BT 2012 Annual Report Download - page 161

28. Related party transactions continued
During 2012 the group purchased services in the normal course of business and on an arm’s length basis from its principal associate, Tech
Mahindra Limited. The net value of services purchased was £253m (2011: £258m, 2010: £301m) and the amount outstanding and payable for
services at 31 March 2012 was £51m (2011: £61m, 2010: £65m). In 2010 a cash payment of £127m was made to Tech Mahindra Limited for the
renegotiation of certain supply contracts as part of the rationalisation of procurement channels within BT Global Services.
29. Financial commitments and contingent liabilities
Capital expenditure contracted for at the balance sheet date but not yet incurred was as follows:
2012 2011
At 31 March £m £m
Property, plant and equipment 431 467
Computer software 2–
Total 433 467
Future minimum operating lease payments for the group were as follows:
2012 2011
£m £m
Payable in the year ending 31 March:
2012 – 464
2013 429 440
2014 403 413
2015 378 383
2016 366 373
2017 357 359
Thereafter 5,660 4,760
Total future minimum operating lease payments 7,593 7,192
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 20 years (2011: 21 years) and rentals are fixed for an average of 20 years (2011: 21 years).
At 31 March 2012, 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$118m as at 31 March 2012 (2011:
US$128m), approximately £74m (2011: £80m), although this could increase by a further US$228m (2011: US$268m), approximately £143m
(2011: £167m), 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.
The group does not believe that there is any single current court action that would have a material adverse effect on the financial position or
operations of the group. During 2012 the aggregate volume and value of legal actions to which the group is party remained broadly the same as
at the end of 2011.
Financial statements
Notes to the consolidated financial statements
158
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