Note 3 – Operating costs
| Continuing operations | Discontinued operations | Total | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| |
2005 £m |
2004 (restated) £m |
2003 (restated) £m |
2005 £m |
2004 £m |
2003 £m |
2005 £m |
2004 (restated) £m |
2003 (restated) £m |
|||||||||
| Total operating costs |
6,676 | 7,045 | 7,067 | – | 158 | 780 | 6,676 | 7,203 | 7,847 | |||||||||
| Charged from discontinued operations |
– | – | (19) | – | – | – | – | – | (19) | |||||||||
| External operating costs |
6,676 | 7,045 | 7,048 | – | 158 | 780 | 6,676 | 7,203 | 7,828 | |||||||||
| Depreciation | 860 | 866 | 825 | – | – | 26 | 860 | 866 | 851 | |||||||||
| Payroll costs (note 5(a)) |
941 | 1,045 | 1,130 | – | – | 14 | 941 | 1,045 | 1,144 | |||||||||
| Other operating charges: |
||||||||||||||||||
| - Purchases of electricity |
1,678 | 1,998 | 1,901 | – | – | – | 1,678 | 1,998 | 1,901 | |||||||||
| - Purchases of gas |
385 | 371 | 357 | – | – | – | 385 | 371 | 357 | |||||||||
| - Rates and property taxes |
490 | 516 | 537 | – | – | – | 490 | 516 | 537 | |||||||||
| - Electricity transmission services scheme direct costs |
301 | 277 | 252 | – | – | – | 301 | 277 | 252 | |||||||||
| - EnMO direct costs |
– | – | – | – | 158 | 530 | – | 158 | 530 | |||||||||
| - Replacement expenditure |
474 | 388 | 405 | – | – | – | 474 | 388 | 405 | |||||||||
| - Exceptional operating items (note 4) |
251 | 277 | 311 | – | – | 168 | 251 | 277 | 479 | |||||||||
| - Other non-exceptional operating charges |
1,296 | 1,307 | 1,330 | – | – | 42 | 1,296 | 1,307 | 1,372 | |||||||||
| 4,875 | 5,134 | 5,093 | – | 158 | 740 | 4,875 | 5,292 | 5,833 | ||||||||||
| 6,676 | 7,045 | 7,048 | – | 158 | 780 | 6,676 | 7,203 | 7,828 | ||||||||||
| Operating costs (except where otherwise noted) include: | ||||||||||||||||||
| Research and development costs | 9 | 10 | 18 | |||||||||||||||
| Operating lease rentals | ||||||||||||||||||
| - Plant and machinery | 23 | 27 | 16 | |||||||||||||||
| - Other | 69 | 45 | 52 | |||||||||||||||
| Amortisation of intangible fixed assets (i) | 109 | 101 | 105 | |||||||||||||||
| Amortisation of regulatory assets (ii) | 163 | 150 | 132 | |||||||||||||||
| Auditors’ remuneration: | ||||||||||||||||||
| Statutory audit services | ||||||||||||||||||
| - Annual audit (audit fee for the Company was £9,100 (2004: £8,700; 2003:£8,500)) |
5 | 4 | 3 | |||||||||||||||
| - Regulatory reporting | 1 | 1 | 1 | |||||||||||||||
| Further audit related services (iii) | 1 | 2 | 3 | |||||||||||||||
| Tax compliance and advisory services | 1 | 1 | 3 | |||||||||||||||
| Other non-audit services (iv) | – | 2 | 3 | |||||||||||||||
| (i) | Includes the amortisation of goodwill amounting to £109m (2004: £99m; 2003: £102m) and amortisation of negative goodwill amounting to £nil (2004: £nil; 2003: £4m). |
|---|---|
| (ii) | Excludes the amortisation of regulatory assets relating to purchased power contracts which are included within ‘Purchases of electricity’ amounting to £56m (2004: £64m; 2003: £88m). |
| (iii) | £0.1m (2004: £1.5m) of assurance services were provided in respect of the separation of UK-based distribution networks. Also included are £nil (2004: £nil; 2003: £2m) of fees related to the Merger which were reflected within non-operating exceptional items. |
| (iv) | For the year ended 31 March 2004 other non-audit services of £2m related to vendor due-diligence work associated with the gas distribution network sales. For the year ended 31 March 2003, other non-audit services included £2m in relation to services provided by the consulting business unit of PricewaterhouseCoopers which was sold to IBM United Kingdom Limited on 30 September 2002. |
For the year ended 31 March 2005, operating costs from continuing operations include £132m relating to an acquired business (Crown Castle UK). These costs comprise depreciation (£26m), payroll costs (£16m), purchases of electricity (£7m), rates and property taxes (£1m), exceptional operating items (£3m) and other non-exceptional operating charges (£79m).