9 Exceptional items
|
2007
|
2006
|
|
Exceptional income:
|
|
|
|
- Gain from the disposal of activities
|
-
|
67
|
|
- Release of provisions
|
-
|
6
|
|
|
|
|
|
Total exceptional income
|
-
|
73
|
|
|
|
|
|
Exceptional expense:
|
|
|
|
- Loss from the disposal of activities
|
-
|
-
|
|
- Additions to provisions
|
(26)
|
(84)
|
|
- Impairment of intangible
assets and property,
plant and equipment
|
(150)
|
(11)
|
|
- Employee-benefits costs
|
-
|
9
|
|
- Other costs
|
-
|
(13)
|
|
|
|
|
|
Total exceptional expense
|
(176)
|
(99)
|
|
|
|
|
|
Operating profit from
exceptional items
|
(176)
|
(26)
|
|
Net finance costs
|
-
|
-
|
|
Share of the profit of associates
|
-
|
4
|
|
|
|
|
|
Total, before income tax expense
|
(176)
|
(22)
|
|
Income tax expense
|
47
|
18
|
|
|
|
|
|
Total, after income tax expense
|
(129)
|
(4)
|
|
Minority interests
|
-
|
-
|
|
|
|
|
|
Net result from exceptional items
|
(129)
|
(4)
|
2007
The exceptional items in 2007 are listed below:
- The impairment of intangible assets and property, plant and equipment relates to the cash generating unit DSM Anti-Infectives. In June 2007 DSM announced that it had studied the strategic options for this cash generating unit and decided that a partnering strategy combined with innovation initiatives and further restructuring was the best way forward. In the context of this study the cash generating unit was tested for impairment in view of persistent operating losses. It was concluded that the recoverable amount of DSM Anti-Infectives was below the carrying amount and therefore an impairment loss of €150 million was recognized in the Pharma segment. The recoverable amount was determined on the basis of the value in use of the cash generating unit. The discount rate that was used amounted to 10% before tax, which is equal to the rate used for impairment testing in previous years. The impairment charge was allocated to property, plant and equipment (98%) and intangible assets (2%). Restructuring charges (€4 million) have been recognized in connection with the planned transfer of part of the production of side chains to China at DSM Anti-Infectives.
- Restructuring charges (€22 million) have been recognized in the Nutrition cluster in relation to the redesign of the business model of the cluster, which encompasses cancellation of existing contracts and the introduction of new ways of working at both DSM Nutritional Products and DSM Food Specialties.
2006
The exceptional items in 2006 are listed below:
- The gain from the disposal of activities relates to gains from the disposal of DSM Minera (Chile), the disposal of the display coatings business and the disposal of the South Haven site (United States).
- Due to the disposal of the South Haven site a restructuring provision could be released.
- The addition to provisions is mainly related to costs (€13 million) for the termination of the aspartame business, costs (€9 million) for the closing of the production facilities in Landskrona (Sweden), costs (€44 million) for a provision for an onerous contract (DSM Nutritional Products) and costs (€14 million) for the restructuring of the Geleen (Netherlands) and Linz (Austria) sites of DSM Pharmaceutical Products.
- The impairment of intangible assets and property, plant and equipment relates to the termination of the aspartame business (€2 milion), the closing of the production facilities in Landskrona (€2 million) and the restructuring of the Geleen and Linz sites of DSM Pharmaceutical Products (€7 million).
- The employee benefits costs comprise the gain from a deferred pension settlement related to the disposal of DSM Bakery Ingredients in 2005.
- The other costs mainly concern the settlement for terminating the melamine production joint venture (AMEL) in the United States (€6 million).
- The share of the profit of associates is the balance of the gain from the disposal of Methanor and the impairment of DSM’s share in AMEL.
- The income tax expense concerns the income tax over the exceptional items in the financial year. The favorable tax rate results from the fact that significant parts of the exceptional items are tax exempt.