BT 2012 Annual Report Download - page 122

Financial statements
Notes to the consolidated financial statements
10. Taxation continued
Factors affecting future tax charges
The rate of UK corporation tax changed from 26% to 24% on 1 April 2012. As deferred tax assets and liabilities are measured at the rates that are
expected to apply in the periods of the reversal, deferred tax balances at 31 March 2012 have been calculated using a rate of 24%. The impact of
the change of rate decreased deferred tax assets by £48m and deferred tax liabilities by £91m totalling a reduction in net liabilities of £43m. This
reduction has been recognised as a deferred tax credit of £164m in the income statement (note 9) and a deferred tax expense of £121m in other
comprehensive income.
The Government has also indicated that it intends to enact future reductions in the main rate of UK corporation tax to 22% by 1 April 2014. The
future annual corporation tax reductions of 1% are expected to affect the group’s financial statements. The actual impact will depend on the
group’s deferred tax position at that time.
Unrecognised tax losses and other temporary differences
At 31 March 2012 the group had operating losses, capital losses and other temporary differences carried forward in respect of which
no deferred tax assets were recognised amounting to £21.8bn (2011: £23.5bn). The group’s capital losses and other temporary differences have
no expiry date restrictions. The expiry date of operating losses carried forward is dependent upon the tax law of the various territories in which the
losses arose. A summary of expiry dates for losses in respect of which restrictions apply is set out below:
2012 Expiry of
At 31 March £m losses
Restricted losses
Europe 430 2013-27
Americas 149 2013-20
Other 8 2013-16
Total restricted losses 587
Unrestricted losses
Operating losses 3,430 No expiry
Capital losses 17,225 No expiry
Total unrestricted losses 20,655
Other temporary differences 576
Total 21,818
At 31 March 2012 the undistributed earnings of overseas subsidiaries was £5.2bn (2011: £5.3bn). No deferred tax liabilities have been
recognised in respect of these unremitted earnings because the group is in a position to control the timing of the reversal of the temporary
differences and it is probable that such differences will not reverse in the foreseeable future. Temporary differences arising in connection with
interests in associates and joint ventures for which deferred tax liabilities have not been recognised are insignificant.
11. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of shares in issue
after deducting the group’s shares held by employee share ownership trusts and treasury shares.
In calculating the diluted earnings per share, share options outstanding and other potential shares have been taken into account where the impact
of these is dilutive. Options over 40m shares (2011: 81m shares, 2010: 138m shares) were excluded from the calculation of the total diluted
number of shares as the impact of these is antidilutive.
Year ended 31 March 2012 2011 2010
Profit attributable to equity shareholders of the parent (£m) 2,002 1,502 1,028
Basic weighted average number of shares (millions) 7,763 7,750 7,740
Dilutive shares from share options (millions) 310 252 174
Dilutive shares held in trust (millions) 128 114 74
Diluted weighted average number of shares (millions) 8,201 8,116 7,988
Basic earnings per share 25.8p 19.4p 13.3p
Diluted earnings per share 24.4p 18.5p 12.9p
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