BT 2006 Annual Report Download - page 82

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3. OPERATING COSTS
2006 2005
£m £m
Costs by nature
Staff costs:
Wages and salaries 3,910 3,645
Social security costs 377 319
Pension costs 603 540
Share-based payment 76 50
Total staff costs 4,966 4,554
Depreciation of property, plant and equipment
Owned assets 2,501 2,536
Under finance leases 134 158
Amortisation of intangible assets 249 150
Payments to telecommunications operators 4,045 3,725
Other operating costs 6,113 5,528
Own work capitalised (900) (722)
Total operating costs before specific items 17,108 15,929
Specific items 138 59
Total operating costs 17,246 15,988
Operating costs include the following:
Early leaver costs 133 166
Research and development expenditure
a
486 352
Rental costs relating to operating leases 413 419
Foreign currency losses 12 3
aResearch and development expenditure includes amortisation of £160 million (2005: £95 million) in respect of internally developed computer software.
4. SPECIFIC ITEMS
The group separately identifies and discloses material one-off or unusual items (termed ‘specific items’,asdefined in accounting
policies). This is consistent with the way that financial performance is measured by management and we believe assists in providing
a meaningful analysis of the trading results of the group.
2006 2005
£m £m
Other operating income
Profit on sale of non current asset investments
a
–358
Operating costs
Property rationalisation costs
b
(68) (59)
Creation of Openreach
c
(70) –
(138) (59)
Share of results of associates and joint ventures
Impairment of assets in joint ventures
d
–(25)
Profit on disposal of joint venture 1–
Net specific items before tax (137) 274
Tax credit on specific items 41 16
Net specific items after tax (96) 290
aDuring the prior year the group disposed of some non-core investments. The resulting profit on disposal of £358 million comprised £236 million from the sale of the group’s 15.8% interest in
Eutelsat SA, £46 million from sale of the 4% interest in Intelsat, £38 million from the sale of the 11.9% interest in Starhub Pte Ltd and other gains of £38 million.
bIn the current year £68 million (2005: £59 million) of property rationalisation charges were recognised in relation to the group’s provincial office portfolio.
cDuring the current financial year a provision of £70 million was recognised for the estimated incremental and directly attributable costs arising from the group’s obligation to set up Openreach in
accordance with the Undertakings agreed with Ofcom on 21 September 2005.
dIn the prior year the group incurred an impairment charge of £25 million representing its share of a write down of Albacom’s assets prior to Albacom becoming a subsidiary.
BT Group plc Annual Report and Form 20-F 2006 Notes to the consolidated financial statements80