Net debt
Net debt was £13.7 billion at 31 March 2014 and includes liabilities for amounts payable under the domination agreement in relation to Kabel Deutschland (£1.4 billion) and deferred spectrum licence costs in India (£1.5 billion). This decreased by £11.7 billion in the year as the proceeds from the disposal of the US sub-group including our interest in Verizon Wireless, positive free cash flow and favourable foreign exchange movements more than offset the impact of the acquisition of Kabel Deutschland, payments for licences and spectrum, equity shareholder dividends, the return of value and share buybacks.
Net debt represented 23.5% of our market capitalisation at 31 March 2014 compared to 27.8% at 31 March 2013. Average net debt at month end accounting dates over the 12 month period ended 31 March 2014 was £22.9 billion and ranged between net debt of £30.4 billion and a net surplus of funds of £2.7 billion.
Our consolidated net debt position at 31 March was as follows:
2014 Restated
2013
£m £m
Cash and cash equivalents 10,134 7,531
Short-term borrowings
Bonds (1,783) (2,133)
Commercial paper1 (950) (4,054)
Put options over non-controlling interests (2,330) (938)
Bank loans (1,263) (2,438)
Other short-term borrowings2 (1,421) (2,237)
(7,747) (11,800) Long-term borrowings
Put options over non-controlling interests (6) (77)
Bonds, loans and other long-term borrowings (21,448) (27,827)
(21,454) (27,904)
Other financial instruments3 5,367 6,819
Net debt (13,700) (25,354)
Notes:
1 At 31 March 2014 US$578 million was drawn under the US commercial paper programme and €731 million was drawn under the euro commercial paper programme.
2 At 31 March 2014 the amount includes £1,185 million (2013: £1,151 million) in relation to cash received under collateral support agreements.
3 Comprises mark-to-market adjustments on derivative financial instruments which are included as a component of trade and other receivables (2014: £2,443 million; 2013: £3,032 million) and trade and other payables (2014: £881 million; 2013: £1,101 million) and short-term investments primarily in index linked government bonds and managed investment funds included as a component of other investments (2014: £3,805 million;
2013: £4,888 million).
22. Liquidity and capital resources (continued)
At 31 March 2014 we had £10,134 million of cash and cash equivalents which are held in accordance with the counterparty and settlement risk limits of the Board approved treasury policy. The main forms of liquid investment at 31 March 2014 were managed investment funds, money market funds, UK index linked government bonds, tri-party repurchase agreements and bank deposits.
The cash received from collateral support agreements mainly reflects the value of our interest rate swap portfolio which is substantially net present value positive. See note 23 for further details on these agreements.
Commercial paper programmes
We currently have US and euro commercial paper programmes of US$15 billion and £5 billion respectively which are available to be used to meet short-term liquidity requirements. At 31 March 2014 amounts external to the Group of €731 million (£604 million) were drawn under the euro commercial paper programme and US$578 million (£346 million) were drawn down under the US commercial paper programme, with such funds being provided by counterparties external to the Group. At 31 March 2013 amounts external to the Group of €2,006 million (£1,693 million), US$35 million (£23 million), £10 million and JPY 5 billion (£35 million) were drawn under the euro commercial paper programme and US$3,484 million (£2,293 million) was drawn down under the US commercial paper programme. The commercial paper facilities were supported by US$4.2 billion (£2.5 billion) and €3.9 billion (£3.2 billion) of syndicated committed bank facilities (see “Committed facilities” opposite).
No amounts had been drawn under either bank facility.
Bonds
We have a €30 billion euro medium-term note programme and a US shelf programme which are used to meet medium to long-term funding requirements. At 31 March 2014 the total amounts in issue under these programmes split by currency were US$14.6 billion, £2.6 billion and
€6.2 billion.
At 31 March 2014 we had bonds outstanding with a nominal value of £16,979 million (2013: £22,837 million). No bonds were issued in the year ended 31 March 2014.
Share buyback programmes
Following the receipt of a US$3.8 billion (£2.4 billion) dividend from Verizon Wireless in December 2012, we initiated a £1.5 billion share buyback programme under the authority granted by our shareholders at the 2012 annual general meeting. The Group placed irrevocable purchase instructions to enable shares to be repurchased on our behalf when we may otherwise have been prohibited from buying in the market. The share buyback programme concluded at the end of June 2013.
Details of the shares purchased under the programme, including those purchased under irrevocable instructions, are shown below:
Number of shares purchased1, 4
Average price paid per share inclusive of transaction costs
Total number of shares purchased under publicly announced share buyback programme2
Maximum value of shares that may yet be purchased under the programme3
Date of share purchase ’000 Pence ’000 £m
April 2013 43,000 192.54 314,651 968
May 2013 204,750 196.09 519,401 567
June 2013 304,300 180.52 823,701 –
Total 552,050 187.23 823,701 –
Notes:
1 The nominal value of shares purchased is 113/7 US cents each.
2 No shares were purchased outside the publicly announced share buyback programme.
3 In accordance with authorities granted by shareholders in general meeting.
4 The total number of shares purchased represents 1.1% of our issued share capital, excluding treasury shares, at the end of June 2013.
The Group held a maximum of 5,099 million shares during the year which represents 9.5% of issued share capital at that time.
Notes to the consolidated financial statements (continued)
Committed facilities
In aggregate we have committed facilities of approximately £10,033 million, of which £6,530 million was undrawn and £3,503 million was drawn at 31 March 2014. The following table summarises the committed bank facilities available to us at 31 March 2014.
Committed bank facilities Amounts drawn Terms and conditions
28 March 2014
€3.9 billion syndicated revolving credit facility, maturing 28 March 2019.
No drawings have been made against this facility. The facility supports our commercial paper programmes and may be used for general corporate purposes including acquisitions.
Lenders have the right, but not the obligation, to cancel their commitments and have outstanding advances repaid no sooner than 30 days after notification of a change of control. This is in addition to the rights of lenders to cancel their commitment if we commit an event of default; however, it should be noted that a material adverse change clause does not apply.
The euro facility agreements provide for certain structural changes that do not affect the obligations to be specifically excluded from the definition of a change of control.
The facility matures on 28 March 2019, with each lender having the option to (i) extend the Facility for a further year prior to the first anniversary of the Facility and should such extension be exercised, to (ii) extend the Facility for a further year prior to the second anniversary of the Facility, in both cases if requested by the Company.
9 March 2011
US$4.2 billion syndicated revolving credit facility, with US$0.1 billion maturing 9 March 2016 and US$4.1 billion maturing 9 March 2017.
No drawings have been made against this facility. The facility supports our commercial paper programmes and may be used for general corporate purposes including acquisitions.
27 November 2013
£0.5 billion loan facility, maturing on the seven year anniversary of the first drawing.
This facility is undrawn and has an availability period of eighteen months.
The facility is available to finance a project to upgrade and expand the network in the UK and Ireland.
As the syndicated revolving credit facilities with the addition that, should our UK and Irish operating companies spend less than the equivalent of
£0.9 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.
28 July 2008
€0.4 billion loan facility, maturing 12 August 2015.
This facility was drawn down in full on 12 August 2008.
As the syndicated revolving credit facilities with the addition that, should our Italian operating company spend less than the equivalent of
€1.5 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 18% of the capital expenditure.
15 September 2009
€0.4 billion loan facility, maturing 30 July 2017, for the German virtual digital subscriber line (‘VDSL’) project.
This facility was drawn down in full on 30 July 2010.
As the syndicated revolving credit facilities with the addition that, should our German operating company spend less than the equivalent of
€0.8 billion on VDSL related capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the VDSL capital expenditure.
This facility is fully drawn down and is amortising.
As the syndicated revolving credit facilities with the addition that the Company was permitted to draw down under the facility based upon the eligible spend with Ericsson up until the final draw down date of 30 June 2011. Quarterly repayments of the drawn balance commenced on 30 June 2012 with a final maturity date of 19 September 2018.
8 December 2011
€0.4 billion loan facility, maturing on the seven year anniversary of the first drawing.
This facility was drawn down in full
on 5 June 2013. As the syndicated revolving credit facilities with the addition that, should our Italian operating company spend less than the equivalent of
€1.3 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.
20 December 2011
€0.3 billion loan facility, maturing 18 September 2019.
This facility was drawn down in full on 18 September 2012.
As the syndicated revolving credit facilities with the addition that, should our Turkish and Romanian operating companies spend less than the equivalent of €1.3 billion on capital expenditure, we will be required to repay the drawn amount of the facility that exceeds 50% of the capital expenditure.
4 March 2013
€0.1 billion loan facility,
maturing 4 December 2020. This facility was drawn down in full on 4 December 2013.
22. Liquidity and capital resources (continued)
Furthermore, certain of our subsidiaries are funded by external facilities which are non-recourse to any member of the Group other than the borrower. These facilities may only be used to fund their operations. At 31 March 2014 Vodafone India had facilities of INR 207 billion (£2.1 billion) of which INR 179 billion (£1.8 billion) was drawn. Vodafone Egypt had an undrawn revolving credit facility of US$120 million (£71 million) . Vodacom had fully drawn facilities of ZAR 1.0 billion (£57 million) and US$37 million (£22 million). Ghana had a facility of US$217 million (£130 million) which was fully drawn.
We believe that we have sufficient funding for our expected working capital requirements for at least the next 12 months. Further details regarding the maturity, currency and interest rates of the Group’s gross borrowings at 31 March 2014 are included in note 21 “Borrowings”.
Dividends from associates and to non-controlling shareholders
Dividends from our associates are generally paid at the discretion of the Board of directors or shareholders of the individual operating and holding companies and we have no rights to receive dividends except where specified within certain of the Group’s shareholders’ agreements. Similarly, other than ongoing dividend obligations to the KDG minority shareholders should they continue to hold their minority stake, we do not have existing obligations under shareholders’ agreements to pay dividends to non-controlling interest partners of our subsidiaries or joint ventures.
The amount of dividends received and paid in the year are disclosed in the consolidated statement of cash flows.
Potential cash outflows from option agreements and similar arrangements
In respect of our interest in Vodafone India Limited (‘VIL’), Piramal Healthcare (‘Piramal’) acquired approximately 11% shareholding in VIL from Essar during the 2012 financial year. In April 2014 Piramal sold its total shareholding in VIL to Vodafone Group. The combined consideration for these shares and the indirect equity interest held by Analjit Singh and Neelu Analjit Singh (completed in March 2014) was £1.0 billion.
Under the terms of the sale and purchase agreement governing the disposal of the US Group, including the 45% interest in Verizon Wireless, the Group retains the responsibility for any tax liabilities of the US Group, excluding those relating to the Verizon Wireless partnership, for periods up to the completion of the transaction on 21 February 2014.
Off-balance sheet arrangements
We do not have any material off-balance sheet arrangements as defined in item 5.E.2. of the SEC’s Form 20-F. Please refer to notes 29 and 30 for a discussion of our commitments and contingent liabilities.