Notes to the accounts
4 Exceptional items
An analysis of the amounts presented as exceptional items in these financial statements is given below:
|
Year ended |
Period ended |
|
Operating items |
||
Restructuring of corporate and divisional headquarters |
(4.5) |
|
Integration of acquisitions |
(9.1) |
(9.0) |
Impairment of goodwill and other assets |
(10.3) |
|
Profit/(loss) on disposal of businesses (note 30) |
27.2 |
(5.2) |
Aborted transaction costs |
(12.7) |
|
Litigation: |
||
– Commutation of insurance policies (note 23) |
42.9 |
|
– Provision for John Crane, Inc. asbestos litigation (note 23) |
(49.0) |
(100.7) |
– Provision for other litigation (note 23) |
(8.6) |
|
– Class action settlement |
5.4 |
|
(35.4) |
(98.2) |
|
Financing items |
||
Exceptional finance costs – adjustment to discounted provision (note 23) |
(4.7) |
|
(40.1) |
(98.2) |
Year ended 31 July 2008
On 3 June 2008 the Company announced a number of changes to its corporate centre and divisional headquarters. The total cost of this restructuring, including redundancy, relocation and consolidation of manufacturing, is considered exceptional by virtue of its size. It is expected to amount to approximately £48m over the period to 2010, of which £4.5m has been charged in the current year.
In addition, restructuring costs in connection with the integration of Medex amounting to £9.1m have been incurred in the period. No further costs relating to this restructuring are anticipated.
The operating charge of £49.0m in respect of John Crane, Inc. asbestos litigation comprises a £40.0m provision for the expected costs of future asbestos judgments, £5.2m in respect of adverse legal judgments (net of insurer contributions previously lodged as collateral) and £3.8m arising from movements in the discounting due to changes in US interest rates (see note 23).
Period ended 31 July 2007
Restructuring costs in connection with the integration of Medex amounting to £9.0m were incurred in the period.
Impairment of goodwill and other assets includes £8.1m in respect of the impairment of a disposal group (John Crane Automotive) prior to its eventual sale.
Costs of £12.7m in relation to the proposed joint venture with GE were written off in the light of the decision not to proceed with the joint venture.
John Crane, Inc. commuted certain insurance policies and received £42.9m in cash for the period. At the same time, a provision of £100.7m in respect of legal defence costs for asbestos cases was established (note 23).
The progression of other litigation cases arising in 2007 gave rise to an exceptional charge.
The exceptional charge recognised in 2006 in respect of the class action settlement has now been finalised. That element of the provision which was surplus was therefore released.