Notes to the consolidated financial statements

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Land and buildings
£m

Plant and machinery
£m

Assets in the course of construction
£m

Total
£m

Cost

 

 

 

 

At 1 April 2010

578

2 349

345

3 272

Additions at cost

3

11

53

67

Transfers on completion

3

50

(53)

Transfer to assets held for sale

(11)

(57)

(68)

Disposals and write-offs

(3)

(12)

(211)

(226)

Businesses sold

(114)

(346)

(39)

(499)

Exchange and other movements

(23)

(102)

(17)

(142)

At 31 March 2011

433

1 893

78

2 404

Accumulated depreciation and impairments

 

 

 

 

At 1 April 2010

292

1 564

208

2 064

Depreciation charge

14

86

100

Transfer to assets held for sale

(4)

(42)

(46)

Impairment losses and write-downs

3

1

4

8

Disposals and write-offs

(12)

(195)

(207)

Businesses sold

(72)

(206)

(4)

(282)

Exchange and other movements

(12)

(63)

(13)

(88)

At 31 March 2011

221

1 328

1 549

Net book value at 31 March 2011

212

565

78

855

Cost

 

 

 

 

At 1 April 2009

591

2 394

345

3 330

Additions at cost

2

12

68

82

Transfers on completion

6

44

(50)

Disposals and write-offs

(1)

(13)

(1)

(15)

Exchange and other movements

(20)

(88)

(17)

(125)

At 31 March 2010

578

2 349

345

3 272

Accumulated depreciation and impairments

 

 

 

 

At 1 April 2009

288

1 493

1

1 782

Depreciation charge

15

101

116

Impairment losses and write-downs

31

209

240

Disposals and write-offs

(1)

(13)

(14)

Exchange and other movements

(10)

(48)

(2)

(60)

At 31 March 2010

292

1 564

208

2 064

Net book value at 31 March 2010

286

785

137

1 208

Additions to property, plant and equipment includes capitalised borrowing costs of £nil (2010 – £2 million).

Impairment losses

It is the Group’s policy to test assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

Impairment reviews

2011

The Group’s European businesses are a major supplier of sweeteners which operates in competition to sugar throughout the Continent. Following the disposal of five European starch plants in October 2007, the Group carried out an impairment review in respect of the remaining CGUs at 31 March 2011. The recoverable amount was based on value in use, calculated based on estimated future cash flows using management’s internal forecasts of future margins for the next five years. The pre-tax discount rate used was 11% (2010 – 11%) and a zero growth rate assumed in perpetuity. Taking all factors into account management concluded that no further impairment or reversal of previous impairments was required.

During the year, the Group carried out an impairment review in respect of its Dayton plant which manufactures citric acid in light of changes to the regulatory and competitive environment in which it operates. The recoverable amount was based on value in use, calculated based on estimated future cash flows using management’s internal forecasts of future margins for the next five years and applying a terminal value. The pre-tax discount rate used was 11%. Taking all factors into account management concluded that no further impairment or reversal of previous impairments was required.

2010

In the year ended 31 March 2010, 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 concluded that the plant was highly unlikely to be completed or commissioned in the foreseeable future. As a result, the facility was mothballed. An impairment review was carried out and as a result an impairment charge of £209 million against assets under construction (as part of the impairment charge of £217 million) was recognised as an exceptional item. This exceptional item related to the Bulk Ingredients segment. The recoverable amount was based on value in use, calculated using the expected cash flow approach, weighted for the potential timings of completion and commissioning the plant, and using management’s internal forecasts of future cash flows for five years, a pre-tax discount rate of 11% and a zero growth rate assumed in perpetuity.

In the year ended 31 March 2010, following a review of its portfolio of research and development projects, the Group decided to write down assets relating to operations in the Bulk Ingredients segment resulting in an impairment write-down of £20 million relating to Plant and Machinery being recognised in exceptional items.

In the year ended 31 March 2010, the Group carried out a further review of its sugar refining operation in Israel as a result of the deterioration of the margins driven by record high sugar prices and a surplus of EU beet sugar being exported into the Israel domestic market. The recoverable amount was based on value in use, calculated based on management’s internal forecasts of future cash flows for the remainder of the operation’s contractual life and a pre-tax discount rate of 13% (2010 – 13%). An impairment of £11 million was recognised in exceptional items that year.

Leased assets

Included in property, plant and equipment is plant and machinery held under finance leases with a net book value of £11 million (2010 – £13 million).