|
|
Notes to the financial statements
|
| 27. |
Financial commitments and contingent liabilities |
| |
|
|
2005
£m |
|
|
2004
£m |
|
|
|
|
Contracts
placed for capital expenditure not provided in the accounts
|
|
|
735 |
|
|
879 |
|
|
|
|
Operating
lease payments payable within one year of the balance sheet
date were in respect of leases expiring:
|
|
|
|
|
|
|
|
|
Within
one year
|
|
|
11 |
|
|
8 |
|
|
Between
one and five years
|
|
|
43 |
|
|
29 |
|
|
After
five years
|
|
|
321 |
|
|
330 |
|
|
|
|
Total
payable within one year
|
|
|
375 |
|
|
367 |
|
|
|
| |
|
Future minimum operating lease payments for the group at 31 March 2005 were as follows:
| |
|
|
2005
£m |
|
|
|
|
Payable
in the year ending 31 March:
|
|
|
|
|
|
2006
|
|
|
375 |
|
|
2007
|
|
|
376 |
|
|
2008
|
|
|
376 |
|
|
2009
|
|
|
373 |
|
|
2010
|
|
|
370 |
|
|
Thereafter
|
|
|
8,587 |
|
|
|
|
Total
future minimum operating lease payments
|
|
|
10,457 |
|
|
|
Operating lease commitments were mainly in respect of leases of land and buildings.
At 31 March 2005, other than disclosed below there were no contingent liabilities or
guarantees other than those arising in the ordinary course of the group’s business and on these no material losses are anticipated. The group has
insurance cover to certain limits for major risks on property and major
claims in connection with legal liabilities arising in the course of its operations. Otherwise, the group generally carries its own risks.
The group has provided guarantees relating to certain leases entered into by O2 UK
Limited prior to its demerger with O2 on 19 November 2001. O2 plc has given BT a counterindemnity for these guarantees. The maximum likely exposure is US$76
million (£41 million) as at 31 March 2005, although
this could increase by a further US$563 million, (£298 million) in the event of credit default in respect of amounts used to defease future lease
obligations. The guarantee lasts until O2 UK Ltd has discharged all its obligations, which is expected to be when the lease ends on 30 January
2017.
The company does not believe there are any pending legal proceedings which would have
a material adverse effect on the financial position or results of operations of the group.
Proceedings have been initiated in Italy against 21 defendants, including a former BT
employee, in connection with the Italian UMTS auction. Blu, in which BT held a minority interest, participated in that auction process. The hearings are
continuing, in Rome. If the proceedings are successful, BT could
be held liable, with others, for any damages. The company has concluded that it is not appropriate to make a provision in respect of any such potential
claim.
The European Commission is formally investigating the way the UK Government has set
BT’s property rates and those paid by Kingston Communications. The Commission is examining whether the Government has complied with EC Treaty rules on
state aid in assessing BT’s rates. BT’s rates were set by
the Valuation Office after lengthy discussions based on well established principles, in a transparent process. In BT’s view, any allegation of state aid
is groundless and BT is confident that the Government will demonstrate the fairness of the UK ratings system. A finding against HM Government could result in
BT having to repay any amount of state aid it may be determined to have received. The company has concluded that it is not appropriate to make a provision in
respect of any such potential finding.
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