DSM Annual Report 2008 - Exceptional items

9) Exceptional items

	2008	2007

Exceptional expense:
Loss from the disposal of activities	(11)	-
Additions to provisions	(37)	(26)
Impairment of intangible assets and Property, plant and equipment	(12)	(150)
Reversal of impairments	15	-

Total exceptional expense	(45)	(176)

Operating profit from exceptional items	(45)	(176)
Net finance costs	-	-
Share of the profit of associates	-	-

Total, before income tax expense	(45)	(176)
Income tax expense	14	47

Total, after income tax expense	(31)	(129)
Minority interests	-	-

Net result from exceptional items	(31)	(129)

2008

The exceptional items in 2008 are listed below:

The book loss from the management buy-out of Deretil, part of DSM Anti-Infectives, amounts to €11 million before taxation.
The following restructuring charges have been recognized:
€25 million before taxation in connection with the actions to strengthen DSM's competitive position announced on 15 December 2008 and €12 million in connection with the closure of the Clavulanic Acid site of DSM Anti-Infectives in Sweden.
The impairment of €12 million relates to the closure of the Clavulanic Acid site of DSM Anti-Infectives in Sweden and principally consists of the write-down of Property, plant and equipment to the remaining value in use.
The reversal of impairments relates to DSM Anti-Infectives and is due to improved business conditions.

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 cluster. 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.

Previous - 8) Net finance costs

Next - 10) Income tax

Notes