BT 2001 Annual Report Download - page 36

Financial review
Total turnover
Total turnover in the 2001 ¢nancial year of »29,666 million
includes BT’s proportionate share of its ventures’ turnover of
»9,937 million before adjusting for trading between the Concert
joint venture and the BT group. This total turnover grew by
35% in the 2001 ¢nancial year after growing by 20% in the
2000 ¢nancial year compared with the total turnover in the
1999 ¢nancial year. BT’s acquisitions of businesses and
interests in new ventures in North America, Europe and Asia
Paci¢c, including Concert from January 2000, accounted for
around three-quarters of the increase in total turnover in the
2001 ¢nancial year and around a half of the increase in total
turnover in the 2000 ¢nancial year.
Other operating income
As part of the arrangements for the establishment of Concert,
BT has been seconding sta¡ and providing administrative and
other services from its launch in early January 2000. The
income from these services totalled »168 million in the 2001
¢nancial year and »79 million in the 2000 ¢nancial year.
Operating costs
Total operating costs increased by 35% in the 2001 ¢nancial
year to »20,759 million after increasing by 15.4% in the 2000
¢nancial year. As a percentage of group turnover, operating
costs, excluding goodwill amortisation, increased from 79% in
the 1999 ¢nancial year to 82% in the 2000 ¢nancial year and to
85% in the 2001 ¢nancial year. In all three ¢nancial years, net
exceptional costs were incurred. These amounted to »2,857
million, »111 million and »69 million in the 2001, 2000 and
1999 ¢nancial years, respectively. These exceptional costs are
considered separately in the table below and the discussion
which follows.
2001
£m
2000
£m
1999
£m
Staff costs 4,625 4,283 3,871
Own work capitalised (693) (498) (428)
Depreciation 3,045 2,704 2,568
Goodwill and other intangibles
amortisation 386 89 –
Payments to
telecommunication operators 3,802 3,068 2,106
Other operating costs 6,737 5,602 5,119
Total operating costs
before exceptional costs 17,902 15,248 13,236
Exceptional costs 2,857 111 69
Total operating costs 20,759 15,359 13,305
Sta¡ costs increased by 8.0% in the 2001 ¢nancial year to
»4,625 million, after rising by 10.6% in the 2000 ¢nancial year.
In the 2001 ¢nancial year, the numbers employed in the group
increased by 200 to 137,000 at 31 March 2001. Over 5,800
people left the group on voluntary release and other incentive
terms and some 3,000 people transferred to joint ventures. Over
7,500 people joined through the acquisitions of Viag Interkom
and Telfort. Higher pension costs and the annual pay awards
were the main reasons for the increase in sta¡ costs. In the 2000
¢nancial year, the numbers employed in the group increased by
12,100. This net increase included 5,000 individuals employed
outside the UK mainly through acquisitions, 2,500 former
agency workers now working for BT, and around 4,500 people
needed in the UK to meet increased demand and to roll out the
ADSL broadband product. These increases and the impact of
pay awards caused the increase in sta¡ costs in the 2000
¢nancial year.
The allocation for the employee share ownership scheme,
included within sta¡ costs, was »32 million in the 2001
¢nancial year. This represents 2% of the pre-tax pro¢t for the
year, before the exceptional goodwill impairment charges and
the gains made on certain disposals. The allocation for the 2000
¢nancial year was »59 million and represented 2% of pre-tax
pro¢t for that year. The allocation for the 1999 ¢nancial year of
»64 million represented 2% of pre-tax pro¢t for that year,
before the gain on the sale of MCI shares.
The depreciation charge increased by 12.6% in the 2001
¢nancial year to »3,045 million after increasing by 5.3% in the
2000 ¢nancial year, re£ecting BT’s continuing high level of
investment in its networks and, in the 2001 ¢nancial year, the
acquisition of its new businesses.
Goodwill amortisation in respect of subsidiaries and
businesses acquired since 1 April 1998, when BT adopted
FRS10,andamortisationofotherintangiblesamountedto
»386 million in the 2001 ¢nancial year compared with
»89 million in the 2000 ¢nancial year. Of the total in the 2001
¢nancial year, »150 million relates to the BT Cellnet minority
acquisition in November 1999 and »93 million relates to the
Esat group acquisition in March 2000.
Payments to other telecommunication operators grew by
24% in the 2001 ¢nancial year to »3,802 million after
increasing by 46% in the 2000 ¢nancial year. The growth in
these payments was primarily as a result of the growing
number of calls originating on or passing through BT’s
networks and terminating on UK competitors’ ¢xed and mobile
networks. This is due, in particular, to the increase in mobile
phone usage and internet-related calls. The payments include
those made to Concert for the delivery of BT’s outgoing
international calls from early January 2000 and those made by
BT to international operators for outgoing and transit calls
prior to that time. Also included are payments made to mobile
36 BT Annual report and Form 20-F