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  Pearson Annual Report 1997    

Notes to the Accounts

   
 

7. Taxation

 

  1997 1996
All figures in million    
Taxation on profit on ordinary activities:    
United Kingdom:    
Corporation tax at 31.5% (1996: 33%) 37.2 46.8
Deferred taxation 10.9 (5.5)
BskyB (0.2) (8.8)
Double taxation relief (0.5) (2.2)
Partnerships and associated undertakings 4.7 10.2
Tax on franked investment income - 0.2
Overseas:    
Overseas tax 29.4 25.3
Deferred taxation 2.0 41.2
Partnerships and associated undertakings 5.1 1.4



  88.6 108.6



  1997 1996
All figures in percentages    
Tax rate reconciliation    
United Kingdom tax rate 31.5 33.0
Effect of BSkyB/ BSBH income - (3.5)
Effect of utilisationof tax losses in the USA (4.3) -
Other items 2.2 (0.7)



Tax rate reflected in adjusted earnings 29.4 28.8
Effect of profits/ (losses) excluding from adjusted earnings 39.5 1.6



Tax rate reflected in earnings 68.9 30.4



Note: The 1997 tax rate has been affected by two significant factors:

A) The Group has substantial tax losses in the USA which have not been recognised in the accounts and more than offset 1997 profits, so reducing the Group tax rate reflected in adjusted earnings.

B) There is no tax payable on the profit arising on the disposal of TVB and the tax payable on the disposal of Flextech plc is reduced by capital losses brought forward. The provision against goodwill on the sale of Mindscape Inc. has had no impact on current year tax.

 The 1996 tax rate was affected by three significant factors:

A) The rate reflected in adjusted earnings was reduced by 8.8m of consortium relief recognised in the profit and loss account following renegotiation with the other partners in BSBH.

B) There was no tax payable on the profit of 231.3m arising on the sale of Westminster Press.

C) The Group had tax losses, arising in the USA, which had not been utilised or recognised in 1996 but were available to carry forward against taxable profits in future years. Accordingly the Group decided not to recognise tax relief on the 100m charge for improper accounting at Penguin USA and wrote off to profit deferred tax assets totalling 36.6m.

1997 Annual Report
* Group summary
* Information
* Education
* Entertainment
* Investment banking
* Chairman's statement
* Chief Executive's review
* Financial Review
* Financial Policy
* Consolidated profit and loss account
* Consolidated balance sheet
* Consolidated statement of cash flows
* Statement of total recognised gains and losses
* Note of historical cost profits and losses
* Reconciliation of movements in equity shareholders' funds
* Principal subsidiaries and associates
* Five year summary
* Shareholder information
   
* Notes to the accounts
 

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