Vodafone 2002 Annual Report Download - page 47

Operating and Financial Review and Prospects Vodafone Group Plc 45Annual Report & Accounts and Form 20-F
A further analysis of net debt, including a full maturity analysis, can be found in
note 31 to the Consolidated Financial Statements, “Analysis of net debt”.
The Group remains committed to maintaining a strong financial position as
demonstrated by its credit ratings of P-1/F1/A-1 short-term and A2/A/A long
term from Moody’s, Fitch Ratings and Standard and Poor’s, respectively.
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.
The Group has dollar and euro commercial paper programmes for $15 billion
and £2 billion, respectively, which are used to meet short-term liquidity
requirements. The commercial paper facilities are backed by a $13.7 billion
committed bank facility which expires on 26 June 2002, with a one year
term-out option. The Group also has approximately £11.6 billion (pounds sterling
equivalent) of capital market debt in issue, with maturities from July 2002 to
February 2030.
The following table provides both a summary of the Group’s bond issues, each of
which have been undertaken since 1 April 2001 for general corporate purposes,
including working capital, and a summary of committed bank facilities currently
available to the Group.
Bond Issues
21 June 2001
10.4 billion 5.4% bond with maturity 21 June 2006.
22 June 2001
£0.25 billion 6.25% bond with maturity 10 July 2008.
21 November 2001
¥3 billion 0.83% bond with maturity 21 November 2006.
Committed Bank Facilities
27 June 2001
$13.7 billion 364-day bank facility
(with a one year term-out). The
bank facility was increased from
$13.275 billion to $13.7 billion on
4 January 2002 through the accession
of a new lender.
29 November 2001
¥225 billion term credit facility
maturing 15 January 2007, entered
into by J-Phone Finance Co., Ltd.
The term credit facility is available
for drawing until 28 November 2002.
Amounts drawn
As of 31 March 2002, no amounts
had been drawn from the bank facility.
The bank facility is available for general
corporate purposes, including working
capital, although it serves principally as
a back-up to the Group’s $15 billion
commercial paper programme.
As of 31 March 2002, no amounts
had been drawn from the term credit
facility. The facility is available for
general corporate purposes, although
amounts drawn must be on-lent to
the Company.
Under the terms and conditions of the $13.7 billion bank facility, lenders would
have the right, but not the obligation, to cancel their commitment and have
outstanding advances repaid 30 days after a change of control of the Company.
The facility agreement provides 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. This is in addition to the rights of lenders to cancel their
commitment if the Company has committed an event of default.
Substantially the same terms and conditions apply in the case of J-Phone
Finance Co., Ltd’s ¥225 billion term credit facility, although the change of control
provision is applicable to any guarantor of borrowings under the term credit
facility. As of 31 March 2002, the Company was the sole guarantor.
In addition, Vodafone AG in Germany has fully drawn bilateral facilities totalling
1562 million (£344 million), which expire in 2004 and 2006, and Japan Telecom
and the J-Phone Group have fully drawn bilateral facilities totalling ¥41,522
million (£220 million) and ¥156,637 million (£830 million), respectively. These
bilateral bank facilities expire at various dates up until January 2009.
Furthermore, certain of the Group’s subsidiary undertakings have committed
facilities that may only be used to fund their operations. Vodafone Egypt
Telecommunications Company SAE has a partly drawn syndicated bank facility of
EGP2.4 billion (£364 million) that expires in 2005 and V.R.A.M. Telecommunications
Company Limited in Hungary has a partly drawn syndicated bank facility of
1350 million (£215 million) that fully expires in 2008. In aggregate, the Group has
committed facilities of approximately £12,786 million, of which £10,947 million
was undrawn at 31 March 2002.
The Group believes that it has sufficient funding for its expected working capital
requirements. Further details regarding the maturity, currency and interest rates
of the Group’s gross borrowings at 31 March 2002 are included in note 20 to
the Consolidated Financial Statements, “Financial liabilities and assets”, included
in this Annual Report.
Put option agreement
As part of the agreements entered into upon the formation of Verizon Wireless,
the Company entered into an Investment Agreement with Verizon
Communications, formerly Bell Atlantic Corporation, and Verizon Wireless,
formerly the Cellco Partnership. Under this agreement, dated 3 April 2000, the
Company has the right to require Verizon Communications or Verizon Wireless to
acquire interests in the partnership from the Company with an aggregate market
value of up to $20 billion between July 2003 and July 2007. This represents a
further potential source of liquidity to the Group.
A summary of the Group’s principal contractual financial obligations is shown
below. Further details on the items included can be found in the Notes to the
Consolidated Financial Statements.
Payments due by period £m
Contractual obligations Total <1 year 1-4 years 4-5 years >5 years
Short term debt 1,319 1,319 –––
Long term debt 12,584 – 5,203 1,817 5,564
Capital commitments 816 783 33 ––
Operating lease commitments 1,990 506 773 166 545
Total contractual cash
obligations 16,709 2,608 6,009 1,983 6,109