Marks and Spencer 2013 Annual Report Download - page 91

Financial statements Marks and Spencer Group plc Annual report and financial statements 2013 89
Overview Strategic review Financial review Governance Financial statements and other information
6 Finance income/costs
2013
£m
2012
£m
Bank and other interest receivable 5.3 7.1
Pension net finance income (see note 11E) 21.2 25.6
Underlying finance income 26.5 32.7
Fair value movement of put option over non-controlling interest in Czech business (see note 5) –15.6
Finance income 26.5 48.3
Interest on bank borrowings (2.1) (5.5)
Interest payable on syndicated bank facility (6.1) (3.0)
Interest payable on medium-term notes (114.3) (126.4)
Interest payable on finance leases (2.8) (0.7)
Unwind of discount on financial instruments (1.0) (1.2)
Unwinding of discount on partnership liability to the Marks & Spencer UK Pension Scheme (16.6) –
Underlying finance costs (142.9) (136.8)
Fair value movement on buy back of the Puttable Callable Reset medium-term notes (see note 5) (75.3) –
Finance costs (218.2) (136.8)
Net finance costs (191.7) (88.5)
7 Income tax expense
A. Tax charge
2013
£m
2012
£m
Current tax
UK corporation tax on profits for the year
– current year 125.5 175.9
– adjustments in respect of prior years (24.6) (9.3)
UK current tax 100.9 166.6
Overseas current tax
– current year 12.8 11.6
– adjustments in respect of prior years 3.8 –
Total current tax 117.5 178.2
Deferred tax
– origination and reversal of temporary differences (2.7) (10.5)
– adjustments in respect of prior years (2.8) 14.0
– changes in tax rate (5.7) (13.3)
Total deferred tax (see note 23) (11.2) (9.8)
Total income tax expense 106.3 168.4
B. Tax reconciliation
2013
£m
2012
£m
Profit before tax 564.3 658.0
Tax at the standard UK corporation tax rate of 24% (last year 26%) 135.4 171.1
Depreciation, charges and other amounts on non-qualifying fixed assets 3.0 3.6
Other income and expenses not taxable or deductible (8.1) (11.1)
Deferred tax rate change benefit (5.4) (13.1)
Overseas profits taxed at rates different to those of the UK (4.0) (8.6)
Benefit of current year losses not recognised 9.3 14.3
Adjustments to tax charge in respect of prior periods (3.2) 4.7
Adjustments to underlying profit:
IAS 36 Impairment of assets –11.7
IAS 39 Fair value movement of put option over non-controlling interest in Czech business –(4.0)
Deferred tax rate change benefit (0.3) (0.2)
Non-underlying adjustment to tax charge in respect of prior periods (20.4) –
Total income tax expense 106.3 168.4
The effective tax rate was 18.8% (last year 25.6%) and the underlying effective tax rate was 22.7% (last year 24.5%).
The non–underlying adjustment to the tax charge in respect of prior periods relates to the reassessment of historic tax liabilities following
discussions with the tax authorities.
On 3 July 2012, the Finance Bill received its third reading in the House of Commons and so the previously announced reduced rate of
corporation tax of 23% from 1 April 2013 was substantively enacted. The Group has remeasured its UK deferred tax assets and liabilities
at the end of the reporting period at 23%, which has resulted in the recognition of a deferred tax credit of £5.7m in the income statement
(reducing the total effective tax rate by 1%), and the recognition of a deferred tax credit of £4.0m in other comprehensive income. The
Chancellor has further stated his intention to reduce the main rate of corporation tax to 21% from 1 April 2014 and to 20% from 1 April
2015. These changes have not been substantively enacted at the date of the statement of financial position. Had these changes been
enacted, then the cumulative effects would have been a credit to the income statement of £11.5m (21%) or £17.3m (20%) and a credit
to other comprehensive income of £7.9m (21%) or £11.9m (20%).