Vodafone 2014 Annual Report Download - page 141

21. Borrowings
The Group’s sources of borrowing for funding and liquidity purposes come from a range of committed bank
facilities and through short-term and long-term issuances in the capital markets including bond and commercial
paper issues and bank loans. We manage the basis on which we incur interest on debt between xed interest rates
and oating interest rates depending on market conditions using interest rate derivatives. The Group enters into
foreign exchange contracts to mitigate the impact of exchange rate movements on certain monetary items.
Accounting policies
Capital market and bank borrowings
Interest bearing loans and overdrafts are initially measured at fair value (which is equal to cost at inception), and are subsequently measured
at amortised cost, using the effective interest rate method, except where they are identied as a hedged item in a designated hedge relationship.
Any difference between the proceeds net of transaction costs and the amount due on settlement or redemption of borrowings is recognised over
the term of the borrowing.
Carrying value and fair value information
2014
Restated
2013
Short-term Long-term Short-term Long-term
borrowings borrowings Total borrowings borrowings Total
£m £m £m £m £m £m
Financial liabilities measured at amortised cost:
Bank loans 1,263 4,647 5,910 2,440 3,077 5,517
Bank overdrafts 22 –22 25 – 25
Redeemable preference shares ––– – 1,355 1,355
Commercial paper 950 –950 4,054 – 4,054
Bonds 1,783 4,465 6,248 2,133 15,698 17,831
Other liabilities1,2 3,729 110 3,839 3,148 753 3,901
Bonds in designated hedge relationships –12,232 12,232 – 7,021 7,021
7,747 21,454 29,201 11,800 27,904 39,704
Notes:
1 At 31 March 2014, amount includes £1,185 million (2013: £1,151 million) in relation to collateral support agreements.
2 At 31 March 2014, amount includes £882 million (2013: £899 million) in relation to the Piramal Healthcare option disclosed in note 22 “Liquidity and capital resources”.
Bank loans include INR 425 billion of loans held by Vodafone India Limited (‘VIL’) and its subsidiaries (the ‘VIL Group’). The VIL Group has
a number of security arrangements supporting certain licences secured under the terms of agreements between the Group, the Department
of Telecommunications, and the Government of India including certain share pledges of the shares within the VIL Group. The terms and conditions
of the security arrangements mean that should members of the VIL Group not meet all of their loan payment and performance obligations,
the lenders may sell the pledged shares and enforce rights over the certain licences under the terms of the tri-party agreements to recover their
losses, with any remaining sales proceeds being returned to the VIL Group. Each of the eight legal entities within the VIL Group provide cross-
guarantees to the lenders in respect of debt contracted by the other entities.
The fair value and carrying value of the Group’s short-term borrowings is as follows:
Sterling equivalentnominal value Fair value Carrying value
2014
Restated
2013 2014
Restated
2013 2014
Restated
2013
£m £m £m £m £m £m
Financial liabilities measured at amortised cost 5,655 9,385 5,964 9,790 5,964 9,667
Bonds: 1,756 2,094 1,771 2,150 1,783 2,133
Czech koruna oating rate note due June 2013 –18 –18 –18
Euro oating rate note due September 2013 –646 –647 –645
5.0% US dollar 1,000 million bond due
December2013 –658 –679 –678
6.875% euro 1,000 million bond due December 2013 –772 –806 –792
Euro oating rate note due June 2014 929 – 930 – 930 –
4.625% sterling 350 million bond due
September2014 302 – 307 – 315 –
4.625% sterling 525 million bond due
September2014 525 – 534 – 538 –
Short-term borrowings 7,411 11,479 7,735 11,940 7,747 11,800
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