Annual Report & Accounts 2013 - Pinewood Studios

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54 Pinewood Shepperton plcAnnual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedSummary of significant accounting policies continuedRevenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenuecan be reliably measured. Revenue is measured at the fair value of the consideration receivable, net of discounts, rebates,VAT and other sales taxes or duty. The Group has assessed its revenue arrangements and has concluded that it is actingas a principal in all of its revenue arrangements. Where a contract spans an accounting cut off date, the value of therevenue recognised is the time proportion of the total value of the contract completed by the cut off date. The followingspecific recognition criteria apply:Media Services:• Film customers utilise services for a period of time. Film revenues are also derived from international agreementsto provide sales and marketing services. Revenue is recognised as the Group earns the right to consideration for theservice provided and this is time apportioned and earned as time elapses.• Television revenue is derived from the provision of services and is recognised on a time apportioned basis in relationto the television production process.• Media Hub revenue, which includes revenue from investment property, is derived from customers contracting to usethe Group’s facilities for a period of time. Revenue is recognised on a straight line basis over the term of the agreement.• Royalty revenue is recognised on an accruals basis in accordance with the relevant contracted agreement. Revenue isrecognised as the Group earns the right to consideration for the royalty and this is time apportioned and earned as timeelapses.Media Investment:• External investment management revenue is derived from the provision of services on a per film investment basis,with revenue from an annual management fee recognised on a straight line basis over the course of the year.• Film Production Companies revenue relates to the funding provided from the various financiers (excluding loans againsttax credit, which are recognised as a liability on the balance sheet). Revenue recognised is the proportion of completionof the relevant project.Film investmentsFilm investments are classified as investments at fair value with any impairment in the investment expensed in theincome statement. The Company reviews the fair value at least annually. Any net changes in fair value are recognisedin the income statement.TaxDeferred taxDeferred corporation tax is provided, using the liability method, on all temporary differences at the statement of financialposition date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.Deferred corporation tax liabilities are recognised for all taxable temporary differences:• except where the deferred corporation tax liability arises from the initial recognition of an asset or liability in atransaction that is not a business combination and, at the time of the transaction, affects neither the accountingprofit nor taxable profit or loss; and• in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint venturesexcept where the timing of the reversal of the temporary differences can be controlled and it is probable that thetemporary differences will not reverse in the foreseeable future.
Pinewood Shepperton plc 55Annual Report & Accounts 2013Notes to the consolidated financial statements continued2. Accounting policies continuedTax continuedDeferred tax continuedDeferred corporation tax assets are recognised for all deductible temporary differences, carry-forward of unusedtax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against whichthe deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can beutilised except:• where the deferred corporation tax asset relating to the deductible temporary difference arises from the initialrecognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,affects neither the accounting profit nor taxable profit or loss; and• in respect of deductible temporary differences associated with investments in subsidiaries deferred tax assets are onlyrecognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future andtaxable profit will be available against which the temporary differences can be utilised.The carrying amount of deferred corporation tax assets is reviewed at each statement of financial position date andreduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part ofthe deferred corporation tax asset to be utilised.Deferred corporation tax assets and liabilities are measured at the tax rates that are expected to apply to the year whenthe asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantivelyenacted at the statement of financial position date.Corporation taxCorporation tax relating to items recognised directly in equity is recognised in other comprehensive income and thestatement of changes in equity and not in the income statement.Film tax creditsFilm tax credits are recognised in line with the cost incurred over the period of a film project. Where the rateof expenditure incurred is not proportionate to the rate of qualifying expenditure, the difference in film tax creditsis accrued or deferred on the balance sheet.Value added taxThe net amount of value added tax recoverable from, or payable to, the taxation authority is included as partof receivables or payables in the statement of financial position.Revenues, expenses and assets are recognised net of the amount of value added tax except:• where the value added tax incurred on a purchase of goods and services is not recoverable from the taxation authority,in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expenseitem as applicable; and• receivables and payables are stated with the amount of value added tax included.Pensions and other post-employment benefitsThe Group operates a defined contribution scheme. Contributions are charged to the income statement as they becomepayable in accordance with the rules of the schemes.Share-based payment transactionsEmployees (including Directors) of the Group may receive part of their remuneration in the form of share-based paymenttransactions, whereby employees render their services in exchange for shares or rights over shares (‘‘equity-settledtransactions”).
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Annual Report & Accounts 2013 - Pinewood Studios

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