Notes to the consolidated financial statements

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31 March

 

2011
£m

2010
£m

Trade guarantees

1

13

As at 31 March 2010, trade guarantees included £13 million in relation to discontinued operations.

In addition to the above, in 2010 we had guaranteed the obligations of certain subsidiaries and joint ventures to Payment Agencies in connection with Restructuring Aid. The Group’s share of these guarantees were £6 million.

Other trade guarantees have been given in the normal course of business by the Group at both 31 March 2011 and 31 March 2010. These are excluded from the figures given above and are in respect of Revenue and Customs and the Rural Payments Agency for Agricultural Produce bonds, ECGD recourse agreements, letters of credit and tender and performance bonds.

The Group is subject to claims and litigation generally arising in the ordinary course of its business, some of which are for substantial amounts. All such actions are strenuously defended but provision is made for liabilities that are considered likely to arise on the basis of current information and legal advice and after taking into account the Group’s insurance arrangements.

While there is always uncertainty as to the outcome of any claim or litigation, it is not expected that claims and litigation existing at the balance sheet date will have a material adverse effect on the Group’s financial position.

Sale of EU Sugars

The sale of EU Sugars to American Sugar Refining, Inc. completed on 30 September 2010. The consideration after working capital adjustments was £227 million, subject to closing adjustments arising from the agreement of post completion statements. The process to reach such agreement is ongoing and items totalling £54 million remain outstanding and are expected to be submitted for adjudication to an independent expert. These items relate to the impact of major turbulence in the supply of raw sugar to the EU during the period prior to closing which resulted in an increase in certain rolling re-export commitments of the business arising under the EU Sugar Regime. The Group believes that its position is fully supported and as such will be robustly defended. No provision in respect of outstanding items has been recorded.