the difference between the cost
of acquisition and the Group’s interest in the fair value of
the identifi able assets and liabilities of a subsidiary or joint
venture, at the acquisition date.
Positive goodwill is not amortized, but tested at
least annually for impairment. Any negative goodwill
is immediately credited to the income statement.
4. Foreign currencies
Foreign currency transactions by Group companies
are recorded initially at the exchange rates prevailing
at the transaction dates. Monetary assets and liabilities
denominated in such currencies are then re-translated at
the exchange rates prevailing at the end of the accounting
period with resulting profi ts and losses recorded in
the income statement for the period.
Assets and liabilities of foreign entities included
in the consolidation are translated into EUR at
the exchange rates prevailing at the end of the accounting
period. Income statement items are converted into EUR at
the average exchange rates for the period. The resulting
translation differences are transferred to the equity item
“currency translation differences”.
The main exchange rates used are:
Year-end rate Average rate
2007 2008 2007 2008
1 Euro =
Pound sterling GBP 0.7334 0.9525 0.6843 0.7963
US Dollar USD 1.4721 1.3917 1.3706 1.4708
Argentinian Peso ARS 4.6348 4.8175 4.2696 4.6379
Brazilian Real BRL 2.6220 3.2436 2.6638 2.6736
Thai Baht THB 43.7999 48.2849 44.4257 48.4769
Japanese Yen JPY 164.9300 126.1400 161.2498 152.4565
Financial
63
Solvay Global Annual Report 2008
Financial