PERNOD RICARD - 2018-2019 Universal registration document
6.
CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
Analysis of effective tax rate – Net profit fromcontinuing operations before tax
30.06.2019
30.06.2018
€ million
Operating profit Financial results Taxable profit
2,296 (301)
2,375 (310)
1,994
2,064
Theoretical tax charge at the effective income tax rate in France (1)
(687)
(711)
Impact of tax rate differences by jurisdiction Tax impact of variations in exchange rates
276
228 (1) (9)
1
Re-estimation of deferred tax assets linked to tax rate changes
86
Impact of tax losses used/not used
2
1
Impact of reduced/increased tax rates on taxable results
0
0
Taxes on distributions
24
(47) (44)
Other impacts
(94)
EFFECTIVE TAXCHARGE EFFECTIVE TAXRATE
(392) 20%
(582) 28%
At the standard rate of 34.43%. (1) The US tax reform, known as the “Tax Cuts and Jobs Act” of 22 December 2017, resulted in a revaluation of deferred tax assets and liabilities following the reduction of the US federal tax rate, resulting in a tax gain of €55 million in the year ended 30 June 2018. Deferred tax is recognised on time differences between the tax and book values of assets and liabilities in the consolidated balance sheet and is measured using the balance sheet approach. The effects of changes in tax rates are recognised in shareholders’ equity or in profit and loss in the year in which the change of tax rates is decided. Deferred tax assets are recognised in the balance sheet when it is more likely than not that they will be recovered in future years. Deferred tax assets and liabilities are not discounted to present value. In order to evaluate the Group’s ability to recover these assets, particular account is taken of forecasts of future taxable profits.
Following the invalidation by the French Constitutional Council of the dividend tax system (known as the “3% tax”) in October 2017, the Group recognised income related to the reimbursement of the tax, estimated at €71 million in the year ended 30 June 2018.
Deferred tax assets relating to tax loss carryforwards are only reported when they are likely to be recovered, based on projections of taxable income calculated by the Group at the end of each financial year. All assumptions used, including, in particular, growth in operating profit and financial income (expenses), taking into account interest rates, are reviewed by the Group at the end of the financial year based on data determined by the relevant senior management.
Deferred taxes are broken down by nature as follows:
30.06.2019
30.06.2018
€ million
Unrealised margins in inventories
87 22
99
Fair value adjustments on assets and liabilities
21
Provisions for pension benefits
90
94
Deferred tax assets related to losses eligible for carryforward Provisions (other than provisions for pension benefits) and other items
870 487
908 468
TOTALDEFERREDTAXASSETS
1,556
1,590
Accelerated tax depreciation
116
124
Fair value adjustments on assets and liabilities
2,218
2,339
Pension and other hedging assets
259
294
TOTALDEFERREDTAX LIABILITIES
2,593
2,756
171
2018-2019
PERNOD RICARD UNIVERSAL REGISTRATIONDOCUMENT
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