Vodafone 2010 Annual Report Download - page 116

114 Vodafone Group Plc Annual Report 2010
Notes to the consolidated nancial statements continued
28. 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:
2010 2009
£m £m
Within one year 1,200 1,041
In more than one year but less than two years 906 812
In more than two years but less than three years 776 639
In more than three years but less than four years 614 539
In more than four years but less than five years 512 450
In more than five years 2,235 2,135
6,243 5,616
The total of future minimum sublease payments expected to be received under non-cancellable subleases is £246 million (2009: £197 million).
Capital commitments
Company and subsidiaries Share of joint ventures Group
2010 2009 2010 2009 2010 2009
£m £m £m £m £m £m
Contracts placed for future capital expenditure not provided in the financial
statements(1) 1,800 1,706 219 401 2,019 2,107
Note:
(1) Commitment includes contracts placed for property, plant and equipment and intangible assets.
29. Contingent liabilities
2010 2009
£m £m
Performance bonds 246 157
Credit guarantees – third party indebtedness 76 61
Other guarantees and contingent liabilities 496 445
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 or commercial arrangements.
Credit guarantees – third party indebtedness
Credit guarantees comprise guarantees and indemnities of bank or other facilities including those in respect of the Group’s associates and investments.
Other guarantees and contingent liabilities
Other guarantees principally comprise commitments to the Spanish tax authorities of £221 million (2009: £229 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 28.
The Company has covenanted to provide security in favour of the Trustee of the Vodafone Group UK Pension Scheme in respect of the funding deficit in the scheme. The
initial security takes the form of a Japanese law share pledge over 400,000 class 1 preferred shares of ¥200,000 in BB Mobile Corp. The security may be replaced either on
a voluntary or mandatory basis but while the security asset consists of the preferred shares, the percentage cover to the secured liabilities will be 100%. As and when
alternative security is provided, the Company has agreed that the security cover should include additional headroom of 33% but (i) where cash is used as the security asset
the ratio will revert to 100% of the relevant liabilities and (ii) where the proposed replacement security asset is listed on an internationally recognised stock exchange in
certain defined core jurisdictions, the Trustee may decide to agree a lower ratio than 133%.
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. We are not aware that the health risks alleged in such personal injury claims have been substantiated and
we are vigorously defending such claims. In August 2007 the trial court dismissed all four actions against the Company on the basis of the federal pre-emption doctrine. On
29 October 2009 the District of Columbia Court of Appeals ruled on the plaintiffs’ appeal of the trial court’s dismissal of all claims in the action on the basis of the federal
pre-emption doctrine. The Court of Appeals has upheld the dismissal of most claims. However the decision permits the plaintiffs to continue any claims alleging i) injuries