BTPLC Annual Report 2005 - Consolidated Fianancial Statements


4.	Operating costs

	2005 £m		2004 £m	^a	2003 £m	^a

Staff costs:
Wages and salaries	3,656		3,675		3,617
Social security costs	319		316		275
Pension costs (note 28)	465		404		322
Employee share ownership^b	11		20		36

Total staff costs	4,451		4,415		4,250
Own work capitalised	(722	)	(677	)	(583	)
Depreciation (note 18)	2,834		2,921		3,011
Amortisation and impairment of goodwill and other intangibles (note 17)	22		15		24
Payments to telecommunications operators	3,725		3,963		3,940
Other operating costs	5,695		5,189		5,724

Total operating costs	16,005		15,826		16,366

Operating costs included the following:
Early leaver costs	166		202		276
Research and development	257		334		380
Rental costs relating to operating leases, including plant and equipment hire of £14 million (2004 – £25 million, 2003 – £34 million)	326		370		395
Foreign currency losses (gains)	3		(5	)	(12	)

Amortisation of goodwill and exceptional items comprising:
Property rationalisation provision	59		–		198
Rectification costs	–		30		–
BT Wholesale bad debt release	–		(23	)	–

Total exceptional items	59		7		198
Goodwill amortisation	16		12		20

Total amortisation of goodwill and exceptional items	75		19		218

^a	Restated – see note 1

^b	Amount set aside for the year for allocation of ordinary shares in the company to eligible employees

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.

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