Urenco Annual Report 2022

1. Significant accounting policies continued Taxation The charge for tax is based on the result for the year and takes into account deferred tax. Deferred tax is recognised in respect of all temporary differences that have originated but not been reversed by the reporting date, where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the reporting date. Temporary differences are differences between the Company's taxable profits and its results as stated in the financial statements. Deferred tax is not provided on temporary differences arising from the revaluation of fixed assets where there is no commitment to sell the asset, or on unremitted earnings of subsidiaries and associates where there is no commitment to remit these earnings. A net deferred tax asset is regarded as recoverable, and therefore recognised, only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply in the periods in which the temporary differences are expected to reverse based on tax rates or laws that have been enacted or substantively enacted by the reporting date. Deferred tax is measured on a non- discounted basis. Foreign currencies The Company’s functional currency is sterling because that is the currency of the primary economic environment in which the Company operates. The Company’s financial statements are presented in euros as that is the same presentational currency of the Group to which it belongs. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange ruling at the reporting date, with all differences being taken to profit and loss. All other translation differences are taken to total comprehensive income. The average sterling to euro rate for 2022 was £0.85 to €1 (2021: £0.86 to €1) and the year-end rate was £0.89 to €1 (2021: £0.84 to €1). Property, plant, equipment and depreciation Property, plant and equipment are included at cost less depreciation. Depreciation is charged so as to write off the cost of assets less their residual values, other than freehold land and assets under construction, over their estimated useful lives or in the event of right-of-use assets, over the shorter of the useful life of the underlying asset and the lease term, using the straight-line method, on the following basis: Asset type Property, plant and equipment Right-of-use assets Buildings 12 - 40 years 2 - 40 years Fixtures and fittings 12 years 12 years Motor vehicles 4 years 4 years The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Assets under construction are carried at cost including directly attributable costs, less any recognised impairment loss (if any). Financial statements Notes to the Company Financial Statements continued For the year ended 31 December 2022 168 Urenco Annual report and accounts 2022 Financial statements 03