Previously, in accordance with US GAAP, Degussa has recognised impairments against property, plant and equipment. Moving to IFRS, the company recognises additional impairment charges of EUR125m (£83m). The previous impairments are based on an initial determination of whether the carrying amount is higher than the undiscounted cashflow. If so, the actual impairment is calculated by reference to the discounted cashflow. Under IFRS, value in use is determined based on discounted cashflows.

Degussa recognises additionally increased early retirement and restructuring provisions of EUR213m. IFRS requires that a provision be raised for all employees that are likely to participate in an early retirement programme and differing levels of detail of restructuring plans plus lower probability thresholds. Under US GAAP, a provision for early retirement is recognised only when an employee signs a binding agreement to participate. Offsetting these negative impacts are EUR94m from discontinuing goodwill amortisation and EUR131m deferred tax effects that result in net loss increasing by 64% to EUR261m.

Meanwhile, Celesio moves from German GAAP and discusses the main differences in recognition and measurement principles. The company finds that, as a consequence of discontinuing goodwill amortisation of EUR19m offset partially by increased provisions of EUR7m, net profit increases by over 5% to EUR263m.

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