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Financial position and financial management
Commitments and contingencies
Commitments and contingencies outstanding at 31 March 2007 and 2006 are summarised in the table below:
| Years ended 31 March | 2007 £m |
2006 £m |
|---|---|---|
| Future capital expenditure contracted but not provided for | 1,554 | 1,343 |
| Total operating lease commitments | 800 | 831 |
| Power commitments | 3,731 | 4,675 |
| Other commitments, contingencies and guarantees | 537 | 334 |
Information regarding obligations under pension and other postretirement benefits is given below under the heading ‘Retirement arrangements’.
The power commitments shown in the commitments and contingencies table above reflect obligations to purchase energy under long-term contracts. These contracts are used in respect of our normal sale and purchase requirements and do not include commodity contracts carried at fair value as described in Commodity contracts carried at fair value.
In addition to the above, we have entered into an agreement to purchase KeySpan Corporation for $7.3 billion (£3.7 billion), subject to regulatory approval.
We propose to meet all of our commitments from existing cash and investments, operating cash flows, existing credit facilities, future facilities and other financing that we reasonably expect to be able to secure in the future.
Contractual obligations at 31 March 2007
The table of contractual obligations shown below analyses our long-term contractual obligations according to payment period.
Purchase obligations reflect commitments under power commitments and future capital expenditure contracted for but not provided. The other long-term liabilities reflected in the balance sheet at 31 March 2007 comprise commodity contracts carried at fair value and other creditors that represent contractual obligations falling due after more than one year.
| Contractual obligations | Total £m |
Less than 1 year £m |
1-3 years £m |
3-5 years £m |
More than 5 years £m |
|---|---|---|---|---|---|
| Financial liabilities | |||||
| Borrowings | 15,937 | 776 | 2,878 | 2,196 | 10,087 |
| Interest on borrowings | 8,335 | 686 | 1,160 | 950 | 5,539 |
| Finance lease liabilities | 159 | 17 | 29 | 19 | 94 |
| Other non-interest bearing liabilities | 1,739 | 1,525 | 214 | - | - |
| Derivative payments | 3,242 | 443 | 889 | 1,378 | 532 |
| Derivative receipts | (3,405) | (382) | (907) | (1,527) | (589) |
| Commodity contracts | 389 | 56 | 93 | 70 | 170 |
| Other contractual obligations | |||||
| Capital commitments | 1,554 | 1,211 | 324 | 15 | 4 |
| Operating leases | 800 | 80 | 148 | 132 | 440 |
| Power commitments | 3,731 | 1,233 | 1,118 | 327 | 1,053 |
| Total as at 31 March 2007 | 32,481 | 5,645 | 5,946 | 3,560 | 17,330 |
Interest on borrowings is calculated based on borrowings at 31 March 2007 and does not reflect future debt issues. Floating rate interest has been estimated using future interest rate curves at 31 March 2007.
Off balance sheet arrangements
There were no significant off balance sheet arrangements other than the contractual obligations and commitments and contingencies described above.
Details of material litigation as at 31 March 2007
Other than the environmental remediation case currently before the House of Lords as described in Legal and related matters, we were not party to litigation that we considered to be material as at 31 March 2007.
As described in Legal and related matters, we are subject to an investigation by Ofgem with respect to metering services in the UK.