british american tobacco p.l.c. annual report 2008 - Notes on the accounts: 22 of 31
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DIRECTORS' REPORT: BUSINESS REVIEW
DIRECTORS' REPORT: GOVERNANCE
FINANCIAL STATEMENTS AND OTHER INFORMATION
22 Other provisions for liabilities and charges
| Restructuring of existing businesses £m | Acquired businesses £m | Employee related benefits £m | Other provisions £m | Total £m | |
|---|---|---|---|---|---|
| 1 January 2009 | 180 | 23 | 35 | 243 | 481 |
| Differences on exchange | (12) | (2) | 1 | 11 | (2) |
| Provided in respect of the year | 99 | 1 | 10 | 2 | 112 |
| Utilised during the year | (75) | (13) | (8) | (38) | (134) |
| Other movements | (5) | (1) | 5 | (1) | |
| 31 December 2009 | 187 | 8 | 38 | 223 | 456 |
| Analysed on the balance sheet as | |||||
| – current | 144 | 2 | 10 | 156 | 312 |
| – non-current | 43 | 6 | 28 | 67 | 144 |
| 187 | 8 | 38 | 223 | 456 | |
| 1 January 2008 | 182 | 23 | 20 | 203 | 428 |
| Differences on exchange | 44 | 5 | 2 | 28 | 79 |
| Provided in respect of the year | 65 | 9 | 15 | 62 | 151 |
| Utilised during the year | (108) | (15) | (4) | (50) | (177) |
| Other movements | (3) | 1 | 2 | ||
| 31 December 2008 | 180 | 23 | 35 | 243 | 481 |
| Analysed on the balance sheet as | |||||
| – current | 104 | 15 | 9 | 167 | 295 |
| – non-current | 76 | 8 | 26 | 76 | 186 |
| 180 | 23 | 35 | 243 | 481 |
The restructuring provisions relate to the restructuring and integration costs incurred and reported as adjusting items in the income statement. The principal restructuring activities in 2009 and 2008 are as described in note 3(e). While some elements of the non-current provisions of £43 million will unwind over several years, as termination payments are made over extended periods in some countries, it is estimated that over 55 per cent will unwind in 2011 and approximately 80 per cent within five years.
Provisions in respect of acquired businesses mostly relate to those which were part of the integration of the Rothmans businesses in 1999 and the reorganisation of the Italian business acquired in 2003. While some elements of the non-current provisions of £6 million will unwind over several years, it is estimated that around 60 per cent will unwind within five years.
Employee related benefits mainly relate to long-term employee benefits other than post-retirement benefits. As the principal components of these provisions are long service awards and ‘jubilee’ payments due after a certain service period, they will unwind over several years. It is estimated that approximately 40 per cent of the non-current provisions of £28 million will unwind within five years.
Other provisions comprise balances set up in the ordinary course of general business that cannot be classified within the other categories, such as sales returns, onerous contracts, together with amounts in respect of supplier, excise and other disputes. The nature of the amounts provided in respect of disputes is such that the extent and timing of cash flows is difficult to estimate and the ultimate liability may vary from the amounts provided.
Amounts provided above are shown net of reversals of unused provisions which include £9 million (2008: £20 million) for restructuring of existing businesses, £nil (2008: £6 million) for acquired businesses, £2 million (2008: £nil) for employee benefits and £90 million (2008: £15 million) for other provisions.