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68
Financial Statements
At 28 February 2011, the Group held an interest rate swap contract which
was designated as hedged against a proportion of the interest cash flow
payable in respect of its LIBOR floating rate borrowings.
The fair value of interest rate swap contracts at 28 February 2011 is
£1,501,000 (2010: £1,608,000).
The interest rate hedges of the expected future interest cash flows was
assessed to be highly effective and an unrealised profit of £107,000 (2010:
loss £1,608,000), with a deferred tax charge of £30,000 (2010: credit
£450,000) was included in other comprehensive income.
The principal amount of the swap was £28,125,000 at 28 February 2011 and
reduces in equal quarterly installments of £175,000 to £25,500,000 by
October 2014.
Capital Management
The objective of the Group’s capital management is to ensure that it maintains
a strong credit rating and healthy capital ratios in order to support its business
and maximise shareholder value.
The Group monitors capital using a gearing ratios. Gearing based on net debt
divided by capital was 47.1% at 28 February 2011 (2010: 31.7%) Gearing
excluding fleet finance and financed fleet assets was 33.5% at 28 February
2011 (2010: 15.2%). The Group includes the following within borrowings;
bank loans and overdrafts, finance leases and hire purchase contracts, income
shares and loan notes. Capital comprises equity attributable to the equity
holders of the parent.
The Group uses share capital to partly fundmajor acquisitions where considered
appropriate.
The Group is not subject to any externally imposed capital restraints.
Dividends are payable out of distributable profits after considering the forecast
funding requirements and headroom.
Liquidity Risk
Liquidity risk arises from the Group’s management of working capital and the
finance charges and principal repayments on its debt instruments. It is the risk
that the Group will encounter difficulty in meeting its financial obligations as
they fall due. See also the maturity profile of loans and borrowings below.
The Group prepares rolling weekly 3-month cash flow projections and daily
cash forecasts for the following week. Actual cash and debt positions along
with available facilities and headroom are reported weekly. Working capital
levels including analyses of receivables and payables profiles are reported by
division weekly. These are monitored by Group management. For the largest
part of the business, cash is monitored against forecast and reported to Group
management on a daily basis.
In addition, full annual 5-year forecasts are prepared including cash flow and
headroom forecasts. These are full detailed forecasts built up by division and
consolidated for the Group.
The Financial Statements have been prepared using the going concern basis
as the financial forecasts support the assumption that the Group will be able
to meet its obligations when they fall due.
The table below summarises the maturity analysis of financial liabilities at 28
February 2011 based on contractual undiscounted payments:
< 1 year
1 to 5 >5 years
Total
years
£’000 £’000 £’000 £’000
Period to 28 February 2011
Loans and borrowings
49,846 13,459 80,745 144,050
Finance lease borrowings
23,853 23,248
-
47,101
Trade payables
39,488
-
-
39,488
Other payables
19,631
-
-
19,631
Interest rate swap
1,501
-
-
1,501
134,319 36,707 80,745 251,771
Period to 28 February 2010
Loans and borrowings
49,273 7,913 4,743 61,929
Finance lease borrowings
20,818 32,307
-
53,125
Trade payables
29,227
-
-
29,227
Other payables
28,172
-
-
28,172
Interest rate swap
1,608
-
-
1,608
129,098 40,220 4,743 174,061
22. Investments in Associates and Joint Ventures
Year End
Issued
Residence
Percentage of
Ordinary
nominal value of
Shares of
issued shares
£1.00 each
or members’
capital held
Ropewalks One LLP
1
30 September
n/a
UK
50%
Westbury Fitness Limited
31 December
10,000
Guernsey
50%
Westbury Fitness Hull Limited
30 April
1
Isle of Man
50%
Westar Limited
31 December
10,000
Guernsey
50%
Westar 2 Limited
31 December
10,000
Guernsey
50%
Burion Limited
31 December
2
Guernsey
50%
The Synergy Gateshead Unit Trust
31 December
n/a
Jersey
50%
The Gateshead Unit Trust
31 December
n/a
Jersey
50%
Endeavour Ware Limited
1
31 December
10,000
Guernsey
47.5%
Convoy Limited
5 April
2
Isle of Man
50%
Starion Tottenham Court Road Limited
30 April
1
Isle of Man
50%
Stobart Biomass Products Limited
31 March
10,000
UK
50%
Everdeal Limited
1,2
31 December
35
3
Eire
5%
1
These entities are associates, all others are joint ventures.
2
Treated as an associated company as the provisions in the shareholder
agreement and option to increase the shareholding by a further 27.5% are
considered to give the Group significant influence.
3
On 10 November 2010 the Group made a 5% interest in Everdeal Limited
which owns Aer Arann Group. The shareholding represents 35 preference
shares of
€
1 each. The Group has an option to increase the shareholding
by a further 27.5%. Consequently the Group have equity accounted for
32.5% of the profit or loss of the investment in line with the guidance set
out in IAS28 Investments in Associates.
4
On 24 March 2010 the Group made a 50% investment in newly set up
Stobart Biomass Products Limited for £30m, half in shares and half in cash.
Further details about the operations of Stobart Biomass Products Limited are
set out on page 13.