Annual Report and Accounts - Hemscott IR

NOTES TO THE FINANCIAL STATEMENTS
23. Borrowings continued
Bank term loans and revolving credit facilities of £739m (2011: £798m) were arranged at variable interest rates. The $400m unsecured Travis Perkins senior
notes were issued at fixed rates of interest and swapped into variable rates. This exposes the Group to fair value interest rate risk. As detailed in note 24, to
manage the risk the Group enters into interest rate derivatives arrangements, which for 2012, fixed interest rates on an average of £221m of borrowing. For
the year to 31 December 2012, this had the effect of increasing the weighted average interest rates paid by 0.5 %.
In respect of income earning financial assets and interest bearing financial liabilities, the following table indicates their effective interest rates at the
balance sheet date and the periods in which they reprice.
THE GROUP
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
2012 2011
––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––
Effective 6 months or less Effective 6 months or less
interest rate £m interest rate £m
Unsecured senior notes 5.8% 261.1 5.8% 279.3
Unsecured variable rate bank facilities 2.3% 264.4 2.3% 323.2
Loan notes 6.0% 3.3 6.0% 3.3
528.8 605.8
THE COMPANY
––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––
2012 2011
––––––––––––––––––––––––––––––––––––––––––––––––– –––––––––––––––––––––––––––––––––––––––––––––––––
Effective 6 months or less Effective 6 months or less
interest rate £m interest rate
Unsecured senior notes 5.8% 261.1 5.8% 279.3
Unsecured variable rate bank facilities 2.3% 315.0 2.3% 385.0
Loan notes 6.0% 3.3 6.0% 3.3
Bank overdraft 2.3% 0.7 2.3% 1.6
580.1 669.2
g. Fair values
For both the Group and the Company the fair values of financial assets and liabilities have been calculated by discounting expected cash flows at prevailing
rates at 31 December. There were no significant differences between book and fair values on this basis and therefore no further information is disclosed.
Details of the fair values of derivatives are given in note 24.
h. Guarantees and security
There are cross guarantees on the overdrafts between group companies.
The companies listed in note 17, with the exception of Benchmarx Kitchens and Joinery Limited, Travis Perkins P&H Partner Limited, Tile Giant Limited
and Toolstation Limited, together with Wickes Limited and Travis Perkins Plumbing and Heating LLP are guarantors of the following facilities advanced
to Travis Perkins plc:
• £264m term loan;
• £475m revolving credit facility;
• $400m unsecured senior notes (note 23(i));
• Interest rate and currency derivatives, (note 24).
The group companies have entered into other guarantee and counter-indemnity arrangements in respect of guarantees issued in favour of group companies
by the clearing banks amounting to approximately £16m (2011: £16m).
i. Unsecured senior notes
The US private placement carries fixed rate coupons of between 130 bps and 140 bps over US treasuries.
24. Financial instruments
a. Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which
income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2 to the
financial statements.
114