On 10 July 2013, the Group announced its intention to dispose of the Services businesses. However, the Group was committed to a plan to sell the businesses prior to 30 June 2013, therefore the assets have been classified as held for sale. The disposal is consistent with the Group's long term policy to focus its activities on the manufacture and marketing of pharmaceutical products.
The Services businesses constitutes a reporting segment in accordance with IFRS 8.
The divestment was completed on 16 August 2013 for sale proceeds of £87.5 million. The costs to sell are £1.5 million (with an associated tax deduction of £0.1 million). Tax on the profit on disposal is expected to be £0.4 million. The completion accounts are yet to be finalised.
The Group has not recognised any impairment losses in respect of the Services businesses, neither when the assets and liabilities of the operation were reclassified to held for sale nor at the end of the reporting period.
The results of the discontinued operations included in the profit for the year are set out below. The Segment was not a discontinued operation or classified as held for sale at 30 June 2012. The comparative consolidated income statement has been represented to show the discontinued operation separately from continuing operations.
Profit for the Year from Discontinued Operations
| 2013
£'000 | 2012
£'000 |
|---|
| Revenue | 333,244 | 315,672 |
| Cost of sales | (303,389) | (287,523) |
| Gross profit | 29,855 | 28,149 |
| Distribution costs | (12,540) | (11,853) |
| Administrative expenses | (6,203) | (5,240) |
| Non-underlying expenses* | (38) | (438) |
| Operating profit | 11,074 | 10,618 |
| Net finance (expense)/income | (5) | 90 |
| Profit before taxation from operating activities | 11,069 | 10,708 |
| Income tax expenses | (2,649) | (2,864) |
| Profit for the year | 8,420 | 7,844 |
| Expenses related to disposal | (1,467) | — |
| Tax on expenses related to disposal | 110 | — |
| | |
| Profit for the year from discontinued operations | 7,063 | 7,844 |
* Non-underlying items comprise amortisation of acquired intangibles and rationalisation costs.
See note 10 for the Earnings per ordinary share split between continued and discontinued operations.
Cash Flows from Discontinued Operations
| 2013
£'000 | 2012
£'000 |
|---|
| Net cash inflows from operating activities | 1,305 | 4,510 |
| Net cash inflows from investing activities | (810) | (534) |
| Net cash outflows from financing activities (including repayment of intercompany funding) | (508) | (30,603) |
Assets Held For Sale
The major classes of assets and liabilities of the Services businesses at the end of the reporting period are set out below:
| 2013
£'000 |
|---|
| Goodwill | 2,621 |
| Intangible assets | 1,092 |
| Property, plant and equipment | 1,656 |
| Inventories | 28,269 |
| Trade and other receivables | 56,146 |
| Assets of Services businesses classified as held for sale | 89,784 |
| |
| Trade and other payables | (53,961) |
| Liabilities of Services businesses classified as held for sale | (53,961) |
| Net assets of Services businesses classified as held for sale | 35,823 |