annington annual rep 2019-web - Page 54



Financial statements | Notes to the financial statements
Notes to the financial statements
5. OPERATING PROFIT/(LOSS)
ACCOUNTING POLICY
Site Review costs
Operating profit/(loss) is stated after charging depreciation,
operating lease payments and auditor remuneration, and
before finance income and finance costs.
2019
£’000
Receipts from joint ventures
accounted through other
operating income
4,117
2018
£’000
-
Operating lease payments
Machinery and motor vehicles
206
210
Land and buildings
509
431
Depreciation of plant and equipment
58
31
Write downs of inventory to net
realisable value
68
-
Auditor’s remuneration
Fees payable to the Company’s
auditor for the audit of the Company
53
52
Fees payable to the Company’s
auditor for the audit of the
Company’s subsidiaries
197
190
Total audit fee
250
242
Non-audit remuneration
Taxation compliance services
57
63
Other taxation advisory services
12
17
-
291
60
410
129
781
Other assurance services
All other services to the Group
Total non-audit fee
54 | Annington Limited Annual Report & Accounts 2019
Included in operating profit are costs relating to the Site
Review, which are considered exceptional in nature, due to the
size and infrequent occurrence of Site Reviews. Site Reviews
will reset rent on the MQE Retained Estate to the relevant open
market rate. The first applies in four annual tranches starting in
December 2021, marking the 25th anniversary of the initial sale
and leaseback agreement of the MQE. The Site Review will
then be performed on a 15 year rolling basis for the remainder
of the lease back to the MoD.
The Arbitration Agreement with the MoD sets out a two
year process for reaching agreement on the future discount
to be applied to sites following the 2021-2024 site review
adjustments. Having entered into this agreement and
confirming the mechanisms to be applied in determining the
uplifts, Annington has determined that a significant sum will
need to be spent in this round of negotiations, as precedents
will need to be developed between the parties as to the
way in which a site review will operate. The Group estimates
that the costs associated with this are of such a material
nature as to require separate disclosure on the face of the
Consolidated Income Statement. The £5.6 million of site review
costs incurred in the 2019 financial year have been disclosed
separately in the income statement. As required by IAS 1
Presentation of Financial Statements, comparative figures for
2018 have been reclassified, with £1.5 million of cost being
re-presented separately as Site Review costs. These were
previously classified under Property operating expenses.
6. INFORMATION REGARDING DIRECTORS AND EMPLOYEES
ACCOUNTING POLICY
Employee benefits
The Group provides a range of benefits to employees,
including annual bonuses, any long-term incentives, paid
holiday arrangements and defined contribution plans.
Short-term benefits, including holiday pay and other similar
non-monetary benefits, are recognised as an expense in the
year in which the service is rendered. Outstanding balances
due to employees are shown as a liability.
The cost of providing contributions to employees’ personal
defined contribution schemes is charged to the income
statement as contributions are made. Differences between
contributions payable in the year and contributions actually
paid are shown as either accruals or prepayments in the
balance sheet.
2019
£’000
2018
£’000
Directors’ emoluments
Aggregate emoluments representing
short-term employee benefits
2,605
2,709
No retirement benefits are accruing to directors. Emoluments,
for the highest paid director amounted to £0.9 million (2018:
£0.9 million). No directors’ emoluments were paid to those
directors who are employed by Terra Firma Capital
Partners Limited.
7. PROFIT ON DISPOSAL OF INVESTMENT PROPERTIES
ACCOUNTING POLICY
Gains or losses on the sale of properties are accounted for on
a legal completion of contract basis. The difference between
the net disposal proceeds and the carrying amount of the
asset is recognised in the income statement in the period of
derecognition.
Sales proceeds
2019
£’000
2018
£’000
15,138
34,918
(828)
(422)
14,310
34,496
(13,584)
(28,062)
726
6,434
Selling costs
2019
Number
2018
Number
Net disposal proceeds
Carrying value of properties
disposed
Average monthly number of persons employed
(including directors)
Administrative
24
23
Operations
17
15
41
38
2019
£’000
2018
£’000
6,179
5,925
Social security costs
612
640
Other pension costs
202
248
6,993
6,813

During the year, disposals of 65 properties
(2018: 121 properties) were completed.
Staff costs incurred during the year
Wages and salaries including
directors’ emoluments

The Company has no direct employees. All staff are employed
by the subsidiary, Annington Management Limited, on behalf
of the Group.
The other pension costs disclosed above represents the
Group’s contributions to employees’ personal defined
contribution pension schemes.
Annington Limited Annual Report & Accounts 2019 | 55

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