BT 2011 Annual Report Download - page 153

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30. Financial commitments and contingent liabilities
Capital expenditure contracted for at the balance sheet date but not yet incurred was as follows:
2011 2010
£m £m
Property, plant and equipment 467 368
Computer software –15
Total 467 383
Future minimum operating lease payments for the group were as follows:
2011 2010
£m £m
Payable in the year ending 31 March:
2011 – 494
2012 464 460
2013 440 431
2014 413 400
2015 383 375
2016 373 367
Thereafter 5,119 5,160
Total future minimum operating lease payments 7,192 7,687
Operating lease commitments were mainly in respect of land and buildings which arose from a sale and operating leaseback transaction in a
prior period. Leases have an average term of 21 years (2010: 22 years) and rentals are fixed for an average of 21 years (2010: 22 years).
At 31 March 2011, other than as 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 Telefonica UK Limited prior to its demerger with O2 on
19 November 2001. mmO2 plc has given BT a counter indemnity for these guarantees. The maximum exposure was US$128m as at
31 March 2011 (2010: US$132m), approximately £80m (2010: £87m), although this could increase by a further US$268m (2010:
US$304m), approximately £167m (2010: £200m), in the event of credit default in respect of amounts used to defease future lease
obligations. The guarantee lasts until Telefonica UK Limited has discharged all its obligations, which is expected to be when the lease ends
on 30 January 2017.
We do not believe that there is any single court action that would have a material adverse effect on the financial position or operations of
the group. During 2011 the aggregate volume and value of legal actions to which the group is party has remained broadly the same as at
the end of 2010, during which the levels had increased significantly.
The European Commission formally investigated the way the UK Government sets the rates payable on BT’s infrastructure and those paid by
KCOM, and whether or not the UK Government complied with EU rules on state aid. The Commission’s decision in October 2006 that no
state aid had been granted was appealed. In January 2011, the appeal was rejected as inadmissible.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS
150
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