The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

PART 3NOTES TO THE ACCOUNTS

Preliminary

42.  Any information required in the case of any company by the following provisions of this Part of this Schedule must (if not given in the company’s accounts) be given by way of a note to the accounts.

General

Reserves and dividends

43.  There must be stated—

(a)any amount set aside or proposed to be set aside to, or withdrawn or proposed to be withdrawn from, reserves,

(b)the aggregate amount of dividends paid in the financial year (other than those for which a liability existed at the immediately preceding balance sheet date),

(c)the aggregate amount of dividends that the company is liable to pay at the balance sheet date, and

(d)the aggregate amount of dividends that are proposed before the date of approval of the accounts, and not otherwise disclosed under sub-paragraph (b) or (c).

Disclosure of accounting policies

44.  The accounting policies adopted by the company in determining the amounts to be included in respect of items shown in the balance sheet and in determining the profit or loss of the company must be stated (including such policies with respect to the depreciation and diminution in value of assets).

45.  It must be stated whether the accounts have been prepared in accordance with applicable accounting standards and particulars of any material departure from those standards and the reasons for it must be given (see regulation 4(2) for exemption for medium-sized companies).

Information supplementing the balance sheet

46.  Paragraphs 47 to 64 require information which either supplements the information given with respect to any particular items shown in the balance sheet or is otherwise relevant to assessing the company’s state of affairs in the light of the information so given.

Share capital and debentures

47.—(1) The following information must be given with respect to the company’s share capital—

(a)where shares of more than one class have been allotted, the number and aggregate nominal value of shares of each class allotted, and

(b)where shares are held as treasury shares, the number and aggregate nominal value of the treasury shares and, where shares of more than one class have been allotted, the number and aggregate nominal value of the shares of each class held as treasury shares.

(2) In the case of any part of the allotted share capital that consists of redeemable shares, the following information must be given—

(a)the earliest and latest dates on which the company has power to redeem those shares,

(b)whether those shares must be redeemed in any event or are liable to be redeemed at the option of the company or of the shareholder, and

(c)whether any (and, if so, what) premium is payable on redemption.

48.  If the company has allotted any shares during the financial year, the following information must be given—

(a)the classes of shares allotted, and

(b)as respects each class of shares, the number allotted, their aggregate nominal value, and the consideration received by the company for the allotment.

49.—(1) With respect to any contingent right to the allotment of shares in the company the following particulars must be given—

(a)the number, description and amount of the shares in relation to which the right is exercisable,

(b)the period during which it is exercisable, and

(c)the price to be paid for the shares allotted.

(2) In sub-paragraph (1) “contingent right to the allotment of shares” means any option to subscribe for shares and any other right to require the allotment of shares to any person whether arising on the conversion into shares of securities of any other description or otherwise.

50.—(1) If the company has issued any debentures during the financial year to which the accounts relate, the following information must be given—

(a)the classes of debentures issued, and

(b)as respects each class of debentures, the amount issued and the consideration received by the company for the issue.

(2) Where any of the company’s debentures are held by a nominee of or trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the accounting records kept by the company in accordance with section 386 of the 2006 Act (duty to keep accounting records) must be stated.

Fixed assets

51.—(1) In respect of each item which is or would but for paragraph 4(2)(b) be shown under the general item “fixed assets” in the company’s balance sheet the following information must be given—

(a)the appropriate amounts in respect of that item as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b)the effect on any amount shown in the balance sheet in respect of that item of—

(i)any revision of the amount in respect of any assets included under that item made during that year on any basis mentioned in paragraph 32,

(ii)acquisitions during that year of any assets,

(iii)disposals during that year of any assets, and

(iv)any transfers of assets of the company to and from that item during that year.

(2) The reference in sub-paragraph (1)(a) to the appropriate amounts in respect of any item as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under that item on either of the following bases, that is to say—

(a)on the basis of purchase price or production cost (determined in accordance with paragraphs 27 and 28), or

(b)on any basis mentioned in paragraph 32,

(leaving out of account in either case any provisions for depreciation or diminution in value).

(3) In respect of each item within sub-paragraph (1) there must also be stated—

(a)the cumulative amount of provisions for depreciation or diminution in value of assets included under that item as at each date mentioned in sub-paragraph (1)(a),

(b)the amount of any such provisions made in respect of the financial year,

(c)the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any assets, and

(d)the amount of any other adjustments made in respect of any such provisions during that year.

52.  Where any fixed assets of the company (other than listed investments) are included under any item shown in the company’s balance sheet at an amount determined on any basis mentioned in paragraph 32, the following information must be given—

(a)the years (so far as they are known to the directors) in which the assets were severally valued and the several values, and

(b)in the case of assets that have been valued during the financial year, the names of the persons who valued them or particulars of their qualifications for doing so and (whichever is stated) the bases of valuation used by them.

53.  In relation to any amount which is or would but for paragraph 4(2)(b) be shown in respect of the item “land and buildings” in the company’s balance sheet there must be stated—

(a)how much of that amount is ascribable to land of freehold tenure and how much to land of leasehold tenure, and

(b)how much of the amount ascribable to land of leasehold tenure is ascribable to land held on long lease and how much to land held on short lease.

Investments

54.—(1) In respect of the amount of each item which is or would but for paragraph 4(2)(b) be shown in the company’s balance sheet under the general item “investments” (whether as fixed assets or as current assets) there must be stated how much of that amount is ascribable to listed investments.

(2) Where the amount of any listed investments is stated for any item in accordance with sub-paragraph (1), the following amounts must also be stated—

(a)the aggregate market value of those investments where it differs from the amount so stated, and

(b)both the market value and the stock exchange value of any investments of which the former value is, for the purposes of the accounts, taken as being higher than the latter.

Information about fair value of assets and liabilities

55.—(1) This paragraph applies where financial instruments have been valued in accordance with paragraph 36 or 38.

(2) There must be stated—

(a)the significant assumptions underlying the valuation models and techniques used where the fair value of the instruments has been determined in accordance with paragraph 37(4),

(b)for each category of financial instrument, the fair value of the instruments in that category and the changes in value—

(i)included in the profit and loss account, or

(ii)credited to or (as the case may be) debited from the fair value reserve,

in respect of those instruments, and

(c)for each class of derivatives, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows.

(3) Where any amount is transferred to or from the fair value reserve during the financial year, there must be stated in tabular form—

(a)the amount of the reserve as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b)the amount transferred to or from the reserve during that year, and

(c)the source and application respectively of the amounts so transferred.

56.  Where the company has derivatives that it has not included at fair value, there must be stated for each class of such derivatives—

(a)the fair value of the derivatives in that class, if such a value can be determined in accordance with paragraph 37, and

(b)the extent and nature of the derivatives.

57.—(1) This paragraph applies if—

(a)the company has financial fixed assets that could be included at fair value by virtue of paragraph 36,

(b)the amount at which those items are included under any item in the company’s accounts is in excess of their fair value, and

(c)the company has not made provision for diminution in value of those assets in accordance with paragraph 19(1) of this Schedule.

(2) There must be stated—

(a)the amount at which either the individual assets or appropriate groupings of those individual assets are included in the company’s accounts,

(b)the fair value of those assets or groupings, and

(c)the reasons for not making a provision for diminution in value of those assets, including the nature of the evidence that provides the basis for the belief that the amount at which they are stated in the accounts will be recovered.

Information where investment property and living animals and plants included at fair value

58.—(1) This paragraph applies where the amounts to be included in a company’s accounts in respect of investment property or living animals and plants have been determined in accordance with paragraph 39.

(2) The balance sheet items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item must be disclosed in a note to the accounts.

(3) In the case of investment property, for each balance sheet item affected there must be shown, either separately in the balance sheet or in a note to the accounts—

(a)the comparable amounts determined according to the historical cost accounting rules, or

(b)the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item.

(4) In sub-paragraph (3), references in relation to any item to the comparable amounts determined in accordance with that sub-paragraph are to—

(a)the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules, and

(b)the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Reserves and provisions

59.—(1) This paragraph applies where any amount is transferred—

(a)to or from any reserves, or

(b)to any provision for liabilities, or

(c)from any provision for liabilities otherwise than for the purpose for which the provision was established,

and the reserves or provisions are or would but for paragraph 4(2)(b) be shown as separate items in the company’s balance sheet.

(2) The following information must be given in respect of the aggregate of reserves or provisions included in the same item—

(a)the amount of the reserves or provisions as at the date of the beginning of the financial year and as at the balance sheet date respectively,

(b)any amounts transferred to or from the reserves or provisions during that year, and

(c)the source and application respectively of any amounts so transferred.

(3) Particulars must be given of each provision included in the item “other provisions” in the company’s balance sheet in any case where the amount of that provision is material.

Provision for taxation

60.  The amount of any provision for deferred taxation must be stated separately from the amount of any provision for other taxation.

Details of indebtedness

61.—(1) For the aggregate of all items shown under “creditors” in the company’s balance sheet there must be stated the aggregate of the following amounts—

(a)the amount of any debts included under “creditors” which are payable or repayable otherwise than by instalments and fall due for payment or repayment after the end of the period of five years beginning with the day next following the end of the financial year, and

(b)in the case of any debts so included which are payable or repayable by instalments, the amount of any instalments which fall due for payment after the end of that period.

(2) Subject to sub-paragraph (3), in relation to each debt falling to be taken into account under sub-paragraph (1), the terms of payment or repayment and the rate of any interest payable on the debt must be stated.

(3) If the number of debts is such that, in the opinion of the directors, compliance with sub-paragraph (2) would result in a statement of excessive length, it is sufficient to give a general indication of the terms of payment or repayment and the rates of any interest payable on the debts.

(4) In respect of each item shown under “creditors” in the company’s balance sheet there must be stated—

(a)the aggregate amount of any debts included under that item in respect of which any security has been given by the company, and

(b)an indication of the nature of the securities so given.

(5) References above in this paragraph to an item shown under “creditors” in the company’s balance sheet include references, where amounts falling due to creditors within one year and after more than one year are distinguished in the balance sheet—

(a)in a case within sub-paragraph (1), to an item shown under the latter of those categories, and

(b)in a case within sub-paragraph (4), to an item shown under either of those categories.

References to items shown under “creditors” include references to items which would but for paragraph 4(2)(b) be shown under that heading.

62.  If any fixed cumulative dividends on the company’s shares are in arrear, there must be stated—

(a)the amount of the arrears, and

(b)the period for which the dividends or, if there is more than one class, each class of them are in arrear.

Guarantees and other financial commitments

63.—(1) Particulars must be given of any charge on the assets of the company to secure the liabilities of any other person, including, where practicable, the amount secured.

(2) The following information must be given with respect to any other contingent liability not provided for—

(a)the amount or estimated amount of that liability,

(b)its legal nature, and

(c)whether any valuable security has been provided by the company in connection with that liability and if so, what.

(3) There must be stated, where practicable, the aggregate amount or estimated amount of contracts for capital expenditure, so far as not provided for.

(4) Particulars must be given of—

(a)any pension commitments included under any provision shown in the company’s balance sheet, and

(b)any such commitments for which no provision has been made,

and where any such commitment relates wholly or partly to pensions payable to past directors of the company separate particulars must be given of that commitment so far as it relates to such pensions.

(5) Particulars must also be given of any other financial commitments that—

(a)have not been provided for, and

(b)are relevant to assessing the company’s state of affairs.

Miscellaneous matters

64.—(1) Particulars must be given of any case where the purchase price or production cost of any asset is for the first time determined under paragraph 29.

(2) Where any outstanding loans made under the authority of section 682(2)(b), (c) or (d) of the 2006 Act (various cases of financial assistance by a company for purchase of its own shares) are included under any item shown in the company’s balance sheet, the aggregate amount of those loans must be disclosed for each item in question.

Information supplementing the profit and loss account

65.  Paragraphs 66 to 69 require information which either supplements the information given with respect to any particular items shown in the profit and loss account or otherwise provides particulars of income or expenditure of the company or of circumstances affecting the items shown in the profit and loss account (see regulation 3(2) for exemption for companies falling within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared)).

Separate statement of certain items of income and expenditure

66.—(1) Subject to sub-paragraph (2), there must be stated the amount of the interest on or any similar charges in respect of bank loans and overdrafts, and loans of any other kind made to the company.

(2) Sub-paragraph (1) does not apply to interest or charges on loans to the company from group undertakings, but, with that exception, it applies to interest or charges on all loans, whether made on the security of debentures or not.

Particulars of tax

67.—(1) Particulars must be given of any special circumstances which affect liability in respect of taxation of profits, income or capital gains for the financial year or liability in respect of taxation of profits, income or capital gains for succeeding financial years.

(2) The following amounts must be stated—

(a)the amount of the charge for United Kingdom corporation tax,

(b)if that amount would have been greater but for relief from double taxation, the amount which it would have been but for such relief,

(c)the amount of the charge for United Kingdom income tax, and

(d)the amount of the charge for taxation imposed outside the United Kingdom of profits, income and (so far as charged to revenue) capital gains.

These amounts must be stated separately in respect of each of the amounts which is or would but for paragraph 4(2)(b) be shown under the items “tax on profit or loss on ordinary activities” and “tax on extraordinary profit or loss” in the profit and loss account.

Particulars of turnover

68.—(1) If in the course of the financial year the company has carried on business of two or more classes that, in the opinion of the directors, differ substantially from each other, the amount of the turnover attributable to each class must be stated and the class described (see regulation 4(3)(b) for exemption for medium-sized companies in accounts delivered to registrar).

(2) If in the course of the financial year the company has supplied markets that, in the opinion of the directors, differ substantially from each other, the amount of the turnover attributable to each such market must also be stated.

In this paragraph “market” means a market delimited by geographical bounds.

(3) In analysing for the purposes of this paragraph the source (in terms of business or in terms of market) of turnover, the directors of the company must have regard to the manner in which the company’s activities are organised.

(4) For the purposes of this paragraph—

(a)classes of business which, in the opinion of the directors, do not differ substantially from each other must be treated as one class, and

(b)markets which, in the opinion of the directors, do not differ substantially from each other must be treated as one market,

and any amounts properly attributable to one class of business or (as the case may be) to one market which are not material may be included in the amount stated in respect of another.

(5) Where in the opinion of the directors the disclosure of any information required by this paragraph would be seriously prejudicial to the interests of the company, that information need not be disclosed, but the fact that any such information has not been disclosed must be stated.

Miscellaneous matters

69.—(1) Where any amount relating to any preceding financial year is included in any item in the profit and loss account, the effect must be stated.

(2) Particulars must be given of any extraordinary income or charges arising in the financial year.

(3) The effect must be stated of any transactions that are exceptional by virtue of size or incidence though they fall within the ordinary activities of the company.

Sums denominated in foreign currencies

70.  Where any sums originally denominated in foreign currencies have been brought into account under any items shown in the balance sheet format or profit and loss account formats, the basis on which those sums have been translated into sterling (or the currency in which the accounts are drawn up) must be stated.

Dormant companies acting as agents

71.  Where the directors of a company take advantage of the exemption conferred by section 480 of the 2006 Act (dormant companies: exemption from audit), and the company has during the financial year in question acted as an agent for any person, the fact that it has so acted must be stated.

Related party transactions

72.—(1) Particulars may be given of transactions which the company has entered into with related parties, and must be given if such transactions are material and have not been concluded under normal market conditions (see regulation 4(2) for exemption for medium-sized companies).

(2) The particulars of transactions required to be disclosed by sub-paragraph (1) must include—

(a)the amount of such transactions,

(b)the nature of the related party relationship, and

(c)other information about the transactions necessary for an understanding of the financial position of the company.

(3) Information about individual transactions may be aggregated according to their nature, except where separate information is necessary for an understanding of the effects of related party transactions on the financial position of the company.

(4) Particulars need not be given of transactions entered into between two or more members of a group, provided that any subsidiary undertaking which is a party to the transaction is wholly-owned by such a member.

(5) In this paragraph, “related party” has the same meaning as in international accounting standards.