ABF Confirms Permanent Renunciation of 13.5% of UK Sugar Quota by British Sugar
Following this announcement, the unamortised cost arising from the purchase of additional quota of 83,000 tonnes in 2006 and costs relating to the closure of the York factory will be charged as an exceptional item totalling some £45m.
07/02/08 Associated British Foods plc, the international food, ingredients and retail group has announced that the application by British Sugar to renounce permanently 165,000 tonnes of UK sugar production from October 2008 has been accepted by the Rural Payments Agency. This is 13.5% of the UK national quota. The total for the renunciation of permanent quota across the EU is expected to be announced by the European Commission in the coming weeks.
The compensation will be €93m (£69m) payable to British Sugar in two instalments of €31m by June 2009 and €62m by February 2010. Payment is subject to the normal audit processes of the Commission. As expected there will be relief from the restructuring levy on the renounced quota in the 2007/8 marketing year amounting to €29m (£22m).
This compensation will be shown as an exceptional credit in the group’s income statements. Following this announcement, the unamortised cost arising from the purchase of additional quota of 83,000 tonnes in 2006 and costs relating to the closure of the York factory will be charged as an exceptional item totalling some £45m.
A separate decision is awaited in respect of the application to renounce permanent quota of 26,000 tonnes in Poland. The financial consequences of this will also be treated as an exceptional item.
