BT 2007 Annual Report Download - page 99
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5. FINANCE INCOME AND FINANCE EXPENSE continued
2007 2006 2005a
£m £m £m
Finance income
Income from listed investmentsb744 47
Other interest and similar incomeb,c,d 211 154 209
Net foreign exchange on items in hedging relationshipse–––
Expected return on pension scheme assets 2,292 2,070 1,918
Total finance income 2,510 2,268 2,174
Net finance expense 94 472 599
aThe group adopted IAS 32 and IAS 39 from 1 April 2005. For the 2005 financial year the group’s previous accounting policies have therefore been applied in calculating the recognition and
measurement basis for finance income (see accounting policies).
bIncome from listed investments and other interest and similar income includes £45 million (2006: £37 million) relating to gains on held for trading investments.
cOn 11 August 2005, the group exercised its option to require early redemption of its US dollar convertible 2008 bond. Bondholders had the option to take redemption proceeds in the form of cash
or shares in the group’s interest in LG Telecom. The majority of bondholders exercised their option to take the redemption proceeds in the form of LG Telecom shares. Other interest in 2006 includes
a net bond redemption gain of £27 million. This reflects the write off of LG Telecom shares of £121 million and the associated release from the available-for-sale reserve of £35 million; the write off
of the bond and transaction costs of £87 million and the associated option liability of £17 million; and the release from the translation reserve of £9 million credit relating to foreign exchange
movements on the investment in LG Telecom to the date of disposal.
dThe 2007 financial year includes £139 million relating to interest on settlement of open tax matters disclosed as a specific item (see note 4).
eIncludes a net charge of £123 million (2006: net credit £85 million) relating to foreign exchange movements on hedged investments and a net credit of £123 million (2006: net charge £85 million)
relating to fair value movements on derivatives recycled from the cash flow reserve.
6. TAXATION
2007 2006 2005
£m £m £m
Analysis of taxation (credit) expense for the year
United Kingdom:
Corporation tax at 30% (2006 and 2005: 30%) 256 404 542
Adjustments in respect of prior periods (1,096) (69) 4
Non-UK taxation:
Current 25 12 (4)
Adjustments in respect of prior periods 38 1 (3)
Total current tax (credit) expense (777) 348 539
Deferred tax:
Origination and reversal of temporary differences 367 155 (15)
Adjustment in respect of prior periods 42 (11) 1
Total deferred tax expense (credit) 409 144 (14)
Total taxation (credit) expense in the income statement (368) 492 525
Consolidated financial statements Notes to the consolidated financial statements
98 BT Group plc Annual Report & Form 20-F