Notes to the consolidated financial statements

Non-current borrowings

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31 March

 

2010
£m

2009
£m

Unsecured borrowings

 

 

2,394,000 6.5% cumulative preference shares of £1 each (2009 – £2,394,000) (note a)

2

2

Industrial Revenue Bonds 2016-2036 (US$92,000,000)

61

64

6.125% Guaranteed Notes 2011 (US$300,000,000)

200

214

6.5% Guaranteed Notes 2012 (£100,000,000) (note b)

106

215

5.0% Guaranteed Notes 2014 (US$500,000,000)

346

366

6.625% Guaranteed Notes 2016 (US$250,000,000)

176

189

6.75% Guaranteed Notes 2019 (£200,000,000)

200

 

1 091

1 050

Bank loans

 

 

Variable unsecured loans (US$)

6

7

Variable unsecured loans (euro)

47

 

6

54

Other borrowings

 

 

Obligations under finance leases

22

25

 

22

25

Total non-current borrowings

1 119

1 129

  1. (a)On a return of capital on a winding-up, the holders of 6.5% cumulative preference shares shall be entitled to £1 per share, in preference to all other classes of shareholders. Holders of these shares are entitled to vote at meetings, except on the following matters: any question as to the disposal of the surplus profits after the dividend on these shares has been provided for; the election of directors; their remuneration; any agreement between the directors and the Company; or the alteration of the Articles of Association dealing with any such matters.
  2. (b)During the year ended 31 March 2010, the Group redeemed £100 million of the 6.5% Guaranteed Notes maturing in June 2012.

Current borrowings

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31 March

 

2010
£m

2009
£m

Unsecured bank overdrafts

23

23

Drawdown of committed facilities

139

257

Receivables securitisation

98

Short-term unsecured loans

25

141

Current portion of non-current borrowings

1

Obligations under finance leases

3

3

Total current borrowings

190

523

Secured borrowings

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Other secured borrowings are secured on receivables and inventories.

Fair values

The fair values of the Group’s borrowings compared with their book values are as follows:

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31 March 2010

31 March 2009

 

Book value
£m

Fair value
£m

Book value
£m

Fair value
£m

Unsecured borrowings

1 091

1 090

1 050

1 127

Non-current bank loans

6

6

54

54

Other non-current borrowings

22

22

25

25

Other current borrowings

190

190

523

523

Total

1 309

1 308

1 652

1 729

The fair value of borrowings has been determined using either quoted market prices, broker dealer quotations or discounted cash flow analysis.

Interest rate risks and maturity of borrowings

The maturity profile of the Group’s non-current borrowings is as follows:

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31 March

 

2010
£m

2009
£m

One to two years

203

49

Two to five years

470

446

After five years

446

634

Total non-current borrowings

1 119

1 129

Floating rate borrowings bear interest based on relevant national LIBOR equivalents. If the interest rates applicable to the Group’s floating rate debt rise from the levels at 31 March 2010 by an average of 1% over the year to 31 March 2011, this would reduce Group profit before tax by approximately £1 million (2009 – £4 million).

Previously, as part of its interest rate management strategy, the Group had entered into interest rate caps. At 31 March 2009, the notional principal amount of these caps was £109 million, capping interest rates at 4%. These caps matured during the year ended 31 March 2010.

Taking into account the Group’s interest rate swap and cap contracts, the effective interest rates of its borrowings are as follows:

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31 March

 

2010

2009

2,394,000 6.5% cumulative preference shares of £1 each

6.5%

6.5%

Industrial Revenue Bonds 2016–2036 (US$92,000,000)

0.8%

0.8%

6.125% Guaranteed Notes 2011 (US$300,000,000)

5.4%

5.0%

6.5% Guaranteed Notes 2012 (£100,000,000)

4.9%

4.2%

5.0% Guaranteed Notes 2014 (US$500,000,000)

5.0%

4.9%

6.625% Guaranteed Notes 2016 (US$250,000,000)

5.9%

6.0%

6.75% Guaranteed Notes 2019 (£200,000,000)

4.5%

n/a

Short-term loans and overdrafts

Current short-term loans mature within the next 12 months and overdrafts are repayable on demand. Both short-term loans and bank overdrafts are arranged at floating rates of interest and expose the Group to cash flow interest rate risk.

Credit facilities and arrangements

The Group has an undrawn committed multi-currency facility of £515 million (2009 – £524 million), which matures in October 2012. This facility incurs commitment fees at market rates prevailing when the facility was arranged. The facility may only be withdrawn in the event of specified events of default. In addition, the Group has substantial uncommitted facilities.

Finance lease commitments

Amounts payable under finance lease commitments are as follows:

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31 March 2010

31 March 2009

 

Minimum lease payments
£m

Present value of minimum lease payments
£m

Minimum lease payments
£m

Present value of minimum lease payments
£m

Within one year

5

3

5

3

Between one and five years

20

17

21

17

After five years

7

5

12

8

 

32

25

38

28

Less future finance charges

(7)

 

(10)

 

Present value of minimum lease payments

25

 

28

 

Finance lease agreements allow for renewal at the end of the original ten-year lease term at the option of the Group.