|
|
Total operating costs before specific items increased by 7% in the 2006 financial year to £17,108 million; excluding the impact of acquisitions the increase was 3%. Our cost efficiency programmes achieved savings of over £400 million in the 2006 financial year which enabled us to continue investing in
growing our new wave activities.
As a percentage of revenue, operating costs, excluding specific items, were 88% in the 2006 financial year (2005 – 86%). In both financial years, net specific items were incurred, amounting to £138 million and £59 million in the 2006 and 2005 financial years, respectively. These specific costs are
considered separately in the discussion which follows.
| |
|
|
2006 |
|
|
2005 |
|
| |
|
|
£m |
|
|
£m |
|
|
|
Operating costs: |
|
|
|
|
|
|
|
Staff costs |
|
|
4,966 |
|
|
4,554 |
|
Depreciation |
|
|
2,635 |
|
|
2,694 |
|
Amortisation |
|
|
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 |
|
|
|
In the 2006 financial year, the number of staff employed increased by 2,300 to 104,400, mainly due to the additional staff required to service networked IT contracts and the increased levels of network activity.
Early leaver costs of £133 million were incurred in the 2006 financial year, compared with £166 million in the 2005 financial year. This reflects BT’s continued focus on improving operational efficiencies. The group’s pension expense for 2006 was £603 million, an increase of £63 million from the 2005
financial year.
The increase in headcount, pay rates and pension costs, partially offset by lower leaver costs have contributed to a 9% increase in staff costs which were £4,966 million in the 2006 financial year. The increase in pension costs includes a switch between wages and salaries and pension costs as a result of
the introduction of Smart Pensions, a salary sacrifice scheme, as well as the increased headcount and pay rates.
The depreciation charge decreased by 2% in the 2006 financial year to £2,635 million. The amortisation charge increased by £99 million to £249 million in the 2006 financial year due to higher capitalised software development costs and the intangible assets associated with the acquisitions in 2005.
Payments to other telecommunications operators increased by 9% in the 2006 financial year to £4,045 million. The increase mainly reflects the full year impact of the Albacom and Infonet acquisitions and higher volumes.
Other operating costs before specific items increased by 11% in the 2006 financial year to £6,113 million. This reflects not only the cost of supporting new networked IT services contracts, but also increased levels of activity in the network. Other operating costs include the maintenance and support of
our networks, accommodation, sales and marketing costs, research and development and general overheads.
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