annington annual rep 2019-web - Page 56



Financial statements | Notes to the financial statements
Notes to the financial statements
2019
£’000
2018
£’000
(5,979)
(152)
Current tax
United Kingdom corporation tax at 19% (2018: 19%)
8. FINANCE INCOME AND COSTS
ACCOUNTING POLICY
9. TAXATION
ACCOUNTING POLICY
Deferred taxation: origination and reversal of temporary differences
(88,745)
231,995
Interest income is recognised over time, by reference to
the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount on initial recognition.
Taxation for the year comprises current and deferred tax, which
is recognised in the income statement.
Total taxation for the year
(94,724)
231,843
Finance costs, including any transaction costs, are charged to
the income statement using the effective interest rate method.
Current tax is measured at the amount expected to be
recovered from, or paid to, the taxation authorities. The tax
rates and tax laws used to compute the amount are those that
are enacted, or substantively enacted at the balance sheet
date. Taxable profit differs from profit before tax as reported
in the income statement because it excludes some items of
income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or
deductible.
2019
£’000
2018
£’000
Finance income
Interest receivable
Fair value gain on interest rate swaps
Total finance income
638
1,266
-
1,530
Deferred tax
638
2,796
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes at the balance sheet date. Deferred tax liabilities
are recognised for all taxable temporary differences, except
in respect of taxable temporary differences associated with
investments in subsidiaries and interests in joint arrangements,
when the timing of the reversal of the temporary differences
can be controlled by the Group and it is probable that the
temporary differences will not reverse in the foreseeable future.
Finance costs
Interest payable on secured floating
and fixed rate notes
97,811
112,288
Amortisation of discount and issue
costs and finance expenses
2,414
35,511
Interest payable on bank loans
9,193
7,150
(8,836)
(405)
Transfer to equity for cash flow
hedge
8,834
(3,060)
Unwinding of discount
2,384
4,958
(1,789)
-
Bond redemption costs
-
838,372
Debt issue costs
-
8,490
1,572
1,489
Finance lease costs
3
-
Total finance costs
111,586
1,004,793
Foreign exchange gains on financing
Effect of change in discount rate on
provision
Other finance expenses
Current tax
Bond redemption costs incurred in 2018 include make-whole
costs on early redemption of notes, write offs of unamortised
discounts and issue costs and professional fees directly related
to the redemption.
The carrying amount of deferred tax assets is reviewed at each
balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the balance sheet date.
The Group has elected to offset the deferred tax assets and
liabilities as:
Deferred tax
The standard rate of current tax for the year, based on the UK standard rate of corporation tax is 19% (2018: 19%). The tax for the
current and preceding year differ from the standard tax rates for the reasons set out in the following reconciliation:

Profit/(loss) before taxation
Tax (charge)/credit at the standard rate
2018
£’000
551,831
(1,291,645)
(104,848)
245,413
(358)
(1,132)
1,137
1,672
(148)
(606)
9,808
(26,131)
(315)
12,082
-
545
(94,724)
231,843
Factors affecting the current tax for the year:
Expenses not deductible for tax purposes
Non-taxable income
Disposal of investments
Effect of tax rate differential between current and deferred tax
Impact of indexation
Deferred profit taxed under securitisation regime
Taxation for the year
From 1 April 2017, the headline rate of corporation tax was reduced from 20% to 19% and it will be reduced to 17% from 1 April
2020, with these rates substantively enacted at the current balance sheet date.
Deferred tax
The movement in deferred tax is as set out below:
Profits under
Investment securitisation
properties
regime
£’000
£’000
Accelerated tax
depreciation
£’000
Employment
benefits
£’000
4
1,918
(886,163)
(Charge)/credit to profit or loss
(35)
(1,918)
At 31 March 2018
(31)
the Group has a legally enforceable right to set off current
tax assets against current tax liabilities; and
the deferred tax assets and deferred tax liabilities relate
to income taxes levied by the same taxation authority
and intend to settle current tax assets and liabilities on a
net basis, or to realise the assets and settle the liabilities
simultaneously.
2019
£’000
At 1 April 2017
(Charge)/credit to profit or loss
At 31 March 2019
Deferred
finance costs
£’000
Tax losses
£’000
Total
£’000
(68)
5,853
71,900
(806,556)
95,339
68
1,274
137,267
231,995
-
(790,824)
-
7,127
209,167
(574,561)
(5)
-
(82,341)
-
(6,607)
208
(88,745)
(36)
-
(873,165)
-
520
209,375
(663,306)

56 | Annington Limited Annual Report & Accounts 2019
Annington Limited Annual Report & Accounts 2019 | 57

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