QinetiQ Annual Report 2017

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118 118 Financial Financial statements statements QinetiQ QinetiQ Group Group plc plc Annual Annual Report Report and and Accounts Accounts 2017 2017 www.qinetiq.com Notes to the financial statements continued 8. Taxation all figures in £ million Analysis of charge Before specific adjusting items* 2017 2016 Specific Before specific Specific adjusting adjusting adjusting items* Total items* items* Current UK tax expense/(income) 7.0 – 7.0 2.2 (35.6) (33.4) Overseas corporation tax Current year 2.0 – 2.0 2.4 – 2.4 Current tax expense/(income) 9.0 – 9.0 4.6 (35.6) (31.0) Deferred tax expense/(income) 3.6 (4.1) (0.5) 7.7 20.0 27.7 Deferred tax impact of change in rates (0.2) – (0.2) (0.2) – (0.2) Deferred tax in respect of prior years (0.1) – (0.1) 0.7 (5.6) (4.9) Deferred tax expense/(income) 3.3 (4.1) (0.8) 8.2 14.4 22.6 Taxation expense/(income) 12.3 (4.1) 8.2 12.8 (21.2) (8.4) Total Factors affecting tax charge/(credit) in year Principal factors reducing the Group’s current year tax charge below the UK statutory rate are explained below: Profit/(loss) before tax 116.1 15.4 131.5 108.7 (18.5) 90.2 Tax on profit/(loss) before tax at 20% (2016: 20%) 23.2 3.1 26.3 21.7 (3.7) 18.0 Effect of: Expenses not deductible for tax purposes and nontaxable items (0.2) (3.3) (3.5) 3.7 4.5 8.2 Research and development expenditure credits (9.1) – (9.1) (13.7) (36.8) (50.5) Tax in respect of an FY09 US acquisition – payable to the tax authorities 1.5 – 1.5 16.2 – 16.2 Tax in respect of an FY09 US acquisition – recoverable from insurers (1.5) – (1.5) (16.2) – (16.2) (Recognition)/utilisation of deferred tax asset in respect of losses – (3.7) (3.7) – 25.2 25.2 Deferred tax impact of change in rates (0.5) – (0.5) (0.2) – (0.2) Deferred tax in respect of prior years (0.1) – (0.1) 0.7 (5.6) (4.9) Other deferred tax movements (0.3) (0.2) (0.5) – (4.8) (4.8) Effect of different rates in overseas jurisdictions (0.7) – (0.7) 0.6 – 0.6 Taxation expense/(income) 12.3 (4.1) 8.2 12.8 (21.2) (8.4) Effective tax rate 10.6% 6.2% 11.8% (9.3%) * Details of specific adjusting items can be found in note 4. At 31 March 2017, the Group had unused tax losses of £141.7m (2016: £154.8m) which are available for offset against future profits. A deferred tax asset of £3.7m has been recognised in the year, with the income statement credit classified as a specific adjusting item. This asset is in respect of £18.8m of UK losses and £1.4m of Canadian losses. No deferred tax asset is recognised in respect of the remaining £121.5m of losses due to the uncertainty over the timing of their utilisation. The Group has £66.5m of time limited losses of which US capital losses of £30.0m will expire in 2020. The remaining £36.5m of losses are time limited with £4.4m expiring in 2034, £22.7m in 2035 and £9.4m in 2036. A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) had previously been substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the Company's future current tax charge accordingly. The deferred tax assets and liabilities at 31 March 2017 have been calculated based on these rates. Factors affecting future tax charges The effective tax rate continues to be below the UK statutory rate, primarily as a result of the benefit of research and development expenditure credits in the UK. The effective tax rate is expected to remain below the UK statutory rate in the medium term, subject to the impact of any tax legislation changes, the geographic mix of profits and the assumption that the benefits of net R&D expenditure credits retained by the Group remain in the tax line. Future recognition of unrecognised tax losses will also affect future tax charges.
www.qinetiq.com QinetiQ QinetiQ Group Group plc plc Annual Annual Report Report and and Accounts Accounts 2017 2017 Financial statements Financial statements 119 119 9. Dividends An analysis of the dividends paid and proposed in respect of the years ended 31 March 2017 and 2016 is provided below: Pence per share £m Date paid/ payable Interim 2017 2.0 11.5 Feb 2017 Final 2017 (proposed) 4.0 22.6 Sept 2017 Total for the year ended 31 March 2017 6.0 34.1 Interim 2016 1.9 11.1 Feb 2016 Final 2016 3.8 21.9 Sept 2016 Total for the year ended 31 March 2016 5.7 33.0 The Directors propose a final dividend of 4.0p (2016: 3.8p) per share. The dividend, which is subject to shareholder approval, will be paid on 1 September 2017. The ex-dividend date is 3 August 2017 and the record date is 4 August 2017. 10. Analysis of employee costs and numbers The largest component of operating expenses is employee costs. The year-end and average monthly number of persons employed by the Group, including Executive Directors, analysed by business segment, were: As at 31 March 2017 Number 2016 Number Monthly average 2017 Number EMEA Services 5,301 5,514 5,375 5,595 Global Products 853 693 739 671 Total 6,154 6,207 6,114 6,266 The aggregate payroll costs of these persons were as follows: 2016 Number all figures in £ million Note 2017 2016 Wages and salaries 272.9 263.7 Social security costs 27.1 27.2 Pension costs 37.8 37.0 Share-based payments costs 29 3.3 4.7 Total employee costs 341.1 332.6 11. Directors and other senior management personnel The Directors and other senior management personnel of the Group during the year to 31 March 2017 comprise the Board of Directors and the Executive Committee. The remuneration and benefits provided to Directors and the Executive Committee are summarised below: all figures in £ million 2017 2016 Short-term employee remuneration including benefits 7.4 6.9 Post-employment benefits 0.1 0.1 Share-based payments costs 0.8 1.2 Total 8.3 8.2 Short-term employee remuneration and benefits include salary, bonus and benefits. Post-employment benefits relate to pension amounts.
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