Notes to the consolidated financial statements

Non-current borrowings

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31 March

 

2011
£m

2010
£m

Unsecured borrowings

 

 

2,394,000 6.5% cumulative preference shares of £1 each (2010 – £2,394,000) (note a)

2

2

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

57

61

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

200

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

104

106

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

328

346

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

170

176

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

201

200

 

862

1 091

Bank loans

 

 

Variable unsecured loans (US$)

7

6

 

7

6

Other borrowings

 

 

Obligations under finance leases

18

22

 

18

22

Total non-current borrowings

887

1 119

  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

 

2011
£m

2010
£m

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

187

Unsecured bank overdrafts

10

23

Drawdown of committed facilities

139

Short-term unsecured loans

25

25

Obligations under finance leases

5

3

Total current borrowings

227

190

Secured borrowings

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

Fair values

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

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31 March 2011

31 March 2010

 

Book value
£m

Fair value
£m

Book value
£m

Fair value
£m

Non-current unsecured borrowings

862

900

1 091

1 100

Non-current bank loans

7

7

6

6

Other non-current borrowings

18

18

22

22

Other current borrowings

227

229

190

190

Total

1 114

1 154

1 309

1 318

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

 

2011
£m

2010
£m

One to two years

115

203

Two to five years

338

470

After five years

434

446

Total non-current borrowings

887

1 119

Floating rate borrowings bear interest based on relevant national LIBOR equivalents. If the interest rates applicable to the Group’s floating rate debt and cash held as at 31 March 2011 rise by an average of 1% over the year to 31 March 2012, this would increase Group profit before tax by approximately £2 million (2010 – £1 million).

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

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31 March

 

2011

2010

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

6.5%

6.5%

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

0.3%

0.3%

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

5.1%

5.0%

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

3.7%

7.2%

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

3.1%

4.9%

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

5.9%

5.9%

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

4.7%

4.8%

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 £623 million
(2010 – £515 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 2011

31 March 2010

 

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

7

5

5

3

Between one and five years

18

16

20

17

After five years

3

2

7

5

 

28

23

32

25

Less future finance charges

(5)

 

(7)

 

Present value of minimum lease payments

23

 

25

 

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