Vodafone 2013 Annual Report Download - page 105

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6. Investment income and nancing costs
Investment income is mainly comprised of interest received from short-term investments in money market
funds, external bank deposits and government bonds and gains from foreign exchange contracts used
to mitigate the impact of exchange rate movements on our net debt. Financing costs mainly arise from interest
due on bonds and commercial paper issued, external bank loans and the results of hedging transactions used
to manage the impact on the Group of foreign exchange and interest rate movements.
2013 20122011
£m £m £m
Investment income:
Available-for-sale investments:
Dividends received 2 2 83
Loans and receivables at amortised cost 124 168339
Gain on settlement of loans and receivables1– – 472
Fair value through the income statement (held for trading):
Derivatives – foreign exchange contracts 115 12138
Other264 165263
Equity put rights and similar arrangements3–– 114
305 4561,309
Financing costs:
Items in hedge relationships:
Other loans 228 211 746
Interest rate swaps (184) (178) (338)
Dividends on redeemable preference shares 57 5658
Fair value hedging instrument (81) (539) (47)
Fair value of hedged item 112 51140
Cash ow hedges transferred from equity – – 17
Other nancial liabilities held at amortised cost:
Bank loans and overdrafts4720 769629
Other loans2736 785121
Interest credit on settlement of tax issues5(92) (9) (826)
Equity put rights and similar arrangements3136 8119
Finance leases – 1 9
Fair value through the income statement (held for trading):
Derivatives – forward starting swaps and futures 105 2441
Other251 – –
1,788 1,932 429
Net nancing costs/(investment income) 1,483 1,476(880)
Notes:
1 Gain on settlement of loans and receivables issued by SoftBank Mobile Corp.
2 Amounts for 2013 include net foreign exchange losses of £91 million (2012: £55 million gain; 2011 £405 million gain) arising from net foreign exchange movements on certain intercompany balances. Amounts for 2012 and
2011 include foreign exchange gains arising on investments held following the disposal of Vodafone Japan to SoftBank Corp.
3 Includes amounts in relation to the Group’s arrangements with its non-controlling interest partners in India.
4 The Group capitalised £8 million of interest expense in the year (2012: £25 million; 2011: £38 million). The interest rate used to determine the amount of borrowing costs eligible for capitalisation was 5.6%.
5 Amounts for 2013, 2012 and 2011 include a reduction of the provision for potential interest on tax issues.
103 Vodafone Group Plc
Annual Report 2013
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