Vodafone 1998 Annual Report Download - page 58

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Vodafone Report and Accounts - Financial Review
Treasury management and policy
The Group's treasury function provides a centralised service to the Group for
funding, foreign exchange, interest rate management and counterparty risk
management.
Treasury operations are conducted within a framework of policies and
guidelines authorised and reviewed annually by the Board and are reported
regularly to the Board. The Group uses a number of derivative instruments
which are transacted, for risk management purposes only by specialist
treasury personnel.
There has been no change during the year, or since the year end, to the
major financial risks faced by the Group or to the Group's approach to the
management of those risks.
Funding and liquidity
The Group has a strong financial position demonstrated by credit ratings of A-
1/P-1 short term and A+/A2 long term from Standard and Poor's and Moody's
respectively, which enables the Group to access a wide range of debt finance
including Eurobonds, commercial paper and committed bank facilities. The
maturities of the committed facilities available to the Group at 31 March 1998
are shown here:
The Group's policy is to borrow centrally using a mixture of long term and
short term loans to meet anticipated funding requirements. These borrowings,
together with cash generated from operations, are lent or contributed as
equity to subsidiaries.
The Board has approved ratios consistent with those used by companies with
high credit ratings for net interest cover, market capitalisation to net debt and
gross cash flow to net debt, which establish internal limits for the maximum
level of debt that the Group may have outstanding. Total Group interest,
including that of associates, is covered 11.6 times by profits before interest
and tax.
A substantial proportion of the debt maturing within one year is commercial
paper, issued under the Group's £500m multi-currency Euro commercial
http://www.vodafone.com/download/investor/reports/annual98/financialreview/treasury.html (1 of 2)29/03/2007 23:09:18