BT 2003 Annual Report Download - page 92
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5. Operating costs
Total Group 2003
£m
2002
£m
2001
£m
Staff costs:
Wages and salaries 3,621 4,013 3,954
Social security costs 275 304 313
Pension costs
a
(note 31) 322 382 326
Employee share ownership
b
36 25 32
Total staff costs 4,254 4,724 4,625
Own work capitalised (583) (659) (693)
Depreciation (note 21) 3,011 3,680 3,045
Amortisation and impairment of goodwill and other intangibles (note 20) 24 2,321 3,386
Payments to telecommunications operators 3,846 4,299 3,802
Other operating costs 5,818 7,035 6,594
Total operating costs 16,370 21,400 20,759
Operating costs included the following:
Early leaver costs
c
276 252 118
Research and development 380 362 364
Rental costs relating to operating leases, including plant and equipment hire of
£34 million (2002 – £51 million, 2001 – £15 million) 395 283 166
Foreign currency gains (12) (1) (50)
Amortisation of goodwill and exceptional items comprising:
Property rationalisation provision 198 ––
Goodwill impairment in subsidiary undertakings –1,955 3,000
Asset impairments –324 –
Costs relating to the Concert unwind –172 –
Costs relating to the demerger of mmO
2
–109 –
BT Retail call centre rationalisation costs –68 –
BT Wholesale bad debt costs –79 –
Credit for rates refunds, relating to prior years –– (193)
Write off of subscriber acquisition costs
d
––7
Write off of Viag Interkom IT systems ––43
Total exceptional items 198 2,707 2,857
Goodwill amortisation 20 352 373
Total amortisation of goodwill and exceptional items 218 3,059 3,230
a
No charge for the cost of providing incremental pension benefits for employees taking early retirement was made in the year ended 31 March 2001 in
view of the combined surplus in the BT Pension Scheme and the amount provided for pension costs within provisions for liabilities and charges.
b
Amount set aside for the year for allocation of ordinary shares in the company to eligible employees.
c
Includes £61 million of leaver costs associated with the rationalisation of the BT Retail call centres in the year ended 31 March 2002.
d
The accounting of all the mmO
2
operating units was aligned; this resulted in a write off of previously capitalised costs in certain non-UK operations.
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.
Notes to the financial statements
BT Annual Report and Form 20-F 2003 91