BT 1999 Annual Report Download - page 69

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NOTES TO THE FINANCIAL STATEMENTS
68
1999 1998 1997
4. Operating costs £m £m £m
))))))))))))01111110051111
Staff costs:
Wages and salaries 3,366 3,290 3,161
Social security costs 275 266 262
Pension costs (note 28) 176 177 291
Employee share ownership scheme (a) 64 64 64
Employee share option scheme compensation for special dividend (b) –120 –
00000000000511!!!01111110051111
Total staff costs 3,881 3,917 3,778
Own work capitalised (428) (424) (399)
Depreciation (note 18) 2,581 2,395 2,265
Payments to telecommunication operators 2,120 1,600 1,476
Other operating costs (c) 5,151 4,867 4,676
00000000000511!!!01111110051111
Total operating costs 13,305 12,355 11,796
00000000000511!!!01111110051111
Operating costs included the following:
Research and development 268 307 291
Rental costs relating to operating leases,
including plant and equipment hire £9m (1998 – £19m, 1997 – £10m) 185 192 215
Foreign currency (gains) losses (88) (9) (7)
Year 2000 computer issue costs 138 76 1
Exceptional costs relating to the disengagement from MCI:
Staff costs 10 – –
Depreciation 13 – –
Payments to telecommunication operators 14 – –
Other operating costs 32 – –
69 – –
00000000000511!!!01111110051111
(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) Includes redundancy charges of £124m (1998 – £106m, 1997 – £367m). Redundancy charges for the year ended 31 March
1997 included £258m being the cost of providing incremental pension benefits for employees taking early retirement. No charge
for these pension benefits was made in the years ended 31 March 1999 and 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.