Annual Report 2010 in PDF - BBA Aviation

16. Bank overdraft and loans – continued
The average foating interest rates on borrowings are as follows:
2010 2009
Sterling 1.5% 1.6%
US Dollar 1.0% 1.7%
Euros 0.9% 1.3%
All borrowings are arranged at foating rates exposing the Group to cash fow interest rate risk. This cash fow interest rate risk is managed by the
use of interest rate swaps in accordance with pre-agreed policies and authority limits. As at 31 December 2010, 53% of the Group’s borrowings
were fxed at a weighted average interest rate of 3.0% for a weighted average period of 2.9 years. The Group’s cash fow interest rate exposure also
includes fnances leases and cross currency swaps and as at 31 December 2010, 47% of the Group’s total interest rate risk exposure was fxed.
Bank overdrafts are repayable on demand. All bank loans are unsecured.
The efective interest rates on borrowings are not materially diferent from their nominal interest rates.
The Group has two bank loan facilities totalling $1,075.0 million (2009: $1,075.0 million). The primary facility is a multicurrency revolving credit
facility dated 7 September 2007 for $900.0 million which is due to expire in September 2012. In addition, the Group has a $175.0 million
multicurrency revolving credit facility dated 27 August 2008 which is due to expire in August 2011. These facilities are unsecured committed bank
facilities and are subject to cross-default.
At 31 December 2010, the Group had available $469.0 million (2009: $322.9 million) of undrawn committed borrowing facilities in respect of
which all conditions precedent had been met.
17. Derivative f nancial instruments
Categories of Financial Instruments
The table below details the categories of fnancial instruments across the Group and the carrying values of each category:
2010 2009
Carrying Carrying
value value
£m £m
Financial assets:
Fair value through profit and loss – held for trading † 0.4 0.1
Derivative instruments in designated hedge accounting relationships 0.4 2.4
Loans and receivables (including cash and cash equivalents) 250.5 251.3
251.3 253.8
Financial liabilities
Fair value through profit and loss – held for trading † (0.8) (0.1)
Derivative instruments in designated hedge accounting relationships (70.0) (57.7)
Amortised cost (541.3) (617.0)
(612.1) (674.8)
† The amounts detailed above as fair value through proft and loss – held for trading do not relate to speculative transactions. They relate to foreign exchange contracts which are not designated in a
formal hedging relationship and are used to hedge foreign currency fows through the BBA Aviation plc Company bank accounts and to ensure that the Group is not exposed to foreign exchange risk
through the management of its international cash management structure.
Derivative Financial Instruments
The fair values of all derivative fnancial instruments shown in the table below are based on market values of equivalent instruments at the
balance sheet date and are held as assets and liabilities within other receivables and other payables. The notional amounts of the derivative
fnancial instruments detailed in the table below are based on the contractual gross amounts as at the balance sheet date. The fair values of all
derivative fnancial instruments in the table below are categorised within level 1 of the fair value hierarchy as confrmation that the fair values
have been calculated based on quoted prices in active markets for identical assets or liabilities. The Group does not have any derivative f nancial
instruments which would be categorised as level 2 or level 3 of the fair value hierarchy.
Consolidated Financial Statements — 107