f) Canadian settlement
On 31 July 2008, the Group's subsidiary in Canada (Imperial Tobacco Canada) announced that it had reached a resolution with the federal and provincial governments with regard to the investigation related to the export to the United States of Imperial Tobacco Canada tobacco products in the late 1980s and early 1990s. The subsidiary entered a plea of guilty to a regulatory violation of a single count of Section 240(i) (a) of the Excise Act and has paid a fine of £102 million which was included in other operating expenses in the profit from operations for the year ended 31 December 2008.
Imperial Tobacco Canada has also entered into a 15-year civil agreement with the federal and provincial governments. In order, amongst other things, to assist the governments in their future efforts against illicit trade, Imperial Tobacco Canada has agreed to pay a percentage of annual net sales revenue each year going forward for 15 years, up to a maximum of Can$350 million, which will be expensed as it is incurred.
g) Amortisation of trademarks
The acquisitions of Tekel and ST resulted in the capitalisation of trademarks which are amortised over their expected useful lives, which do not exceed 20 years. The amortisation charge of £24 million is included in depreciation and amortisation costs in the profit from operations for the year ended 31 December 2008.
h) Gains on disposal of businesses and trademarks
The gain on disposal of businesses and trademarks for the year ended 31 December 2008 was £141 million, of which £139 million arose on 2 July 2008 with the disposal of the Group's 32.35 per cent holding in the non-cigarette and snus businesses of ST (as described in note 26(a)). The gain is included in other operating income in the profit from operations for the year ended 31 December 2008.
On 20 February 2007, the Group announced that it had agreed to sell its pipe tobacco trademarks to the Danish company, Orlik Tobacco Company A/S, for €24 million. The sale was completed during the second quarter of 2007 and resulted in a gain of £11 million included in other operating income in profit from operations. However, the Group retained the Dunhill and Captain Black pipe tobacco trademarks.
On 23 May 2007, the Group announced that it had agreed to sell its Belgian cigar factory and associated trademarks to the cigars division of ST. The sale included a factory in Leuven as well as trademarks including Corps Diplomatique, Schimmelpennick, Don Pablo and Mercator. The transaction was completed on 3 September 2007 and a gain on disposal of £45 million was included in other operating income in profit from operations for the year ended 31 December 2007.
On 1 October 2007, the Group agreed the termination of its license agreement with Philip Morris for the rights to the Chesterfield trademark in a number of countries in southern Africa. This transaction resulted in a gain of £19 million included in other operating income in profit from operations for the year ended 31 December 2007.