directors report and accounts 2006 - Notes 13-15

 
 

 Notes 13-15

 13 Deferred tax

Deferred tax assets comprise:

 Stock
relief
£m
Excess of
depreciation
over capital
allowances
£m
Tax
losses
£m
Retirement
benefits
£m
Fair value
losses
£m
Other
temporary
differences
£m
Total
£m
At 1 January 200640 9 18 137  221 425
Exchange differences(3)(1)(1)(10) 27 12
Credited/(charged) to the income statement1 (4)34 (16) (8)7
Other5 9 (19)1  (52)(56)
At 31 December 200643 13 32 112  188 388

At 1 January 2005
32 14 36 123  167 372
Change in accounting policy (note 24)    10  10
At 1 January 200532 14 36 123 10 167 382
Exchange differences3 1 1 5  14 24
Credited / (charged) to the income statement5 (4)31 1  24 57
Charged to equity    (10) (10)
Other (2)(50)8  16 (28)
At 31 December 200540 9 18 137  221 425

Deferred tax liabilities comprise:

 Stock
relief
£m
Excess of capital
allowances over
depreciation
£m
Undistributed
earnings of
associates and
subsidiaries
£m
Retirement
benefits
£m
Fair value
gains
£m
Other
temporary
differences
£m
Total
£m
At 1 January 200630 154 73 98 15 42 412
Exchange differences(1)(12)(3)(2)(2)39 19
Charged/(credited) to the
income statement
(4)(8)17 20 (2)4 27
Credited to equity    (2) (2)
Other2 6  (2)(1)(50)(45)
At 31 December 200627 140 87 114 8 35 411
At 1 January 200537 138 49 91  44 359
Change in accounting policy (note 24)    3  3
At 1 January 200537 138 49 91 3 44 362
Exchange differences(1)12 1 1   13
Charged / (credited) to the
income statement
(7)5 20 5  (13)10
Charged to equity    12  12
Acquisitions of subsidiaries1 1  1   3
Other (2)3   11 12
At 31 December 200530 154 73 98 15 42 412
      2006
£m
2005
£m
Net deferred tax liabilities / (assets)     23 (13)

The net deferred tax liabilities / (assets) are reflected in the balance sheet as follows, after offsetting assets and liabilities where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred income taxes relate to the same fiscal authority.

 2006
£m
2005
£m
Deferred tax assets(273)(290)
Deferred tax liabilities296 277
 23 (13)

Deferred tax expected to be recovered within 12 months:

 2006
£m
2005
£m
Deferred tax assets(86)(126)
Deferred tax liabilities105 87
 19 (39)

At the balance sheet date, the Group has recognised and unrecognised deferred tax assets in respect of unused tax losses of £144 million (2005: £137 million) available for offset against future profits. A deferred tax asset has been recognised in respect of £32 million (2005: £18 million) of such losses, as realisation of the related tax benefit is probable.

Unrecognised deferred tax assets in respect of unused income tax losses of £67 million (2005: £69 million) have no expiry date and unused income tax losses of £35 million (2005: £40 million) expire after 5 years. Unrecognised deferred tax assets in respect of unused capital tax losses of £10 million (2005: £10 million) have no expiry date.

At the balance sheet date, the Group has unrecognised deferred tax assets in respect of deductible temporary differences of £183 million (2005: £179 million) and unused tax credits of £136 million (2005: £133 million). £nil million (2005: £10 million) of these unrecognised deferred tax assets expire after 5 years, whilst the remainder have no expiry period.

At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognised was £5 billion (2005: £5 billion). 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 it is probable that such differences will not reverse in the foreseeable future.

 14 Trade and other receivables

 2006
£m
2005
£m
Trade receivables 1,0831,093
Loans and other receivables 530511
Prepayments and accrued income147170
 1,7601,774
Analysed on the balance sheet as  
- current1,5681,577
- non-current192197
 1,7601,774

Impairment on trade receivables charged in the year as part of other operating expenses was £17 million (2005: £7 million).

Prepayments and accrued income include £48 million (2005: £45 million) in respect of dividends from associates and £1 million (2005: £1 million) in respect of interest.

Trade and other receivables are predominantly denominated in the functional currencies of subsidiary undertakings apart from the following:

 2006
£m
2005
£m
US dollar106140
UK sterling41
Euro2235
Other currencies2432

Trade and other receivables also include certain interest bearing amounts and their effective interest rates as follows:

 2006
£m
2005
£m
2006
%
2005
%
US dollar*64784.63.7
Euro133.63.4
Other currencies363310.611.4

*Includes US$100 million (£51 million) (2005: £58 million) representing a bond posted in connection with the Engle class action in the US (note 30).

There is no material difference between the above amounts for trade and other receivables and their fair value, due to the short term duration of the majority of trade and other receivables. There is no concentration of credit risk with respect to trade receivables as the Group has a large number of customers, internationally dispersed.

 15 Available-for-sale investments

 2006
£m
2005
£m
1 January123100
Change in accounting policy (note 24) 16
 123116
Differences on exchange(1)1
Additions and advances85179
Revaluations(2)(1)
Disposals and repayments(54)(173)
Other movements11
31 December152123
Current12896
Non-current2427
Total152123

Investments have the following maturities:

 2006
£m
2005
£m
   
Equity investments2526
Non-equity investments  
- within one year7324
- beyond one year and within two years418
- beyond two years and within three years216
- beyond three years and within four years1221
- beyond four years and within five years 14
- beyond five years1714
 152123

Investments are denominated in the functional currency of the subsidiary undertaking or other currencies as shown below:

 2006
£m
2005
£m
Functional currencies92118
US dollar562
Other currencies43
 152123

Non-equity investments are denominated in the following currencies:

 2006
£m
2005
£m
US dollar562
UK sterling7189
Other currencies 6
 12797

Effective interest rates applicable to non-equity investments are as follows:

 2006
%
2005
%
On US dollar4.85.8
On UK sterling5.35.6
On other currencies 18.7