Untitled

wwwfoof ghteB com
wwwsarah-brightman.com
.]:
]
Treasury management
The qroupS {undrng, liquidity and interest
rate and foreign exchange rate risks
are managed by the groups treasury
departmenl. Treasury activities are carried
oui wthin a framework of policies and
guidelines approved by the board, with
iontrol and monitoring delegated to the
Treasury Management Committee, chaired
by the group finance director Treasury does
not operate as a profit centre and po|cres
specifically prohibit the use of fir^ancial
instruments for speculative purposes.
Financial instruments held by the group
comp/tse derivatives, bonowings, cash
and irquid resources and other frnancial
assets and liabilities. including certain
creditors and provisions which are payable
after more than one year. The main
purpose of these financial instruments is
to raise finance for the groupS operations.
Treasury policies cover the use of financial
instruments within the group and have
remained unchanged throughout the
financial year. These policies also ensure
that adequate, cost-effective funding is
available to the group at all times and that
exposure to financial risk is minimised.
Funding and interest rate risk
Group funding is managed via the use
of short and medium-term committed and
uncommitted bank facilities. ln addition, in
Auqust 1999, the group issued U5$500m
of 1O-year Guaranteed Notes to finance
the Windsvvept Pacific acquisition and
to replace existing US bank borrowings.
Bank tacilities used by the group have
a broad range of maturities, which are
renegotiated as they fall due to ensure
sufficient funding for the group.
The group borrows in a variety of
currencies at both fixed and floating rates
and then uses interest rate s\lr'aps, caps
and collars to manage group exposure to
interest rate fluctuations. Treasury policy
is to keep between 25o/o and75ok oI
its borrowngs at fixed or capped rates.
Al the year end, 54.4olo of the group's
bonowings were fixeo or capped after
taking account of interest rate swaps, caps
and collars. Financial instruments held by
the group to manage interest rate risk at
31 l\,4arch 2000 are disclosed on page
59, note 19 (vii).
Foreign currency risk
Due to the international nature of its
operations, the group faces cunency
exposure in respect of exchange rate
fluctuation against sterling. Balance sheet
translation exposures are hedged to the
extent that overseas liabilities, including
bonowings, provide a natural hedge,
Group policy is not to undeftake additional
hedging measures.
It is also the groups policy not to
hedge profit and loss account translation
exposure. Transaction exposures are
hedged, where deemed appropriate and
where they can be reliably forecast, with
the use of forward exchange rate contracts.
FoMard rate contracts held by the group
at 3l March 2000 are disclosed on page
59, note 19 (vii).
Warner EMI Music
As discused in the Chairmans Statement,
on 24 January 2000 we announced that
an agreement had been reached betureen
ElVl and Time Warner to combine our
respective music busineses to form Warner
EMI Music. This agreement is conditional
on, among other things, regulatory and
tax clearances and obtaining shareholder
approval at an Extraordinary General
Meeting (EGM). A Circular and Lining
Particula6 explaining the deal in further
detail will be issued at the beginning of
June with a Notice convening the EGM.
Year 2000
Leading up to the year 2000, we
implemented a programme to update or
replace all date dependent internal lEtems
that are critical to the groupb ongoing
operations or preparation of financial
information. This proJect has been
completed successfully with total cosb
to the group of lust over f22m.
EMU programme
There still remain a number of issues to
be resolved concerning European Monetary
Union and EMI has therefore decided to
become a late adopter. EM|S EMU
programme is nevertheless well under way
and is giving rise to costs both in trainrng
and systems modification. These costs
are being charged to the profit and loss
account as incurred. Costs to date have
not been significant and total costs are
estimated at f 5m, the majority of which
will be incuned in the financial year
200cv01.