GENERAL: FPH: Impact of Government Budget tax changes

25 Jun 2010 9:51 am

FPH 25/06/2010 GENERAL

REL: 0951 HRS Fisher & Paykel Healthcare Corporation Limited

GENERAL: FPH: Impact of Government Budget tax changes

Impact of Government Budget tax changes on Fisher & Paykel Healthcare Corporation Limited

Auckland, New Zealand, 23 June 2010 - Fisher & Paykel Healthcare Corporation Limited (NZSX:FPH, ASX:FPH). The New Zealand Government budget announcement on 20 May 2010 will result in a number of tax changes, specifically, the removal of the ability to depreciate buildings, a reduction in the corporate tax rate from 30% to 28% from 1 April 2011, and the removal of depreciation loading for certain assets acquired after 20 May 2010.

The impact of these changes on the company's cash-flow is not expected to be significant. It is anticipated that the cash-flow benefit of the reduction in the corporate tax rate will likely offset any impact from the removal of the ability to depreciate buildings and the depreciation loading.

The company has obtained external advice on the expected impact that these budget tax announcements will have on the accounting value of deferred tax in the company's reported earnings for the year ending 31 March 2011.

The advice is that the accounting deferred tax liability will increase, and as a result this will decrease reported net profit after tax by an estimated NZ$11 million for the year ending 31 March 2011.

The deferred tax liability adjustment is a one-off, non-cash accounting entry and has no impact on the company's underlying profitability, cash-flows or dividend policy. Previous profit guidance excludes one-off items such as this accounting adjustment to deferred tax.

The increase in the deferred tax liability will be included in the interim financial statements for the six months ending 30 September 2010 and will be subject to audit during the year-end process. End CA:00196519 For:FPH Type:GENERAL Time:2010-06-25:09:51:11

More announcements for FPH