Notes forming part of the financial statements (continued)
Consolidated Parent entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
Note 5. Income tax expense
(a) Income tax expense
Current tax
Deferred tax
(Over) under provided in prior years
5,855
1,866
(81)
2,327
(1,257)
(704)
3,978
113
—
2,319
(124)
—
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operations
7,640
7,640
—
366
366
—
4,091
4,091
—
2,195
2,195
—
Aggregate income tax expense
Deferred income tax (revenue) expense included in income
tax expense comprises:
Decrease (increase) in deferred tax assets (note 14)
Increase (decrease) in deferred tax liabilities (note 22)
7,640
780
1,086
366
(596)
(661)
4,091
113
—
2,195
(124)
—
1,866 (1,257) 113 (124)
(b) Numerical reconciliation of income tax expense
to prima facie tax payable
Profit from continuing operations before income
tax expense
Profit/(loss) from discontinuing operations before income
tax expense
22,939
1,289
4,646
(196)
18,058
—
84,093
—
Tax at the Australian tax rate of 30% (2006: 30%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Discontinued operations
Non-taxable dividends
Sundry items
Research and development deductions
24,228
7,268
(388)
—
97
(165)
4,450
1,335
59
—
(257)
(234)
18,058
5,417
—
(1,347)
21
—
84,093
25,228
—
(23,042)
9
—
Difference in overseas tax rates
Under/(over) – provision for income tax in prior years (1)
6,812
67
761
903
167
(704)
4,091
—
—
2,195
—
—
Income tax expense 7,640 366 4,091 2,195
(1) Included in the prior year adjustment is $842,000 relating to deferred
tax expense.
(c) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period
and not recognised in net profit or loss but directly debited or
credited to equity
Net deferred tax – debited (credited) directly to equity (notes 14 and 22)
410 979 — —
410 979 — —
(d) Tax losses
Unused capital tax losses for which no deferred tax asset
has been recognised 8,167 8,167 — —
Potential tax benefit at 30% 2,450 2,450 — —
All unused tax losses were incurred by Australian entities
Tax consolidation legislation
Wattyl Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation as of 1 July 2003.
The accounting policy on implementation of the legislation is set out in note
1(h).
On adoption of the tax consolidation legislation the entities in the tax consolidated
group entered into a tax sharing agreement which, in the
opinion of the directors, limits the joint and several liability of the wholly-owned
entities in the case of a default by the head entity, Wattyl Limited.
The entities have also entered into a funding agreement under which the wholly-owned
entities fully compensate Wattyl Limited for any
current tax payable assumed and are compensated by Wattyl Limited for any current
tax receivable and deferred tax assets relating to
unused tax losses or unused tax credits that are transferred to Wattyl Limited
under the tax consolidation legislation. The funding amounts
are determined by reference to the amounts recognised in the wholly-owned entities’
financial statements.
The amounts receivable/payable under the tax funding agreement are due upon
receipt of the funding advice from the head entity, which
is issued as soon as practicable after the end of each financial year. The
head entity may also require payment of interim funding amounts
to assist with its obligations to pay tax installments. The funding amounts
are recognised as non-current intercompany receivables or
payables (see note 11, 17 and 20).
Note 6. Discontinued operations
There were no operations discontinued during the year ended 30 June 2007.
On 10 September 2004, the Group announced that it had completed the sale of
its US businesses, Coronado and Lenmar, and had exited operations in the United
States. The businesses disposed of are reported in this financial report as
discontinued operations. Consideration
of $26,480,000 was received on the sale of the US businesses, which was equal
to the carrying amount of the net assets sold.
Net profit for the year from discontinued operations of $1,289,000 includes
$923,000 write-back of a surplus provision for exit costs for the US operations.
Further information relating to the discontinued operations for the year ended
30 June 2007 is disclosed in note 2 – Segment information.
Consolidated Parent entity
2007
$’000
2006
$’000
2007
$’000
2006
$’000
Note 7. Current assets – Cash and
cash equivalents
Cash at bank and on hand
Deposits at call
8,861
14,500
5,969
11,000
48
—
708
—
23,361 16,969 48 708
The above figures are reconciled to cash at the end of the financial year
as shown in the Statement of Cash Flows as follows:
Balances as above
Less bank overdrafts (note 18)
23,361
—
16,969
(26)
48
—
708
—
Cash per Statement of Cash Flows 23,361 16,943 48 708
Deposits at call
The deposits bear a floating interest rate of 6.00% (2006: 5.44%).
Note 8. Current assets –
Trade and other receivables
Trade receivables
Provision for doubtful receivables
57,514
(5,008)
60,097
(5,829)
—
—
—
—
Other receivables
Prepayments
52,506
1,006
872
54,268
516
667
—
—
—
—
—
—
54,384 55,451 — —
(a) Bad and doubtful trade receivables
Details of losses recognised by the Group are detailed in note 4 Expenses
(b) Receivables terms and conditions
i) Trade receivables are non-interest bearing and generally 30 day terms, however,
some debtors do have other trading
terms as negotiated.
ii) Other receivables arise from transactions outside the usual operating activities
of the Group, are non-interest bearing
and have repayment terms of between 30 and 90 days. Collateral is not normally
obtained.
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