Imperial Chemical Industries (ICI)

ICI commenced reshaping its portfolio of businesses in 1997 consistent with plans to focus its resources on Paints and Specialty Products. In pursuit of this strategy, the Group announced that it intended to divest most of its Industrial Chemicals businesses.

Prior to 2002

Between 1997 and 2002 the Group sold its Polyurethanes, Tioxide and selected Petrochemicals businesses, Chlor-Chemicals, Klea and Crosfield businesses, Polyester polymer intermediates business excluding operations in Pakistan, the Explosives operations in Canada, Latin America and Europe and the explosives distribution business in the USA, the Polyester film business, the Forest Products business based in Canada, the UK based Fertiliser business, the Teesside Utilities and Services business, the Acrylics business, the Automotive refinish business, the Fluoropolymers business, Ethylene Oxide, the Methanol business and the Methylamines and derivatives businesses, the Group’s 50% interest in Phillips-Imperial Petroleum and the Eutech engineering consultancy.

Provisions were created for both long term residual obligations resulting from the divestments and more immediate and direct disposal costs. Total provisions created for the divestments prior to 2002 were £1,547m mainly in respect of termination costs (£291m), pension costs relating to employees transferring to the purchaser (£302m), transaction costs (£90m), separation costs (£62m), IT related costs (£38m), site clearance (£48m), asset write-downs (£74m), and long-term residual costs (£285m).

The long term residual provisions were created to cover legacy management, legal, estates, pension administration and environmental costs resulting from these divestments. The nature of the provisions is such that expenditure is expected to occur over the period from 2005 to at least 2030. During 2004 revisions were made to these provisions resulting in a release of £4m. At 31 December 2004, £248m remained to be spent.

The direct disposal provisions relating to the pre-2002 divestments were reviewed during 2004 resulting in a net charge of £23m to exceptional profit. At 31 December 2004, £37m remained to be spent relating to pre-2002 divestments principally termination costs (£11m), transaction costs (£3m) and site costs (£4m). These provisions are expected to be substantially utilised by the end of 2005.

2002

(i) Synetix

The Group completed the sale of its catalyst business, Synetix, in 2002. Provisions charged were £46m, mainly in respect of transition and separation costs (£19m), pension costs relating to employees transferring to the purchaser (£14m), termination costs (£2m) relating to 31 employees, transaction costs (£7m) and environmental costs (£2m). At 31 December 2004, £5m remained to be spent including separation costs (£3m), termination costs (£1m) and environmental costs (£1m). During 2004, revisions were made to these provisions resulting in a release of £7m. The majority of the provisions are expected to be utilised by the end of 2005.

(ii) Other disposals

The Group also divested some smaller businesses including the 51% owned pharmaceutical business of ICI India, its Security Systems business and the UK Nitrocellulose and Energetic Technologies businesses. In addition, IFI, the Irish Fertilizer business in which the Group has a 49% interest ceased trading. Provisions of £37m were raised for these transactions, mainly in respect of separation costs (£14m), costs relating to employees transferring to the purchaser (£13m) and transaction related costs (£5m). At 31 December 2004, £2m remained to be spent including separation costs (£1m) and environmental costs (£1m). Full utilisation is expected by the end of 2005.

ICI ANNUAL REPORT AND ACCOUNTS 2004

ICI commenced reshaping its portfolio of businesses in 1997 consistent with plans to focus its resources on Paints and Specialty Products. In pursuit of this strategy, the Group announced that it intended to divest most of its Industrial Chemicals businesses.

Prior to 2002

Between 1997 and 2002 the Group sold its Polyurethanes, Tioxide and selected Petrochemicals businesses, Chlor-Chemicals, Klea and Crosfield businesses, Polyester polymer intermediates business excluding operations in Pakistan, the Explosives operations in Canada, Latin America and Europe and the explosives distribution business in the USA, the Polyester film business, the Forest Products business based in Canada, the UK based Fertiliser business, the Teesside Utilities and Services business, the Acrylics business, the Automotive refinish business, the Fluoropolymers business, Ethylene Oxide, the Methanol business and the Methylamines and derivatives businesses, the Group’s 50% interest in Phillips-Imperial Petroleum and the Eutech engineering consultancy.

Provisions were created for both long term residual obligations resulting from the divestments and more immediate and direct disposal costs. Total provisions created for the divestments prior to 2002 were £1,547m mainly in respect of termination costs (£291m), pension costs relating to employees transferring to the purchaser (£302m), transaction costs (£90m), separation costs (£62m), IT related costs (£38m), site clearance (£48m), asset write-downs (£74m), and long-term residual costs (£285m).

The long term residual provisions were created to cover legacy management, legal, estates, pension administration and environmental costs resulting from these divestments. The nature of the provisions is such that expenditure is expected to occur over the period from 2005 to at least 2030. During 2004 revisions were made to these provisions resulting in a release of £4m. At 31 December 2004, £248m remained to be spent.

The direct disposal provisions relating to the pre-2002 divestments were reviewed during 2004 resulting in a net charge of £23m to exceptional profit. At 31 December 2004, £37m remained to be spent relating to pre-2002 divestments principally termination costs (£11m), transaction costs (£3m) and site costs (£4m). These provisions are expected to be substantially utilised by the end of 2005.

2002

(i) Synetix

The Group completed the sale of its catalyst business, Synetix, in 2002. Provisions charged were £46m, mainly in respect of transition and separation costs (£19m), pension costs relating to employees transferring to the purchaser (£14m), termination costs (£2m) relating to 31 employees, transaction costs (£7m) and environmental costs (£2m). At 31 December 2004, £5m remained to be spent including separation costs (£3m), termination costs (£1m) and environmental costs (£1m). During 2004, revisions were made to these provisions resulting in a release of £7m. The majority of the provisions are expected to be utilised by the end of 2005.

(ii) Other disposals

The Group also divested some smaller businesses including the 51% owned pharmaceutical business of ICI India, its Security Systems business and the UK Nitrocellulose and Energetic Technologies businesses. In addition, IFI, the Irish Fertilizer business in which the Group has a 49% interest ceased trading. Provisions of £37m were raised for these transactions, mainly in respect of separation costs (£14m), costs relating to employees transferring to the purchaser (£13m) and transaction related costs (£5m). At 31 December 2004, £2m remained to be spent including separation costs (£1m) and environmental costs (£1m). Full utilisation is expected by the end of 2005.

ICI ANNUAL REPORT AND ACCOUNTS 2004