Vodafone 2010 Annual Report Download - page 110

108 Vodafone Group Plc Annual Report 2010
Notes to the consolidated nancial statements continued
22. Borrowings continued
Interest rate and currency of borrowings
Total Floating rate Fixed rate Other
borrowings borrowings borrowings(1) borrowings(2)
Currency £m £m £m £m
Sterling 3,022 3,022 – –
Euro 14,244 9,429 4,815 –
US dollar 15,195 7,329 4,461 3,405
Japanese yen 2,605 2,605 – –
Other 4,729 4,105 624 –
31 March 2010 39,795 26,490 9,900 3,405
Sterling 2,549 2,549 – –
Euro 15,126 13,605 1,521 –
US dollar 17,242 10,565 3,071 3,606
Japanese yen 2,660 2,660 – –
Other 3,796 3,323 473 –
31 March 2009 41,373 32,702 5,065 3,606
Notes:
(1) The weighted average interest rate for the Group’s euro denominated fixed rate borrowings is
5.3% (2009: 5.1%). The weighted average time for which the r ates are fixed is 3.4 years (2009: 6.7
years). The weighted average interest rate for the Group’s US dollar denominated fixed rate
borrowings is 5.5% (2009: 6.6%). The weighted average time for which the rates are fixed is 12.3
year s (2009: 25.4 years). The weighted average interest rate for the G roup’s other currenc y fixed
rate borrowings is 10.1% (2009: 10.1%). The weighted average time for which the rates are fixed
is 1.5 years (2009: 2.5 years).
(2) Other borrowings of £3,405 million (2009: £3,606 million) are the liabilities arising under put
options granted over direct and indirect interests in Vodafone Essar.
The figures shown in the tables above take into account interest rate swaps used to
manage the interest rate profile of financial liabilities. Interest on floating rate
borrowings is generally based on national LIBOR equivalents or government bond
rates in the relevant currencies.
At 31 March 2010 the Group had entered into foreign exchange contracts to decrease
its sterling currency borrowings above by £8,257 million and to increase its euro, US
dollar, Japanese yen and other currency borrowings above by amounts equal to
£5,473 million, £1,490 million, £527 million and £730 million respectively.
At 31 March 2009 the Group had entered into foreign exchange contracts to decrease
its sterling and other currency borrowings above by amounts equal to £6,039 million
and £1,204 million respectively and to increase its euro, US dollar and Japanese yen
borrowings above by amounts equal to £5,582 million, £1,400 million and £194
million respectively.
Further protection from euro and US dollar interest rate movements on debt is
provided by interest rate swaps. At 31 March 2010 the Group had euro denominated
interest rate swaps for amounts equal to £6,335 million and US dollar denominated
interest rate swaps for amounts equal to £5,761 million. The average effective rate
which has been fixed is 1.21% in relation to euro denominated interest rate swaps and
0.92% in relation to US dollar denominated interest rate swaps.
The Group has entered into euro and US dollar denominated interest rate futures. The
euro denominated interest rate futures cover the period June 2010 to September
2010, September 2010 to December 2010 and December 2010 to March 2011 for
amounts equal to £7,888 million, £8,461 million and £4,067 million respectively. The
average effective rate which has been fixed is 1.27%. The US dollar denominated
interest rate futures cover the period June 2010 to September 2010, September 2010
to December 2010 and December 2010 to March 2011 for amounts equal to £3,197
million, £2,582 million and £1,119 million respectively. The average effective rate
which has been fixed is 0.86%.
At 31 March 2009 the Group had entered into euro and US dollar denominated interest
rate fu tures. T he euro deno minated fu tures covered t he perio d J une 2009 to Se ptember
2009, September 2009 to December 2009 and December 2009 to March 2010 for
amounts equal to £6,845 million, £6,061 million and £3,931 million respectively. The
US dollar denominated interest rate futures cover the period June 2009 to September
2009, September 2009 to December 2009 and December 2009 to March 2010 for
amounts equal to £7,003 million, £7,871 million, and £9,333 million respectively.
Borrowing facilities
At 31 March 2010 the Group’s most significant committed borrowing facilities
comprised two bank facilities of US$4,115 million (£2,709 million) and US$5,025
million (£3,308 million) both expiring between one and three years (2009: two bank
facilities of US$4,115 million (£2,878 million) and US$5,025 million (£3,514 million)),
a US$650 million (£428 million) bank facility which expires in more than 5 years
(2009: £nil), a ¥259 billion (£1,821 million, 2009: ¥259 billion (£1,820 million)) term
credit facility, which expires within one year, two loan facilities of €400 million (£356
million) and €350 million (£312 million) both expiring between two and five years
and a loan facility of €410 million (£365 million) which expires in more than five years
(2009: two loan facilities of €400 million (£370 million) and €350 million (£324
million)). The US dollar bank facilities remained undrawn throughout the financial
year, the ¥259 billion term credit facility was fully drawn down on 21 December 2005,
the €400 million and €350 million loan facilities were fully drawn on 14 February
2007 and 12 August 2008 respectively and the €410 million facility remains undrawn.
Under the terms and conditions of the US$4,115 million and US$5,025 million bank
facilities, lenders have the right, but not the obligation, to cancel their commitment
30 days from the date of notification of a change of control of the Company and have
outstanding advances repaid on the last day of the current interest period.
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. 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 Vodafone Finance
K.K.’s ¥259 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 2010 the Company was
the sole guarantor.
The terms and conditions of the €400 million loan facility are similar to those of the
US dollar bank facilities, with the addition that, should the Group’s Turkish operating
company spend less than the equivalent of US$800 million 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 €350 million loan facility are similar to those of the
US dollar bank facilities, with the addition that, should the Group’s Italian operating
company spend less than the equivalent of €1,500 million on capital expenditure,
the Group will be required to repay the drawn amount of the facility that exceeds 18%
of the capital expenditure.
In addition to the above, certain of the Group’s subsidiaries had committed facilities
at 31 March 2010 of £5,759 million (2009: £4,725 million) in aggregate, of which
£1,647 million (2009: £1,571 million) was undrawn. Of the total committed facilities
£1,139 million (2009: £675 million) expires in less than one year, £2,880 million
(2009: £2,275 million) expires between two and five years, and £1,740 million (2009:
£1,775 million) expires in more than five years.
Redeemable preference shares
Redeemable preference shares comprise class D and E preferred shares issued by
Vodafone Americas, Inc. An annual dividend of US$51.43 per class D and E preferred
share is payable quarterly in arrears. The dividend for the year amounted to £56
million (2009: £51 million). The aggregate redemption value of the class D and E
preferred shares is US$1.65 billion. The holders of the preferred shares are entitled to
vote on the election of directors and upon each other matter coming before any
meeting of the shareholders on which the holders of ordinary shares are entitled to
vote. Holders are entitled to vote on the basis of twelve votes for each share of class
D or E preferred stock held. The maturity date of the 825,000 class D preferred shares
is 6 April 2020. The 825,000 class E preferred shares have a maturity date of 1 April
2020. The class D and E preferred shares have a redemption price of US$1,000 per
share plus all accrued and unpaid dividends.