RE: Free Cash Flow (FCF)3 Nov 2021 12:00
Baysilhope,
'ever heard of deferred tax - to balance Capital Allowances from capex and future taxation. where did you qualify as an accountant? Then explain why Voda had a $4bn tax charge in 2020 - here's why - tax in multiple countries and tax rules is mega complex Quote Deferred tax assets on losses in Luxembourg Included in the table above are losses of €69,742 million (2019: €82,372 million) that have arisen in Luxembourg companies. A deferred tax asset of €17,394 million (2020: €20,544 million) has been recognised in respect of these losses, as we conclude it is probable that the Luxembourg entities will continue to generate taxable profitsin the future against which we can utilise these losses. These taxlosses principally arose from historical impairments, primarily following the acquisition of the Mannesmann Group in 2000. These losses arose prior to the 2017 taxreform in Luxembourg and are available to carry forward indefinitely. The Luxembourg companies hold investmentsin the Group’s operating companies which are assessed for impairment for local GAAP financial statements using the Group’s value in use calculations(see note 4 “Impairment losses”). Impairments and reversals of impairments are recorded in the local GAAP financialstatements and therefore carrying values and valuation methodology differsfrom the goodwill assessment for the Group’s consolidated financialstatements. This assessment can give rise to tax deductible impairments or taxable reversals of previous impairments. Following the 2017 taxreform in Luxembourg, taxlosses expire after 17 years and are only used after any pre-existing losses. In the years ended 31 March 2019 and 31 March 2020 the Luxembourg companies had tax deductible impairments resulting in additional tax losses. No deferred tax asset isrecognised for these losses on the basis that they are not forecast to be used prior to the expiry of their 17 year life. In a period where pre-existing tax losses are not utilised due to impairments arising the forecast utilisation timeframe extends by one year. The reversal of impairments can result in a significant reduction to our deferred tax assets and the period over which these assets can be utilised. In the year ended 31 March 2021 a reversal of previous impairments of €12 billion has arisen in Luxembourg. This represents taxable income against which the brought forward losses can be used. This is the main driver of the reduction in the losses, and the associated deferred tax asset, compared to the prior period.'
Very interesting post. I suspect there are material losses from the acquired Cable & Wireless business too.
Taking everything in this post together, I think Vod will increase the div for inflation and deliver against guidance.
GLA
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