These excerpts taken from the ICI 6-K filed Mar 21, 2007.
(j) Discounted provisions
Under SOP 96-1, a provision can only be discounted if the aggregate amount of the liability and the timing of the future cash flow are fixed or determinable reliably. Under IFRS, the Group holds discounted provisions relating to environmental and legacy items associated with businesses disposed of; the liability and timing of the future cash flows of some of these provisions is not fixed or determinable reliably. The timing of the future cash flows of some of these provisions is not fixed or determinable reliably. As these discounts are unwound under IFRS, a financing cost is charged to interest in the Group income statement.
(ii) Discounted provisions
The credit of £7m (2005 £16m credit; 2004 £14m charge) arising on discounted provisions is due to the reversal of the discount unwind (using a discount rate of 5.0%) of £2m (2005 £4m; 2004 £2m) and a release of £5m (2005 £12m release; 2004 £16m increase). The undiscounted provision recognised under US GAAP at 31 December 2006 of £53m is £15m higher than the discounted provision held under IFRS (2005 £22m higher).