Vodafone Group Plc Annual Report for the year ended 31 March 2012

Vodafone Group Plc
Annual Report 2012
109
5. Investment income and financing costs
2012 2011 2010
£m £m £m
Investment income:
Available-for-sale investments:
Dividends received 2 83 145
Loans and receivables at amortised cost 168 339 423
Gain on settlement of loans and receivables 1 – 472 –
Fair value through the income statement (held for trading):
Derivatives – foreign exchange contracts 121 38 3
Other 2 165 263 92
Equity put rights and similar arrangements 3 – 114 53
456 1,309 716
Financing costs:
Items in hedge relationships:
Other loans 211 746 888
Interest rate swaps (178) (338) (464)
Dividends on redeemable preference shares 56 58 56
Fair value hedging instrument (539) (47) 228
Fair value of hedged item 511 40 (183)
Cash flow hedges transferred from equity – 17 82
Other financial liabilities held at amortised cost:
Bank loans and overdrafts 4 769 629 591
Other loans 2 785 121 185
Potential interest credit on settlement of tax issues 5 (9) (826) (178)
Equity put rights and similar arrangements 2 3 81 19 94
Finance leases 1 9 7
Fair value through the income statement (held for trading):
Derivatives – forward starting swaps and futures 244 1 206
1,932 429 1,512
Net financing costs/(investment income) 1,476 (880) 796
Notes:
1 Gain on settlement of loans and receivables issued by SoftBank Mobile Corp.
2 Amounts for 2012 include net foreign exchange gains of £55 million (2011: £405 million gain; 2010 £78 million loss) arising from net investments in foreign operations, investments held following the disposal of Vodafone
Japan to SoftBank Corp. and net foreign exchange movements on certain intercompany balances.
3 Includes amounts in relation to the Group’s arrangements with its minority partners in India.
4 The Group capitalised £25 million of interest expense in the year (2011: £138 million; 2010: £1 million). The interest rate used to determine the amount of borrowing costs eligible for capitalisation was 5.0%.
5 Amounts for 2012, 2011 and 2010 include a reduction of the provision for potential interest on tax issues.
6. Taxation
Income tax expense
2012 2011 2010
£m £m £m
United Kingdom corporation tax (income)/expense:
Current year – 141 40
Adjustments in respect of prior years (4) (5) (4)
(4) 136 36
Overseas current tax expense/(income):
Current year 2,440 2,152 2,377
Adjustments in respect of prior years (231) (477) (1,718)
2,209 1,675 659
Total current tax expense 2,205 1,811 695
Deferred tax on origination and reversal of temporary differences:
United Kingdom deferred tax (8) (275) (166)
Overseas deferred tax 349 92 (473)
Total deferred tax expense/(income) 341 (183) (639)
Total income tax expense 2,546 1,628 56
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