Financial position and resources
Liquidity and capital resources
The major sources of Group liquidity for the 2009 and 2008 financial years were cash generated from operations, dividends from associated undertakings, and borrowings through short term and long term issuances in the capital markets. The Group does not use off-balance sheet special purpose entities as a source of liquidity or for other financing purposes.
The Group’s key sources of liquidity for the foreseeable future are likely to be cash generated from operations and borrowings through long term and short term issuances in the capital markets, as well as committed bank facilities.
The Group’s liquidity and working capital may be affected by a material decrease in cash flow due to factors such as reduced operating cash flow resulting from further possible business disposals, increased competition, litigation, timing of tax payments and the resolution of outstanding tax issues, regulatory rulings, delays in the development of new services and networks, licence and spectrum payments, inability to receive expected revenue from the introduction of new services, reduced dividends from associates and investments or increased dividend payments to minority shareholders. Please see the section titled “Principal risk factors and uncertainties”. In particular, the Group continues to expect significant cash tax payments and associated interest payments in relation to long standing tax issues.
The Group is also party to a number of agreements that may result in a cash outflow in future periods. These agreements are discussed further in “Option agreements and similar arrangements” at the end of this section.
Wherever possible, surplus funds in the Group (except in Egypt and India) are transferred to the centralised treasury department through repayment of borrowings, deposits, investments, share purchases and dividends. These are then loaned internally or contributed as equity to fund Group operations, used to retire external debt, invested externally or used to pay external dividends.
Cash flows
Free cash flow before licence and spectrum payments increased by 2.5% to £5,722 million, despite a deferral of a US$250 million gross tax distribution from Verizon Wireless to April 2009, as the increased cash generated by operations more than offset higher capital expenditure, and taxation payments were lower than in the prior year. Free cash flow was lower resulting from a £647 million payment representing 60% of the licence in Qatar, of which £530 million was funded by Vodafone Qatar’s other shareholders.
Cash generated by operations increased by £1,345 million to £14,634 million, with approximately 72% generated in the Europe region. Capital expenditure before licence and spectrum payments increased by £1,575 million, primarily due to network expansion in India and Turkey and in Europe due to accelerated investment in broadband and higher speed capability on the Group’s networks to deliver an improved customer experience. Increased capital expenditure in emerging markets is increasingly being funded through cash generated by operations.
Payments for taxation decreased by £394 million, primarily due to lower settlements, a lower weighted average statutory tax rate and structural benefits following enhancements to the Group’s internal capital structure.
Dividends received from associated undertakings and investments fell by 20.1% to £755 million, in line with expectations following acquisitions in Verizon Wireless and SFR. Together with Verizon Communications Inc., the Group agreed to delay a US$250 million gross tax distribution to April 2009. Both shareholders benefited by enabling Verizon Wireless to minimise arrangement and duration fees applicable to the bridge facility drawn to acquire Alltel. In addition, dividends from SFR were lower, in line with expectations, following the agreement after SFR’s acquisition of Neuf Cegetel that SFR would partially fund debt repayments by a reduction in dividends between 2009 and 2011 inclusive.
Net interest payments increased by 5.5% to £1,168 million, primarily due to unfavourable exchange rate movements impacting the translation of interest payments into sterling. The interest payments resulting from the 28.2% increase in average net debt at month end accounting dates was minimised due to changes in the Group’s currency mix of net debt and significantly lower interest rates for debt denominated in US dollars.
| 2009 £m |
2008 £m |
% |
|
|---|---|---|---|
| Cash generated by operations | 14,634 | 13,289 | 10.1 |
| Purchase of intangible fixed assets | (1,764) | (846) | |
| Purchase of property, plant and equipment | (5,204) | (3,852) | |
| Disposal of property, plant and equipment | 317 | 39 | |
| Operating free cash flow | 7,983 | 8,630 | (7.5) |
| Taxation | (2,421) | (2,815) | |
| Dividends from associated undertakings and investments(1) | 755 | 945 | |
| Dividends paid to minority shareholders in subsidiary undertakings | (162) | (113) | |
| Interest received | 302 | 438 | |
| Interest paid | (1,470) | (1,545) | |
| Free cash flow | 4,987 | 5,540 | (10.0) |
| Licence and spectrum payments(2) | 735 | 40 | |
| Free cash flow before licence and spectrum payments | 5,722 | 5,580 | 2.5 |
Acquisitions and disposals(3) |
(1,330) | (6,541) | |
| Amounts received from minority shareholders(4) |
618 | – | |
| Put options over minority interests | (4) | (2,521) | |
| Equity dividends paid | (4,013) | (3,658) | |
| Purchase of treasury shares | (963) | – | |
| Foreign exchange and other | (8,371) | (2,918) | |
| Net debt increase | (9,076) | (10,098) | |
| Opening net debt | (25,147) | (15,049) | |
| Closing net debt | (34,223) | (25,147) | 36.1 |
Notes:
- (1)
- Year ended 31 March 2009 includes £303 million (2008: £450 million) from the Group’s interest in SFR and £333 million (2008: £414 million) from the Group’s interest in Verizon Wireless.
- (2)
- Year ended 31 March 2009 includes £647 million in relation to Vodafone Qatar.
- (3)
- Year ended 31 March 2009 includes net cash and cash equivalents paid of £1,240 million (2008: £5,268 million) and assumed debt of £78 million (2008: £1,273 million), excluding liabilities related to put options over minority interests which are shown separately. It also includes a £12 million increase in net debt in relation to the change in consolidation status of Safaricom from a joint venture to an associate.
- (4)
- Year ended 31 March 2009 includes £591 million in relation to Vodafone Qatar.
Dividends from associated undertakings and to minority shareholders
Dividends from the Group’s associated undertakings are generally paid at the discretion of the Board of directors or shareholders of the individual operating and holding companies and Vodafone has no rights to receive dividends, except where specified within certain of the companies’ shareholders’ agreements, such as with SFR, the Group’s associated undertaking in France. Similarly, the Group does not have existing obligations under shareholders’ agreements to pay dividends to minority interest partners of Group subsidiaries or joint ventures, except as specified below. Included in the dividends received from associated undertakings and investments is an amount of £333 million (2008: £414 million) received from Verizon Wireless. Until April 2005, Verizon Wireless’ distributions were determined by the terms of the partnership agreement distribution policy and comprised income distributions and tax distributions. Since April 2005, tax distributions have continued. Current projections forecast that tax distributions will not be sufficient to cover the US tax liabilities arising from the Group’s partnership interest in Verizon Wireless until 2015. However, the tax distributions are expected to be sufficient to cover the net tax liabilities of the Group’s US holding company.
Following the announcement of Verizon Wireless’ acquisition of Alltel, certain additional tax distributions were agreed. Under the terms of the partnership agreement, the Verizon Wireless board has no obligation to effect additional distributions above the level of the tax distributions. However, the Verizon Wireless board has agreed that it will review distributions from Verizon Wireless on an annual basis. When considering whether distributions will be made each year, the Verizon Wireless board will take into account its debt position, the relationship between debt levels and maturities and overall market conditions in the context of the five year business plan. It is expected that Verizon Wireless’ free cash flow will be deployed in servicing and reducing debt for the foreseeable future. Together with Verizon Communications Inc., the Group agreed to delay a US$250 million gross tax distribution to April 2009. Both shareholders benefited by enabling Verizon Wireless to minimise arrangement and duration fees applicable to the bridge facility drawn to acquire Alltel.
During the year ended 31 March 2009, cash dividends totalling £303 million (2008: £450 million) were received from SFR in accordance with the shareholders’ agreement. Following SFR’s purchase of Neuf Cegetel, it was agreed that SFR would partially fund debt repayments by a reduction in dividends between 2009 and 2011, inclusive. The amount of dividends received fell by 32.7% from the prior year, which is in line with this agreement.
Verizon Communications Inc. has an indirect 23.1% shareholding in Vodafone Italy and, under the shareholders’ agreement, the shareholders have agreed to take steps to cause Vodafone Italy to pay dividends at least annually, provided that such dividends will not impair the financial condition or prospects of Vodafone Italy including, without limitation, its credit standing. During the 2009 financial year, Vodafone Italy paid a dividend net of withholding tax of €424.1 million to Verizon Communications Inc., which was declared in the previous financial year. On 27 April 2009, Vodafone Italy declared and paid a dividend of €1.3 billion, of which €0.3 billion was received by Verizon Communications Inc. net of withholding tax.
The Vodafone Essar shareholders’ agreement provides for the payment of dividends to minority partners under certain circumstances but not before May 2011.
Acquisitions and disposals
The Group invested a net £1,240 million(1) in acquisition and disposal activities, including the purchase and disposal of investments, in the year ended 31 March 2009. An analysis of the significant transactions in the 2009 financial year, including changes to the Group’s effective shareholding, is shown in the table below. Further details of the acquisitions are provided in note 29 to the consolidated financial statements.
| £m | |
|---|---|
| Arcor (26.4%)(2) | 366 |
| Ghana Telecommunications (70.0%) | 486 |
| Polkomtel (4.8%) | 171 |
| Gateway Communications (50%)(3) | 185 |
| Other net acquisitions and disposals, including investments | 32 |
| Total | 1,240 |
Notes:
- (1)
- Amounts are shown net of cash and cash equivalents acquired or disposed.
- (2)
- This acquisition has been accounted for as a transaction between shareholders. Accordingly, the difference between the cash consideration paid and the carrying value of net assets attributable to minority interests has been accounted for as a charge to retained losses.
- (3)
- Acquisition undertaken by Vodacom, which at 31 March 2009 was 50% owned by the Group.
On 19 May 2008, the Group acquired 26.4% of Arcor previously held by minority interests for cash consideration of €460 million (£366 million). Following the transaction, Vodafone owns 100.0% of Arcor.
On 17 August 2008, the Group completed the acquisition of 70.0% of Ghana Telecommunications Company Limited (‘Ghana Telecommunications’), a leading telecommunications operator in Ghana, from the Government of Ghana for cash consideration of US$900 million (£486 million).
On 18 December 2008, the Group completed the acquisition of an additional 4.8% stake in Polkomtel S.A. for net cash consideration of €186 million (£171 million). The acquisition increased Vodafone’s stake in Polkomtel S.A. from 19.6% to 24.4%.
On 30 December 2008, Vodacom acquired the carrier services and business network solutions subsidiaries (‘Gateway’) of Gateway Telecommunications SA (Pty) Ltd. Gateway provides services in more than 40 countries in Africa.
Treasury shares
The Companies Act 1985 permits companies to purchase their own shares out of distributable reserves and to hold shares with a nominal value not to exceed 10% of the nominal value of their issued share capital in treasury. If shares in excess of this limit are purchased they must be cancelled. While held in treasury, no voting rights or pre-emption rights accrue and no dividends are paid in respect of treasury shares. Treasury shares may be sold for cash, transferred (in certain circumstances) for the purposes of an employee share scheme, or cancelled. If treasury shares are sold, such sales are deemed to be a new issue of shares and will accordingly count towards the 5% of share capital which the Company is permitted to issue on a non pre-emptive basis in any one year as approved by its shareholders at the AGM. The proceeds of any sale of treasury shares up to the amount of the original purchase price, calculated on a weighted average price method, is attributed to distributable profits which would not occur in the case of the sale of non-treasury shares. Any excess above the original purchase price must be transferred to the share premium account.
The Board considered the market reaction to the Group’s interim management statement, issued on 22 July 2008, and introduced a £1 billion share repurchase programme. This programme was completed on 18 September 2008. Details of shares purchased are shown below:
| Date of share purchase | Total number of shares purchased ‘000 |
Average price paid per share inclusive of transaction costs Pence |
Total number of shares purchased under share repurchase programme(1) ‘000 |
Maximum value of shares that may yet be purchased under the programme(1) £m |
|---|---|---|---|---|
| July 2008 | 161,364 | 133.16 | 161,364 | 785 |
| August 2008 | 265,170 | 138.78 | 426,534 | 417 |
| September 2008 | 309,566 | 134.71 | 736,100 | – |
| Total | 736,100 | 135.84 | 736,100 | – |
Note:
- (1)
- No shares were purchased outside of the publicly announced share purchase programmes.
Shares purchased are held in treasury in accordance with section 162 of the Companies Act 1985. The movement in treasury shares during the financial year is shown below:
| Number Million |
£m | |
|---|---|---|
| 1 April 2008 | 5,133 | 7,856 |
| Reissue of shares | (43) | (59) |
| Purchase of shares | 736 | 1,000 |
| Cancelled shares | (500) | (755) |
| Other receipts | (4) | (6) |
| 31 March 2009 | 5,322 | 8,036 |
Funding
The Group has maintained a robust liquidity position despite challenging conditions within the credit markets, thereby enabling the Group to service shareholder returns, debt and expansion through capital investment. This position has been achieved through continued delivery of strong operating cash flows, effective management of working capital, issuances on short term and long term debt markets and non-recourse borrowing assumed in respect of the emerging market business. It has not been necessary for the Group to draw down on its committed bank facilities during the year.
Net debt
The Group’s consolidated net debt position at 31 March was as follows:
| 2009 £m |
2008 £m |
|
|---|---|---|
| Cash and cash equivalents (as presented in the consolidated balance sheet) | 4,878 | 1,699 |
| Short term borrowings: | ||
| Bonds | (5,025) | (1,930) |
| Commercial paper(1) | (2,659) | (1,443) |
| Bank loans | (893) | (806) |
| Other short term borrowings(2) | (1,047) | (353) |
| (9,624) | (4,532) | |
| Long term borrowings: | ||
| Put options over minority interest | (3,606) | (2,625) |
| Bonds, loans and other long term borrowings(3) | (28,143) | (20,037) |
| (31,749) | (22,662) | |
| Trade and other receivables(4) | 2,707 | 892 |
| Trade and other payables(4) | (435) | (544) |
| Net debt | (34,223) | (25,147) |
Notes:
- (1)
- At 31 March 2009, US$1,412 million was drawn under the US commercial paper programme and amounts of €1,340 million, £357 million and US$108 million were drawn under the euro commercial paper programme.
- (2)
- At 31 March 2009, amount includes £691 million in relation to collateral support agreements.
- (3)
- At 31 March 2009, £5,159 million related to drawn facilities, including £1,821 million for a JPY term loan and £1,930 million for loans within the Indian corporate structure.
- (4)
- Represents mark-to-market adjustments on derivative financial instruments which are included as a component of trade and other receivables and trade and other payables.
At 31 March 2009, the Group had £4,878 million of cash and cash equivalents, with the increase since 31 March 2008 being due to funding requirements in relation to the completion of the Vodacom transaction and in anticipation of bond redemptions occurring in May 2009. Cash and cash equivalents are held in accordance with the Group treasury policy.
The Group holds its cash and liquid investments in accordance with the counterparty and settlement risk limits of the Board approved treasury policy. The main forms of liquid investments at 31 March 2009 were money market funds, commercial paper and bank deposits.
Net debt increased to £34,223 million, from £25,147 million at 31 March 2008, as the impact of business acquisitions and disposals, movements in the liability related to written put options and equity dividend payments were partially offset by free cash flow. The impact of foreign exchange rates increased net debt by £7,613 million, as approximately 57% of net debt is denominated in euro and the euro/sterling exchange rate increased by 16.3% during the 2009 financial year. Net debt represented approximately 53.1% of the Group’s market capitalisation at 31 March 2009 compared with 31% at 31 March 2008. Average net debt at month end accounting dates over the 12 month period ended 31 March 2009 was £28,462 million and ranged between £23,339 million and £34,281 million during the year.
The cash received from collateral support agreements mainly reflects the value of the Group’s interest rate swap portfolio, which is substantially net present value positive. See note 24 to the consolidated financial statements for further details on these agreements.
Credit ratings
Consistent with the development of its strategy, the Group targets, on average, a low single A long term credit rating. As of 18 May 2009, the credit ratings were as follows:
| Rating Agency | Rating date | Type of debt | Rating | Outlook |
|---|---|---|---|---|
| Standard & Poor’s | 30 May 2006 | Short term | A-2 | Stable |
| 30 May 2006 | Long term | A- | Stable | |
| Moody’s | 30 May 2006 | Short term | P-2 | Stable |
| 16 May 2007 | Long term | Baa1 | Stable | |
| Fitch Ratings | 30 May 2006 | Short term | F2 | Stable |
| 30 May 2006 | Long term | A- | Stable |
The Group’s credit ratings enable it to have access to a wide range of debt finance, including commercial paper, bonds and committed bank facilities. Credit ratings are not a recommendation to purchase, hold or sell securities, in as much as ratings do not comment on market price or suitability for a particular investor, and are subject to revision or withdrawal at any time by the assigning rating organisation. Each rating should be evaluated independently.
Commercial paper programmes
The Group currently has US and euro commercial paper programmes of US$15 billion and £5 billion, respectively, which are available to be used to meet short term liquidity requirements. At 31 March 2009, amounts external to the Group of €1,340 million (£1,239 million), £357 million and US$108 million (£76 million) were drawn under the euro commercial paper programme and US$1,412 million (£987 million) was drawn down under the US commercial paper programme, with such funds being provided by counterparties external to the Group. At 31 March 2008, there were no drawings under the US commercial paper programme and €1,705 million (£1,357 million), £81 million and £5 million equivalent of other currencies were drawn under the euro commercial paper programme. The commercial paper facilities were supported by US$9.1 billion (£6.4 billion) of committed bank facilities (see “Committed facilities” on page 44), comprised of a US$4.1 billion revolving credit facility that matures on 28 July 2011 and a US$5 billion revolving credit facility that matures on 22 June 2012. At 31 March 2009 and 31 March 2008, no amounts had been drawn under either bank facility.
Bonds
The Group has a €30 billion euro medium term note programme and a US shelf programme, which are used to meet medium to long term funding requirements. At 31 March 2009, the total amounts in issue under these programmes split by currency were US$12.8 billion, £2 billion, €13.6 billion and £0.2 billion sterling equivalent of other currencies.
In the year to 31 March 2009, bonds with a nominal value equivalent of £4.9 billion, at the relevant 31 March 2009 exchange rates, were issued under the US shelf and the euro medium term note programme. The bonds issued during the year were:
Date of bond issue |
Maturity of bond |
Nominal amount Million |
Sterling equivalent Million |
|---|---|---|---|
| April 2008 | April 2015 | JPY3,000 | 21 |
| May 2008 | November 2012 | €250 | 231 |
| June 2008 | June 2013 | CZK534 | 18 |
| June 2008 | June 2010 | €1,250 | 1,157 |
| Oct/Nov 2008(1) | Sept to Nov 2009 | €250 | 232 |
| November 2008 | November 2018 | £450 | 450 |
| December 2008 | December 2028 | €186 | 172 |
| December 2008 | December 2013 | €1,000 | 925 |
| December 2008 | September 2014 | £100 | 100 |
| January 2009 | September 2014 | £100 | 100 |
| January 2009 | January 2016 | €1,250 | 1,157 |
| February 2009 | September 2014 | £325 | 325 |
Note:
- (1)
- Multiple bonds issued at various dates.
At 31 March 2009, the Group had bonds outstanding with a nominal value of £23,754 million (2008: £17,143 million). On 1 April 2009, the Group issued €250 million of 3.625% bonds, maturing in November 2012.
Committed facilities
The following table summarises the committed bank facilities available to the Group at 31 March 2009.
| Committed bank facilities | Amounts drawn |
|---|---|
| 29 July 2008 | |
| US$4.1 billion revolving credit facility, maturing 28 July 2011 | No drawings have been made against this facility. The facility supports the Group’s commercial paper programmes and may be used for general corporate purposes, including acquisitions. |
| 24 June 2005 | |
| US$5 billion revolving credit facility, maturing 22 June 2012 | No drawings have been made against this facility. The facility supports the Group’s commercial paper programmes and may be used for general corporate purposes, including acquisitions. |
| 21 December 2005 | |
| ¥258.5 billion term credit facility, maturing 16 March 2011, entered into by Vodafone Finance K.K. and guaranteed by the Company | The facility was drawn down in full on 21 December 2005. The facility is available for general corporate purposes, although amounts drawn must be on-lent to the Company. |
| 16 November 2006 | |
| €0.4 billion loan facility, maturing 14 February 2014 |
The facility was drawn down in full on 14 February 2007. The facility is available for financing capital expenditure in the Group’s Turkish operating company. |
| 28 July 2008 | |
| €0.4 billion loan facility, maturing 12 August 2015 | The facility was drawn down in full on 12 August 2008. The facility is available for financing the roll out of a converged fixed mobile broadband telecommunications network in Italy. |
Under the terms and conditions of the US$9.1 billion committed bank facilities, lenders have the right, but not the obligation, to cancel their commitments and have outstanding advances repaid no sooner than 30 days after notification of a change of control of the Company. This is in addition to the rights of lenders to cancel their commitment if the Company has committed an event of default; however, it should be noted that a material adverse change clause does not apply.
The facility agreements provide for certain structural changes that do not affect the obligations of the Company to be specifically excluded from the definition of a change of control.
Substantially the same terms and conditions apply in the case of Vodafone Finance K.K.’s ¥258.5 billion term credit facility, although the change of control provision is applicable to any guarantor of borrowings under the term credit facility. Additionally, the facility agreement requires Vodafone Finance K.K. to maintain a positive tangible net worth at the end of each financial year. As of 31 March 2009, the Company was the sole guarantor.
The terms and conditions of the €0.4 billion loan facility maturing on 14 February 2014 are similar to those of the US$9.1 billion committed bank facilities, with the addition that, should the Group’s Turkish operating company spend less than the equivalent of €0.8 billion on capital expenditure, the Group will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.
The terms and conditions of the €0.4 billion loan facility maturing 12 August 2015 are similar to those of the US$9.1 billion committed bank facilities, with the addition that, should the Group’s Italian operating company spend less than the equivalent of €1.5 billion on capital expenditure, the Group will be required to repay the drawn amount of the facility that exceeds 18% of the capital expenditure.
Furthermore, two of the Group’s subsidiary undertakings are funded by external facilities which are non-recourse to any member of the Group other than the borrower, due to the level of country risk involved. These facilities may only be used to fund their operations. At 31 March 2009, Vodafone India had facilities of INR 274.4 billion (£3.8 billion), of which INR 172.7 billion (£2.4 billion) is drawn. Vodafone Egypt has a partly drawn EGP 2.6 billion (£327 million) syndicated bank facility of EGP 4.0 billion (£497 million) that matures in March 2014.
In aggregate, the Group has committed facilities of approximately £13,631 million, of which £7,963 million was undrawn and £5,668 million was drawn at 31 March 2009.
The Group believes that it has sufficient funding for its expected working capital requirements for at least the next 12 months. Further details regarding the maturity, currency and interest rates of the Group’s gross borrowings at 31 March 2009 are included in note 25 to the consolidated financial statements.
Financial assets and liabilities
Analyses of financial assets and liabilities, including the maturity profile of debt, currency and interest rate structure, are included in notes 18 and 25 to the consolidated financial statements. Details of the Group’s treasury management and policies are included within note 24 to the consolidated financial statements.
Option agreements and similar arrangements
Potential cash outflows
In respect of the Group’s interest in the Verizon Wireless partnership, an option granted to Price Communications, Inc. by Verizon Communications Inc. was exercised on 15 August 2006. Under the option agreement, Price Communications, Inc. exchanged its preferred limited partnership interest in Verizon Wireless of the East LP for 29.5 million shares of common stock in Verizon Communications Inc. Verizon Communications Inc. has the right, but not the obligation, to contribute the preferred interest to the Verizon Wireless partnership, diluting the Group’s interest. However, the Group also has the right to contribute further capital to the Verizon Wireless partnership in order to maintain its percentage partnership interest. Such amount, if contributed, would be US$0.9 billion.
As part of the Vodafone Essar acquisition, the Group acquired less than 50% equity interests in Telecom Investments India Private Limited (‘TII’) and in Omega Telecom Holdings Private Limited (‘Omega’), which in turn have a 19.54% and 5.11% indirect shareholding in Vodafone Essar. The Group was granted call options to acquire 100% of the shares in two companies which together indirectly own the remaining shares of TII for, if the market equity of Vodafone Essar at the time of exercise is less than US$25 billion, an aggregate price of US$431 million plus interest or, if the market equity value of Vodafone Essar at the time of exercise is greater than US$25 billion, the fair market value of the shares as agreed between the parties. The Group also has an option to acquire 100% of the shares in a third company which owns the remaining shares in Omega. In conjunction with the receipt of these options, the Group also granted a put option to each of the shareholders of these companies with identical pricing which, if exercised, would require Vodafone to purchase 100% of the equity in the respective company. These options can only be exercised in accordance with Indian law prevailing at the time of exercise.
The Group granted put options exercisable between 8 May 2010 and 8 May 2011 to members of the Essar group of companies that, if exercised, would allow the Essar group to sell its 33% shareholding in Vodafone Essar to the Group for US$5 billion or to sell between US$1 billion and US$5 billion worth of Vodafone Essar shares to the Group at an independently appraised fair market value.
Off-balance sheet arrangements
The Group does not have any material off-balance sheet arrangements, as defined in item 5.E.2. of the SEC’s Form 20-F. Please refer to notes 32 and 33 to the consolidated financial statements for a discussion of the Group’s commitments and contingent liabilities.
Quantitative and qualitative disclosures about market risk
A discussion of the Group’s financial risk management objectives and policies and the exposure of the Group to liquidity, market and credit risk is included within note 24 to the consolidated financial statements.