16. Loans and other borrowings

         
  2008   2007  
  £m   £m  
Sterling 6.375% bonds 2037b 521   –  
US dollar 9.125% (2007: 9.125%) notes 2030 (minimum 8.625%a)b 1,380   1,398  
Sterling 5.75% bonds 2028 608   608  
Sterling 3.5% indexed linked notes 2025 315   301  
Sterling 8.625% bonds 2020 298   297  
US dollar 5.95% bonds 2018b 563   –  
Sterling 6.625% bonds 2017b 524   –  
Sterling 8.0% (2007: 8.0%) notes 2016 (minimum 7.5%a) 712   712  
Euro 5.25% bonds 2014b 622   –  
Euro 5.25% bonds 2013b 812   –  
US dollar 5.15% bonds 2013b 434   –  
Euro 7.375% (2007: 7.375%) notes 2011 (minimum 6.875%a)b 903   768  
US dollar 8.625% (2007: 8.625%) notes 2010 (minimum 8.125%a)b 1,496   1,515  
US dollar 8.765% bonds 2009c 110   108  
US dollar 7% notes 2007c –   542  
 
Total listed bonds, debentures and notes 9,298   6,249  
 
Finance leases 320   567  
 
Commercial paperb,d 107   794  
Sterling 6.35% bank loan due 2012 312   –  
Sterling 10.4% bank loan due 2009 140   147  
Sterling floating rate note 2008-2009 (average effective interest rate 5.2% (2007: 4.3%))
 36   42  
Sterling floating rate loan 2008-2009 (average effective interest rate 6.7% (2007: 5.5%))
 402   724  
Sterling floating rate loan 2008 (average effective interest rate 6.3%) 351   –  
Sterling floating rate loan 2008 (average effective interest rate 6.4%) 100   –  
Other loans 2008-2012 15   16  
Bank overdrafts (of which £256 million (2007: £49 million) had a legally enforceable right of set off – see note 9)
 261   51  
 
Total other loans and borrowings 1,724   1,774  
 
Total loans and other borrowings 11,342   8,590  
 
a
 The interest rate payable on these notes will be subject to adjustment from time to time if either Moody’s or Standard and Poor’s (S&P) reduces the rating ascribed to the group’s senior unsecured debt below A3 in the case of Moody’s or below A - in the case of S&P. In this event, the interest rate payable on the notes and the spread applicable to the floating notes will be increased by 0.25% for each ratings category adjustment by each rating agency. In addition, if Moody’s or S&P subsequently increase the ratings ascribed to the group’s senior unsecured debt, then the interest rate then payable on notes and the spread applicable to the floating notes will be decreased by 0.25% for each rating category upgrade by each rating agency, but in no event will the interest rate be reduced below the minimum interest rate reflected in the above table.
 
 
 
b
 Hedged in a designated cash flow hedge.
c
 Hedged in a designated cash flow and fair value hedge.
d
 Commercial paper is denominated in Sterling £nil (2007: £25 million) and Euro £107 million (2007: £769 million).

The interest rates payable on loans and borrowings disclosed above reflect the coupons on underlying issued loans and borrowings and not the interest rates achieved through applying associated currency and interest rate swaps in hedge arrangements.
     The carrying values disclosed above reflect balances at amortised cost adjusted for deferred and current fair value adjustments to the relevant loans or borrowings’ hedged risk in a fair value hedge. This does not reflect the final principal repayment that will arise after taking account of the relevant derivatives in hedging relationships which is reflected in the table below. Apart from finance leases all borrowings as at 31 March 2008 and 2007 are unsecured.

        2008         2007  
 
 
        a           a    
  Carrying
amount
£m		   Effect of hedging and interest £m   Principal
repayments
at hedged rates
£m		   Carrying
amount
£m		   Effect of hedging and interest £m   Principal
repayments
at hedged rates
£m		  
Repayments fall due as follows:                        
Within one year, or on demand
 1,524   (264 ) 1,260   2,203   (132 ) 2,071  
Between one and two years 278   22   300   330   1   331  
Between two and three years 2,363   157   2,520   340   21   361  
Between three and four years 12   –   12   2,250   271   2,521  
Between four and five years 1,536   (86 ) 1,450   12   –   12  
After five years 5,626   164   5,790   3,454   242   3,696  
Total due for repayment after more than one year
 9,815   257   10,072   6,386   535   6,921  
 
Total repayments 11,339   (7 ) 11,332   8,589   403   8,992  
Fair value adjustments for hedged risk
 3         1          
 
Total loans and other borrowings 11,342         8,590          
 
a

Adjustment for hedging and interest reflects the impact of the currency element of derivatives and adjusts the repayments to exclude interest recognised in the carrying amount.

As noted above, the principal repayments of loans and borrowings at hedged rates amounted to £11,332 million (2007: £8,992 million). The table below reflects the currency risk, market pricing risk and interest cash flow risk associated with these loans and borrowings after the impact of hedging.

        2008         2007  
 
 
  Fixed rate interest   Floating rate interest   Total   Fixed rate interest   Floating rate interest   Total  
  £m   £m   £m   £m   £m   £m  
Sterling 9,442   1,718   11,160   5,957   2,880   8,837  
Euro –   172   172   –   155   155  
 
Total 9,442   1,890   11,332   5,957   3,035   8,992  
                       
Weighted average effective fixed interest rate Sterling
 8.2%           9.2%          
 

The floating rate loans and borrowings bear interest rates fixed in advance for periods ranging from one day to one year by reference to LIBOR quoted rates.

  2008   2007   2008   2007  
 
 
  Minimum lease payments   Repayment of outstanding lease obligations  
  £m   £m   £m   £m  
Amounts payable under finance leases:                
   Within one year 35   329   19   303  
   In the second to fifth years inclusive 127   123   63   56  
   After five years 450   415   238   208  
 
  612   867   320   567  
Less: future finance charges (292 ) (300 ) –   –  
 
Total finance lease obligations 320   567   320   567  
 

The group’s obligations under finance leases are secured by the lessors’ title to the leased assets.

< Previous  Back to top  Next  >>