BT 2009 Annual Report Download - page 37

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
BUSINESS AND FINANCIAL REVIEWS
35BT GROUP PLC ANNUAL REPORT & FORM 20-F
BUSINESS AND FINANCIAL REVIEWS FINANCIAL REVIEW
Wholesale and carrier
Wholesale and carrier revenue decreased by 0.7% to £5,404m in
2009 (2008: £5,442m, 2007: £5,537m), compared with a decline
of 2% in 2008, as a result of a decline in low margin transit
revenue, conveyance volumes and revenue from DSL broadband.
The declines were partially offset by higher revenue from LLU,
managed network solutions and the global carrier business.
In the UK, we had 13.8m wholesale broadband DSL and LLU
connections, including 5.7m LLU lines, at 31 March 2009, an
increase of 1.1m connections in the year.
Other operating income
Other operating income before specific items was £352m in 2009
(2008: £359m, 2007: £236m). The decrease in 2009 was largely
due to lower income from the sale of intellectual property rights,
licences, vehicles and other assets, partially offset by higher income
from the sale of scrap and cable recovery. The increase in 2008 was
largely due to growth in the third party business undertaken by our
vehicle fleet operations, some upfront benefits from the
transformation of our operational cost base through global
sourcing and income from the exploitation of our intellectual
property.
Operating costs
2009 2008 2007
£m £m £m
Staff costs before leaver costs 5,302 5,231 5,076
Leaver costs 204 127 147
Staff costs 5,506 5,358 5,223
Own work capitalised (673) (724) (718)
Net staff costs 4,833 4,634 4,505
Depreciation 2,249 2,410 2,536
Amortisation 641 479 384
Payments to
telecommunications
operators 4,266 4,237 4,162
Other operating costs 8,934 6,408 6,159
Operating costs before
specific items 20,923 18,168 17,746
Specific items 395 529 169
Operating costs 21,318 18,697 17,915
Group operating costs before specific items increased by 15% to
£20,923m. Group operating costs in 2009 include the impact of
foreign exchange rate movements of £720m and the impact of
acquisitions of £486m. Excluding these, the impact of the contract
and financial review charges within BT Global Services of £1.6bn
(see page 10) and specific items, underlying operating costs of
£18,119m were broadly unchanged compared with the prior year.
Outside of BT Global Services the rest of the group has reduced
operating costs. Group operating costs before depreciation,
amortisation and leaver costs, excluding BT Global Services costs of
£8,562m, decreased by 6% to £7,669m, or 9% on an underlying
basis excluding foreign exchange rate movements of £86m and
acquisitions of £143m. The reduction reflects the success of the
group’s cost savings initiatives. The group has reduced total labour
resource by around 15,000 in 2009. Most of the reductions were in
the area of indirect labour, including agency and contractors.
Adjusted Depreciation
operating profit (loss)band amortisation Adjusted EBITDAb
2009 2008 2007 2009 2008 2007 2009 2008 2007
£m £m £m £m £m £m £m £m £m
(467) 117 70 776 744 665 309 861 735 BT Global Services
1,209 1,050 912 425 445 445 1,634 1,495 1,357 BT Retail
580 502 592 686 893 908 1,266 1,395 1,500 BT Wholesale
1,218 1,222 1,220 778 689 707 1,996 1,911 1,927 Openreach
(82) 4 (81) 225 118 195 143 122 114 Other
Intra-group
2,458 2,895 2,713 2,890 2,889 2,920 5,348 5,784 5,633 Group totals