Why did Caffe Nero pay a low tax charge of 2.7% in 2005? They now
expect a lower EPS in 2006 as a result of reverting to the normal 33%
UK tax rate in 2006...why?

Won't this lower EPS be offset by increased earnings due to their now
self-financing expansion? Record capital expenditure was reported in
2005 with the largest number of stores opened yet so a hefty tax bill
would only cause unnecessary harm to the market value of a share. Not
too sure about the tax as far as im aware new companies get certain
allowances being they floated in 2000.

I don't know for sure, but I suspect its the application of net
operating loss carryforwards from a prior year that has substantially
reduced the net effective tax rate during the current one.