The way ahead? - Vodafone

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162 Vodafone Group Plc Annual Report 2013 Notes to the Company financial statements (continued) 2. Significant accounting policies (continued) Financial instruments Financial assets and financial liabilities, in respect of financial instruments, are recognised on the Company balance sheet when the Company becomes a party to the contractual provisions of the instrument. Financial liabilities and equity instruments Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities and includes no obligation to deliver cash or other financial assets. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. 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 identified as a hedged item in a fair value hedge. Any difference between the proceeds net of transaction costs and the settlement or redemption of borrowings is recognised over the term of the borrowing. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issuance costs. Derivative financial instruments and hedge accounting The Company’s activities expose it to the financial risks of changes in foreign exchange rates and interest rates. The use of financial derivatives is governed by the Group’s policies approved by the Board of directors, which provide written principles on the use of financial derivatives consistent with the Group’s risk management strategy. Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date. The Company designates certain derivatives as hedges of the change of fair value of recognised assets and liabilities (“fair value hedges”). Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, no longer qualifies for hedge accounting or the Company chooses to end the hedging relationship. Fair value hedges The Company’s policy is to use derivative instruments (primarily interest rate swaps) to convert a proportion of its fixed rate debt to floating rates in order to hedge the interest rate risk arising, principally, from capital market borrowings. The Company designates these as fair value hedges of interest rate risk with changes in fair value of the hedging instrument recognised in the profit and loss account for the period together with the changes in the fair value of the hedged item due to the hedged risk, to the extent the hedge is effective. The ineffective portion is recognised immediately in the profit and loss account. Share-based payments The Group operates a number of equity-settled share-based compensation plans for the employees of subsidiaries using the Company’s equity instruments. The fair value of the compensation given in respect of these share-based compensation plans is recognised as a capital contribution to the Company’s subsidiaries over the vesting period. The capital contribution is reduced by any payments received from subsidiaries in respect of these share-based payments. Dividends paid and received Dividends paid and received are included in the Company financial statements in the period in which the related dividends are actually paid or received or, in respect of the Company’s final dividend for the year, approved by shareholders. Pensions The Company is the sponsoring employer of the Vodafone Group pension scheme, a defined benefit pension scheme. The Company is unable to identify its share of the underlying assets and liabilities of the Vodafone Group pension scheme on a consistent and reasonable basis. Therefore, the Company has applied the guidance within FRS 17 to account for defined benefit schemes as if they were defined contribution schemes and recognise only the contribution payable each year. The Company had no contributions payable for the years ended 31 March 2013 and 31 March 2012.
Overview 3. Fixed assets Shares in Group undertakings Cost: 1 April 2012 70,667 Additions 161 Capital contributions arising from share-based payments 134 Contributions received in relation to share-based payments (246) 31 March 2013 70,716 Amounts provided for: 1 April 2012 and 31 March 2013 5,631 Net book value: 31 March 2012 65,036 31 March 2013 65,085 At 31 March 2013 the Company had the following principal subsidiary: Name Principal activity Country of incorporation £m Percentage shareholding Vodafone European Investments Holding company England 100 4. Debtors 2013 2012 £m £m Amounts falling due within one year: Amounts owed by subsidiaries 163,238 145,200 Taxation recoverable 126 207 Other debtors 184 177 163,548 145,584 Amounts falling due after more than one year: Deferred taxation 1 2 Other debtors 2,693 2,441 2,694 2,443 5. Other investments 2013 2012 £m £m Investments 117 49 6. Creditors Business review Performance Governance Financials Additional information 163 Vodafone Group Plc Annual Report 2013 2013 2012 £m £m Amounts falling due within one year: Bank loans and other loans 7,474 4,576 Amounts owed to subsidiaries 104,872 94,432 Other creditors 242 127 Accruals and deferred income 1,042 1,136 113,630 100,271 Amounts falling due after more than one year: Other loans 24,594 20,821 Other creditors 912 763 25,506 21,584 Included in amounts falling due after more than one year are other loans of £11,008 million, which are due in more than five years from 1 April 2013 and are payable otherwise than by instalments. Interest payable on these loans ranges from 2.5% to 8.125%.
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The way ahead? - Vodafone

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