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18. LOANS AND OTHER BORROWINGS
2006
£m
2005
a
£m
US dollar 8.875% notes 2030 (minimum 8.625%
b
)
c
1,580 1,413
Sterling 5.75% bonds 2028 607 596
Sterling 3.5% indexed linked notes 2025 291 278
Sterling 8.625% bonds 2020 297 297
Sterling 7.75% notes 2016 (minimum 7.5%
b
)709 692
Euro 7.125% notes 2011 (minimum 6.875%
b
)
c
790 771
US dollar 8.375% notes 2010 (minimum 8.125%
b
)
c
1,713 1,535
US dollar 8.765% bonds 2009
d
120 106
US dollar convertible 2008 (0.75%) –90
US dollar 7% notes 2007
d
624 529
Sterling 7.375% notes 2006 (minimum 7.125%
b
)409 399
Sterling 12.25% bonds 2006 –229
Euro 6.375% notes 2006 (minimum 6.125%
b
)
d
–2,061
US dollar 7.875% notes 2005 (minimum 7.624%
b
)
d
–1,485
Total listed bonds, debentures and notes 7,140 10,481
Finance leases 845 1,100
Commercial paper
c,e
472 –
Sterling bank loans due 2007-2009 (average effective interest rate 9.7%) 240 240
Sterling floating rate note 2005-2009 (average effective interest rate 4.1%) 49 90
Sterling floating rate loan 2006 (average effective interest rate 10.3%) –92
Sterling floating rate loan 2009 (average effective interest rate 4.6%) 1,003 –
Preference shares 5–
Bank overdrafts (of which £171 million had a legally enforceable right of set off – see note 9) 181 2
Total other loans and borrrowings 1,950 424
Total loans and other borrowings 9,935 12,005
aThe group adopted IAS 32 and IAS 39 from 1 April 2005. The group previously recognised the currency value of derivatives against the loans and other borrowings balance. These recognised
amounts have been reclassified in the comparative period as derivative financial instruments. In addition, the underlying borrowing is stated based on previously applied UK GAAP at the amount of
net proceeds adjusted to amortise any discount over the term of the debt (see accounting policies).
bThe 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 minus 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 increasedby
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.
cHedged in a designated cash flow hedge.
dHedged in a designated cash flow and fair value hedge.
eCommercial paper is denominated in sterling (£35 million), US dollar (£66 million) and euro (£371 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 for the current year reflect balances at amortised cost adjusted for deferred and current fair
value adjustments to the relevant loans or borrowing’s 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 2006 are unsecured.
2006 2005
Carrying
amount
£m
Effect of hedging
and interest
a
£m
Principal
repayments at
hedged rates
£m
Carrying
amount
£m
Effect of hedging
and interest
a
£m
Principal
repayments at
hedged rates
£m
Repayments fall due as follows:
Within one year, or on demand 1,940 (190) 1,750 4,261 344 4,605
Between one and two years 1,182 (3) 1,179 788 – 788
Between two and three years 337 – 337 806 43 849
Between three and four years 369 8 377 100 (2) 98
Between four and five years 2,467 55 2,522 258 17 275
After five years 3,628 63 3,691 5,792 289 6,081
Total due for repayment after more than one
year 7,983 123 8,106 7,744 347 8,091
Total repayments 9,923 (67) 9,856 12,005 691 12,696
Fair value adjustments for hedged risk 12 –
Total loans and other borrowings 9,935 12,005
aAdjustment 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.
BT Group plc Annual Report and Form 20-F 2006 Notes to the consolidated financial statements92