Tesco 2002 Annual Report Download - page 27

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TESCO PLC 25
NOTE 9 Taxation continued
(b) Factors affecting the tax charge for the year
The effective rate of corporation tax for the year of 28.0% (2001 – 26.9%) is lower than the standard rate of corporation tax in the UK
of 30.0%.The differences are explained below:
Restated
2002 2001
%%
Standard rate of corporation tax 30.0 30.0
Effects of:
Expenses not deductible for tax purposes (primarily goodwill amortisation and non-qualifying depreciation) 3.4 3.8
Capital allowances for the year in excess of depreciation on qualifying assets (2.8) (3.1)
Differences in overseas taxation rates (0.4) (0.3)
Losses on property disposals not available for current tax relief 0.3 0.2
Prior year items (2.4) (4.0)
Other items (0.1) 0.3
Effective rate of corporation tax for the year 28.0 26.9
(c) Factors that may affect future tax charges
A number of deferred tax assets have not been recognised on the basis that the likelihood of future economic benefit is not certain.
NOTE 10 Dividends
2002 2001 2002 2001
Pence per share Pence per share £m £m
Declared interim 1.67 1.48 115 101
Proposed final 3.93 3.50 275 239
5.60 4.98 390 340
NOTE 11 Earnings per share and diluted earnings per share
Earnings per share and diluted earnings per share have been calculated in accordance with FRS 14,‘Earnings per Share’.The standard requires
that earnings should be based on the net profit attributable to ordinary shareholders.The calculation for earnings, including and excluding net
loss on disposal of fixed assets and goodwill amortisation, is based on the profit for the financial year of £830m (2001 – £722m as restated).
For the purposes of calculating earnings per share, the number of shares is the weighted average number of ordinary shares in issue during
the year of 6,887 million (2001 – 6,792 million).
The calculation for diluted earnings per share uses the weighted average number of ordinary shares in issue adjusted by the effects of
all dilutive potential ordinary shares. The dilution effect is calculated on the full exercise of all ordinary share options granted by the Group,
including performance-based options which the Group considers to have been earned. The calculation compares the difference between
the exercise price of exercisable ordinary share options, weighted for the period over which they were outstanding, with the average daily
mid-market closing price over the period.
2002 2001
million million
Weighted average number of dilutive share options 114 134
Weighted average number of shares in issue in the period 6,887 6,792
Total number of shares for calculating diluted earnings per share 7,001 6,926