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John Menzies Group not adjusting expectations after US tax reform
Following the recent changes to the US federal corporate tax rate, John Menzies Group announced on Tuesday that it was not expecting any material impact on its underlying effective tax rate for 2018 onwards.
The London-listed firm said that was because historically, its effective tax rate on US profits had been reduced by the offset of net operating losses brought forward and the recognition of a deferred tax asset in relation to net operating losses carried forward.
Its board said it was continuing to consider the impact the full US tax reform would have on the group, however its current expectation was that - as those net operating losses were utilised - the reduction in US tax rates should allow the group to maintain the underlying effective tax rate at or around 28% going forward.
"Were the composition of the group structure to change in the future, we would provide the market with an update on the underlying effective tax rate impact at that point," the board explained in its statement.
In 2017, Menzies' US deferred tax assets would be revalued due to the change in the federal corporate tax rate leading to a one-off non-cash increase to the group's underlying effective tax rate in the year.
"There is potential for some other impacts from the changes, the guidelines and regulations for which are still being developed, however at this stage, they are not expected to be material and overall we still expect the 2017 underlying effective tax rate to be lower than the prior year."
John Menzies said it would announce its full year results on 13 March.
As at 0959 GMT, shares in John Menzies were up 0.44% at 688p.