Notes to the consolidated financial statements - analysis of items in the primary statements
2. Operating costs
| Before exceptional items, remeasurements and stranded cost recoveries | Exceptional items, remeasurements and stranded cost recoveries | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2010 £m | 2009 £m | 2008 £m | 2010 £m | 2009 £m | 2008 £m | 2010 £m | 2009 £m | 2008 £m |
|||
| Depreciation of property, plant and | |||||||||||
| equipment | 1,131 | 1,058 | 940 | – | – | – | 1,131 | 1,058 | 940 | ||
| Amortisation of intangible assets | 57 | 64 | 50 | 6 | 5 | 4 | 63 | 69 | 54 | ||
| Payroll costs | 1,354 | 1,415 | 1,071 | 48 | 34 | 108 | 1,402 | 1,449 | 1,179 | ||
| Other operating charges: | |||||||||||
| Purchases of electricity | 1,592 | 2,199 | 1,589 | (19) | 28 | (95) | 1,573 | 2,227 | 1,494 | ||
| Purchases of gas | 2,294 | 3,228 | 2,011 | (52) | 334 | (141) | 2,242 | 3,562 | 1,870 | ||
| Rates and property taxes | 907 | 881 | 608 | – | – | – | 907 | 881 | 608 | ||
| Electricity transmission | |||||||||||
| services scheme direct costs | 691 | 904 | 574 | – | – | – | 691 | 904 | 574 | ||
| Payments to Scottish electricity | |||||||||||
| transmission network owners | 260 | 243 | 226 | – | – | – | 260 | 243 | 226 | ||
| Other | 2,224 | 2,345 | 1,452 | 221 | 326 | 137 | 2,445 | 2,671 | 1,589 | ||
| 10,510 | 12,337 | 8,521 | 204 | 727 | 13 | 10,714 | 13,064 | 8,534 | |||
| Operating costs include: | |||||||||||
| Inventory consumed | 475 | 788 | 390 | ||||||||
| Research expenditure | 19 | 10 | 13 | ||||||||
| Operating lease rentals | |||||||||||
| Plant and machinery | 55 | 48 | 33 | ||||||||
| Other | 32 | 33 | 30 | ||||||||
(a) Payroll costs
| 2010 £m | 2009 £m | 2008 £m |
|
|---|---|---|---|
| Wages and salaries | 1,596 | 1,615 | 1,169 |
| Social security costs | 120 | 118 | 84 |
| Other pension costs | 161 | 160 | 218 |
| Share-based payments | 25 | 22 | 18 |
| Severance costs (excluding pension costs) | 16 | 16 | 14 |
| 1,918 | 1,931 | 1,503 | |
| Less: payroll costs capitalised | (516) | (482) | (324) |
| 1,402 | 1,449 | 1,179 |
Payroll costs above represent continuing operations only. Payroll costs of discontinued operations for the year ended 31 March 2010 were £nil (2009: £11m; 2008: £16m).
(b) Number of employees
| 31 March 2010 Number | Average 2010 Number | 31 March 2009 Number* | Average 2009 Number* |
|
|---|---|---|---|---|
| UK | 10,211 | 10,269 | 10,297 | 10,296 |
| US | 17,895 | 17,798 | 17,694 | 17,829 |
| Continuing operations | 28,106 | 28,067 | 27,991 | 28,125 |
| Discontinued operations | – | – | – | 83 |
| 28,106 | 28,067 | 27,991 | 28,208 |
- *
- Comparatives have been restated to present items on a basis consistent with the current year classification
The vast majority of employees in the US are either directly or indirectly employed in the transmission, distribution and generation of electricity or the distribution of gas, while those in the UK are either directly or indirectly employed in the transmission and distribution of gas or the transmission of electricity. At 31 March 2010, 3,533 (2009: 3,597) employees were employed in other operations, excluding shared services.
(c) Key management compensation
| 2010 £m | 2009 £m | 2008 £m |
|
|---|---|---|---|
| Salaries and short-term employee benefits | 10 | 11 | 9 |
| Post-employment benefits | 4 | 3 | 8 |
| Share-based payments | 5 | 5 | 3 |
| 19 | 19 | 20 |
Key management compensation relates to the Board of Directors, including the Executive Directors and Non-executive Directors for the years presented.
(d) Directors’ emoluments
Details of Directors’ emoluments are contained in the auditable part of the Directors’ Remuneration Report, which form part of these financial statements.
(e) Auditors’ remuneration
| 2010 £m | 2009 £m | 2008 £m |
|
|---|---|---|---|
| Audit services: | |||
| Audit of parent company and consolidated financial statements | 1.1 | 1.5 | 1.4 |
| Other services: | |||
| Audit of subsidiary financial statements pursuant to legislation | 5.4 | 5.8 | 5.1 |
| Other services supplied pursuant to legislation | 1.9 | 2.4 | 2.4 |
| Services relating to tax compliance | 0.6 | 0.6 | 0.7 |
| Services relating to tax advisory | 0.8 | 0.3 | 0.5 |
| Services relating to corporate finance transactions | – | 0.1 | 0.7 |
| All other services | 1.2 | 0.8 | 0.4 |
| 11.0 | 11.5 | 11.2 | |
| Total services pursuant to legislation | 8.4 | 9.7 | 8.9 |
| Total other services | 2.6 | 1.8 | 2.3 |
| 11.0 | 11.5 | 11.2 |
Other services supplied pursuant to legislation represent fees payable for services in relation to other statutory filings or engagements that are required to be carried out by the auditors. In particular, this includes fees for reports under section 404 of the US Public Company Accounting Reform and Investor Protection Act of 2002 (Sarbanes-Oxley) and audit reports on regulatory returns.
All other services include fees relating to corporate responsibility reporting, treasury related projects, work in connection with our rights issue and sundry services, all of which have been subject to Audit Committee approval.