Full Annual Report - Inchcape

Financial statements
Notes to the accounts continued
16 Deferred tax
Net deferred tax asset / (liability)
Pension
and other
postretirement
benefits
£m
Cash flow
hedges
£m
Share-based
payments
£m
Tax losses
£m
Accelerated
tax
depreciation
£m
Provisions and
other timing
differences
£m
At 1 January 2009 (7.0) (36.6) – 1.8 14.1 (29.9) (57.6)
Businesses acquired – – – – – (1.1) (1.1)
Credited / (charged) to the consolidated
income statement 7.0 4.4 0.7 (0.3) (3.1) 10.1 18.8
Credited to shareholders’ equity 22.6 38.0 0.6 – – – 61.2
Effect of foreign exchange rate changes – 0.3 – (0.2) 0.1 0.7 0.9
At 31 December 2009 22.6 6.1 1.3 1.3 11.1 (20.2) 22.2
Analysed as:
Deferred tax assets 37.6 11.5
Deferred tax liabilities (15.4) (69.1)
22.2 (57.6)
The Group has unrecognised deferred tax assets of £30m (2008 – £24m) relating to tax relief on trading losses. The asset represents
£122m (2008 – £101m) of losses at the standard blended rate of 24.8%. The asset is not recognised as it relates to losses which exist
within legal entities that are not forecast to generate taxable income with reasonable certainty in the foreseeable future.
The deferred tax asset of £1.3m (2008 – £1.8m) relates to trading losses in Belgium where future profits are anticipated with
reasonable certainty.
The Group has unrecognised deferred tax assets of £37m (2008 – £38m restated at the UK rate) relating to capital losses. The asset
represents £132m (2008 – £135m) of losses at the UK standard rate of 28.0%. The key territory holding the losses is the UK.
No deferred tax is recognised on unremitted earnings of overseas subsidiaries and joint ventures. Due to the enactment of the 2009
Finance Act, the majority of overseas reserves can now be repatriated to the UK with no tax cost. If all overseas earnings were repatriated
with immediate effect, no tax charge (2008 – £71m) would be payable.
The £20.2m deferred tax liability for ‘Provisions and other timing differences’ consists of a £33.5m (2008 – £45.2m) liability in respect of the
net book value of tangible fixed assets that do not qualify for tax allowances and property revaluations, and a £13.3m (2008 – £15.3m)
deferred tax asset in respect of provisions and other temporary differences between the accounts base and the tax base. The key
temporary differences are £3.9m for Greece, £5.8m for Australia and £3.6m in other territories.
17 Inventories
Raw materials and work in progress 8.1 10.1
Finished goods and merchandise 764.6 1,074.0
772.7 1,084.1
Vehicles held on consignment which are in substance assets of the Group amount to £110.0m (2008 – £175.5m). These have been
included in ‘finished goods and merchandise’ with the corresponding liability included within ‘trade and other payables’. Payment
becomes due when title passes to the Group, which is generally the earlier of six months from delivery or the date of sale.
An amount of £31.4m (2008 – £48.7m) has been provided against the gross cost of inventory at the year end. The cost of inventories
recognised as an expense in the year is £3,892.8m (2008 – £4,308.8m). The write down of inventory to net realisable value recognised as
an expense during the year was £14.6m (2008 – £31.5m). All of these items have been included within ‘cost of sales’ in the consolidated
income statement.
2009
£m
2009
£m
Total
£m
2008
£m
2008
£m
116
Inchcape plc ¦ Annual Report and Accounts 2009