BT 2009 Annual Report Download - page 98

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ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS – NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
96 BT GROUP PLC ANNUAL REPORT & FORM 20-F
3. Operating costs
2009 2008 2007
£m £m £m
Costs by nature
Staff costs:
Wages and salaries 4,499 4,242 4,099
Social security costs 432 417 388
Pension costs 544 626 643
Share based payment costs 31 73 93
Total staff costs 5,506 5,358 5,223
Own work capitalised (673) (724) (718)
Net staff costs 4,833 4,634 4,505
Depreciation of property, plant and equipment:
Owned assets 2,200 2,324 2,420
Held under finance leases 49 86 116
Amortisation of intangible assets 641 479 384
Payments to telecommunications operators 4,266 4,237 4,162
Other operating costsa8,934 6,408 6,159
Total operating costs before specific items 20,923 18,168 17,746
Specific items (note 4) 395 529 169
Total operating costs 21,318 18,697 17,915
Operating costs before specific items include the following:
Contract and financial review charges 1,598 – –
Leaver costsb204 127 147
Research and development expenditurec1,021 857 692
Rental costs relating to operating leases 426 423 389
Foreign currency losses 3085
aOther operating costs also include a net credit of £8m (2008 and 2007: £nil) relating to fair value movements on derivatives recycled from the cash flow reserve.
bLeaver costs exclude manager leaver costs associated with the group’s transformation and reorganisation activities during 2009 and 2008. Manager leaver costs associated with the transformation activities
have been recorded as a specific item. Other leaver costs are included within wages and salaries and social security costs.
cResearch and development expenditure includes amortisation of £431m (2008: £325m, 2007: £314m) in respect of internally developed computer software.
In 2009, the group recognised contract and financial review charges of £1,639m, of which £1,598m was recorded within other operating
costs and £41m was recorded as a reduction to revenue. As described on page 10, the financial review covered the financial performance
of BT Global Services and its balance sheet position. The contract reviews covered the largest and most complex contracts. These charges
reflect a more cautious view of the recognition of future cost efficiencies and other changes in the underlying assumptions and estimates,
particularly in the light of the current economic outlook and events occurring during the year.
The total charge of £1,639m was allocated against the following assets and liabilities: intangible assets £241m; non current trade and
other receivables £913m; prepayments £52m; accrued income £41m; provisions £256m; £136m was allocated against a number of other
balance sheet categories and the individual amounts are insignificant.
FINANCIAL STATEMENTS