ANNUAL REPORT 2001 - Prudential plc

15. Investment Expenses and Charges
Long-term business Non-technical
technical account
account
2001 2000 2001 2000
£m £m £m £m
Interest payable on core structural borrowings – – 118 131
Interest on bank loans and overdrafts 45 33 0 0
Interest on other borrowings 137 116 44 12
Total interest payable 182 149 162 143
Investment management expenses 357 272 0 1
Total 539 421 162 144
Long-term business interest payable includes £128m (£102m) in respect of funding arrangements entered into by Jackson National Life.
Interest on other borrowings in the non-technical account includes £12m (£12m) in respect of non-recourse borrowings of investment
funds managed by PPM America, £4m (£nil) in respect of the UK Banking debenture loan and £28m (£nil) in respect of commercial
paper borrowings that support a short-term fixed income securities reinvestment programme. Further details on borrowings are
included in note 31.
Long-term business investment management expenses include management fees charged by M&G and the Group’s US and Asia fund
management operations and fees paid to external property managers.
16. Tax
(i) Profit and loss account tax (credit) charge
The tax expense for certain long-term business operations is attributable to shareholders and policyholders. The shareholders’ portion
of tax is determined using the long-term effective tax rate of the underlying business applied to the profits transferred to the nontechnical
account. A summary of the tax expense attributable to the long-term business technical account and shareholders’ profits
in the non-technical account is shown below:
Long-term business Non-technical account
technical account (attributable to
(attributable to
shareholders’
long-term funds)
profits)
2001 2000 2001 2000
£m £m £m £m
(a) Between current and deferred tax expense (benefit)
Current:
UK 291 784 110 145
Foreign 186 170 (35) 145
477 954 75 290
Deferred:
UK (684) (818) (47) 23
Foreign (34) 30 (7) 1
(718) (788) (54) 24
Total (241) 166 21 314
(b) By category of tax expense (benefit)
UK corporation tax 286 802 (1) 2
Double tax relief (27) (12) (1) 0
Overseas tax 186 170 (152) (22)
Prior year adjustments 32 (6) (6) (8)
477 954 (160) (28)
Deferred tax (718) (788) (54) 24
(241) 166 (214) (4)
Shareholder tax attributable to balance on the long-term business technical account – – 235 318
Total (241) 166 21 314
59 Prudential plc Annual Report 2001