- 11. Analysis of cash flows
- 12. Intangible assets
- 13. Property, plant and equipment
- 14. Interests in associates, joint ventures and other investments
- 15. Deferred tax
15. Deferred tax
The Group's tax assets and liabilities are measured at the end of each period in accordance with IAS 12 and IAS 37. Tax liabilities have been recognised based on the Group's best estimate of potential tax exposures, using advice from external advisors where appropriate.
The recognition of deferred tax assets is determined by reference to the Group's estimate of recoverability as required by IAS 12. The Group uses models where appropriate to forecast future taxable profits.
Deferred tax assets are recognised in relation to an element of the Group's defined benefit pension provisions. Assets have only been recognised for territories where the Group considers that it is probable there would be sufficient taxable profits for the future deductions to be utilised.
Certain deferred tax assets and liabilities have been offset as they relate to the same tax group. The following is the analysis of the deferred tax balances for financial reporting purposes:
|Deferred tax assets||109.6||(53.6)||56.0|
|Deferred tax liabilities||(517.6)||53.6||(464.0)|
|Deferred tax assets||130.7||(21.8)||108.9|
|Deferred tax liabilities||(489.6)||21.8||(467.8)|
The following are the major gross deferred tax assets recognised by the Group and movements thereon in 2007 and 2006:
|At 1 January 2006||52.9||16.9||21.8||53.8||145.4|
|(Charge)/credit to income||(16.8)||–||19.6||(9.1)||(6.3)|
|Credit to equity||–||5.3||12.3||–||17.6|
|Transfer to current tax||(5.9)||–||(2.8)||–||(8.7)|
|At 31 December 2006||24.3||20.8||49.0||36.6||130.7|
|Credit/(charge) to income||10.0||1.5||(5.2)||(20.7)||(14.4)|
|Charge to equity||–||(9.9)||(0.5)||–||(10.4)|
|At 31 December 2007||36.2||13.4||42.9||17.1||109.6|
In addition the Group has recognised the following gross deferred tax liabilities and movements thereon in 2007 and 2006:
|At 1 January 2006||504.3||12.4||11.6||19.9||548.2|
|Acquisition of subsidiaries||7.6||–||–||–||7.6|
|(Charge)/credit to income||(18.3)||5.3||9.3||(4.2)||(7.9)|
|Transfer to current tax||–||–||–||(4.8)||(4.8)|
|At 31 December 2006||442.8||17.0||19.3||10.5||489.6|
|Acquisition of subsidiaries||25.4||–||–||–||25.4|
|(Charge)/credit to income||(15.9)||2.3||0.2||15.1||1.7|
|Transfer to current tax||–||(0.8)||13.0||(1.4)||10.8|
|At 31 December 2007||442.4||18.5||32.5||24.2||517.6|
Other short-term temporary differences comprise a number of items, none of which is individually significant to the Group's balance sheet. At 31 December 2007, £19.3 million related to property related temporary differences.
At the balance sheet date, the Group has gross tax losses and other temporary differences of £3,141.5 million available for offset against future profits. Deferred tax assets have been recognised in respect of the tax benefit of £290.5 million of such tax losses and other temporary differences. No deferred tax asset has been recognised in respect of the remaining £2,851.0 million of losses and other temporary differences as the Group considers that there will not be enough taxable profits in the entities concerned such that any additional asset could be considered recoverable. Included in the total unrecognised temporary differences are losses of £239.5 million that will expire by 2020 (a further £155.2 million will expire after this date). £2,119.7 million of losses may be carried forward indefinitely.
At the balance sheet date, the aggregate amount of the temporary differences in relation to the investment in subsidiaries for which deferred tax liabilities have not been recognised was £6,754.0 million (2006: £5,796.8 million). No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences and the Group considers that it is probable that such differences will not reverse in the foreseeable future.