Download full Annual Report and Accounts - Kingfisher

Kingfi sher plc
Annual Report
and Accounts
2009/10
81
The Group values its Medium Term Notes and other fi xed term debt on an amortised cost basis, adjusted for fair value gains and losses (based on observable
market inputs) attributable to the risk being hedged in designated and effective fair value hedge relationships.
The carrying amounts of the MTNs and USPP have been impacted both by exchange rate movements and fair value adjustments for interest rate risk.
At 30 January 2010, the cumulative effect of interest rate fair value adjustments is to increase the Group’s Medium Term Notes and other fi xed term debt by
£70m (2008/09: £106m).
The USPP contains a covenant requiring that, as at the end of each semi-annual and annual fi nancial reporting period, the ratio of operating profi t to net interest
payable, excluding exceptional items, should not be less than 3 to 1 for the preceding 12 month period. The Group has complied with this covenant for the year
ended 30 January 2010.
Finance leases
The Group leases certain of its buildings and fi xtures and equipment under fi nance leases. The average lease term maturity for buildings is seven years
(2008/09: seven years) and for fi xtures and equipment is two years (2008/09: two years). Certain building leases include a clause to enable upward revision
of the rental charge to prevailing market conditions.
Future minimum lease payments under fi nance leases, together with the present value of minimum lease payments, are as follows:
2009/10 2008/09
Present Present
value of Minimum value of Minimum
£ millions payments payments payments payments
Less than one year 12 16 13 18
One to fi ve years 27 36 23 37
More than fi ve years 26 43 33 51
Total 65 95 69 106
Less amounts representing fi nance charges (30) (37)
Present value of minimum lease payments 65 69
The interest rates inherent in the fi nance leases are fi xed at the contract date for the lease term. The weighted average effective interest rate on the Group’s
fi nance leases is 8.2% (2008/09: 8.4%).
Fair value of borrowings
The fair values of current borrowings approximate to their carrying amounts.
Where available, market values have been used to determine the fair values of non-current borrowings. Where market values are not available or are not reliable,
fair values have been calculated by discounting cash fl ows at prevailing interest and foreign exchange rates. The carrying amounts and fair values of non-current
borrowings are as follows:
2009/10 2008/09
Carrying Fair Carrying Fair
£ millions amount value amount value
Bank loans 18 17 94 98
Medium Term Notes and other fi xed term debt 812 820 1,757 1,521
Finance leases 53 75 56 70
883 912 1,907 1,689
Assets worth RMB 1 billion (£91m) secure a bank facility in China, which matures in July 2010. There were no borrowings secured against assets in the prior year.