D1.1428 Calculating group-EBITDA

Corporate tax
Corporate tax | Commentary

D1.1428 Calculating group-EBITDA

Corporate tax | Commentary

D1.1428 Calculating group-EBITDA

Group-EBITDA is an important concept as it the denominator in the calculation of the GRP1.

Group-EBITDA is a measure of the earnings performance of a group that is calculated using the amounts recognised as items of profit or loss in the financial statements of the worldwide group for the period of account. It will not, however, exactly align to the EBITDA figure calculated by businesses for their own reporting purposes because the adjustments to earnings in respect of interest, depreciation and amortisation are required to be calculated on UK tax, rather than accounting, principles. The definition of relevant capital expenditure includes an amount of depreciation in respect of a relevant asset leased under a finance lease for some or all of the relevant period of account to a company that is a member of the worldwide group2.

The group-EBITDA of a worldwide group for a period of account is calculated as PBT + I + DA where3:


    •     PBT is the group's profit before tax per the accounts


    •     I is the net group interest expense (NGIE) which is broadly ANGIE before any adjustments, and


    •     DA is the depreciation and amortisation adjustment which includes within it three separate adjustments

All of the above items may be positive or negative. They are taken from the amounts for the period of account as recognised in the financial statements for the worldwide group. It is thought that group's profit before tax in the financial statements includes continuing and discontinued operations from group

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