Notes to the Company financial statements
The Company has issued letters of continuing support to subsidiary companies with net liabilities amounting to £7.1 million (2008: £5.6 million) and net current liabilities of £nil (2008: £nil). These subsidiary companies are expected to meet their working capital requirements from operating cash flows.
The Company is guarantor to the EIB in respect of borrowings by Northumbrian Water Limited. The loan principal outstanding at 31 March 2009 amounted to £381.5 million (2008: £356.0 million).
The Company is party to a cross guarantee arrangement with other group companies in respect of bank facilities. Overdrafts outstanding at 31 March 2009 in respect of the arrangement amounted to £17.5 million (2008: £26.4 million). The directors do not expect any loss to arise as a result of this arrangement.
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.