Punch Taverns plc 2011 Annual Report

Punch Taverns plc
Annual Report and Financial Statements 2011
81
22 Financial liabilities continued
After taking account of the various interest rate swaps entered into by the Group, the interest rate exposure of the Group’s financial
liabilities is set out below. There are no financial liabilities other than short-term payables and provision for share schemes excluded
from this analysis:
20 August 2011 21 August 2010
Fixed Floating Total Fixed Floating
£m £m £m
£m
£m
Secured loan notes:
Issued by Punch Taverns Finance plc 1,508.2 – 1,508.2 1,645.5 – 1,645.5
Issued by Punch Taverns Finance B Limited 997.1 – 997.1 997.0 – 997.0
Issued by Spirit Issuer plc – – – 915.7 – 915.7
Total loans and borrowings 2,505.3 – 2,505.3 3,558.2 – 3,558.2
Obligations under finance leases 4.7 – 4.7 17.0 – 17.0
Total financial liabilities 2,510.0 – 2,510.0 3,575.2 3,575.2
Interest rate analysis
The weighted average effective interest rates of interest-bearing loans and borrowings, including the effect of interest rate swaps,
at the balance sheet date are as follows:
20 August
2011
%
Total
£m
21 August
2010
%
Secured loan notes 6.9 6.8
Finance leases 6.5 6.5
The average interest rate for Group loans and borrowings is 6.9% (August 2010: 6.8%).
Obligations under finance leases
The minimum lease payments under finance leases fall due as follows:
20 August 2011 21 August 2010
Present value Minimum
of future lease
obligations payments
£m
£m
Minimum
lease
payments
£m
Present value
of future
obligations
£m
Within one year 1.0 1.0 2.4 2.4
Within one to five years 2.3 1.8 6.2 5.0
Over five years 8.4 1.9 45.6 9.6
11.7 4.7 54.2 17.0
Convertible bonds
The Group issued £275.0m 5.0% convertible bonds at a nominal value of £275.0m on 14 December 2005. During the prior period,
the Group redeemed all remaining bonds (nominal value of £192.1m). The share price at the date of pricing of the convertible bonds
in the market was £8.60. The fair values of the liability component and equity component were determined at issuance of the bonds.
The fair value of the liability component was calculated using a market rate for an equivalent non-convertible bond. The residual
amount, representing the value of the equity conversion component, was included in shareholders’ equity as a separate reserve.
The value of convertible bonds recognised in the balance sheet is calculated as follows:
£m
Liability component at 22 August 2009 193.5
Finance cost (note 5) 2.2
Cash interest paid (3.0)
Amortisation of deferred issue costs 0.2
Redeemed (192.9)
Liability component at 21 August 2010 and 20 August 2011 –
Governance Business review
Financial statements
Finance cost on the bonds was calculated using the effective interest method by applying the effective interest rate of 9.23% in the
prior period.