Marks and Spencer 2008 Annual Report Download - page 82

80 MARKS AND SPENCER GROUP PLC
Notes to the financial statements
continued
21 Borrowings and other financial liabilities
2008 2007
£m £m
Current
Bank loans, overdrafts and commercial paper1257.4 159.7
Syndicated bank facility2615.0 296.9
Finance lease liabilities 6.2 4.4
878.6 461.0
Partnership liability to the Marks & Spencer UK Pension Scheme 50.0 –
928.6 461.0
Non-current
6.375% £375m medium term notes 20113382.0 381.3
5.875% £400m medium term notes 20123421.4 397.5
5.625% £400m medium term notes 20143398.8 398.5
6.250% US$500m medium term notes 20174253.0 –
7.125% US$300m medium term notes 20374151.1 –
6.875% £250m puttable callable reset medium term notes 20373, 5 252.9 –
Finance lease liabilities 77.3 57.2
1,936.5 1,234.5
Partnership liability to the Marks & Spencer UK Pension Scheme 673.2 496.9
2,609.7 1,731.4
Total 3,538.3 2,192.4
1 Bank loans, overdrafts and commercial paper includes a £5.0m (last year £5.0m) loan from the Hedge End Park Limited joint venture (see note 16).
2 Relates to a £1.2bn committed bank revolving credit facility set to mature on 26 March 2013.
3 These notes are issued under Marks and Spencer plc’s £3bn European Medium Term Note Programme and all pay interest annually.
4 Interest on these bonds is payable semi-annually.
5 These notes include an investor put and issuer call option exercisable in December 2012.
During the year the Group issued new bonds totalling £638m in both the US$ and sterling debt capital markets. On 6 December
2007 the Group issued under rule 144A of the U.S. Securities Act US$500m of notes out to 2017 and US$300m of notes out to
2037 at fixed rates of 6.250% and 7.125% respectively. These notes have been swapped back into sterling proceeds and pay
fixed sterling rates of 7.034% and 7.238% respectively. These cross currency swaps have been designated as cash flow hedges
in relation to the US$ notes.
In addition on 13 December 2007 the Group issued £250m of puttable callable reset notes at a coupon rate of 6.875%. The
Group’s right of call within these notes can be assigned which provides a discount of 0.75% per annum until December 2012,
giving a net interest rate for the first five years of 6.125%. If called at that date, these notes will continue to exist until December
2037 at an underlying rate of 4.54% plus the applicable credit spread at that time.
At year end, the Group had a committed syndicated bank revolving credit facility of £1.2bn set to mature on 26 March 2013.
This facility contains only one financial covenant being the ratio of earnings before interest, tax, depreciation, amortisation
and rents payable to interest plus rents payable. In addition the Group entered into a £400m credit agreement set to expire
on 13 February 2009 with an option to term out for a further year. This facility has the same financial covenant as the main
£1.2bn facility. The Group also has a number of undrawn uncommitted facilities available to it. At year end, these amounted
to £155m (last year £155m), all of which are due to be reviewed within a year. At the balance sheet date a sterling equivalent
of £615m (last year £297m) was drawn under the committed facilities and a further £29m (last year £19m) was drawn under
the uncommitted facilities.
Finance leases
The minimum lease payments under finance leases fall due as shown in the table opposite. It is the Group’s policy to lease certain
of its properties and equipment under finance leases. The average lease term for equipment is five years and 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.