annington annual rep 2019-web - Page 85



Financial statements | Notes to the Company financial statements
D. TAXATION
ACCOUNTING POLICY
Taxation for the year comprises current and deferred tax, which
is recognised in the income statement.
Notes to the Company financial statements
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 year and the previous year differs from the standard tax
rate for the reasons set out in the following reconciliation:
2019
£’000
2018
£’000
Loss before taxation
-
(81)
Tax on loss at the standard rate
-
15
Current tax
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.
Deferred tax
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 joint arrangements, when the timing of the
reversal of the temporary differences can be controlled by the
Company and it is probable that the temporary differences will
not reverse in the foreseeable future.
Factors affecting the current tax for the year:
Effect of tax rate differential between
current and deferred tax
-
(186)
Transfer pricing adjustment
-
1,754
Total taxation for the year
-
1,583
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.
2019
£’000
2018
£’000
Current tax
United Kingdom corporation tax at
19% (2018: 19%)
Financial assets and financial liabilities are recognised when
the Company becomes party to the contractual provisions
of the instrument. Financial assets and financial liabilities are
initially measured at fair value and net of directly attributable
transaction costs as appropriate.
Financial assets
Receivables are initially recognised at fair value, subsequently
measured at amortised cost using the effective interest
method, and less any impairment.
The Group’s expected credit losses are updated at each
reporting date to reflect changes in credit risk since initial
recognition.
Impairment of financial assets
2019
£’000
2018
£’000
Amounts owed by group
undertakings
-
36
Financial liabilities
The Company’s financial liabilities consists of intercompany
borrowings.
The Company has the following financial instruments:
Note
2019
£’000
2018
£’000
Receivables
e
-
36
Investment in subsidiary
companies
c
3,362,800
2,530,400
3,362,800
2,530,436
27
63
27
63

The carrying value of receivables approximates the fair value.
Financial assets
Deferred tax
F. PAYABLES
ACCOUNTING POLICY
The movement in deferred tax is as set out below:
Deferred
finance costs
£’000
Tax losses
£’000
Total
£’000
At 1 April 2017
5,016
-
5,016
Credit to profit or
loss
1,583
-
1,583
At 31 March 2018
6,599
-
6,599
(Charge)/credit to
profit or loss
(6,599)
6,599
-
-
6,599
6,599
2019
£’000
2018
£’000
Deferred tax assets
6,599
6,599
Net deferred tax assets
6,599
6,599
At 31 March 2019
-
G. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
ACCOUNTING POLICY
E. RECEIVABLES
ACCOUNTING POLICY
Amounts falling due within one year
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.
No deferred tax liabilities are recognised on temporary
differences associated with the investment in the Company’s
subsidiary for the current year and preceding year in
accordance with the accounting policy. At the balance sheet
date, the Company has unrecognised deferred tax liabilities
relating to the investment in the subsidiary of £488.4 million
(2018: £346.9 million).
Payables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest
method.
Total financial assets
Financial liabilities
2019
£’000
Amounts owed to group
undertakings
2018
£’000
Liabilities measured at amortised cost:
Payables
27
63
f
Total financial liabilities

Amounts owed to group undertakings by the Company are
unsecured, interest free and have no fixed date of repayment.
Details of risk management of the Company are shown in Note
20 to the Consolidated financial statements.
-
Deferred tax
Deferred taxation: origination and
reversal of temporary differences
-
(1,583)
Total taxation for the year
-
(1,583)

84 | Annington Limited Annual Report & Accounts 2019
Annington Limited Annual Report & Accounts 2019 | 85

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