Full Annual Report - Inchcape

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Financial statements Notes to the accounts continued 21 Provisions Product warranty £m Vacant leasehold £m Litigation £m At 1 January 2009 59.3 9.4 14.0 19.9 102.6 Charged to the consolidated income statement 30.4 6.7 2.2 2.8 42.1 Released to the consolidated income statement (3.4) (1.8) (1.6) (4.9) (11.7) Effect of unwinding of discount factor 0.4 0.2 – – 0.6 Utilised during the year (25.7) (3.4) (1.3) (5.2) (35.6) Subsidiaries acquired – – – 0.1 0.1 Effect of foreign exchange rate changes (2.4) – (0.4) (0.9) (3.7) At 31 December 2009 58.6 11.1 12.9 11.8 94.4 Other £m Total £m Analysed as: 2009 £m Current 46.7 50.6 Non-current 47.7 52.0 2008 £m 94.4 102.6 Product warranty Certain Group companies provide self-insured extended warranties beyond those provided by the manufacturer, as part of the sale of the vehicle. These are not separable products. The warranty periods covered are up to six years and/or specific mileage limits. Provision is made for the expected cost of labour and parts based on historical claims experience and expected future trends. These assumptions are reviewed regularly. Vacant leasehold The Group is committed to certain leasehold premises for which it no longer has a commercial use. These are principally located in the UK. Provision has been made to the extent of the estimated future net cost. This includes taking into account existing subtenant arrangements. The expected utilisation period of these provisions is generally over the next 10 years. Litigation This includes a number of litigation provisions in respect of the exit of certain motors and non-motors businesses. The majority of these relate to the exit of our former South American bottling business and shipping business. The cases are largely historic claims and are generally expected to be concluded within the next three to five years. Other This category principally includes provisions relating to residual values on leased vehicles, which are expected to be settled within three years. 118 Inchcape plc ¦ Annual Report and Accounts 2009
Section Three Financial statements 22 Borrowings 2009 £m Floating rate Weighted average effective interest rate % £m Fixed rate Weighted average effective interest rate % Total interest bearing £m On which no interest is paid £m Current Bank overdrafts 122.4 1.5 – – 122.4 1.7 124.1 Bank loans 35.0 0.8 4.4 13.3 39.4 – 39.4 Other loans 1.2 0.1 0.1 1.8 1.3 – 1.3 Finance leases 0.9 2.9 0.3 7.9 1.2 – 1.2 159.5 1.3 4.8 12.8 164.3 1.7 166.0 Non-current Bank loans – – – – – 0.9 0.9 Private Placement 294.8 1.7 – – 294.8 – 294.8 Finance leases 1.0 3.0 2.5 7.1 3.5 – 3.5 295.8 1.7 2.5 7.1 298.3 0.9 299.2 Total borrowings 455.3 1.6 7.3 10.8 462.6 2.6 465.2 2009 Total £m 2008 £m Floating rate Weighted average effective interest rate % £m Fixed rate Weighted average effective interest rate % Total interest bearing £m On which no interest is paid £m Current Bank overdrafts 144.9 3.0 – – 144.9 0.3 145.2 Bank loans 3.0 7.2 3.5 14.0 6.5 – 6.5 Other loans 1.8 5.2 7.4 14.0 9.2 – 9.2 Finance leases 4.1 5.6 0.3 7.7 4.4 – 4.4 153.8 3.2 11.2 13.8 165.0 0.3 165.3 Non-current Bank loans 405.0 2.3 0.6 14.0 405.6 2.0 407.6 Private Placement 391.8 5.0 52.1 6.0 443.9 – 443.9 Finance leases 1.9 6.7 2.7 7.2 4.6 – 4.6 798.7 3.7 55.4 6.1 854.1 2.0 856.1 Total borrowings 952.5 3.6 66.6 7.4 1,019.1 2.3 1,021.4 Interest payments on floating rate financial liabilities are determined by reference to short-term benchmark rates applicable in the relevant currency or market (primarily LIBOR or the local equivalent). The fair values of the Group’s borrowings are not considered to be materially different from their book value with the exception of the Private Placement which includes a fair value basis adjustment of £24.6m (2008 – £62.5m). The Group’s borrowings are unsecured. At 31 December, £nil (2008 – £370m) of the £500m syndicated credit facility that expires in 2013 was drawn down. In addition, the Group has a £35m bilateral facility which expires in 2010. US$475m of the Group’s US$550m Private Placement has historically been swapped into Sterling. During the year, US$114m of the US$550m was repaid to the loan noteholders, of which US$39m related to the original US$475m swapped into Sterling. It was replaced with an opposing US$39m swap (see note 23 for further details). US$275m is repayable in eight years and US$161m in 10 years. 2008 Total £m www.inchcape.com 119
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Annual Report and Accounts 2009 Ind
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Section One Business review Financi
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Global experience Section One Busin
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Full Annual Report - Inchcape

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