Other items

Pension deficit

The net accounting pension deficit at the year end has increased to £500m (2008: £253m). The increase was driven primarily by a reduction in the discount rate used to calculate the present value of future liabilities from 6.9% to 5.5% in the UK. The basis for the reduced discount rate was lower corporate bond yields.

We anticipate cash contributions to fund the pension deficit will be c.£70m per annum in 2010 and will remain at this level in the medium term.

Accounting policies

There have been no changes in accounting policies during this financial year. The Group continues to monitor the potential impact and timing of changes to International Financial Reporting Standards which will be applicable to the Group in future years.

Treasury policies

The Board has established a framework to ensure that the Group has adequate policies, procedures and controls to successfully manage the financial risks that it faces. These form part of the Company’s Risk Management Framework.

The key financial risks faced by the Company are in relation to foreign currency, interest rate, fuel price and liquidity. Group Treasury has implemented individual treasury policies to cover specific risks faced by each business unit. The procedures stipulate the levels of authority applied to dealing and approve the financial instruments that may be used to manage these exposures. All significant treasury transactions on behalf of the businesses are undertaken and executed by Group Treasury. Transactions are undertaken only to hedge underlying exposures. Financial instruments are not traded, nor are speculative positions taken.