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Overview Business Review Governance Financial statements
ITE Group plc Annual Report and Accounts 2012 101
1 Basis of accounting
The separate financial statements of the Company are presented as required by the Companies Act 2006. The financial
statements have been prepared on a going concern basis as discussed in the Group going concern disclosure on page 67.
These accounts have been prepared under the historical cost convention and in accordance with Companies Act 2006 and
United Kingdom Accounting Standards and have been applied consistently.
The principal accounting policies are summarised below. They have all been applied consistently throughout the year and
the preceding year.
Investments
Fixed asset investments are shown at cost less provision for any impairment.
Intangible assets
Trademarks are measured initially at purchase cost and have a definite useful life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line method to allocate the cost over their estimated useful life.
The estimated useful lives are up to 20 years.
Provisions
Provisions are recognised when the Company has a present legal obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of
the obligation.
Financial instruments
Financial assets and financial liabilities are recognised on the Company’s balance sheet when the Company becomes a
party to the contractual provisions of the instrument.
Trade debtors and creditors
Trade debtors and creditors are stated at their nominal value. Trade debtors are reduced by appropriate allowances for
estimated irrecoverable amounts.
Bank borrowings
Bank overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges are accounted for on an
accrual basis to profit or loss.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profits and
its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in
periods different from those in which they are recognised in the financial statements.
A net deferred tax asset is regarded as recoverable and therefore recognised only to the extent that, on the basis of all
available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the
future reversal of the underlying timing differences can be deducted.
Deferred tax is not recognised when fixed assets are revalued unless by the balance sheet date there is a binding
agreement to sell the revalued assets and the gain or loss expected to arise on sale has been recognised in the financial
statements. Neither is deferred tax recognised when fixed assets are sold and it is more likely than not that the taxable gain
will be rolled over, being charged to tax only if and when the replacement assets are sold.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the timing differences
are expected to reverse, based on tax rates and laws that have been enacted or substantively enacted by the balance
sheet date.
Notes to the Company accounts
For the year ended 30 September 2012