Vodafone 2009 Annual Report Download - page 116

114 Vodafone Group Plc Annual Report 2009
Notes to the consolidated nancial statements continued
32. Commitments
Operating lease commitments
The Group has entered into commercial leases on certain properties, network infrastructure, motor vehicles and items of equipment. The leases have various terms,
escalation clauses, purchase options and renewal rights, none of which are individually significant to the Group.
Future minimum lease payments under non-cancellable operating leases comprise:
2009 2008
£m £m
Within one year 1,041 837
In more than one year but less than two years 812 606
In more than two years but less than three years 639 475
In more than three years but less than four years 539 415
In more than four years but less than five years 450 356
In more than five years 2,135 1,752
5,616 4,441
The total of future minimum sublease payments expected to be received under non-cancellable subleases is £197 million (2008: £154 million).
Capital and other nancial commitments
Company and subsidiaries Share of joint ventures Group
2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m
Contracts placed for future capital expenditure not provided in the
financial statements(1) 1,706 1,477 401 143 2,107 1,620
Note:
(1) Commitment includes contracts placed for property, plant and equipment and intangible assets.
33. Contingent liabilities
2009 2008
£m £m
Performance bonds 157 111
Credit guarantees – third party indebtedness 61 29
Other guarantees and contingent liabilities 445 372
Performance bonds
Performance bonds require the Group to make payments to third parties in the event that the Group does not perform what is expected of it under the terms of any
related contracts.
Credit guarantees – third party indebtedness
Credit guarantees comprise guarantees and indemnities of bank or other facilities, including those in respect of the Group’s associated undertakings and investments.
Other guarantees and contingent liabilities
Other guarantees principally comprise commitments to the Spanish tax authorities of £229 million (2008: £197 million).
The Group also enters into lease arrangements in the normal course of business, which are principally in respect of land, buildings and equipment. Further details on the
minimum lease payments due under non-cancellable operating lease arrangements can be found in note 32.
Legal proceedings
The Company and its subsidiaries are currently, and may be from time to time, involved in a number of legal proceedings, including inquiries from or discussions with
governmental authorities, that are incidental to their operations. However, save as disclosed below, the Company and its subsidiaries are not involved currently in any legal
or arbitration proceedings (including any governmental proceedings which are pending or known to be contemplated) which may have, or have had in the 12 months
preceding the date of this report, a significant effect on the financial position or profitability of the Company and its subsidiaries. With the exception of the Vodafone 2 enquiry,
due to inherent uncertainties, no accurate quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings outlined below can
be made.
The Company is one of a number of co-defendants in four actions filed in 2001 and 2002 in the Superior Court of the District of Columbia in the United States alleging
personal injury, including brain cancer, from mobile phone use. The Company is not aware that the health risks alleged in such personal injury claims have been substantiated
and is vigorously defending such claims. In August 2007, the court dismissed all four actions against the Company on the basis of the federal pre-emption doctrine. The
plaintiffs have appealed this dismissal.
A subsidiary of the Company, Vodafone 2, is responding to an enquiry (‘the Vodafone 2 enquiry’) by HMRC with regard to the UK tax treatment of its Luxembourg holding company,
Vodafone Investments Luxembourg SARL (‘VIL’), under the Controlled Foreign Companies section of the UK’s Income and Corporation Taxes Act 1988 (‘the CFC Regime’) relating
to the tax treatment of profits earned by the holding company for the accounting period ended 31 March 2001. Vodafone 2’s position is that it is not liable for corporation tax in
the UK under the CFC Regime in respect of VIL. Vodafone 2 asserts, inter alia, that the CFC Regime is contrary to EU law and has made an application to the Special Commissioners
of HMRC for closure of the Vodafone 2 enquiry. In May 2005, the Special Commissioners referred certain questions relating to the compatibility of the CFC Regime with EU law
to the European Court of Justice (the ‘ECJ’) for determination (‘the Vodafone 2 reference’). HMRC subsequently appealed against the decision of the Special Commissioners to
make the Vodafone 2 reference but its appeal was rejected by both the High Court and Court of Appeal.