Vodafone 2016 Annual Report Download - page 33

Net nancing costs, excluding mark-to-market losses and foreign
exchange differences in relation to certain intercompany balances,
decreased by 3% primarily due to the impact of foreign exchange losses
on nancing costs.
Taxation
2016
£m
2015
£m
Income tax
Continuing operations before deferred tax on
revaluation of investments in Luxembourg (162) (703)
Deferred tax on revaluation of investments
inLuxembourg (3,207) 5,468
Total income tax (expense)/credit –
continuing operations (3,369) 4,765
Tax on adjustments to derive adjusted
prot before tax (436) (305)
Recognition of deferred tax asset for losses
inLuxembourg – (3,341)
Deferred tax following revaluation
ofinvestments in Luxembourg 3,207 (2,127)
Deferred tax on use of Luxembourg losses 423 439
Adjusted income tax expense (175) (569)
Share of associates’ and joint ventures’ tax (104) (117)
Adjusted income tax expense for
calculating adjusted tax rate (279) (686)
(Loss)/prot before tax (449) 1,095
Adjustments to derive adjusted
prot beforetax (see earnings per share) 2 ,191 1,12 2
Adjusted prot before tax 1,74 2 2,217
Share of associates’ and joint ventures’ tax
andnon-controlling interest 104 117
Adjusted prot before tax for calculating
adjusted effective tax rate 1,846 2,334
Adjusted effective tax rate 15.1% 29.4%
The Group’s underlying tax rate for the year ended 31 March 2016
was 28.8%. Certain non-recurring items had a signicant effect on the
adjusted effective tax rate in the year, which was 15.1%. These include
a benet of 18.4% following the restructuring and simplication of our
Indian business, partially offset by a tax cost of 4.6% due to the reduction
in the UK corporation tax rate (which resulted in a decrease in the value
of our UK capital allowances).
The Group’s adjusted effective tax rate is expected to be in the
mid-twenties over the medium term reecting the ongoing impact
fromthe re-organisation of our Indian business.
The Group’s adjusted effective tax rate for both years does not
include the use of Luxembourg losses in the year of £423 million
(2015: £439 million) and a reduction in the deferred tax asset in the
period of £3,207 million (2015: recognition of an additional asset
of £2,127 million) arising from the tax treatment of the revaluation
of investments based upon the local GAAP nancial statements.
These items reduce the amount of losses we have available for future
use against our prots in Luxembourg and do not affect the amount
of tax we pay in other countries.
Additionally, the adjusted effective tax rate in the year ended 31 March
2015 did not include the impact of the recognition of an additional
£3,341 million deferred tax asset in respect of the Group’s historic tax
losses in Luxembourg. The losses were recognised as a consequence
of the acquisition of Ono.
Earnings per share
Adjusted earnings per share, which excludes the reduction in the tax
losses in Luxembourg following the revaluation of investments in the
local statutory accounts in the current period and the recognition
of deferred tax assets in respect of tax losses in Luxembourg in the prior
year, was 5.04 pence, a decrease of 9.2% year-on-year, reecting the
Group’s lower adjusted operating prot for the year.
Basic earnings per share was a loss of 15.08 pence primarily due to the
reduction in deferred tax on losses, as described above, which has been
excluded from adjusted earnings per share.
2016
£m
2015
£m
(Loss)/prot attributable to owners
ofthe parent (4,024) 5,761
Adjustments:
Impairment loss 450 –
Amortisation of acquired customer base
and brand intangible assets 979 1,269
Restructuring costs 236 157
Other income and expense 75 114
Non-operating income and expense 2 19
Investment income and nancing costs 449 (437)
2 ,191 1,122
Taxation 3 ,19 4 (5,334)
Discontinued operations – (57)
Non-controlling interests (17) (21)
Adjusted prot attributable to owners
ofthe parent 1,344 1,471
Overview Strategy review Performance Governance Financials Additional information
Vodafone Group Plc
Annual Report 2016
31