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18. Net borrowings

(a) Analysis of net borrowings

    Current Non-current Total
  Notes Within
one
year
£m
One
to
two
years
£m
Two
to
five
years
£m
More
than
five
years
£m
Total
£m
£m
2008              
Other borrowings              
  £350 million 6 3/4% 2019 unsecured bond i (346) (346) (346)
  £325 million 7% 2012 unsecured bond i (325) (325) (325)
  Other secured US$ denominated loan   (2) (1) (4) (5) (10) (12)
  Other long term borrowings   (7) (37) (3) (40) (47)
Finance lease obligations iii (1) (1) (2) (1) (4) (5)
Bank overdrafts   (20) (20)
Other short term bank borrowings   (67) (67)
Borrowings   (97) (39) (334) (352) (725) (822)
Bank balances and cash 102 102
Short term bank deposits ii 12 12
Cash and cash equivalents iv 114 114
Net borrowings   17 (39) (334) (352) (725) (708)
2007              
Other borrowings              
  £350 million 6 3/4% 2019 unsecured bond i (346) (346) (346)
  £325 million 7% 2012 unsecured bond i (325) (325) (325)
  £30 million 12 3/8% 2008 Westland Group plc debenture i
(30)





(30)
  Other secured US$ denominated loan   (1) (1) (6) (1) (8) (9)
  Other long term borrowings   (2) (4) (2) (6) (8)
Finance lease obligations iii (1) (1) (2) (8) (11) (12)
Bank overdrafts   (32) (32)
Other short term bank borrowings   (26) (26)
Borrowings   (92) (6) (335) (355) (696) (788)
Bank balances and cash   135 135
Short term bank deposits ii 147 147
Cash and cash equivalents iv 282 282
Net borrowings    190 (6) (335) (355) (696) (506)

Other borrowings include: Unsecured £350 million (2007 – £350 million) 63/4% bond maturing in 2019 less unamortised issue costs of £4 million (2007 – £4 million), unsecured £325 million (2007 – £325 million) 7% bond maturing in 2012 less unamortised issue costs of nil (2007 – nil) and secured term loans of £10 million (2007 – £39 million). These secured term loans include nil (2007 – £30 million) debenture stocks of Westland Group plc, redeemed in the year, which were secured by a floating charge on the undertaking and net assets including financial assets of nil (2007 – £88 million) of that company and certain of its subsidiaries and guaranteed by GKN Holdings plc, and £10 million (2007 – £9 million) secured by way of a fixed and floating charge on certain Aerospace fixed assets.

Notes

(i) Denotes borrowings at fixed rates of interest until maturity. All other borrowings and cash and cash equivalents are at variable interest rates.

(ii) The average interest rate on short term bank deposits was 2.22% (2007 – 5.48%). Deposits at 31 December 2008 have no fixed maturity date (2007 – 2 days).

(iii) Finance lease obligations gross of finance charges fall due as follows: £1 million within one year (2007 – £2 million); £4 million in one to five years (2007 – £8 million) and £2 million in more than five years (2007 – £12 million).

(iv) £10 million (2007 – £18 million) of the Group’s cash and cash equivalents are held by the Group’s captive insurance company to maintain solvency requirements and as collateral for Letters of Credit issued to the Group’s principal external insurance providers. These funds, therefore, are not circulated within the Group on demand.

(b) Fair values of borrowings and cash and cash equivalents

  2008 2007
  Book value
£m
Fair value
£m
Book value
£m
Fair value
£m
Other borrowings (730) (520) (718) (736)
Finance lease obligations (5) (5) (12) (12)
Bank overdrafts and other short term bank borrowings (87) (87) (58) (58)
Bank balances and cash 102 102 135 135
Short term bank deposits 12 12 147 147
  (708) (498) (506) (524)

The following methods and assumptions were used in estimating fair values for financial instruments:

Unsecured bank overdrafts, other short term bank borrowings, bank balances and cash and short term bank deposits approximate to book value due to their short maturities. For other borrowings and finance lease obligations carrying fixed rates of interest, the repayments which the Group is committed to make have been discounted at the relevant interest rates applicable at 31 December 2008. Bonds included within other borrowings have been valued using quoted closing market values.

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