Notes to the company
financial statements
11. Contingent liabilities
| 2010 £m | 2009 £m |
|
|---|---|---|
| Performance bonds | 5 | 35 |
| Credit guarantees – third party indebtedness | 5,112 | 5,317 |
| Other guarantees and contingent liabilities | 224 | 231 |
Performance bonds
Performance bonds require the Company to make payments to third parties in the event that the Company or its subsidiaries do not perform what is expected of them under the terms of any related contracts.
Credit guarantees – third party indebtedness
Credit guarantees comprise guarantees and indemnities of bank or other facilities.
A subsidiary of the Company has 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 up to US$5 billion worth of Vodafone Essar shares to the Group at an independently appraised fair market value. The Company has guaranteed payment of up to US$5 billion related to these options.
At 31 March 2010 the Company had also guaranteed debt of Vodafone Finance K.K. amounting to £1,821 million (2009: £1,820 million). This facility expires in March 2011.
Other guarantees and contingent liabilities
Other guarantees principally comprise of a guarantee relating to a commitment to the Spanish tax authorities of £221 million (2009: £229 million).
As discussed in note 29 to the consolidated financial statements 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.
Legal proceedings
Details regarding certain legal actions which involve the Company are set out in note 29 to the consolidated financial statements.
© Copyright Vodafone 2010
