13 Non-underlying and exceptional adjustments

Non-underlying adjustments constitute the fair value re-measurement of foreign exchange contracts and deferred contingent share consideration, and exceptional items. Exceptional items are defined as being items that are material in size, unusual or infrequent in nature, and are disclosed separately as exceptional items in the Group statement of comprehensive income.

Group
2014
£m
2013
£m
Re-measurements:
Deferred contingent share consideration(4.0)(2.5)
(Loss)/ gain on financial derivatives(3.7)2.6
Exceptional items:
Set-up costs regarding the Retail distribution centre(3.4)(0.5)
Buy out of Spanish and UK agents(3.3)
Buy out of German agent and business combination costs(2.4)
Re-measurements and exceptional items(16.8)(0.4)
Taxation:
Tax impact of non-underlying adjustments1.8(0.6)
Deferred income tax – exceptional (note 14)(4.3)(1.5)
Taxation on non-underlying adjustments(2.5)(2.1)
Total non-underlying adjustments(19.3)(2.5)
Re-measurements and exceptional items are included within:
Selling, general and administrative expenses(13.1)(3.0)
Other gains and losses(3.7)2.6
Re-measurements and exceptional items(16.8)(0.4)

Re-measurements

a) Fair value re-measurement of deferred share consideration

The SuperGroup Europe BVBA acquisition in February 2011 included two tranches of deferred contingent share consideration to be issued on the second and third anniversaries of the acquisition. The consideration is payable in shares, and the shares will be issued in proportion to the percentage completion of certain sales and store number targets. The fair value of these shares at the acquisition date was £10.3m.

IFRS 3 (revised) requires deferred contingent share consideration to be re-measured at each period end to reflect the estimated percentage completion of the targets and change in share price. The share price movement from £7.36 at April 2013 to £16.10 in February 2014, the date the shares were issued on the third anniversary of the acquisition, increased the liability by £3.9m (2013: the share price movement from £3.50 at April 2012 to £6.93 in February 2013, the date the shares were issued on the second anniversary of the acquisition, increased the liability by £0.8m. The movement on the remaining deferred contingent consideration to £7.36, at April 2013, increased the liability by £1.7m). The movements in the deferred contingent share consideration have been recorded in the Group statement of comprehensive income.

b) Loss/gain on financial derivatives

Loss/gain on derivatives are recognised as a non-underlying adjustment. See note 8.

Exceptional items

aa) Set-up costs regarding the Retail distribution centre

On the 15 April 2013 the Group announced that the Gloucester Retail and e-commerce distribution centres would close and the activities be moved to a site in Burton-upon-Trent. During the period £3.4m (2013: £0.5m) of set-up and dual running costs and write-off of assets was recognised.

ab) Buy-out of Spanish and UK agents

During the year the Group bought out Spanish and UK agents. Total costs, including deferred consideration and legal fees was £3.3m.

ac) Buy-out of German agent and business combination costs

On 31 October 2013 the Group completed a business combination (see note 33). As part of the business combination, a pre-existing agency relationship that was unfavourable to the Group was terminated and a loss was recognised of £1.8m. £0.6m of other related costs, including professional fees were also incurred.