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3.7 Taxation
Non-REIT taxable income
Taxation on the Group's profit or loss for the period that is not exempt from tax under the
UK-REIT regulations comprises current and deferred tax, as applicable. Tax is recognised in
profit or loss except to the extent that it relates to items recognised as direct movements in
equity, in which case it is similarly recognised as a direct movement in equity.
Current tax is the expected tax payable on any non-REIT taxable income for the period,
using tax rates enacted or substantively enacted at the end of the relevant period.
NOTES TO THE FINANCIAL STATEMENTS
Entry to the UK-REIT regime
The Group obtained its UK-REIT status effective from 21 December 2017. Entry to the
regime results in, subject to continuing relevant UK-REIT criteria being met, the profits of the
Group's property rental business, comprising both income and capital gains, being exempt
from UK taxation.
The Group intends to ensure that it complies with the UK-REIT regulations on an on-going
basis and regularly monitors the conditions required to maintain REIT status.
3.8 Investment properties Investment properties consist of land and buildings (all
supermarkets) which are held to earn rental income together with the potential for capital
growth. Investment properties are recognised when the risks and rewards of ownership
have been transferred and are measured initially at cost, being the fair value of
consideration given, including transaction costs. Transaction costs include transfer taxes
and professional fees for legal services. Any subsequent capital expenditure incurred in
improving investment properties is capitalised in the period incurred and included within the
book cost of the property. All other property expenditure is written off in profit or loss as
incurred.
After initial recognition, investment properties are measured at fair value, with gains and
losses recognised in profit or loss in the period in which they arise.
Gains and losses on disposals of investment properties will be determined as the difference
between the net disposal proceeds and the carrying value of the relevant asset. These will
be recognised in profit or loss in the period in which they arise.
3.9 Financial assets and liabilities Financial assets and liabilities are recognised when the
relevant group entity becomes a party to the unconditional contractual terms of an
instrument. Unless otherwise indicated, the carrying amounts of financial assets and
liabilities are considered by the Directors to be reasonable estimates of their fair values.
Financial assets Financial assets are recognised initially at their fair value. All of the Group's
financial assets, except interest rate derivatives, currently constitute 'loans and receivables'
which are measured at amortised cost using the effective interest method, less any
impairment.
Cash and cash equivalents Cash and cash equivalents consist of cash in hand and shortterm
deposits in banks with an original maturity of three months or less. NOTES TO THE
FINANCIAL STATEMENTS Trade and other receivables Trade and other receivables,
including rents receivable, are recognised and carried at the lower of their original invoiced
value and recoverable amount. A provision for impairment will be made where there is
objective evidence that the Group will not be able to recover balances in full. Balances will
be written-off in profit or loss in circumstances where the probability of recovery is assessed
as being remote.
Trade and other payables Trade and other payables are recognised initially at their fair
value and subsequently at amortised cost.
Bank borrowings
Bank borrowings are initially recognised at fair value net of attributable transaction costs.
After initial recognition, bank borrowings are subsequently measured at amortised cost,
using the effective interest method. The effective interest rate is calculated to include all
associated transaction costs. Derivative financial instruments and hedge accounting
The Group's derivative financial instruments currently comprise interest rate caps that are
designated as hedging instruments and for which hedge accounting is being applied. These
instruments are used to manage the Group's cash flow interest rate risk.
The instruments are initially recognised at fair value on the date that the derivative contract
is entered into, being the cost of any premium paid at inception and are subsequently remeasured
at their fair values at each reporting date.