Other group items

Specific items
Specific items for 2008, 2007 and 2006 are shown in the table below.

                 
  2008
£m
    2007
£m
    2006
£m
 
Operating costs          
Restructuring costs 402          
Property rationalisation costs     64     68  
Write off of circuit inventory and other working capital balances 74     65      
Creation of Openreach and delivery of the Undertakings 53     30     70  
Costs associated with settlement of open tax years     10      








 
  529     169     138  
Other operating income          
Net loss on sale of group undertakings 10     5      
Profit on sale of non current asset investments     (2 )    








 
  10     3      
Finance income          
Interest on settlement of open tax years     (139 )    








 
Associates and joint ventures          
Profit on sale of joint venture         (1 )
Profit on sale of associate (9 )   (22 )    








 
Net specific items charge before tax 530     11     137  








 
Tax credit on specific items above (149 )   (41 )   (41 )
Tax credit in respect of settlement of open tax years (40 )   (938 )    
Tax credit on re-measurement of deferred taxes (154 )        








 
Net specific items charge (credit) after tax 187     (968 )   96  








 

 

 

In 2008, specific operating costs included £402 million (2007 and 2006: £nil) in respect of restructuring costs relating to our transformation activities in the year. The most significant element of the charge related to manager leaver costs, and also property exit and transformation programme costs. A charge of £74 million (2007: £65 million, 2006: £nil) was recognised as a result of the completion of a review of circuit inventory and other working capital balances which commenced in 2007. A charge of £53 million (2007: £30 million, 2006: £70 million) was recognised in relation to further estimated costs required to create Openreach and deliver the Undertakings agreed with Ofcom, particularly with regard to the introduction of equivalence of input systems, which are due to complete in 2010. In 2007 and 2006 we incurred property rationalisation costs of £64 million and £68 million, respectively.
     In both 2008 and 2007, we recognised losses on disposal of group undertakings, principally in relation to the disposal of our satellite broadcast business. In 2008, the net loss on disposal was £10 million (2007: £5 million, 2006: £nil). In 2008, we recognised a £9 million profit arising from the receipt of contingent consideration from the disposal of our interest in an associate, e-peopleserve. In 2007, we also disposed of 6% of our equity interest in our associate Tech Mahindra Limited, resulting in a profit on disposal of £22 million.
     In 2008, we agreed an outstanding tax matter relating to a business demerged in 2001, the impact of which was a tax credit of £40 million and this closes all open items in relation to the settlement reached last year. In 2007, we agreed the settlement of substantially all open UK tax matters relating to ten tax years up to and including 2004/05 with HM Revenue and Customs (HMRC). In 2007, the total impact of the settlement was a net credit of £1,067 million comprising a tax credit of £938 million representing those elements of the tax charges previously recognised which were in excess of the final agreed liability, interest income of £139 million and operating costs of £10 million, representing the costs associated with reaching this agreement. A tax credit of £154 million has also been recognised in 2008 for the re-measurement of deferred tax balances as a result of the change in the UK statutory corporation tax rate from 30% to 28%, effective in 2009.

 

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