Imperial Chemical Industries (ICI)

Prior to 2004

Between 1997 and 2004 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, the Eutech engineering consultancy, the synetix catalyst business, the 51% owned pharmaceutical business of ICI India, the Security Systems business, the UK Nitrocellulose and Energetic Technologies business, the Permabond and Cheese Coatings business of National Starch and the Explosives business of ICI India. In addition, Irish Fertiliser Industries Ltd, a business in which the Group had a 49% interest, ceased trading.

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 2004 were £1,636m mainly in respect of termination costs (£295m), post-retirement benefit costs relating to employees transferring to the purchaser (£329m), transaction costs (£105m), separation costs (£96m), 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 2006 to at least 2030. During 2004 revisions were made to these provisions resulting in a release of £4m. During 2005 further revisions were made resulting in a net charge of £16m. At 31 December 2005, £201m remained to be spent.

The direct disposal provisions relating to the pre-2004 divestments were reviewed during 2005 resulting in a net charge of £4m to profit on special items. At 31 December 2005, £74m remained to be spent relating to pre-2004 divestments principally termination costs (£16m), transaction costs (£6m) and site separation costs (£9m). These provisions are expected to be substantially utilised by the end of 2007.

2004

(i) Quest Food Ingredients
The Group completed the sale of Quest’s Food Ingredients business on 30 April 2004. Provisions of £22m were charged in respect of transaction costs (£6m), post-retirement benefit costs relating to employees transferring to the purchaser (£6m), separation costs (£9m) and severance costs (£1m). Minor revisions were made during 2005. At 31 December 2005, £10m remained to be spent. The majority of provisions are expected to be utilised by the end of 2006.

(ii) Other disposals
During 2004 the Group closed its polyethylene business in Argentina. Provisions of £5m were charged in respect of transaction costs (£1m) and separation costs (£4m). At 31 December 2005, £2m remained to be spent relating to separation costs. The majority of provisions are expected to be utilised by the end of 2007.

2005

(i) National Starch Vinamul Polymers
The Group completed the sale of National Starch Vinamul Polymers business on 7 February 2005. Provisions of £23m were charged in respect of transaction costs (£5m), post-retirement benefit liabilities relating to employees transferring to the purchaser (£13m) and environmental costs (£5m). As at 31 December 2005, £7m remained to be spent including post-retirement benefit costs (£2m) and environmental costs (£5m). Full utilisation is expected by the end of 2006.

(ii) Paints Wood Finishing
The Group completed the sale of Paints Wood Finishing business on 30 September 2005 creating a provision of £1m in relation to separation costs. This provision is expected to be utilised in 2007.

24   Disposal and legacy, and restructuring provisions (continued)

Prior to 2004

Between 1997 and 2004 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, the Eutech engineering consultancy, the synetix catalyst business, the 51% owned pharmaceutical business of ICI India, the Security Systems business, the UK Nitrocellulose and Energetic Technologies business, the Permabond and Cheese Coatings business of National Starch and the Explosives business of ICI India. In addition, Irish Fertiliser Industries Ltd, a business in which the Group had a 49% interest, ceased trading.

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 2004 were £1,636m mainly in respect of termination costs (£295m), post-retirement benefit costs relating to employees transferring to the purchaser (£329m), transaction costs (£105m), separation costs (£96m), 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 2006 to at least 2030. During 2004 revisions were made to these provisions resulting in a release of £4m. During 2005 further revisions were made resulting in a net charge of £16m. At 31 December 2005, £201m remained to be spent.

The direct disposal provisions relating to the pre-2004 divestments were reviewed during 2005 resulting in a net charge of £4m to profit on special items. At 31 December 2005, £74m remained to be spent relating to pre-2004 divestments principally termination costs (£16m), transaction costs (£6m) and site separation costs (£9m). These provisions are expected to be substantially utilised by the end of 2007.

2004

(i) Quest Food Ingredients
The Group completed the sale of Quest’s Food Ingredients business on 30 April 2004. Provisions of £22m were charged in respect of transaction costs (£6m), post-retirement benefit costs relating to employees transferring to the purchaser (£6m), separation costs (£9m) and severance costs (£1m). Minor revisions were made during 2005. At 31 December 2005, £10m remained to be spent. The majority of provisions are expected to be utilised by the end of 2006.

(ii) Other disposals
During 2004 the Group closed its polyethylene business in Argentina. Provisions of £5m were charged in respect of transaction costs (£1m) and separation costs (£4m). At 31 December 2005, £2m remained to be spent relating to separation costs. The majority of provisions are expected to be utilised by the end of 2007.

2005

(i) National Starch Vinamul Polymers
The Group completed the sale of National Starch Vinamul Polymers business on 7 February 2005. Provisions of £23m were charged in respect of transaction costs (£5m), post-retirement benefit liabilities relating to employees transferring to the purchaser (£13m) and environmental costs (£5m). As at 31 December 2005, £7m remained to be spent including post-retirement benefit costs (£2m) and environmental costs (£5m). Full utilisation is expected by the end of 2006.

(ii) Paints Wood Finishing
The Group completed the sale of Paints Wood Finishing business on 30 September 2005 creating a provision of £1m in relation to separation costs. This provision is expected to be utilised in 2007.

24   Disposal and legacy, and restructuring provisions (continued)