Notes to the financial statements
4 Exceptional items
Exceptional items comprise those items that are material and one-off in nature that the Group believes should be separately disclosed to assist in the understanding of the underlying financial performance of the Group.
|
Operating costs |
Year ended 31 March 2014 £m |
Year ended 31 March 2013 £m |
||
|---|---|---|---|---|
|
Depot administration restructuring costs |
– |
(9.2) |
||
|
Costs associated with closure of Dairy processing sites |
– |
(21.3) |
||
|
Spreads restructuring costs |
(3.8) |
(13.8) |
||
|
Business reorganisation |
(4.4) |
(3.5) |
||
|
Rationalisation of operating sites |
(2.0) |
– |
||
|
(10.2) |
(47.8) |
|||
|
Finance costs |
||||
|
Repayment of loan notes and associated costs (Note 5) |
(0.2) |
(8.7) |
||
|
(10.4) |
(56.5) |
|||
|
Tax relief on exceptional items |
2.1 |
12.0 |
||
|
Deferred tax adjustment for change in UK corporation tax rate |
1.9 |
– |
||
|
(6.4) |
(44.5) |
|||
|
Discontinued operations – (Note 29) |
1.4 |
47.7 |
||
|
(5.0) |
3.2 |
Exceptional items in the year ended 31 March 2014 comprise:
- In September 2012 the Group announced that it was to consult with employees on plans to consolidate spreads production into a single UK location at its site in Kirkby, Liverpool. As a result of this consolidation the site at Crudgington, Shropshire is expected to close in the coming financial year. The exceptional costs incurred in the period ended 31 March 2014 were £3.8 million (2013: £13.8 million), comprising plant and equipment write-down,termination costs and duplicate running costs. The tax effect of this exceptional charge in the year was £0.8 million (2013: £2.8 million).
- In February 2013 the Group announced plans to reorganise the business into a single management and operational structure from 1 April 2013. This is replacing the divisional structures that previously existed and will lead to a more efficient and simplified organisation. This reorganisation has resulted in exceptional costs in the year ended 31 March 2014 of £4.4 million (2013: £3.5 million) comprising predominantly redundancy costs and the write-down of an intangible asset on the basis that there will be no future benefit from this asset following the reorganisation. The tax effect in the year of this exceptional charge in the year was £0.8 million (2013: £0.8 million). This project has now completed.
- In December 2013 the Group announced that it was starting consultation with employees regarding the closure of its Proper Welsh Milk dairy in Whitland, Carmarthenshire. The dairy was subsequently closed in January 2014 resulting in exceptional costs in the year of £0.6 million comprising plant and equipment write-down and redundancy costs. In March 2014, the Group announced a strategic review of its FoodTec UK Ltd subsidiary and an exceptional cost of £1.4 million has been incurred in the period comprising the write-down of its working capital, plant and equipment. The tax effect of this exceptional charge in the year was £0.3 million.
- In March 2013 the Group gave notice to the holders of its 2007 private placement loan notes that it would repay £100 million of principal in April 2013. The costs of early repayment were accrued at 31 March 2013 as the Group was irrevocably committed to the repayment at that date. Costs of £8.7 million predominantly comprise make whole penalties which were calculated based on the discounted future coupons between repayment date and original note maturity. A further £0.2 million of costs have been incurred in the period ended 31 March 2014 comprising bank charges and professional fees relating to the transaction. The tax effect of this exceptional charge was nil (2013: £2.1 million).
- In the year ended 31 March 2013, the Group closed two processing sites in Aintree and Fenstanton. Whilst these projects were largely completed within the year, £0.5 million of closure costs have been incurred in the year ended 31 March 2014 that have been offset by proceeds from the sale of property, plant and equipment of £0.5 million.
- With effect from 1 April 2015, the corporation tax rate which was enacted on 2 July 2013 has changed from 23% to 20%. The deferred tax calculations are now based on the lower rate resulting in a deferred tax benefit of £1.9 million in the year ended 31 March 2014. Due to the size and one-off nature of this significant amendment in the enacted rate, it has been classified as an exceptional deferred tax credit in the period.
Exceptional items in the year ended 31 March 2013 comprised:
- £9.2 million of costs associated with the rationalisation of administrative activities and other structural changes in the Dairies depot network. This restructuring resulted in centralisation of back office activities supporting the depot network. These costs related to redundancies (£7.4 million), incremental operating costs associated with delivery of the project (£1.1 million) and write downs of property, plant and equipment (£0.7 million). The tax effect of this exceptional charge was £2.2 million. The project has now completed.
- In the year ended 31 March 2013, the Group closed two processing sites at Aintree in Liverpool and Fenstanton in Cambridgeshire. The closure of the sites and resultant changes in the supply chain, volume requirements and customer channels resulted in exceptional costs of £21.3 million. These costs related to redundancies (£9.0 million), duplicate running costs (£6.2 million), asset write downs (£0.7 million) and other costs (£5.4 million) including stock write offs and duplicate running costs. The tax effect of this exceptional charge was £5.0m. This project has now completed.