Telstra 2012 Annual Report Download - page 230

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
We have provided the following indemnities, performance
guarantees and financial support through the Telstra Entity:
• indemnities to financial institutions to support bank guarantees to
the value of $279 million (2011: $294 million) in respect of the
performance of contracts;
• indemnities to financial institutions in respect of the obligations of
our controlled entities. The maximum amount of our contingent
liabilities for this purpose is $189 million (2011: $189 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 $108
million (2011: $60 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 $10 million
(2011: $10 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 $96 million (US$98
million) (2011: $106 million (US$114 million)). In fiscal 2012, we
exercised our early buyout option to terminate a portion of the
leases that commenced in 1999. 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 2012, this guarantee remains unchanged and
$142 million (2011: $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)