bat plc annual report 2007 - Notes on the accounts: Note 21-23

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21 Borrowings

The floating rate interest rates are based on EURIBOR or US LIBOR plus a margin ranging between 36 and 200 basis points.

Current borrowings include interest payable of £136 million at 31 December 2007 (2006: £133 million). Included within non-current borrowings are £2,466 million (2006: £2,340 million) of borrowings subject to fair value hedges where this amortised cost has been decreased by £49 million (2006: decreased £52 million) in the table above.

The fair value of borrowings is estimated to be £6,862 million (2006: £6,772 million) and has been determined using quoted market prices or discounted cash flow analysis.

Amounts secured include finance leases of £65 million (2006: £62 million) and the remaining amounts are secured on certain property and inventory of the Group (note 10 and note 17).

Borrowings are repayable as follows:

The contractual gross maturities in each year include the borrowings maturing in that year together with forecast interest payments on all borrowings which are outstanding for all or part of that year.

Borrowings are denominated in the functional currency of the subsidiary undertaking or other currencies as shown below:

Details of the derivative financial instruments included in these tables are given in note 16.

The exposure to interest rate changes when borrowings are repriced is as follows:

Details of the derivative financial instruments included in these tables are given in note 16.

Effective interest rates are as follows:

The values and rates shown above do not reflect the effect of the interest rate and cross-currency swaps detailed in note 16.

Finance lease liabilities per the Balance Sheet and on a contractual gross maturity basis are payable as follows:

Borrowings facilities

The facilities include undrawn amounts in respect of the Group’s central banking facility of £1.75 billion (2006: £1.75 billion). In March 2007, a one year option was exercised with final maturity dates between March 2011 and March 2012.

As explained in the Director’s Report, a new central banking facility of €1.8 billion was entered into in 2007.

Facility fees of £2 million were charged to the Income Statement in 2007 (2006: £2 million) in respect of undrawn committed borrowing facilities.

22 Other provisions for liabilities and charges
  

The restructuring provisions relate to the restructuring costs incurred and reported as exceptional items in the Income Statement. The principal restructurings provided in 2007 and 2006 are as described in note 3(e). While some elements of the non-current provisions of £76 million will unwind over several years, as termination payments are made over extended periods in some countries, it is estimated that over 50 per cent will unwind in 2009 and approximately 80 per cent within five years.

Provisions in respect of acquired businesses mostly relate to those which were part of the integration of the Rothmans businesses in 1999, the transition of Imperial Tobacco Canada Ltd. to a subsidiary in 2000 and the reorganisation of the Italian business acquired in 2003. While some elements of the non-current provisions of £9 million will unwind over several years, it is estimated that around 50 per cent will unwind within five years.

Employee-related benefits mainly relate to long term employee benefits other than post-retirement benefits. As the principal components of these provisions are long service awards and ‘Jubilee’ payments due after a certain service period, they will unwind over several years. It is estimated that approximately 50 per cent of the non-current provisions of £15 million will unwind within five years.

Other provisions comprise balances set up in the ordinary course of general business that cannot be classified within the other categories, such as sales returns, onerous contracts and the age verification scheme in Japan, together with amounts in respect of supplier, excise and other disputes. The nature of the amounts provided in respect of disputes is such that the extent and timing of cash flows is difficult to estimate and the ultimate liability may vary from the amounts provided.

Amounts provided above are shown net of reversals of unused provisions which include £10 million (2006: £15 million) for restructuring of existing businesses, £3 million (2006: £12 million) for acquired businesses, £nil (2006: £2 million) for employee-related benefits and £24 million (2006: £12 million) for other provisions.

23 Trade and other payables

Accrued charges and deferred income include £4 million (2006: £12 million) in respect of interest payable.

There is no material difference between the above amounts for trade and other payables and their fair value, due to the short term duration of the majority of trade and other payables.

Trade and other payables are predominantly denominated in the functional currencies of subsidiary undertakings with less than 6 per cent in other currencies.