Notes to the consolidated financial statements

Exceptional items are as follows:

(XLS:) Download Excel

 

Year to 31 March

 

2011
£m

2010
£m

Continuing operations

 

 

Gain on disposal, net of pre-disposal costs – Fort Dodge (note a)

10

Impairment charges – Fort Dodge (note b)

(217)

Business transformation costs (note c)

(15)

(3)

Closure and restructuring costs (note d)

(55)

UK Group Pension Scheme changes (note e)

5

Write-down of assets (note f)

(28)

Total

(5)

(298)

Discontinued operations

 

 

Loss on disposal – EU Sugars (note g)

(55)

Gain on disposal – Molasses (note h)

12

UK Group Pension Scheme changes (note e)

37

Impairment charges (note b)

(15)

Total

(43)

22

The comparative figures for 2010 have been restated to reflect the disposal of EU Sugars and Molasses, which are presented as discontinued operations in both years.

  1. (a) The Group has recorded a net exceptional gain of £10 million in respect of the mothballed ethanol facility at Fort Dodge, Iowa. On 30 March 2011 the facility was sold for cash consideration of £36 million resulting in a gain on disposal of £15 million. An exceptional charge of £25 million had previously been booked early in the year in respect of onerous contracts relating to future obligations of the plant. As a result of the disposal, £20 million of the resultant provision was no longer required and was reversed. This exceptional gain is reported in the Bulk Ingredients segment.
  2. (b) 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 and an impairment charge of £217 million recognised. Of the £217 million charge, £209 million related to assets previously held in assets under construction and £8 million related to prepayments. This exceptional item was reported in the Bulk Ingredients segment.
  3. In the year ended 31 March 2010, the Group recognised an impairment charge of £15 million at its sugar refining business in Israel comprising a full write-down of the property, plant and equipment (£11 million) and an inventory impairment (£4 million). This impairment charge reflected anticipated future decline in the commercial prospects of Israel which is now reported within discontinued operations.
  4. (c) The Group has recognised an exceptional charge of £15 million in relation to business transformation costs. The Group incurred £6 million of charges in relation to the implementation of a common global IS/IT platform, £4 million in relation to the relocation of employees and restructuring associated with the new Commercial and Food Innovation Centre in Chicago, Illinois, and £5 million (2010 – £3 million) of closure and other restructuring costs relating to the Food Systems business. These costs are reported in the Bulk Ingredients (£1 million), Speciality Food Ingredients (£7 million) and the Central costs (£7 million) segments.
  5. (d) In the year ended 31 March 2010, the Group recognised an exceptional charge in relation to the decision to mothball the sucralose manufacturing facility in McIntosh, Alabama. The charge totalled £55 million and covered costs connected with redundancy, clean-up activities and ongoing fixed costs, and included provision for costs to final closure. The exceptional item was reported in the Speciality Food Ingredients segment.
  6. (e) In the year ended 31 March 2010, the Group 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 related to negative past service costs following the removal of the discretionary early retirement benefit from November 2009 and £10 million related 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 related to the Central costs (£5 million) and Sugars (£37 million) segments.
  7. (f) In the year ended 31 March 2010, following a review of its portfolio of research and development projects, the Group wrote 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 related to operations reported in both the Bulk Ingredients (£20 million) and Speciality Food Ingredients (£8 million) segments.
  8. (g) The Group recorded a loss of £55 million in relation to the disposal of EU Sugars. Further details are set out in Note 37.
  9. (h) The Group recorded a gain of £12 million in relation to the disposal of Molasses. Further details are set out in Note 37.

The tax impact on continuing net exceptional items is £10 million charge (2010 – £117 million credit). The tax impact on the discontinued net exceptional items is a £19 million credit (2010 – £5 million charge). 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 has been an exceptional tax credit of £8 million in respect of the recognition of a deferred tax asset on unrealised profit in inventory following the restructuring of the business organisation.

There was an exceptional tax credit of £15 million in the year ended 31 March 2010 in respect of the release of various tax provisions following settlement of outstanding issues around the Group.