Enterprise Inns plc Annual Report and Accounts 2012

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Notes to the Accounts at 30 September 2012 23. Financial assets and liabilities (continued) The new Forward Start Facility comprises of a tranche A loan of £70 million, which expires in December 2015, and tranches B and C each of £75 million which expire in June 2016. Both tranche A and B are term loans with tranche C being a revolving facility. The margin payable under tranche A, B and C are 5%, 4.5% and 4.0% respectively with tranche A increasing in increments of 0.5% every 6 months until termination of this facility. The tranche C loan will be reduced to 3.5% following repayment of both facility A and B. A utilisation fee of 0.5% is payable if tranche C is more than 66% drawn. The amortisation of the new facility commences in September 2014 under tranche B with £9 million being repayable each quarter until termination and with tranche A not exceeding £40 million by December 2014. There is no amortisation of the tranche C loan. Interest rate swaps All of the Group’s swaps were in place to hedge cash payments made on the floating rate debt. There are no swaps held in the Group or Parent Company as at 30 September 2012. The movement in the fair value of interest rate swaps has been accounted for as follows: 2012 £m 2011 £m At 1 October 4 12 Cancellation of interest rate swaps (3) (6) Fair value movements: – ineffective portion and swaps not designated as effective hedges recognised in Income Statement (1) (2) At 30 September – 4 Annual Report 2011 2012 Our Accounts Financial instruments and risk The Group’s financial instruments, other than derivatives, comprise bank borrowings, corporate bonds, securitised bonds and cash. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group also enters into derivative transactions, specifically interest rate swaps. The purpose of such transactions is to manage the interest rate risk arising from the Group’s sources of finance. The main risks arising from the Group’s financial instruments are interest rate risk and liquidity risk. There is no currency exposure as all transactions are in Sterling. The Board reviews and agrees policies for managing each of these risks and they are summarised as follows: Liquidity risk The Group has exposure to liquidity risk, being the risk that payments cannot be made when they fall due. The Group’s objective is to maintain a balance between the continuity of funding and flexibility through the use of bank borrowings, corporate bonds and securitised bonds. This objective is achieved through the following processes: • regular cash flow forecasting and reporting through the treasury function; • regular review of the Group’s debt portfolio including maturities and repayment profile; • maintenance of undrawn bank facilities. 84
Notes to the Accounts at 30 September 2012 23. Financial assets and liabilities (continued) The proportion of nominal value of borrowings (excluding interest rate swaps and finance lease payables) comprised: Group Company 2012 2011 2012 2011 Bank borrowings 12% 15% 22% 28% Corporate bonds 42% 38% 78% 72% Securitised bonds 46% 47% – – The maturity of the debt and interest payments, including interest rate swap liabilities, is set out below: Group Debt £m Interest £m 2012 2011 Total £m Debt £m Interest £m Total £m In more than five years 2,139 779 2,918 2,272 941 3,213 In more than two years but not more than five years 437 451 888 564 468 1,032 In more than one year but not more than two years 169 169 338 209 184 393 In one year or less or on demand 95 176 271 40 191 231 2,840 1,575 4,415 3,085 1,784 4,869 2012 2011 Company Debt £m Interest £m Total £m Debt £m Interest £m Total £m In more than five years 1,125 385 1,510 1,125 460 1,585 In more than two years but not more than five years 211 233 444 338 225 563 In more than one year but not more than two years 99 87 186 146 94 240 In one year or less or on demand 85 92 177 40 101 141 1,520 797 2,317 1,649 880 2,529 The table above shows the contractual, undiscounted cash flows due in future periods to settle the debt and interest payments, including interest rate swaps. The total amount of debt payable shown above differs from the total book value of debt of £2,862 million (2011: £3,117 million) in the Group and £1,509 million (2011: £1,639 million) in the Parent Company as the book value of debt includes the fair value of interest rate swaps which is based on discounted cash flows and unamortised fees. The contractual maturity of trade and other payables is within one year. An analysis of minimum lease payments due under finance leases is set out in note 25. Our Accounts Annual Report 2011 2012 85
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