BT 2001 Annual Report Download - page 88
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5. Operating costs
2001
£m
2000
£m
1999
£m
Staff costs:
Wages and salaries 3,954 3,754 3,366
Social security costs 313 316 275
Pension costs (note 30) 326 167 176
Employee share ownership scheme (a) 32 59 64
Total staff costs 4,625 4,296 3,881
Own work capitalised (693) (498) (428)
Depreciation (note 19) 3,045 2,752 2,581
Amortisation and impairment of goodwill and other intangibles (note 18) 3,386 89 –
Payments to telecommunications operators 3,802 3,086 2,120
Other operating costs (b) 6,594 5,634 5,151
Total operating costs 20,759 15,359 13,305
Operating costs included the following:
Redundancy charges 104 59 124
Research and development 364 345 268
Rental costs relating to operating leases, including plant and equipment hire £15 million
(2000 – £12 million, 1999 – £9 million) 166 189 185
Foreign currency gains (50) (26) (88)
Amortisation of goodwill and exceptional items comprising:
Exceptional costs relating to impairment of goodwill 3,000 ––
Exceptional credit for rates refunds, relating to prior years (193) ––
Exceptional costs relating to the write off of subscriber acquisition costs (c) 7––
Exceptional costs relating to the write off of Viag Interkom IT systems 43 ––
Exceptional costs relating to the proposed closure of the BT Cellnet analogue network:
Depreciation –37 –
Other operating costs –10 –
–47 –
Exceptional costs relating to the disengagement from MCI:
Staff costs –13 10
Depreciation –11 13
Payments to telecommunication operators –18 14
Other operating costs –22 32
–64 69
Total exceptional items 2,857 111 69
Goodwill amortisation 373 89 –
Total amortisation of goodwill and exceptional items 3,230 200 69
(a) Amount set aside for the year for allocation of ordinary shares in the company to eligible employees.
(b) No charge for the cost of providing incremental pension benefits for employees taking early retirement was made in the years ended 31 March 2001, 2000 and
1999 in view of the combined surplus in the BT Pension Scheme disclosed by the actuarial valuations as at 31 December 1999 and 1996, and the amount
provided for pension costs within provisions for liabilities and charges.
(c) The accounting of all the BT Wireless operating units has been aligned; this has 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
88 BT Annual report and Form 20-F