Solvay SA – Annual report – 31 December 2025
Industry: chemicals
Standards, interpretations and amendments applicable for the annual periods beginning after
January 1, 2025 (extract)
IFRS 18 Presentation and Disclosure in Financial Statements
The application of IFRS 18 is expected to have a material effect on the consolidated financial statements of the Solvay Group. The group has assessed the potential impacts of the new standard, along with related amendments to other applicable IFRS, as they will stand at the time of initial application. IFRS 18 introduces a new five-category classification system that will fundamentally change the structure of the consolidated income statement. The standard defines an operating category that encompasses all items of income or expense not classified elsewhere; consequently, the majority of items currently included in the group’s EBIT will be allocated here, alongside items such as income and expenses from hedging relationships and foreign exchange differences related to trade receivables or payables.
Other categories include investing and financing. The investing category will primarily house income and expenses from investments accounted for using the equity method, as well as cash and cash equivalents—items currently presented within the financial result. The financing category will capture transactions involving the raising of finance, such as interest expenses on convertible bonds and lease liabilities, as well as related foreign exchange differences. Meanwhile, the income taxes category will remain limited to items currently presented under that heading, and the discontinued-operations category, while required by IFRS 5, is not expected to be relevant for the Solvay Group.
These classification changes necessitate three new subtotals: operating profit or loss, profit before financing and income taxes, and a final profit or loss subtotal equal to net income. It is important to note that the new profit before financing and income taxes subtotal is not equivalent to the group’s current EBIT due to the reclassification of items from the financial result into the operating or investing categories. Furthermore, amendments to IAS 7 will alter the consolidated statement of cash flows. Under the indirect method, the starting point for operating cash flows will shift from net income to the new operating profit or loss subtotal. Additionally, interest paid will move to financing activities, while interest and dividends received will move to investing activities, which will subsequently impact the calculation of free cash flow.
New disclosure requirements will also take effect, most notably regarding expenses by nature and management-defined performance measures, such as adjusted EBIT. Solvay Group will adopt IFRS 18 for the annual reporting period beginning on January 1, 2027. Following IAS 8, the standard will be applied retrospectively, necessitating a reconciliation for each line item of the prior period presented in the 2027 annual report. This transition will also apply to interim financial statements throughout the 2027 fiscal year. These expected impacts are based on reasonable information available before this report was authorized for issue and remain subject to change as further information becomes available.
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