Note 29 – Commitments and contingencies
a) Future capital expenditure
| |
2005 £m |
2004 £m |
|---|---|---|
| Contracted for but not provided | 927 | 448 |
b) Lease commitments
At 31 March 2005, the Group’s operating lease commitments for the financial year ending 31 March 2006 amounted to £99m (2004: £59m) and are analysed by lease expiry date as follows:
| Land and buildings | Other | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
| |
2005 £m |
2004 £m |
2005 £m |
2004 £m |
2005 £m |
2004 £m |
|||
| Within one year | 1 | 2 | 3 | 4 | 4 | 6 | |||
| Between two and five years | 10 | 5 | 18 | 15 | 28 | 20 | |||
| After five years | 57 | 21 | 10 | 12 | 67 | 33 | |||
| 68 | 28 | 31 | 31 | 99 | 59 | ||||
Total Group commitments under non-cancellable operating leases were as follows:
| |
2005 £m |
2004 £m |
|---|---|---|
| In one year or less | 99 | 59 |
| In more than one year, but not more than two years | 91 | 45 |
| In more than two years, but not more than three years | 83 | 40 |
| In more than three years, but not more than four years | 79 | 32 |
| In more than four years, but not more than five years | 77 | 31 |
| In more than five years | 501 | 271 |
| 930 | 478 |
c) Power commitments
At 31 March 2005, the Group had obligations to purchase energy under long-term contracts. The following table analyses these commitments, excluding those purchased power obligations, the net present value of which is already reflected in creditors (notes 18 and 19):
| |
2005 £m |
2004 £m |
|---|---|---|
| In one year or less | 1,058 | 1,065 |
| In more than one year, but not more than two years | 623 | 629 |
| In more than two years, but not more than three years | 583 | 592 |
| In more than three years, but not more than four years | 567 | 575 |
| In more than four years, but not more than five years | 462 | 559 |
| In more than five years | 1,622 | 2,135 |
| 4,915 | 5,555 |
d) Other commitments, contingencies and guarantees
The value of other Group commitments, contingencies and guarantees at 31 March 2005 amounted to £349m (2004: £263m), including guarantees amounting to £189m (2004: £168m).
Details of the guarantees entered into by the Group at 31 March 2005 are shown below:
| (i) | performance guarantees of £45m relating to certain property obligations of Group undertakings. The bulk of these expire by December 2025; |
|---|---|
| (ii) | a guarantee of £50m of the obligations of a Group undertaking to make payments in respect of any liabilities under a meter operating contract that runs until May 2008; |
| (iii) | a performance guarantee relating to the construction of the Victoria to Tasmania interconnector that commenced at 840 million Australian Dollars, reducing at construction milestones. The maximum potential payout is now estimated as £11m. The guarantee expires at commissioning, currently anticipated in April 2006; |
| (iv) | a further performance guarantee relating to the construction of the Victoria to Tasmania interconnector of 48 million Australian Dollars (£20m). This halves on commissioning, currently anticipated in April 2006 and expires in November 2006; |
| (v) | a guarantee of the payment obligations of a Group undertaking in respect of a Power Connection Agreement amounting to an annual maximum of 6 million Australian Dollars, reducing over the term of the contract. This runs until June 2049, but the maximum potential payout is estimated as £5m; |
| (vi) | a guarantee of the payment obligations of a Group undertaking in respect of a Nitrogen Supply Agreement amounting to a maximum potential payout of £15m subject to a cap of £1m per annum. This runs until November 2019; |
| (vii) | a guarantee of the payment obligations of a Group undertaking in respect of a Power Connection Agreement amounting to a maximum potential payout of £14m subject to a cap of £7m per annum. This runs until December 2024; |
| (viii) | guarantees in respect of a former associate amounting to £14m, the bulk of which relates to its obligations to supply telecommunications services. This is open-ended; and |
| (ix) | other guarantees amounting to £15m arising in the normal course of business and entered into on normal commercial terms. These guarantees run for varying lengths of time. |
The Company has also guaranteed the lease obligations of a former associate to a Group undertaking, amounting to £37m (2004: £45m).
e) Parent Company loan guarantees on behalf of Group undertakings
The Company has guaranteed the repayment of principal sums, any associated premium and interest on specific loans due from certain Group undertakings to third parties. At 31 March 2005, the sterling equivalent amounted to £2,019m (2004: £1,892m). The guarantees are for varying terms between four and ten years.
f) Larkhall prosecution
Following a fatal accident in Larkhall, Lanarkshire in December 1999 in which four people died, our subsidiary Transco plc faces charges alleging breaches of sections 3 and 33 of the Health and Safety at Work Act 1974. The case is currently being tried in Edinburgh. The maximum penalty for breach of either of the above sections is an unlimited fine.
g) Cavendish Mill prosecution
Following a fatal accident at Cavendish Mill, Lancashire in November 2001 in which one person died, our subsidiary Transco plc has been charged with a breach of section 3 of the Health and Safety at Work Act 1974. The prosecution is ongoing. The maximum penalty for breach of this section is an unlimited fine.