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Chief Financial Officer’s report

Pension financing expense and retranslation expenses

Pension financing expense was £17 million compared to income of £70 million (restated) in the prior year. This was mainly due to the fact that we saw a £129 million increase in interest costs offset by £17 million amortisation of the actuarial gain associated with the Airways Pension Scheme that sits outside the corridor.

The retranslation of currency borrowings generated a charge of £59 million, compared with a charge of £11 million the previous year, due to the significant weakening of sterling.

Profit on sale of property, plant and equipment and investments

Profit on the sale of property, plant and equipment and investments for the year was £8 million (2008: £14 million).

Share of post-tax profits in associates

Our holding in Iberia at 13.15 per cent remained unchanged throughout the year. The decrease in our share of post-tax profits in associates – down from £26 million in the prior year to £4 million in 2008/09 – reflects the impact the economic climate has had on Iberia’s results.


The analysis and explanation of tax on the result for the year is set out in note 12 to the financial statements.

Our total tax credit for the year was £43 million (2008: charge of £194 million, restated). The tax credit was reduced by a one-off deferred tax charge of £79 million arising from the phased abolition of industrial buildings allowance which was substantively enacted during the year, and there were adjustments relating to prior years totalling a credit of £10 million (2008: £4 million charge). Excluding these one-off items the effective tax rate for the Group would have been 28 per cent.

Our deferred tax balance at March 31, 2009, was £652 million (2008: £1,075 million, restated). The year on year reduction was primarily related to the retranslation of foreign debt and the marked-to-market movement on fuel and currency hedges.

The Group also contributes tax revenues through payment of transaction and payroll related taxes. The total amount of such taxes paid during the year was £632 million (2008: £659 million).

chart of group manpower

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