Annual Report and
Accounts 2006

Year ended 31 July 2006


24. Bank loans and overdrafts

Current 2006
£m 		2005
£m
Bank overdrafts 124 437
Bank loans 68 2
Total bank loans and overdrafts 192 439

The fair values of current overdrafts and loans approximate to book value due to their short maturities.

The currency analysis of bank loans and overdrafts is as follows:

Sterling – –
US dollar 65 265
Euro 116 122
Other 11 52
Total 192 439
     
Non-current 2006
£m		 2005
£m
Bank loans 1,465 1,043
Other loans 1 1
Senior unsecured notes 617 –
US Industrial Revenue Bonds 1 1
Total bank loans 2,084 1,045

The non-current loans are repayable as follows:

Due in one to two years 35 516
Due in two to five years 403 529
Due in over five years 1,646 –
Total 2,084 1,045

At 31 July 2006, £651 million of loans carried a fixed interest rate (2005: £34 million). The weighted average interest rate paid on fixed interest borrowings is 5.0% (2005: 6.2%). Interest receipts and payments on the floating rate assets and liabilities are determined by reference to short-term benchmark rates applicable to the relevant currency or market, such as LIBOR.

The fair value of fixed interest rate loans payable after one year is £621 million, compared to their book value of £626 million (2005: no material difference). The floating rate loans payable after one year generally attract variable interest rates based on 6 month LIBOR. Thus the fair value of these instruments approximates to their book value.

The Group’s undrawn committed facilities amount to £780 million. Further details of these centrally managed facilities and the financial risk management activities of the Group are set out in the Performance review.

The currency analysis of non-current loans is as follows:

  2006
£m		 2005
£m
Sterling 136 1
US dollar 1,246 455
Euro 645 558
Other currencies 57 31
Total 2,084 1,045

The Group’s financial assets and liabilities are exposed to both fair value interest rate risk (fixed rate borrowings) and cash flow interest rate risk (floating rate borrowings). The interest rate profile of the financial assets and liabilities that comprised the Group’s net debt at 31 July 2006 and 31 July 2005, after including the effect of interest rate swaps, are set out in the following tables.

Assets at 31 July 2006
Currency Floating Fixed Currency
swaps		 Total Weighted
average fixed
interest rate
%		 Weighted
average time
for which
rate is fixed
Years
Sterling 104 – – 104 – –
US dollars 550 – – 550 – –
Euros 63 – – 63 – –
Other currencies 26 – – 26 – –
Total 743 – – 743 – –
Liabilities at 31 July 2006
Currency Floating Fixed Currency
swaps		 Total Weighted
average fixed
interest rate
%		 Weighted
average time
for which
rate is fixed
Years
Sterling (135) (5) (419) (559) 9.5 10.0
US dollars (1,255) (423) 336 (1,342) 5.0 2.9
Euros (235) (563) 152 (646) 3.0 2.0
Other currencies (43) (32) (71) (146) 5.6 4.4
Total (1,668) (1,023) (2) (2,693)    
Assets at 31 July 2005
Currency Floating Fixed Currency
swaps		 Total Weighted
average fixed
interest rate
%		 Weighted
average time
for which
rate is fixed
Years
Sterling 33 – – 33 – –
US dollars 491 – – 491 – –
Euros 100 – – 100 – –
Other currencies 30 – – 30 – –
Total 654 – – 654 – –

 

Liabilities at 31 July 2005
Currency Floating Fixed Currency
swaps		 Total Weighted
average fixed
interest rate
%		 Weighted
average time
for which
rate is fixed
Years
Sterling – (5) 282 277 – –
US dollars (725) (274) (329) (1,328) 4.2 1.5
Euros (250) (463) 90 (623) 3.0 2.6
Other currencies (53) (38) (54) (145) 6.0 1.4
Total (1,028) (780) (11) (1,819)    
Hedge of net investment in overseas operations

The Group has financial instruments denominated in foreign currencies which have been designated as hedges of the net investment in its subsidiaries in North America and Europe. The value of these financial instruments at the balance sheet date was:

  2006
£m		 2005
£m
US dollar 926 922
Euro 611 573
Other currencies 112 106
Total 1,649 1,601

The gain on translation of the borrowings into sterling of £58 million (2005: loss of £36 million) has been taken to the translation reserve.