Notes to the consolidated financial statements

Exceptional items are as follows:

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Year to 31 March

 

2010
£m

2009
£m

Continuing operations

 

 

UK Group Pension Scheme changes (a)

42

Closure and restructuring costs (b)

(58)

Write-down of assets (c)

(28)

(24)

Impairment charges (d)

(232)

(106)

Settlement with Mexican government (e)

11

Total

(276)

(119)

Discontinued operations

 

 

Loss on disposal – international Sugar Trading (f)

(22)

Total

(22)

  1. (a)The Group has recognised an exceptional gain of £42 million in relation to changes announced to the Group Pension Scheme in the United Kingdom. Of the total gain, £32 million relates to negative past service costs following the removal of the discretionary early retirement benefit from November 2009 and £10 million relates to a curtailment gain as a result of the closure of the scheme to future benefit accrual for employee members from 6 April 2011. This exceptional item relates to the Sugars and central costs segments.
  2. (b)The Group has recognised an exceptional charge in relation to the decision to mothball the Sucralose manufacturing facilities in McIntosh, Alabama. In the year to 31 March 2010 the charge totalled £55 million and covers costs connected with redundancy, clean-up activities and ongoing fixed costs, and includes provision for costs to final closure. The cash outflows in the year totalled £19 million and the remaining balance is forecast to be spent in the years ending 31 March 2011 and 31 March 2012. This exceptional item relates to the Sucralose segment. Additionally, the Group has recognised £3 million of closure and other restructuring costs relating to the Food Systems business within the Food & Industrial Ingredients, Europe segment.
  3. (c) Following a review of its portfolio of research and development projects, the Group has written off £28 million in relation to assets from which it does not expect to receive a commercial benefit. Of the £28 million, £20 million had previously been reported within property, plant and equipment, £6 million within intangible assets and £2 million within prepayments. These assets relate to operations reported in the Food & Industrial Ingredients, Americas segment.

    In the year ended 31 March 2009, the Group wrote off £24 million in relation to a dispute with a supplier over the performance and suitability of certain equipment. Of the £24 million, £6 million had previously been reported within property, plant and equipment and £18 million within prepayments. This exceptional loss related to operations reported in the Food & Industrial Ingredients, Americas segment.
  4. (d)Following a detailed analysis of end markets, in light of costs of around £70 million to complete and commission the plant in Fort Dodge, Iowa, and factoring in the risks associated with future returns from operating the plant, the Group has concluded that the plant is highly unlikely to be completed or commissioned in the foreseeable future. As a result, the facility has been mothballed and an impairment charge of £217 million has been reflected in the year. Of the £217 million charge, £209 million relates to assets previously held in assets under construction and £8 million relates to prepayments. This exceptional item relates to the Food & Industrial Ingredients, Americas segment.
  5. The Group has also recognised an impairment charge of £15 million at its sugar refining business in Israel comprising a full write-down of the fixed assets (£11 million) and an inventory impairment (£4 million). This impairment charge reflects future decline in the commercial prospects in Israel and is in addition to the impairment charge of £9 million recognised in the year ended 31 March 2009. The sugar refining business in Israel is reported in the Sugars reporting segment.
  6. In the year ended 31 March 2009, the decision to mothball the McIntosh, Alabama plant resulted in an impairment charge of £97 million being recognised. This impairment charge is recognised in the Sucralose segment.
  7. (e)In the year ended 31 March 2009, as a result of a settlement of a dispute with the Mexican government over tax on soft drinks containing high fructose corn syrup, Almidones Mexicanos SA, the Group’s joint venture in Mexico, received £22 million, of which the Group’s share is £11 million, as compensation for the lost revenue. The business is reported in the Food & Industrial Ingredients, Americas segment.
  8. (f)In the year ended 31 March 2009 the Group recorded a loss of £22 million in relation to its international Sugar Trading business. The loss is net of a gain of £4 million arising from the disposal of an available-for-sale investment held in connection with the business. The business was previously reported in the Sugars segment.

The tax impact on continuing net exceptional items is a £112 million credit (2009 – £44 million credit). There was no tax effect on the exceptional item from discontinued operations in the year to 31 March 2009. Tax credits on exceptional costs are only recognised to the extent that losses incurred will result in tax recoverable in the future. In addition, there are exceptional tax items of £15 million (Note 11) in respect of the release of various tax provisions following settlement of outstanding issues around the Group.