20495_Debenhams_AR_151104

NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
For the financial year year ended ended 29 29 August August 2015 2015
10 Taxation continued
The effective tax rate for the financial year is lower at 17.6% (2014: 17.6%) than the rate of corporation tax in the UK of
20.6% (2014: 22.2%). The differences are explained below:
29 August
2015
£m
30 August
2014
£m
Profit before taxation 113.5 105.8
Profit on ordinary activities at standard rate of corporation tax in the UK of 20.6%
(2014: 22.2%) 23.4 23.5
Effects of:
Permanent differences (0.2) (0.7)
Overseas tax rates 0.5 1.1
Utilisation of tax losses (1.8) (3.7)
Non-qualifying depreciation and lease transactions 1.5 1.7
Effect on deferred taxation of the change in current tax rate (0.6) (2.6)
Adjustments in respect of prior financial years (2.8) (0.7)
Taxation charge for the financial year 20.0 18.6
The Finance Act 2013 (‘the 2013 Act”) included legislation reducing the main rate of corporation tax from 21.0% to
20.0% from 1 April 2015.
The reduction in the corporation tax rate enacted in the 2013 Act has had no effect on the net deferred tax liability
recognised at 30 August 2014 (31 August 2013: net deferred tax asset decreased by £1.0 million).
One of the Group’s UK subsidiaries, Debenhams Retail plc, changed its reporting framework from UK GAAP to FRS 101
“Reduced disclosure framework” (“FRS 101”) at the beginning of the financial year. FRS 101 is one of the new
accounting frameworks being adopted by all companies throughout the UK and the Republic of Ireland. A consequence
of the adoption of FRS 101 is that income from lease incentives held in that subsidiary is spread over a longer period
than previously was the case under UK GAAP. This has resulted in a temporary reduction in the current taxation charge
in this financial year. On 1 September 2013 Debenhams Properties Limited changed its reporting framework from UK
GAAP to FRS 101 which resulted in a temporary reduction in the current taxation charge in the financial year ended
30 August 2014.
In addition to the amount charged to the income statement, taxation movements recognised in other comprehensive
income were as follows:
29 August
2015
£m
30 August
2014
£m
Taxation relating to items that will not be reclassified to the income statement
Current taxation
Pension schemes (2.2) (2.3)
Deferred taxation
Remeasurements of pension schemes 5.8 3.9
Total taxation relating to items that will not be reclassified to the income statement 3.6 1.6
Taxation relating to items that may be reclassified to the income statement
Deferred taxation
Currency translation differences 0.4 –
Gains/(losses) on cash flow hedges 6.0 (5.1)
Transferred to the income statement on cash flow hedges – 0.5
Recycled and adjusted against cost of inventory 0.3 1.6
Total taxation relating to items that may be reclassified to the income statement 6.7 (3.0)
Total taxation charge/(credit) in other comprehensive income 10.3 (1.4)
110
Debenhams plc Annual Report & Accounts & Accounts 2015 2015