Download PDF (1.3MB) - J Sainsbury plc

Recommendations

Info

21 Financial instruments continued Financial liabilities After taking into account various interest rate swaps and forward foreign currency contracts, the interest rate profile of the Group’s financial liabilities as at 3 April 1999 was: Fixed rate debt Financial liabilities Floating rate Fixed rate Weighted Average time on which no financial financial average for which rate Total interest is paid liabilities liabilities interest rate is fixed Currency £m £m £m £m % years Sterling 821 25 591 205 7.3 3.8 US dollar 799 10 440 349 8.7 7.8 1,620 35 1,031 554 8.2 6.3 Floating rate financial liabilities comprise bank borrowings, linked to bank Base Rate and LIBOR, and commercial paper, floating rate notes and fixed rate long-term debt issues swapped into floating rates, all bearing interest rates linked to LIBOR. Financial liabilities on which no interest is paid do not have predetermined dates of payment and therefore a weighted average period of maturity cannot be calculated. The above analysis includes three interest rate swaps which convert nominal fixed rate financial liabilities of $150 million at 6.625 per cent, £200 million at 8.25 per cent and £40 million at 7.36 per cent into floating rates based on US dollar and sterling LIBOR, respectively, and one interest rate swap which converts nominal floating rate LIBOR linked debt of $150 million into fixed rate financial liabilities at 6.95 per cent. The above analysis excludes two swap options with an aggregate amount of $200 million which if exercised by the bank, would require the Group to enter into a swap under which it would receive fixed rate interest at 6.40 per cent and pay floating rate LIBOR on a nominal amount of $200 million for a period to November 2002. The options may be exercised by the bank on quarterly dates through to August 2002. The above analysis of financial liabilities includes finance leases with a capitalised value of £132 million. These leases primarily finance stores in the Group’s US operations and it is not practicable to estimate the fair value of these loans as no appropriate external benchmark is available. Excluding these leases, the fair value of the Group’s financial liabilities exceeds book value by £20 million. Interest rate swaps and forward foreign currency contracts had a book value of £nil and a fair value of £6 million favourable and £2 million unfavourable, respectively, at 3 April 1999. Market values have been used to determine the fair value of public debt issues and the fair values of all other items have been calculated by discounting expected future cash flows at LIBOR equivalent interest rates prevailing at 3 April 1999. During the year the Group recognised costs of £16 million in crystallising interest rate swap instruments which had been used to hedge borrowings financing the Group’s investment in Giant Food Inc. (see note 3). There were no other material recognised or unrecognised gains or losses on interest rate hedging instruments or forward foreign currency contracts at the beginning, end or during the 56 week period ended 3 April 1999 other than the interest rate swap and forward foreign currency contracts disclosed above. Financial instruments – Sainsbury’s Bank The financial assets and financial liabilities of Sainsbury’s Bank are shown separately as current assets and current liabilities in the Group accounts (see note 18). The management of the Bank’s treasury operations is separate from that of the Group, as described on page 21 of the Financial Review. The Bank’s exposure to movements in interest rates is shown in the following table which discloses the interest rate repricing profile of assets and liabilities as at 3 April 1999. Any asset (or positive) gap position reflects the fact that the Bank’s financial assets reprice more quickly, or in greater proportion than liabilities in a given time period, and will tend to benefit interest rate income in a rising interest rate environment. A liability (or negative) gap exists when liabilities reprice more quickly or in greater proportion than assets during a given period and tends to benefit net interest income in a declining rate environment. Items are allocated to time bands by reference to the earlier of the next contractual interest rate repricing date and maturity date. J Sainsbury plc Annual report and accounts 1999 51
Notes to the accounts 21 Financial instruments continued Interest rate sensitivity table of Sainsbury’s Bank as at 3 April 1999 52 J Sainsbury plc Annual report and accounts 1999 Not more Over 3 months but Over 6 months but Over 1 year but Over 3 years but Non-interest than 3 months not over 6 months not over 1 year not over 3 years not over 5 years bearing Total £m £m £m £m £m £m £m Assets: Treasury bills and other eligible bills 83 – – – – – 83 Loans and advances to banks 1,033 179 – – – – 1,212 Loans and advances to customers 294 1 3 47 53 – 398 Debt securities 48 – – – – – 48 Other assets 6 1 – – – 22 29 Total assets 1,464 181 3 47 53 22 1,770 Liabilities: Customer accounts 1,653 – – – – – 1,653 Other liabilities – – – – – 16 16 Shareholders’ funds – – – – – 101 101 Total liabilities 1,653 – – – – 117 1,770 Interest rate sensitivity gap (189) 181 3 47 53 (95) – Cumulative gap (189) (8) (5) 42 95 – – 22 Analysis of net debt Other At 8 March non-cash Exchange At 3 April 1998* Cash flow movements movements 1999 £m £m £m £m £m Cash and liquid funds 284 448 10 742 Overdrafts (249) 120 1 (128) 568 Debt due within 1 year (181) (188) (155) (8) (532) Debt due after 1 year (812) 9 155 (5) (653) Finance leases (119) 6 (17) (3) (133) Total (1,077) 395 (17) (5) (704) * Current asset investments (see note 17) have been treated as cash. Consequently, brought forward net debt has been restated and reduced by £14 million. (173)
Page 1 and 2:
Annual report and accounts 1999
Page 3 and 4: J Sainsbury plc is one of the world
Page 5 and 6: Financial highlights Group sales £
Page 7 and 8: A common theme runs through our Gro
Page 9 and 10: Right: As customer tastes become mo
Page 11 and 12: Above: Our Prawn Laksa, a spicy coc
Page 13 and 14: Greater choice, greater value Left:
Page 15 and 16: Above: Sainsbury’s Hydro Source i
Page 17 and 18: Operating review SAINSBURY’S SUPE
Page 19 and 20: Operating review Sainsbury’s Cent
Page 21 and 22: Operating review Shaw’s Directors
Page 23 and 24: Financial review Group capital expe
Page 25 and 26: Board of Directors 22 J Sainsbury p
Page 27 and 28: Report of the Directors for the 56
Page 29 and 30: Report of the Directors Annual Gene
Page 31 and 32: Report of the Remuneration Committe
Page 37 and 38: Accounting policies Basis of accoun
Page 39 and 40: Group profit and loss account for t
Page 41 and 42: Group cash flow statement for the 5
Page 43 and 44: Notes to the accounts at 3 April 19
Page 45 and 46: Notes to the accounts 5 Profit on o
Page 47 and 48: Notes to the accounts 11 Tangible f
Page 49 and 50: Notes to the accounts 13 Investment
Page 51 and 52: Notes to the accounts 17 Current as
Page 53: Notes to the accounts 21 Financial
Page 57 and 58: Notes to the accounts 24 Called up
Page 59 and 60: Notes to the accounts 27 Reconcilia
Page 61 and 62: Interim accounts 52 weeks ended 6 M
Page 63 and 64: Ten year financial record 60 J Sain
Page 65 and 66: Investor information Shareholders
Page 67 and 68: Financial calendar, registered offi
Page 69: J Sainsbury plc Stamford House Stam
show all

Download PDF (1.3MB) - J Sainsbury plc

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?