BT 1998 Annual Report Download - page 53

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N O T E S T O T H E F I N A N C I A L S TAT E M E N T
1998 1997 1996
6. Interest payable £m £m £m
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Interest payable and similar charges in respect of:
Bank loans and overdrafts 80 76 74
Other borrowings 334 259 297
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Total interest payable 414 335 371
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7. Premium on repurchase of bonds
In August 1996, the company repurchased two of the three series of HM Government held bonds then outstanding for £422m at an
effective premium of £60m. The final bond series with a face value of £140m was repaid on maturity on 31 March 1997.
1998 1997 1996
8. Tax on profit on ordinary activities £m £m £m
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United Kingdom:
Corporation tax at 31% (1997 – 33%, 1996 – 33%) 985 1,135 1,000
Deferred taxation charge (credit) at 30% (1997 – 33%, 1996 – 33%) 17 (100) (20)
Taxation on the group’s share of results of associated undertakings 1– 1
Deferred taxation provision released due to reduction in corporation tax rate (25) – –
Prior year adjustments (2) 1 (1)
00000000000511!!!01111110051111
Total UK taxation, excluding windfall tax 976 1,036 980
Overseas taxation:
Current 617 8
Taxation charge (credit) on the group’s share of results of associated undertakings (4) 49 39
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Total corporation and similar taxes 978 1,102 1,027
Windfall tax 510 – –
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Total tax on profit on ordinary activities 1,488 1,102 1,027
00000000000511!!!01111110051111
The company’s charge to the UK windfall tax, imposed on certain privatised companies on 2 July 1997, is payable in two equal
instalments, the first of which was paid on 2 December 1997. The second instalment is payable on 1 December 1998. The charge
is based on the group’s profit for the financial years ended 31 March 1986 to 31 March 1989.
Total tax on profit on ordinary activities, excluding the windfall tax, varied from the amount computed by applying the corporation
tax rate to profit on ordinary activities before taxation. The differences were attributable to the following factors:
1998 1997 1996
%% %
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UK corporation tax rate 31.0 33.0 33.0
Non-deductible depreciation 0.6 0.8 1.3
Non-deductible overseas losses 1.1 1.0 0.9
Unprovided deferred taxes on excess capital allowances (0.9) (0.9) (1.0)
Effect of reduction in UK corporation tax rate on defer red tax provision (0.8) – –
Lower effective tax on MCI merger break up fee (0.7) – –
Non-deductible premium on bonds repurchased from HM Government –0.4 –
Other 0.1 0.1 (0.2)
00000000000511!!!01111110051111
Effective corporation tax rate 30.4 34.4 34.0
00000000000511!!!01111110051111
Deferred taxation of £30m (1997 – £28m, 1996 – £30m) arising on excess capital allowances and £nil (1997 – £19m, 1996 – £11m)
on profits of associated undertakings was not provided in the year ended 31 March 1998.