Marks and Spencer 2012 Annual Report Download - page 99

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Financial statements Marks and Spencer Group plc Annual report and financial statements 2012 97
Overview Strategic review Financial review Governance Financial statements and other information
20 Borrowings and other financial liabilities
2012
£m
2011
£m
Current
Bank loans and overdrafts138.4 274.8
6.375% £308m medium-term notes 20112 – 315.1
5.875% £267m medium-term notes 20122280.6 –
Finance lease liabilities 8.7 12.4
327.7 602.3
Non-current
Bank loans 0.3 14.3
5.875% £267m medium-term notes 20122–280.2
5.625% £400m medium-term notes 20142399.9 399.7
6.250% US$500m medium-term notes 20173317.8 316.8
6.125% £400m medium-term notes 20192428.5 404.7
6.125% £300m medium-term notes 20212301.6 –
7.125% US$300m medium-term notes 20373189.9 189.3
6.875% £250m puttable callable reset medium-term notes 20372,4 253.3 253.2
Finance lease liabilities 56.8 65.9
1,948.1 1,924.1
Total 2,275.8 2,526.4
1 Bank loans and overdrafts includes a £5.0m (last year £5.0m) loan from the Hedge End Park Limited joint venture (see note 28).
2 These notes are issued under Marks and Spencer plc’s £3bn European medium-term note programme and all pay interest annually.
3 Interest on these bonds is payable semi-annually.
4 These 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 five 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.
21 Financial instruments
Treasury policy
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.
The Group treasury function 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.