Vodafone 2007 Annual Report Download - page 126

124 Vodafone Group Plc Annual Report 2007
Notes to the Consolidated Financial Statements
continued
24. Borrowings continued
Borrowing facilities
At 31 March 2007, the Group’s most significant committed borrowing
facilities comprised two bank facilities of $5,925 million (£3,010 million) and
$5,025 million (£2,553 million) expiring between two and five years and in
more than five years, respectively (2006: two bank facilities of $5,925 million
(£3,407 million) and $5,025 million (£2,890 million)), a ¥259 billion (£1,117
million, 2006: ¥259 billion (£1,265 million)) term credit facility, which expires
between two and five years and a €400 billion (£272 million, 2006: nil) loan
facility, which expires in more than five years. The bank facilities remained
undrawn throughout the year, the ¥259 billion term credit facility was fully
drawn down on 21 December 2005 and the €400 million loan facility was
fully drawn down on 14 February 2007.
Under the terms and conditions of the $5,925 million and $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 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 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. As of 31 March 2007, the Company was the sole
guarantor of the ¥259 billion term credit facility. 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 $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.
In addition to the above, certain of the Group’s subsidiaries had
committed facilities at 31 March 2007 of £1,030 million (2006:
£271 million) in aggregate, of which £278 million (2006: £65 million) was
undrawn. Of the total committed facilities, £99 million (2006:
£121 million) expires in less than one year, £574 million (2006:
£109 million) expires between two and five years, and £357 million (2006:
£41 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 $51.43 per class D
and E preferred share is payable quarterly in arrears. The dividend for the year
amounted to £45 million (2006: £48 million). The aggregate redemption
value of the class D and E preferred shares is $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 $1,000
per share plus all accrued and unpaid dividends.
Interest rate and currency of borrowings
Fixed rate borrowings
Weighted
average
Floating Fixed Weighted time for
Total rate rate average which rate is
borrowings borrowings borrowings interest rate fixed
Currency £m £m £m % Years
Sterling 1,520 1,520 – – –
Euro 9,295 8,382 913 5.1 9.8
US dollar 9,687 9,687 – – –
Japanese yen 1,118 1,118 – – –
Other 995 995 – – –
31 March 2007 22,615 21,702 913 5.1 9.8
Sterling 1,511 1,511 – – –
Euro 6,941 5,996 945 5.1 10.8
US dollar 8,905 8,905 – – –
Japanese yen 1,296 1,296 – – –
Other 1,545 1,545 – – –
31 March 2006 20,198 19,253 945 5.1 10.8
Interest on floating rate borrowings is based on national LIBOR equivalents or government bond rates in the relevant currencies.
The figures shown in the tables above take into account interest rate swaps used to manage the interest rate profile of financial liabilities.
At 31 March 2007, the Group had entered into foreign exchange contracts to decrease its sterling, US dollar, Japanese yen and other currency borrowings
above by amounts equal to £4,477 million, £1,988 million, £106 million and £663 million respectively and to increase its euro borrowings above by amounts
equal to £7,204 million.
At 31 March 2006, the Group had entered into foreign exchange contracts to decrease its sterling and US dollar borrowings above by amounts equal to
£2,971 million and £6,009 million respectively and to increase its euro, Japanese yen and other currency borrowings above by amounts equal to £6,230
million, £1,827 million and £962 million respectively.
Further protection from euro and Japanese yen interest rate movements on debt is provided by interest rate swaps. At 31 March 2007, the Group had euro
denominated interest rate swaps for amounts equal to £1,494 million. The effective rates, which have been fixed, are 3.54%. In addition, the Group has
entered into euro denominated forward starting interest rate swaps for amounts equal to £679 million, £2,717 million and £679 million, which cover the
periods June 2007 to June 2008, June 2008 to June 2009 and September 2008 to September 2009 respectively. The effective rates, which have been fixed,
range from 2.62% per annum to 3.02% per annum.