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Notes to the Consolidated Financial Statements

13. Deferred income tax

All figures in millions 2007 2006
Deferred income tax assets
Deferred income tax assets to be recovered after more than 12 months 262 288
Deferred income tax assets to be recovered within 12 months 66 129
328 417
Deferred income tax liabilities
Deferred income tax liabilities to be settled after more than 12 months (287) (245)
Deferred income tax liabilities to be settled within 12 months
(287) (245)
Net deferred income tax 41 172

Deferred income tax assets to be recovered within 12 months relate to the utilisation of losses in the US.

Deferred income tax assets and liabilities may be offset when there is a legally enforceable right to offset current tax assets against current income tax liabilities and when the deferred income taxes relate to the same fiscal authority. The Group has unrecognised deferred income tax assets at 31 December 2007 in respect of UK losses of 34m (2006: 35m). None of these unrecognised deferred income tax assets have expiry dates associated with them.

The recognition of the deferred income tax assets is supported by management’s forecasts of the future profitability of the relevant business units.

The movement on the net deferred income tax account is as follows:

All figures in millions Notes 2007 2006
At beginning of year 172 181
Exchange differences (4) (16)
Income statement (charge)/benefit 7 (87) 19
Acquisition through business combination 29 (45) (26)
Disposal through business disposal 31 2
Tax benefit to equity 3 14
At end of year 41 172

The movement in deferred income tax assets and liabilities during the year is as follows:

All figures in millions Capital
losses
Trading
losses
Goodwill and
intangibles
Returns
provisions
  Other Total
Deferred income tax asset
At 1 January 2006 134 35 83 133 385
Exchange differences (17) (4) (10) (11) (42)
Income statement benefit/(charge) 76 12 (6) (7) (12) 63
Tax benefit to equity 11 11
At 31 December 2006 76 129 25 66 121 417
Exchange differences (5) (1) (2) (8)
Acquisition through business combination 10 1 11
Income statement (charge)/benefit (76) (47) (5) 14 19 (95)
Tax benefit to equity 3 3
At 31 December 2007 87 20 79 142 328

Other deferred income tax assets include temporary differences on share-based payments, inventory, retirement benefit obligations and other provisions.

All figures in millions Goodwill and
intangibles
Other Total
Deferred income tax liabilities
At 1 January 2006 (117) (87) (204)
Exchange differences 15 11 26
Acquisition through business combination (20) (6) (26)
Income statement charge (27) (17) (44)
Tax benefit to equity 3 3
At 31 December 2006 (149) (96) (245)
Exchange differences 3 1 4
Acquisition through business combination (56) (56)
Disposal through business disposal 2 2
Income statement (charge)/benefit (12) 20 8
Tax benefit to equity
At 31 December 2007 (214) (73) (287)

Other deferred tax liabilities include temporary differences in respect of depreciation and royalty advances.

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