20. Other Comprehensive Income
Accounting policies
The expenses and income shown in other comprehensive income are divided into two categories: Items that will be recognized in the income statement in the future (known as “recycling”) and items that will not be reclassified to the income statement in the future. The first category includes gains and losses from currency translation, the measurement of certain securities classified as debt instruments, and changes in the fair value of derivatives held to hedge future cash flows. Items that will not be reclassified to the income statement at a future date include effects from the remeasurement of defined benefit plans.
Remeasurement of defined benefit plans
Changes in the value of defined benefit plans led to an increase in other comprehensive income of €2,709 million in 2021 and to a decrease of €973 million in the previous year (after taxes in both years). Of that, €44 million was attributable to investments accounted for using the equity method in 2021 (2020: –€19 million). Deferred taxes amounted to –€811 million in 2021 and to €422 million in 2020.
Because of the disposal of the pigments business on June 30, 2021, the amount of €48 million for the remeasurement of defined benefit plans, plus an additional €6 million resulting from the disposal of the operational companies of Solenis UK International Ltd., London, United Kingdom, which had been accounted for using the equity method until that date, was reclassified, in equity, from other comprehensive income to retained earnings. Moreover, deferred taxes in the amount of –€18 million arising from an adjustment in connection with the introduction of IAS 19 were offset against retained earnings in equity.
Currency translation
Differences resulting from currency translation increased equity by a total of €2,205 million and decreased equity by €2,598 million in the previous year. This included deferred taxes in the amount of –€19 million in 2021 (2020: €19 million). At-equity investments accounted for €697 million (2020: –€1,125 million). The differences resulted primarily from the appreciation of the U.S. dollar and the Chinese renminbi relative to the euro in 2021.
Furthermore, as a result of divestitures and other changes in the scope of consolidation, €52 million after taxes was reclassified to the income statement in 2021 and €71 million after taxes in 2020.
Cash flow hedges
Changes in the fair value of derivatives designated in hedging relationships (cash flow hedges) adjusted for deferred taxes in the amount of –€10 million (2020: €24 million) reduced equity by a total of €329 million (2020: €108 million). In 2021, –€381 million (2020: –€163 million) was attributable to the hedging of future cash flows at shareholdings accounted for using the equity method.