Notes to the consolidated financial statements

28. Related parties

During the year, the Group entered into transactions, in the ordinary course of business, with other related parties. Those transactions with directors of the Company are disclosed in the directors’ remuneration report. In accordance with IAS 24, the directors consider that there are no further disclosures in respect of key management. Transactions entered into, and trading balances outstanding at 31 March with other related parties, are as follows:

Purchases from jointly controlled entities include £3.9 million (2008: £3.8 million) in respect of capital purchases under finance leases, £0.2 million (2008: £0.4 million) in respect of operating leases, £6.0 million (2008: £5.0 million) in respect of costs payable under finance leases and £0.6 million (2008: £0.8 million) in respect of other purchases.

At 31 March 2009, the Group had a short term cash deposit with the Northumbrian Water Pension Scheme of £39.8 million (2008: £nil).

Outstanding balances due from related parties are expected to be settled within 60 days and amounts due to related parties are in respect of leasing arrangements, where the amounts owed will relate specifically to the terms of the lease.

29. Contingent liability

The Group’s subsidiary responsible for a contract with Scottish Water, Caledonian Environmental Services plc (CES), has received a claim from its Design and Construction Consortium (DCC), primarily in respect of the DCC’s additional costs attributed by it to non-conforming influent at the treatment works. CES is defending this claim and has also issued a counterclaim against the DCC. As non-conforming influent is ultimately the responsibility of the client, CES has protected its position by issuing a claim against Scottish Water. The directors do not expect any material loss to arise as a result of these claims.