Marks and Spencer 2013 Annual Report Download - page 104

Download and view the complete annual report

Please find page 104 of the 2013 Marks and Spencer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 120

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

Financial statements Marks and Spencer Group plc Annual report and financial statements 2013 102
Notes to the financial statements continued
21 Financial instruments continued
Financial risk management
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:
(a) Liquidity/funding risk
The risk that the Group could be unable to settle or meet its obligations at a reasonable price as they fall due:
–The Group’s funding strategy ensures a mix of funding sources offering flexibility and cost effectiveness to match the
requirements of the Group.
–Operating subsidiaries are financed by a combination of retained profits, bank borrowings, medium-term notes and committed
syndicated bank facilities.
At year end, the Group had a committed syndicated bank revolving credit facility of £1.325bn set to mature on 29 September 2017.
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. The covenant is measured semi-annually. The Group also has a number of undrawn
uncommitted facilities available to it. At year end, these amounted to £105m (last year £105m), all of which are due to be reviewed
within a year. At the balance sheet date a sterling equivalent of £81m (last year £nil) was drawn under the committed facilities and
£nil (last year £nil) was drawn under the uncommitted facilities.
In addition to the existing borrowings, the Group has a euro medium-term note programme of £3bn, of which £1.5bn (last year
£1.6bn) was in issuance as at the balance sheet date.
The 5.875% £267m bond was repaid in May 2012. A new 4.75% £400m bond was issued under the programme in December
2012 maturing in June 2025.
The contractual maturity of the Group’s non-derivative financial liabilities (excluding trade and other payables (see note 19)) and
derivatives is as follows:
Bank loans
and
overdrafts
£m
Syndicated
bank
facility
£m
Medium-term
notes
£m
Finance
lease
liabilities
£m
Partnership
liability to
the Marks
& Spencer
UK pension
scheme
£m
Total
borrowings
and other
financial
liabilities
£m
Derivative
assets
£m
Derivative
liabilities
£m
Total
£m
Timing of cash flows
Within one year (38.4) – (398.5) (11.8) (71.9) (520.6) 1,540.1 (1,529.4) 10.7
Between one and two years (0.3) – (517.1) (8.8) – (526.2) 163.6 (161.9) 1.7
Between two and five years – – (283.8) (9.2) – (293.0) 110.5 (103.3) 7.2
More than five years – – (2,310.9) (192.1) – (2,503.0) 804.6 (841.8) (37.2)
(38.7) – (3,510.3) (221.9) (71.9) (3,842.8) 2,618.8 (2,636.4) (17.6)
Effect of discounting and foreign exchange – – 1,338.7 156.4 – 1,495.1
At 31 March 2012 (38.7) – (2,171.6) (65.5) (71.9) (2,347.7)
Timing of cash flows
Within one year (70.8) (81.0) (509.6) (9.3) (71.9) (742.6) 1,787.4 (1,751.9) 35.5
Between one and two years (0.3) – (96.6) (4.3) (71.9) (173.1) 201.7 (192.0) 9.7
Between two and five years – – (619.5) (7.3) (215.5) (842.3) 449.3 (431.1) 18.2
More than five years – – (1,854.3) (188.6) (359.2) (2,402.1) 485.6 (468.1) 17.5
(71.1) (81.0) (3,080.0) (209.5) (718.5) (4,160.1) 2,924.0 (2,843.1) 80.9
Effect of discounting and foreign exchange – – 1,003.5 152.1 95.9 1,251.5
At 30 March 2013 (71.1) (81.0) (2,076.5) (57.4) (622.6) (2,908.6)
The present value of finance lease liabilities is as follows:
2013
£m
2012
£m
Within one year (6.7) (8.7)
Later than one year and not later than five years (9.1) (8.7)
Later than five years (41.6) (48.1)
Total (57.4) (65.5)
(b) Counterparty risk
Counterparty risk exists where the Group can suffer financial loss through default or non-performance by financial institutions.
Exposures are managed through Group treasury policy which limits the value that can be placed with each approved counterparty
to minimise the risk of loss. The counterparties are limited to the approved institutions with secure long-term credit ratings A-/A3 or
better, assigned by Moody’s and Standard & Poor’s respectively, unless approved by exception by the CFO. Limits are reviewed
regularly by senior management. The credit risk of these financial instruments is estimated as the fair value of the assets resulting
from the contracts.