Telstra 2010 Annual Report Download - page 215

Telstra Corporation Limited and controlled entities
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Notes to the Financial Statements (continued)
Contingent liabilities and guarantees (continued)
Indemnities, performance guarantees and financial support
(continued)
• Indemnities to financial institutions in respect of the obligations
of our controlled entities. The maximum amount of our
contingent liabilities for this purpose was $286 million (2009:
$263 million);
• Financial support for certain controlled entities to the amount
necessary to enable those entities to meet their obligations as
and when they fall due. The financial support is subject to
conditions including individual monetary limits totalling $73
million (2009: $28 million) and a requirement that the entity
remains our controlled entity;
• Guarantees of the performance of jointly controlled entities
under contractual agreements to a maximum amount of $12
million (2009: $14 million);
• Guarantees over the performance of third parties under
defeasance arrangements, whereby lease payments are made
on our behalf by the third parties over the remaining terms of
the finance leases. The lease payments over the remaining
expected term of the leases amount to $319 million (US$272
million) (2009: $522 million (US$424 million)). In fiscal 2010,
we exercised our early buyout option to terminate a portion of
the leases that commenced in 1999 and 2000. We still hold an
early buyout option for the remaining leases; and
• During fiscal 1998, we resolved to provide IBM Global Services
Australia Limited (IBMGSA) with guarantees issued on a several
basis up to $210 million as a shareholder of IBMGSA. We issued
a guarantee of $68 million on behalf of IBMGSA during fiscal
2000. During fiscal 2004, we sold our shareholding in this
entity. The $68 million guarantee is provided to support service
contracts entered into by IBMGSA and third parties, and was
made with IBMGSA bankers, or directly to IBMGSA customers.
As at 30 June 2010, this guarantee has still been provided and
$142 million (2009: $142 million) of the $210 million guarantee
facility remains unused.
Upon sale of our shareholding in IBMGSA and under the deed of
indemnity between shareholders, our liability under these
performance guarantees has been indemnified for all
guarantees that were in place at the time of sale. Therefore, the
overall net exposure to any loss associated with a claim has
effectively been offset.
30. Parent entity information (continued)