Marks and Spencer 2011 Annual Report Download - page 99

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Strategy Performance & Marketplace Operating review Financial review Governance
Financial statements
& other information
To find out more visit marksandspencer.com/annualreport2011
97
Financial statements
22 Borrowings and other financial liabilities
2011
£m
2010
£m
Current
Bank loans and overdrafts1 274.8 249.5
Syndicated bank facility2 –219.8
6.375% £308m medium-term notes 20113 315.1 –
Finance lease liabilities 12.4 13.6
602.3 482.9
Non-current
Bank loans 14.3 17.9
6.375% £308m medium-term notes 20113 –314.6
5.875% £267m medium-term notes 20123 280.2 279.9
5.625% £400m medium-term notes 20143 399.7 399.5
6.250% US$500m medium-term notes 20174 316.8 333.8
6.125% £400m medium-term notes 20193 404.7 403.5
7.125% US$300m medium-term notes 20374 189.3 199.6
6.875% £250m puttable callable reset medium-term notes 20373,5 253.2 253.0
Finance lease liabilities 65.9 76.2
1,924.1 2,278.0
Total 2,526.4 2,760.9
1Bank loans and overdrafts includes a £5.0m (last year £5.0m) loan from the Hedge End Park Limited joint venture (see notes 17 and 30).
2Relates to a £1.2bn committed bank revolving credit facility set to mature on 26 March 2013.
3These notes are issued under Marks and Spencer plc’s £3bn European medium-term note programme and all pay interest annually.
4Interest on these bonds is payable semi-annually.
5These notes include an investor put and issuer call option exercisable in December 2012.
Finance leases
The minimum lease payments under finance leases fall due as shown in the table on the following page. It is the Group’s policy to lease
certain of its properties and equipment under finance leases. The average lease term for equipment is six years (last year six years) and
125 years (last year 125 years) for property. Interest rates are fixed at the contract rate. All leases are on a fixed repayment basis and no
arrangements have been entered into for contingent payments. The Group’s obligations under finance leases are secured by the
lessors’ charges over the leased assets.
23 Financial instruments
Treasury policy and financial risk management
The Group operates a centralised treasury function to manage the Group’s funding requirements and financial risks in line with the
Board approved treasury policies and procedures, and their delegated authorities.
The Group’s financial instruments, other than derivatives, comprise borrowings, cash and liquid resources and various items, such as
trade receivables and trade payables, that arise directly from its operations. The main purpose of these financial instruments is to
finance the Group’s operations.
Group treasury also enters into derivative transactions, principally interest rate and currency swaps and forward currency contracts.
The purpose of these transactions is to manage the interest rate and currency risks arising from the Group’s operations and financing.
It remains the Group’s policy not to hold or issue financial instruments for trading purposes, except where financial constraints
necessitate the need to liquidate any outstanding investments. The treasury function is managed as a cost centre and does not engage
in speculative trading.
The principal financial risks faced by the Group are liquidity/funding, interest rate, foreign currency and counterparty risks. The policies
and strategies for managing these risks are summarised :
on the following pages