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Debt detail and evolution

Leverage Ratio

The leverage ratio (net debt over OIBDA) for the last 12 months stood at 2.47 times at the end of June 2014, and at 2.43 times including post-closing transactions (disposal of T. Ireland).

January-June 2014 Net Financial Debt Evolution

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Net financial debt and commitments

Unaudited figures (Euros in millions)

June 2014

- Nota:

- 2014 reported figures include the hyperinflationary adjustments in Venezuela.

(1) Includes "Non current interest-bearing debt" and 1,139 million euros of "Non-current trade and other payables".

(2) Includes "Current interest-bearing debt" and 118 million euros of "Other current payables".

(3) Includes 2,869 million euros of "Current financial assets" and 4,199 million euros of "Non-current financial assets".

(4) Mainly in Spain. This amount is detailed in the captions "Long-term provisions" and "Short-term provisions and other liabilities" of the Statement of Financial Position, and is the result of adding the following items: "Provision for Pre-retirement, Social Security Expenses and Voluntary Severance", "Group Insurance", "Technical Reserves", and "Provisions for Pension Funds of Other Companies".

(5) Amount included in the caption "Non-current financial assets" of the Statement of Financial Position. Mostly related to investments in fixed income securities and long-term deposits that cover the materialization of technical reserves of the Group insurance companies.

(6) Net present value of tax benefits arising from the future payments related to actual workforce reduction commitments.

(7) Calculated based on the last 12 months OIBDA, excluding gains/losses on the sale of companies.

Long-term debt (1) 51,498
Short term debt including current maturities (2) 9,492
Cash and cash equivalents (10,131)
Short and Long-term financial investments (3) (7,068)
(A) Net Financial Debt 43,791
Gross commitments related to workforce reduction (4) 4,064
Value of associated Long-term assets (5) (789)
Taxes receivable (6) (1,298)
(B) Net commitments related to workforce reduction 1,978
(A+B) Total Debt + Commitments 45,769
Net Financial Debt / OIBDA (7) 2.47x

Financing Activity

In In the first half of 2014, Telefónica's financing activity through bond and loan markets stood at around 9,880 million equivalent euros. This activity was mainly focused on strengthening the liquidity position, actively managing the cost of debt and smoothing the debt maturity profile of Telefónica S.A. for the following years. Therefore, as of the end of June, the Group maintains a comfortable liquidity position to accommodate the next debt maturities. In Hispanoamérica, Telefónica's subsidiaries tapped financing markets for approximately 151 million equivalent euros in the January-June period. Also noteworthy is the 500 million euro bond placement by T. Deutschland in January.

Telefónica S.A. and its holding companies have remained active under the various Commercial Paper Programmes (Domestic and European), with an outstanding balance of approximately 1,687 million euros at the end of June.

Telefónica maintains total undrawn committed credit lines with different credit entities for an approximate amount of 12,083 million euros, with around 10,763 million euros maturing in more than 12 months, which, together with the cash position, increases liquidity to 22.2 billion euros.

Financial Debt

Unaudited figures (Euros in millions)

June 2014
Bonds and commercial paper Debt with financial institutions Other financial debt (including governments) and net derivatives
Total financial liabilities 74% 21% 5%

Unaudited figures (Euros in millions)

June 2014
Debt structure by currency 77% 13% 6% 3%

Financial Expenses

Net financial expenses amounted to 1,380 million euros in the first six months, of which 137 million euros were due to net negative foreign exchange differences primarily as a result of the implicit devaluation of the Venezuelan bolivar. Excluding this effect, net financial expenses fell 8.0% year-on-year due to a 15.3% reduction in average debt and an improvement in credit spreads. The effective cost of debt over the last twelve months was 5.58%, 24 basis points higher than in December 2013, as most of the average debt reduction has been in euros and Czech crowns (with below average costs).

NOTE: For further information, please access the January – June 2014 Results Report

View Quarterly Report PDF document [761 KB]