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Notes to the consolidated financial statements
Year ended 31 July 2007
24. Bank loans and overdrafts
| Current | 2007 £m |
2006 £m |
|---|---|---|
| Bank overdrafts | 184 | 124 |
| Bank loans | 346 | 68 |
| Total bank loans and overdrafts | 530 | 192 |
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: | £m | £m |
|---|---|---|
| US dollar | 80 | 65 |
| Euro | 447 | 116 |
| Other currencies | 3 | 11 |
| Total | 530 | 192 |
| Non-current | 2007 £m |
2006 £m |
|---|---|---|
| Bank loans | 1,526 | 1,465 |
| Other loans | – | 1 |
| Senior unsecured notes | 571 | 617 |
| US Industrial Revenue Bonds | – | 1 |
| Total bank loans | 2,097 | 2,084 |
| The non-current loans are repayable as follows: | £m | £m |
|---|---|---|
| Due in one to two years | 157 | 35 |
| Due in two to five years | 1,377 | 403 |
| Due in over five years | 563 | 1,646 |
| Total | 2,097 | 2,084 |
At 31 July 2007, £594 million of loans carried a fixed interest rate (2006: £651 million). The weighted average interest rate paid on fixed interest borrowings is 5.0 per cent (2006: 5.0 per cent). 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 £590 million, compared to their book value of £594 million (2006: £621 million compared to their book value of £626 million). The floating rate loans payable after one year generally attract variable interest rates based on six-month LIBOR. Thus the fair value of these instruments approximates to their book value.
The Group’s undrawn committed facilities amount to £1,204 million (2006: £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:
| Non-current | 2007 £m |
2006 £m |
|---|---|---|
| Sterling | – | 136 |
| US dollar | 727 | 1,246 |
| Euro | 1,095 | 645 |
| Other currencies | 275 | 57 |
| Total | 2,097 | 2,084 |
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 profiles of the financial assets and liabilities that comprised the Group’s net debt at 31 July 2007 and 31 July 2006, after including the effect of interest rate swaps, are set out in the following tables.
Assets at 31 July 2007
| Currency | Floating | Fixed | Currency swaps |
Total | Weighted average fixed interest rate % |
Weighted average time for which rate is fixed Years |
|---|---|---|---|---|---|---|
| Sterling | 7 | – | – | 7 | – | – |
| US dollar | 454 | – | – | 454 | – | – |
| Euro | 37 | – | – | 37 | – | – |
| Other currencies | 46 | – | – | 46 | – | – |
| Total | 544 | – | – | 544 |
Liabilities at 31 July 2007
| Currency | Floating | Fixed | Currency swaps |
Total | Weighted average fixed interest rate % |
Weighted average time for which rate is fixed Years |
|---|---|---|---|---|---|---|
| Sterling | – | (6) | 98 | 92 | 9.5 | 11.0 |
| US dollar | (728) | (389) | 74 | (1,043) | 5.0 | 1.8 |
| Euro | (752) | (849) | (116) | (1,717) | 3.9 | 2.1 |
| Other currencies | (277) | (10) | (56) | (343) | 5.8 | 3.3 |
| Total | (1,757) | (1,254) | – | (3,011) |
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 dollar | 550 | – | – | 550 | – | – |
| Euro | 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 dollar | (1,255) | (423) | 336 | (1,342) | 5.0 | 2.9 |
| Euro | (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) |
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 Europe and North America. The value of these financial instruments at the balance sheet date was:
| 2007 £m |
2006 £m |
|
|---|---|---|
| US dollar | 667 | 926 |
| Euro | 1,187 | 611 |
| Other currencies | 115 | 112 |
| Total | 1,969 | 1,649 |
The gain on translation of the borrowings into sterling of £97 million (2006: gain of £58 million) has been taken to the translation reserve.