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Annual Report > Report of the directors > Financial review > Specific items

SPECIFIC ITEMS


Specific items for the 2007, 2006 and 2005 financial years are shown in the table below.


      2007     2006     2005  
      £m     £m     £m  










 
Operating costs:
                   
Property rationalisation costs
    64     68     59  
Write off of circuit inventory and other working capital balances
    65          
Creation of Openreach
    30     70      
Costs associated with settlement of open tax years
    10          










 
      169     138     59  
Other operating income:
                   
Net loss on sale of group undertakings
    5          
Profit on sale of non current asset investments
    (2 )       (358 )










 
      3         (358 )
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
    (22 )        
Impairment of assets in joint ventures
            25  










 
Net specific items loss (profit) before tax
    11     137     (274 )
Tax credit in respect of settlement of open tax years
    (938 )        
Tax credit on specific items
    (41 )   (41 )   (16 )










 
Net specific items loss (profit) after tax
    (968 )   96     (290 )










 

In the 2007 financial year, specific operating costs included £64 million of property rationalisation charges in relation to the group’s provincial property portfolio. A further £30 million was recognised for the incremental costs associated with the creation of Openreach and complying with the Undertakings agreed with Ofcom. A charge of £65 million was recognised as a result of a review of circuit inventory and other working capital balances. During the year, the group 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. The total impact of this 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. The group also disposed of 6% of its equity interest in its associate Tech Mahindra Limited resulting in a profit on disposal of £22 million, in addition, the group disposed of a number of non core businesses in the 2007 financial year, resulting in a total loss on disposal of £5 million. This principally comprised a loss on disposal of £7 million relating to the sale of satellite broadcast assets.
     In the 2006 financial year specific operating costs included £68 million of property rationalisation charges in relation to the group’s provincial property portfolio. In addition, a provision of £70 million was recognised relating to the incremental and directly attributable costs to create Openreach arising from the Undertakings agreed with Ofcom.
     In the 2005 financial year, the profit on disposal of non current asset investments, included within other operating income totalled £358 million. This mainly comprised the sale of BT’s 15.8% interest in Eutelsat SA for net proceeds of £356 million resulting in a profit on disposal of £236 million, the sale of BT’s 4% interest in Intelsat for net proceeds of £64 million which resulted in a profit on disposal of £46 million and the sale of BT’s 11.9% interest in StarHub Pte Ltd for net proceeds of £77 million resulting in a profit on disposal of £38 million. In addition, BT incurred an impairment charge of £25 million being BT’s share of a write down of Albacom’s assets prior to becoming a subsidiary.
 

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