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Annual Report and Accounts 2011

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Notes to the Annual Financial Statements
For the year ended 30 June 2011

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25. Deferred taxation


US$ million 2011 2010
Balance at beginning of the year 30.3 7.4
Adjustment as a result of business combination 24.1
Income statement charge/(credit) 6.4 (1.1)
Foreign currency translation difference 1.0 (0.1)
Balance at the end of the year 37.7 30.3

Deferred taxation comprising:

US$ million Total 2011
Recognised
2011
Unrecognised
Deferred tax liability:
– Capital allowances 88.3 88.3
– Prepayments and accruals 0.1 0.1
– Foreign exchange allowances 2.7 2.7
91.1 91.1
Deferred tax asset:
– Capital allowances (40.4) (39.0) (1.4)
– Provisions and accruals (9.7) (9.1) (0.6)
– Foreign exchange allowances (1.6) (1.3) (0.3)
– Tax losses (36.8) (4.0) (32.8)
(88.5) (53.4) (35.1)
Net deferred taxation liability/(asset) 2.6 37.7 (35.1)

US$ million Total 2010
Recognised
2010
Unrecognised
Deferred tax liability:
– Capital allowances 72.0 64.3 7.7
– Prepayments and accruals 0.3 0.3
– Foreign exchange allowances 1.4 0.3 1.1
73.7 64.6 9.1
Deferred tax asset:
– Capital allowances (37.7) (27.4) (10.3)
– Provisions and accruals (7.3) (6.7) (0.6)
– Foreign exchange allowances (1.0) (1.0)
– Tax losses (13.0) (0.2) (12.8)
(59.0) (34.3) (24.7)
Net deferred taxation liability/(asset) 14.7 30.3 (15.6)

2011 deferred taxation schedule of movements

US$ million Total Income
statement
Statement of
financial
position
Deferred tax liability:
– Capital allowances 24.0 24.0
– Prepayments and accruals 0.1 0.1
– Foreign exchange allowances 2.4 2.4
Deferred tax asset:
– Capital allowances (11.6) (11.6)
– Provisions and accruals (2.4) (2.4)
– Foreign exchange allowances (2.3) (2.3)
– Tax losses (3.8) (3.8)
Net deferred tax liability movement 6.4 6.4

2010 deferred taxation schedule of movements

US$ million Total Income
statement
Statement of
financial
position
Deferred tax liability:
– Capital allowances 54.7 35.6 19.1
– Foreign exchange allowances 0.1 0.1
Deferred tax asset:
– Capital allowances (27.4) (24.9) (2.5)
– Provisions and accruals (6.5) (6.5)
– Foreign exchange allowances 1.2 1.1 0.1
– Tax losses 0.9 0.9
Net deferred tax liability movement 23.0 6.3 16.7
Less deferred tax adjustment for CIHL inventory fair value uplift1 (7.4)
Income statement credit (1.1)

1. The deferred tax adjustment of US$7.4 million is in respect of a deferred tax asset raised by the Group on inventory that has been fair valued at
the date of acquiring the additional 50% in CIHL. Subsequent to the acquisition, the inventory was sold and the deferred tax liability released.

Deferred tax assets of US$5.0 million have been recognised in respect of tax losses to be utilised by future taxable profits at Kimberley Underground. The Directors believe it is probable these tax assets will be recovered through future taxable income or the reversal of temporary differences. Losses were recorded in FY 2010 as the mine only started production in May 2010; a taxable profit was generated in FY 2011. The utilised tax losses expiry period is detailed in note 11 and deductible temporary differences have no expiry period.

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