BT 1998 Annual Report Download - page 52

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O T E S T O TH E F I N A N C I A L S TAT E M E N T S
1998 1997 1996
3. Operating costs £m £m £m
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Staff costs:
Wages and salaries 3,290 3,161 3,105
Social security costs 266 262 261
Pension costs (note 25) 177 291 284
Employee share ownership scheme (a) 64 64 30
Employee share option scheme compensation for special dividend (b) 120 – –
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Total staff costs 3,917 3,778 3,680
Own work capitalised (424) (399) (417)
Depreciation (note 14) 2,395 2,265 2,189
Payments to telecommunication operators 1,600 1,476 1,383
Redundancy charges (c) 106 367 421
Other operating costs 4,761 4,309 4,193
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Total operating costs 12,355 11,796 11,449
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Operating costs included the following:
Research and development 307 291 282
Rental costs relating to operating leases,
including plant and equipment hire £19m (1997 – £10m, 1996 – £23m) 192 215 250
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(a) Amount set aside for the year for allocation of ordinary shares in the company to eligible employees.
(b) Compensation for employees holding share options on 15 August 1997 in respect of the September 1997 special dividend.
(c) Redundancy charges for the year ended 31 March 1997 included £258m (1996 – £266m) being the cost of providing
incremental pension benefits for employees taking early retirement. No charge for these pension benefits was made in the year
ended 31 March 1998 in view of the surplus in the BT pension scheme disclosed by the most recent actuarial valuation as at
31 December 1996; the previous valuation had shown a deficit.
The directors believe that the nature of the group’s business is such that the analysis of operating costs required by the
Companies Act 1985 is not appropriate. As required by the Act, the directors have therefore adapted the prescribed format so
that operating costs are disclosed in a manner appropriate to the group’s principal activity. Other operating income, previously
presented within operating costs, is now shown separately on the face of the group profit and loss account because of its greater
materiality in the year ended 31 March 1998.
4. Profit on sale of group undertakings
In the years ended 31 March 1998, 31 March 1997 and 31 March 1996 the subsidiary undertakings disposed of had a negligible
effect on the group’s operating profit and cash flows and their net assets were immaterial to the group’s financial position.
1998 1997 1996
5. Interest receivable £m £m £m
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Income from listed investments 11 12 29
Other interest receivable 154 194 172
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Total interest receivable 165 206 201
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