REG - Rentokil Initial PLC - Half-year Report <Origin Href="QuoteRef">RTO.L</Origin> - Part 2
27/07/2017 07:10
- Part 2: For the preceding part double click ID:nRSa2186Ma
Operating profit 143.8 91.8
Adjusted for:
Amortisation and impairment of intangible assets (excluding computer software) 4 25.9 20.1
One-off items - operating 4 7.7 2.1
Reversal of depreciation - assets held-for-sale (34.3) -
Adjusted operating profit 143.1 114.0
Finance income 7.2 10.0
Add back: Net interest credit from pensions (3.4) (4.3)
Finance cost (24.4) (24.4)
Share of profit from associates, net of tax of £1.9m (2016: £1.4m) 3.8 3.0
Adjusted profit before income tax 126.3 98.3
Basic adjusted earnings per share attributable to the Company's equity holders 5.36p 4.20p
The weighted average number of ordinary shares in issue is 1,833m (HY 2016:
1,823m). For the diluted EPS calculation the adjustment for share options and
LTIPs is 7.7m (HY 2016: 8.3m).
Condensed consolidated balance sheet
At 30 June2017 At 31 December2016
Notes £m £m
Assets
Non-current assets
Intangible assets 1,202.4 999.6
Property, plant and equipment 382.1 416.3
Investments in associated undertakings 275.1 17.8
Other investments 0.2 0.2
Deferred tax assets 1.5 2.0
Retirement benefit assets 8 266.3 272.7
Other receivables 10.1 10.8
Derivative financial instruments 10 3.5 -
2,141.2 1,719.4
Current assets
Other investments 3.2 9.6
Inventories 88.7 80.0
Trade and other receivables 462.0 383.3
Current tax assets 13.3 11.0
Disposal group held-for-sale 30.4 177.7
Derivative financial instruments 10 1.3 1.6
Cash and cash equivalents 499.5 160.2
1,098.4 823.4
Liabilities
Current liabilities
Trade and other payables (513.3) (458.5)
Current tax liabilities (79.0) (71.6)
Provisions for other liabilities and charges (29.0) (15.3)
Bank and other short-term borrowings 9 (388.3) (77.4)
Derivative financial instruments 10 (1.5) (56.8)
(1,011.1) (679.6)
Net current assets 87.3 143.8
Non-current liabilities
Other payables1 (68.3) (21.4)
Bank and other long-term borrowings 9 (1,130.7) (1,260.4)
Deferred tax liabilities (95.3) (112.8)
Retirement benefit obligations 8 (27.3) (30.9)
Provisions for other liabilities and charges (53.9) (55.2)
Derivative financial instruments 10 (18.8) (21.8)
(1,394.3) (1,502.5)
Net assets 834.2 360.7
Equity
Capital and reserves attributable to the company's equity holders
Called up share capital 18.4 18.3
Share premium account 6.8 6.8
Other reserves (1,822.0) (1,763.5)
Retained profits 2,630.8 2,099.0
834.0 360.6
Non-controlling interests 0.2 0.1
Total equity 834.2 360.7
0.1
Total equity
834.2
360.7
1 Non-current other payables includes £42.6m of contingent
consideration related to the PCI India acquisition
Condensed consolidated statement of changes in equity
Called up share capital Share premium account Other reserves Retained earnings Non-controlling interests Total equity
£m £m £m £m £m £m
At 1 January 2016 18.2 6.8 (1,768.8) 1,956.1 (0.2) 212.1
Profit for the period - - - 64.9 0.2 65.1
Other comprehensive income:
Net exchange adjustments offset in reserves - - (0.7) - - (0.7)
Remeasurement of net defined benefit asset - - 95.9 - 95.9
Effective portion of changes in fair value of cash flow hedge - - (0.8) - - (0.8)
Tax related to remeasurement of net defined benefit asset - - (19.2) - (19.2)
Total comprehensive income for the period - - (1.5) 141.6 0.2 140.3
Transactions with non-controlling interests:
Amounts received from non-controlling interests - - - - 0.2 0.2
Transactions with owners:
Dividends paid to equity shareholders - - - (37.5) - (37.5)
Issue of ordinary shares 0.1 - - - - 0.1
Cost of share options and long-term incentive plan - - - 2.3 - 2.3
At 30 June 2016 18.3 6.8 (1,770.3) 2,062.5 0.2 317.5
At 1 January 2017 18.3 6.8 (1,763.5) 2,099.0 0.1 360.7
Profit for the period - - - 579.5 0.1 579.6
Other comprehensive income:
Net exchange adjustments offset in reserves - - (22.5) - - (22.5)
Remeasurement of net defined benefit asset - - - (9.5) - (9.5)
Effective portion of changes in fair value of cash flow hedge - - 6.2 - - 6.2
Cumulative exchange recycled to income statement on disposal of foreign operations - - (42.2) - - (42.2)
Tax related to remeasurement of net defined benefit asset - - - 1.7 - 1.7
Total comprehensive income for the period - - (58.5) 571.7 0.1 513.3
Transactions with owners:
Dividends paid to equity shareholders - - - (43.5) - (43.5)
Issue of ordinary shares 0.1 - - - - 0.1
Cost of share options and long-term incentive plan - - - 3.6 - 3.6
At 30 June 2017 18.4 6.8 (1,822.0) 2,630.8 0.2 834.2
-
-
3.6
-
3.6
At 30 June 2017
18.4
6.8
(1,822.0)
2,630.8
0.2
834.2
Treasury shares represent 7.9m (HY 2016: 5.4m) shares held by the Rentokil
Initial Employee Share Trust and are netted against retained earnings. The
market value of these shares at 30 June 2017 was £21.6m (HY 2016: £10.4m).
Dividend income from, and voting rights on, the shares held by the Trust have
been waived.
Analysis of other reserves
Capital reduction reserve Legal Cash flow hedge reserve Translation reserve Total
£m £m £m £m £m
At 1 January 2016 (1,722.7) 10.4 0.2 (56.7) (1,768.8)
Net exchange adjustments offset in reserves - - - (0.7) (0.7)
Effective portion of changes in fair value of cash flow hedge - - (0.8) - (0.8)
Total comprehensive income for the period - - (0.8) (0.7) (1.5)
At 30 June 2016 (1,722.7) 10.4 (0.6) (57.4) (1,770.3)
At 1 January 2017 (1,722.7) 10.4 (5.9) (45.3) (1,763.5)
Net exchange adjustments offset in reserves - - - (22.5) (22.5)
Effective portion of changes in fair value of cash flow hedge - - 6.2 - 6.2
Cumulative exchange recycled to income statement on disposal of foreign operations - - - (42.2) (42.2)
Total comprehensive income for the period - - 6.2 (64.7) (58.5)
At 30 June 2017 (1,722.7) 10.4 0.3 (110.0) (1,822.0)
-
6.2
(64.7)
(58.5)
At 30 June 2017
(1,722.7)
10.4
0.3
(110.0)
(1,822.0)
Condensed consolidated cash flow statement
6 months to 30 June 6 months to 30 June
2017 2016
Notes £m £m
Profit for the period 579.6 65.1
Adjustments for:
- Tax 13.3 15.3
- Share of profit from associates (3.8) (3.0)
- Net interest credit from pensions (3.4) (4.3)
- Interest income (3.8) (5.7)
- Interest expense 24.4 24.4
Reversal of non-cash items:
- Depreciation and impairment of property, plant and equipment 66.6 87.8
- Amortisation and impairment of intangible assets1 25.9 20.1
- Amortisation of computer software 6.4 6.0
- Other non-cash items 3.1 1.6
- Profit on sale of businesses (462.5) -
Changes in working capital (excluding the effects of acquisitions and exchange differences on consolidation):
- Inventories (7.6) (6.8)
- Trade and other receivables (38.5) (16.0)
- Trade and other payables and provisions 16.0 14.5
Cash generated from operating activities 215.7 199.0
Interest received 8.2 6.3
Interest paid (13.8) (28.5)
Income tax paid (19.5) (17.8)
Net cash generated from operating activities 190.6 159.0
Cash flows from investing activities
Purchase of property, plant and equipment (107.3) (89.0)
Purchase of intangible fixed assets (7.4) (8.8)
Proceeds from sale of property, plant and equipment 3.0 3.3
Acquisition of companies and businesses, net of cash acquired 5 (206.8) (27.6)
Disposal of companies and businesses (net of disposal costs) 396.1 0.5
Net cash flows from investing activities 77.6 (121.6)
Cash flows from financing activities
Issue of ordinary share capital 0.1 0.1
Dividends paid to equity shareholders (43.5) (37.5)
Interest element of finance lease payments (0.7) (0.6)
Capital element of finance lease payments (8.5) (6.6)
Cash outflow on settlement of debt related foreign exchange forward contracts (43.5) (0.3)
Proceeds from issue of debt 225.0 239.4
Net investment in term deposits 6.4 94.4
Net loan/bond repayments (10.5) (341.4)
Net cash flows from financing activities 124.8 (29.7)
Net increase in cash and cash equivalents 393.0 7.7
Cash and cash equivalents at beginning of year 105.9 100.5
Exchange gains/(losses) on cash and cash equivalents (4.7) 6.8
Cash and cash equivalents at end of the financial period 494.4 115.0
115.0
1 excluding computer software
1. General information
The Company is a limited liability company incorporated and domiciled in the
UK with a listing on the London Stock Exchange. The address of its registered
office is Rentokil Initial plc, Riverbank, Meadows Business Park, Blackwater,
Camberley, Surrey, GU17 9AB.
The condensed consolidated half-yearly financial information for the half-year
to 30 June 2017 was approved for issue on 27 July 2017.
On pages 65 to 66 of the Annual Report 2016 we set out the Group's approach to
risk management and on pages 34 to 39 we define the principal risks that are
most relevant to the Group. These risks are described in detail and have
mitigating actions assigned to each of them. In our view the principal risks
remain unchanged from those indicated in the Annual Report 2016 and actions
continue to be taken to substantially mitigate the impact of such risks,
should they materialise.
These interim financial results do not comprise statutory accounts within the
meaning of Section 435 of the Companies Act 2006, and should be read in
conjunction with the Annual Report 2016. Those accounts have been reported
upon by the Group's auditors and delivered to the registrar of companies. The
report of the auditors was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying their report and did not contain statements under section 498(2) or
(3) of the Companies Act 2006.
For all information relating to 2016 results please refer to the Annual Report
2016 which can be accessed here:
http://www.rentokil-initial.com/investors/year-in-review.aspx
2. Basis of preparation
These interim financial statements have been prepared in accordance with IAS
34 Interim Financial Reporting as adopted by the EU.
The annual financial statements of the Group are prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the EU. As
required by the Disclosure and Transparency Rules of the Financial Conduct
Authority, the interim financial statements have been prepared applying the
accounting policies and presentation that were applied in the preparation of
the Company's published condensed consolidated financial statements for the
year ended 31 December 2016 except for the changes described in Note 3.
After reviewing Group cash balances, borrowing facilities and projected cash
flows, the directors believe that the Group has adequate resources to continue
operations for the foreseeable future. For this reason they continue to adopt
the going concern basis in preparing the condensed consolidated financial
statements.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 December 2016, as described in
those financial statements with the addition of accounting policy choices as
described in note 5 and 6.
The preparation of the interim financial information for the half-year ended
30 June 2017 requires management to make estimates and assumptions that affect
the reported amounts of revenues, expenses, assets, liabilities and disclosure
of contingent liabilities at the date of the statement. If in the future such
estimates and assumptions, which are based on management's best judgement at
the date of the statement, deviate from the actual circumstances, the original
estimates and assumptions will be modified as appropriate in the year in which
the circumstances change.
Significant seasonal or cyclical variations in the group's total revenues are
not experienced during the financial year.
Changes in accounting policies
The Group has adopted the following amendments to standards with effect from 1
January 2017:
- Amendments resulting from the disclosure initiative - IAS 7
- Amendments regarding the recognition of deferred tax assets for
unrealised losses - IAS 12
These standards have had no impact on the financial position or performance of
the Group. Consequently, no adjustment has been made to the comparative
financial information as at 31 December 2016 or 30 June 2016. The Group has
not early adopted any standard, interpretation or amendment that was issued
but is not yet effective.
The Group is considering the impact on the financial statements of relevant
forthcoming standards, including IFRS 15 Revenue from Contracts with Customers
(effective 1 January 2018), IFRS 16 Leases (effective 1 January 2019), and
IFRS 9 Financial Instruments (effective 1 January 2018).
It is expected that substantially all of the Group's revenue will be treated
as revenue from contracts with customers under IFRS 15, but the new standard
will not require material changes to the timing of revenue recognition. We
also expect that certain sales commissions that meet the requirements stated
within the standard may need to be recognised as an asset and amortised over
the life of the contracts to which they relate. This treatment is not
anticipated to materially affect the profit of the Group.
As a result of the changes within the forthcoming standard IFRS 16 Leases, the
majority of our existing operating leases will be accounted for as right of
use assets, which will be largely offset by corresponding lease liabilities.
The assets will be recognised as property, plant and equipment, and the lease
liability will increase net debt. It is anticipated that operating expenses
will decrease and financing costs will increase as the operating lease expense
is replaced by depreciation and interest. Depreciation will be straight-line
over the life of the lease but the financing charge will decrease over the
lease term. The overall impact on net profit is not expected to be material.
The changes resulting from the new standard IFRS 9 are expected to be minimal.
Financial assets are subject to new rules regarding provisions for impairment,
however the Group has minimal financial assets (other than trade debtors), and
a history of minimal impairments against these assets. Therefore the impact is
not expected to be material.
4. Segmental information
Segmental information has been presented in accordance with IFRS 8 Operating
Segments. Reporting segments reflect the internal management organisation and
reporting structures. Each segment is headed by a Regional Managing Director
who reports directly to the Chief Executive and is a member of the Executive
Leadership Team responsible for the review of Group performance. The operating
businesses within each segment report to the Regional Managing Directors.
Given the international nature of the Group, foreign exchange movements can
have a significant impact on regional performance and as a result the
segmental analysis is presented at constant exchange rates (CER).
Restructuring costs and central and regional overheads are also presented
separately as they are not directly attributable to any reportable segment.
The basis of presentation is consistent with the information reviewed by
internal management. Revenue and profit are from ongoing operations, which is
defined and reconciled to the nearest equivalent GAAP measure in Note 12.
Revenue Revenue Operating Operating
30 June 2017 30 June 2016 profit profit
£m £m 30 June 2017 30 June 2016
£m £m
France 136.6 135.7 19.5 21.5
Benelux 38.9 38.5 11.1 10.4
Germany 36.8 33.4 10.6 9.5
Southern Europe 35.9 33.9 5.5 5.0
Latin America 15.8 11.4 1.5 1.5
Europe 264.0 252.9 48.2 47.9
UK & Ireland 122.5 115.9 22.2 21.6
Rest of World 60.2 54.6 13.3 12.3
UK & Rest of World 182.7 170.5 35.5 33.9
Asia 82.4 63.5 8.2 6.3
North America 386.7 298.0 45.8 35.4
Pacific 80.8 74.2 16.9 15.5
Central and regional overheads - - (37.4) (34.2)
Restructuring costs - - (3.8) (4.4)
Ongoing operations at constant exchange rates 996.6 859.1 113.4 100.4
Disposed businesses 168.3 172.0 52.5 20.2
Continuing operations at constant exchange rates 1,164.9 1,031.1 165.9 120.6
Foreign exchange 68.7 (44.0) 11.5 (6.6)
Continuing operations at actual exchange rates 1,233.6 987.1 177.4 114.0
One-off items - operating (7.7) (2.1)
Amortisation of intangible assets1 (25.9) (20.1)
Operating profit 143.8 91.8
One-off items and amortisation and impairment of intangible assets
Amortisation and impairment of intangibles1 Amortisation and impairment of intangibles1 One-off items - operating One-off items - operating
30 June 2017£m 30 June 2016£m 30 June 2017£m 30 June 2016£m
Europe 3.1 2.9 1.3 0.3
UK & Rest of World 3.5 2.6 0.2 0.2
Asia 1.4 1.2 0.4 0.3
North America 13.4 12.1 4.1 1.3
Pacific 1.2 0.4 0.3 0.3
Central and regional 1.9 1.6 0.9 0.1
Disposed businesses - 0.1 - (0.3)
Total at constant exchange rates 24.5 20.9 7.2 2.2
Foreign exchange 1.4 (0.8) 0.5 (0.1)
Total at actual exchange rates 25.9 20.1 7.7 2.1
1 excluding computer software
One-off items - operating largely comprises acquisition and integration costs
associated with significant acquisitions and in particular the Steritech
acquisition in North America.
5. Business combinations
The Group purchased 100% of either the share capital or the trade and assets
of 24 companies and businesses in the period and 57% of PCI India.
The Group has elected to account for the PCI India acquisition under the
anticipated acquisition method per IAS 1 , and therefore no non-controlling
interest is recognised. Under this accounting policy, put and call options are
accounted for as an anticipated acquisition of the underlying non-controlling
interest. The acquisition includes put options whereby the non-controlling
interest can require the Group to purchase the remaining 43% of shares in
stages over a fixed term (between five and ten years from the date of
acquisition). The Group also holds a call option to acquire the shares from
the non-controlling interest at the end of this fixed term which has not been
recognised as it has nil fair value. The Group has recognised contingent
consideration of £43.0m for the anticipated acquisition of the shares. The
Group has also made an accounting policy choice, consistent with IAS 39, to
recognise movements in the fair value of the liability for the options through
other comprehensive income.
The total consideration in respect of acquisitions in the current year was
£281.6m. Details of goodwill and the fair value of net assets acquired are as
follows:
6 months to 30June 2017 6 months to 30June 2016
£m £m
Purchase consideration:
- Cash paid 207.5 25.6
- Deferred and contingent consideration 74.1 6.8
Total purchase consideration 281.6 32.4
Fair value of net assets acquired (56.5) (19.8)
Goodwill from current period acquisitions 225.1 12.6
Goodwill represents the synergies, workforce and other benefits expected as a
result of combining the respective businesses.
Deferred consideration of £3.2m and contingent consideration of £70.9m is
payable in respect of the above acquisitions. Contingent consideration is
payable based on a variety of conditions including revenue and profit targets
being met.
The provisional fair value of assets and liabilities arising from acquisitions
in the period are shown below. The provisional fair values will be finalised
in the 2017 financial statements. The fair values are provisional as the
acquisition accounting has not yet been finalised, primarily due to the
proximity of the acquisitions to the period end.
6 months to 30June 2017 6 months to 30June 2016
£m £m
Non-current assets
- Intangible assets 45.9 21.3
- Property, plant and equipment 11.7 1.0
Current assets 25.6 2.2
Current liabilities (20.0) (1.5)
Non-current liabilities (6.7) (3.2)
Net assets acquired 56.5 19.8
From the dates of acquisition to 30 June 2017, these acquisitions contributed
£40.5m to revenue and £5.8m to operating profit. If the acquisitions had
occurred on 1 January 2017, the revenue and operating profit of the combined
entity would have amounted to £1,252.7m and £553.2m respectively.
In relation to prior period acquisitions, there has been an adjustment to the
provisional fair values resulting in an increase to goodwill of £0.5m.
In addition £5.0m was paid in respect of deferred and contingent consideration
for prior year acquisitions resulting in the total cash outflow in the period
from current and past period acquisitions, net of cash acquired, of £206.8m.
6. Disposal group held for sale and business disposals
Net profit on disposal of businesses
30 June 2017£m
Disposal group held-for-sale impairment charge (19.1)
Net gain on disposal of businesses 481.6
462.5
A non-current asset or a disposal group is classified as held for sale if its
carrying amount will be recovered principally through sale rather than through
continuing use, it is available for immediate sale, and sale is highly
probable within one year.
On initial classification as held for sale, non-current assets and disposal
groups are measured at the lower of previous carrying amount and fair value
less costs to sell with any adjustments taken to profit or loss. The same
applies to gains and losses on subsequent remeasurement although gains are not
recognised in excess of any cumulative impairment loss. Any impairment loss
on a disposal group is first allocated to goodwill, and then to remaining
assets and liabilities on pro rata basis, except that no loss is allocated to
inventories, financial assets, deferred tax assets and employee benefit assets
, which continue to be measured in accordance with the Group's accounting
policies. Intangible assets and property, plant and equipment once classified
as held for sale or distribution are not amortised or depreciated.
Subject to a successful completion of an employee consultation process and
competition clearance, eight textile laundries in France are planned to be
sold to Regie Linge Developpement ('RLD') for consideration of E33.0m. This
disposal is expected to complete in the second half of the year. The assets
and liabilities of the disposal group have been written down to their
recoverable value resulting in an impairment of £19.1m, and classified as held
for sale as set out in the table below.
Net assets of disposal group held for sale
30 June 2017
£m
Assets held for sale
Property, plant and equipment 43.2
Inventories 0.9
Liabilities held for sale
Trade and other payables (0.2)
Retirement benefit obligations (2.8)
Deferred and current tax (10.7)
Net assets held for sale 30.4
On the 30 June 2017 the Group sold its Workwear and Hygiene operations in 10
countries, principally in the Benelux and Central and Eastern Europe, to a
joint venture with the CWS-Boco businesses of Franz Haniel & Cie. Holding
Company. The disposal group was recognised as held for sale at 31 December
2016. In addition to cash consideration the Group received an 17.8% share in
the combined CWS-Boco business. This is accounted for as an investment in
associate at 30 June 2017. The value of the investment in associate is based
on the valuation of the combined businesses.
The Group has made an accounting policy choice to recognise a full disposal of
the businesses to CWS-boco under IFRS 10, rather than accounting for this as a
partial disposal under IAS 28. Under this approach, no elimination of the gain
or loss is performed and the fair value of the retained investment is its
deemed cost for the purposes of subsequent accounting. Details of net assets
disposed and disposal proceeds in the year relating to this disposal are as
follows:
30 June 2017
£m
Non-current assets
- Intangible assets 39.1
- Property, plant and equipment 202.7
Current assets
- Inventories 2.0
- Trade and other receivables 52.0
- Cash 17.5
Current liabilities
- Trade and other payables (44.7)
Non-current liabilities
- Provisions (1.7)
- Retirement benefit obligations (2.0)
- Deferred and current tax (19.6)
Net assets and liabilities disposed 245.3
Cash consideration (419.4)
Deferred consideration (30.0)
Share of investment in associate (254.0)
Total consideration (703.4)
Cumulative exchange recycled from translation reserve (42.2)
Costs of disposal 18.7
Net gain on disposal (481.6)
7. Dividends
6 months to 30 June 2017 6 months to 30 June 2016 Year to 31 December 2016
£m £m £m
2015 final dividend paid - 2.06p per share - 37.5 37.5
2016 interim dividend paid - 0.99p per share - - 18.0
2016 final dividend paid - 2.38p per share 43.5 - -
43.5 37.5 55.5
The directors have declared an interim dividend of 1.14p per share amounting
to £21.0m payable on 13 September 2017 to shareholders on the register at 12
August 2017. The Company has a progressive dividend policy and will take a
view on the level of any growth for 2017 based on the year-end results. These
interim financial statements do not reflect this dividend payable.
8. Retirement benefit obligations
Apart from the legally required state social security schemes, the Group
operates a number of pension schemes around the world covering many of its
employees. The major schemes are of the defined benefit type with assets held
in separate trustee administered funds.
The principal scheme in the Group is the Rentokil Initial 2015 Pension Scheme
in the United Kingdom ("the scheme"). It has a number of defined benefit
sections which are all now closed to new members. At 30 June 2017 the scheme
was valued at an accounting surplus of £265.7m (December 2016: £272.0m) on the
Group's balance sheet.
Other schemes currently in an accounting surplus position total £0.6m and
other schemes currently in an accounting deficit position total £27.3m
The scheme is re-appraised semi-annually by independent actuaries based upon
actuarial assumptions in accordance with IAS 19 requirements. The principal
assumptions used for the scheme are shown below:
30 June 2017 31 December 2016
£m £m
Weighted average %
Discount rate 2.6% 2.6%
Future salary increases N/A N/A
Future pension increases 3.4% 3.4%
RPI Inflation 3.5% 3.5%
CPI Inflation 2.4% 2.4%
2.4%
The trustees of the scheme value the liabilities on a different basis and in
the most recent valuation at 31 December 2015, it was agreed that the scheme
is now fully funded and no contributions are required from the company at this
time. The funding position will be reviewed at the next triennial actuarial
valuation, which is due to be carried out at 31 December 2018.
9. Bank and other borrowings
At 30 June 2017 At 31 December 2016
£m £m
Non-current
RCF and other bank borrowings 360.7 473.4
Bond debt 743.1 764.6
Finance lease liabilities 26.9 22.4
1,130.7 1,260.4
Current
Bank overdrafts 5.1 54.3
Bank borrowings 308.3 -
Bond debt 43.8 -
Bond interest accruals 18.7 6.2
Finance lease liabilities 12.4 16.9
388.3 77.4
Total bank and other borrowings 1,519.0 1,337.8
1,519.0
1,337.8
At 30 June 2017, the Group has a £420m revolving credit facility (RCF) which
is available for cash drawings up to £360m, and for guarantees and letters of
credit up to £60m. The maturity date is January 2022. As at 30 June 2017
£308.3m was drawn under the part of the facility available for cash drawings
and £33.2m under the part available for guarantees.
The Group also has a US$25m revolving credit facility, maturing December 2019,
on terms in line with main RCF. At 30 June 2017, nothing was drawn on this
facility.
In addition the Group has Term Loans available for cash drawings of up to
£200m and $157m with a maturity date of December 2018. Both were fully drawn
during the six months to 30 June 2017. The cost of borrowing under the £200m
and $157m loans were 1.01% and 1.99% respectively.
Medium-term notes and bond debt comprises:
Bond interest coupon Effective hedged interest rate
Non-current
E50m bond due March 20181 Float 3M EURIBOR+0.48% Fixed 0.66%
E500m bond due September 2019 Fixed 3.375% Fixed 3.50%
E350m bond due October 2021 Fixed 3.25% Fixed 3.41%
£1.3m perpetual debentures Fixed 5.00% Fixed 5.00%
£0.3m perpetual debentures Fixed 4.50% Fixed 4.50%
Average cost of bond debt at period end rates 3.30%
1 The E50m bond due March 2018 was fixed at rate of 0.57% payable
quarterly. The effective hedge rate is higher than the annual coupon on our
bonds due to discount and fees paid on issuance
The carrying values and the fair values of the Group's non-current borrowings
are shown in the table below. Fair values are based on cash flows discounted
at the current market rates.
Carrying amount Carrying amount Fair Value Fair Value
30 June 2017 31 December 2016 30 June 2017 31 December 2016
£m £m £m £m
Bank borrowings 360.7 473.4 360.7 473.4
E50m bond due March 2018 - 42.6 - 42.6
E500m bond due September 2019 437.4 425.0 469.5 465.6
E350m bond due October 2021 304.7 296.0 339.4 337.0
£1.6m perpetual debentures 1.0 1.0 1.7 1.7
Finance lease liabilities 26.9 22.4 26.9 22.4
1,130.7 1,260.4 1,198.2 1,342.7
10. Derivative financial instruments
For all financial instruments held by the Group, those that are held at fair
value are to be classified by reference to the source of inputs used to derive
the fair value. The following hierarchy is used:
Level 1 - unadjusted quoted prices in active markets for identical assets or
liabilities;
Level 2 - inputs other than quoted prices that are observable for the asset or
liability either directly as prices or indirectly through modelling based on
prices;
Level 3 - inputs for the asset or liability that are not based on observable
market data.
Financial instrument Hierarchy level Valuation method
Financial assets traded in active markets 1 Current bid price
Financial liabilities traded in active markets 1 Current ask price
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