Vodafone 2008 Annual Report Download - page 122

24. Borrowings continued
Interest rate and currency of borrowings
Total Floating rate Fixed rate Other
borrowings borrowings borrowings(1) borrowings
Currency £m £m £m £m
Sterling 1,563 1,563 – –
Euro 10,787 9,673 1,114 –
US dollar 10,932 8,456 – 2,476
Japanese yen 1,516 1,516 – –
Other 2,396 2,396 – –
31 March 2008 27,194 23,604 1,114 2,476
Sterling 1,520 1,520 – –
Euro 9,295 8,382 913 –
US dollar 9,687 9,687 – –
Japanese yen 1,118 1,118 – –
Other 995 995 – –
31 March 2007 22,615 21,702 913 –
(1) The weighted average interest rate for the Group’s euro denominated fixed rate borrowings
is 5.1% (2007: 5.1%). The weighted average time for which the rates are fixed is 8.8 years
(2007: 9.8 years).
Other borrowings of £2,476 million are the liabilities arising under put options
granted over interests in Vodafone Essar.
Interest on floating rate borrowings is generally 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 2008, the Group had entered into foreign exchange contracts to
decrease its sterling, US dollar and other currency borrowings above by amounts
equal to £6,136 million, £2,916 million and £755 million respectively and to
increase its euro and Japanese Yen borrowings above by amounts equal to
£10,111 million and £12 million respectively.
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.
Further protection from euro and Japanese yen interest rate movements on
debt is provided by interest rate swaps. At 31 March 2008, the Group had euro
denominated interest rate swaps for amounts equal to £796 million. The average
effective rate which has been fixed, is 2.62%. In addition, the Group has entered
into euro denominated forward starting interest rate swaps for amounts equal to
£3,183 million and £796 million, which cover the periods June 2008 to June 2009
and September 2008 to September 2009, respectively. The effective rates,
which have been fixed, range from 2.87% per annum to 3.02% per annum.
Borrowing facilities
At 31 March 2008, the Group’s most significant committed borrowing facilities
comprised two bank facilities of $6,125 million (£3,083 million) and $5,200 million
(£2,617 million) expiring between two and five years and in more than five years,
respectively (2007: two bank facilities of $5,925 million (£3,010 million) and
$5,025 million (£2,553 million)), a ¥259 billion (£1,306 million, 2007: ¥259 billion
(£1,117 million)) term credit facility, which expires between two and five years and
a €400 million (£318 million, 2007: €400 million (£272 million)) loan facility, which
expires in more than five years. 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 and the €400 million loan facility was fully drawn
down on 14 February 2007.
Under the terms and conditions of the $6,125 million and $5,200 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. 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 2008, 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 $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 2008 of £2,548 million (2007: £1,030 million) in aggregate,
of which £473 million (2007: £278 million) was undrawn. Of the total committed
facilities, £1,031 million (2007: £99 million) expires in less than one year,
£743 million (2007: £574 million) expires between two and five years, and
£774 million (2007: £357 million) expires in more than five years. The increase in
2008 is predominantly due to the inclusion of Vodafone Essar facilities totalling
£1,736 million.
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
£42 million (2007: £45 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.
120 Vodafone Group Plc Annual Report 2008
Notes to the Consolidated Financial Statements continued
Vodafone – Financials