Tullett Prebon plc Annual Report 2010
Eurobond: Due 6 July 2016 In July 2009 £141,144,000 of 7.04% Guaranteed Notes due 6 July 2016 were issued. At 31 December 2010, the carrying value of the Eurobond due 2016, together with unamortised transaction costs, amounted to £139.1m and its fair value was £139.7m (2009: £129.2m). Eurobond: Due 12 August 2014 As at 31 December 2010, £8,470,000 (2009: £8,770,000) of the 8.25% Step-up Coupon Subordinated Notes due 12 August 2014 remain outstanding. These notes are callable by Tullett Prebon Group Holdings plc at any time. The coupon was reset to 6.52% in August 2009. During the year bonds with a nominal value of £300,000 were repurchased. At 31 December 2010, the carrying value of the Eurobond due 2014, together with unamortised transaction costs and fair value adjustments, amounted to £8.5m and its fair value was £7.0m (2009: £6.6m). Bank loan and credit facility As at the year end the Group had banking facilities consisting of a £210m amortising term loan and a £50m committed revolving credit facility. The term loan is subject to a repayment of £30m in January 2011 with the remaining £180m repayable in January 2012 when the committed revolving credit facility will also mature. As at 31 December 2010 the carrying value of the loan approximated to the fair value. The revolving credit facility was undrawn as at 31 December 2010. The average effective interest rate on the bank loan was 1.6% during 2010 (2009: 2.1%). On 8 February 2011, the Group entered into a new £235m credit agreement consisting of a £120m amortising term loan facility and a £115m committed revolving credit facility. These facilities replace the facilities discussed above. The term loan is subject to repayments of £30m in each of February 2012 and February 2013 with £60m maturing in February 2014. The committed revolving credit facility, which has not been drawn, will also mature in February 2014. Finance leases The Group leases certain items of property, plant and equipment under ﬁnance leases. The average lease term is 2-3 years (2009: 3-4 years). For 2010 the average effective borrowing rate was 7.1% (2009: 7.7%). Interest rates are ﬁxed at the contract date. All leases are on a ﬁxed repayment basis and no arrangements have been entered into for contingent rental payments. The fair value of the Group’s lease obligations approximates to the carrying amount. Group obligations under ﬁnance leases are secured by a lessor’s charge over the leased assets.
In 2009 a £9.0m fair value gain was recognised on a £64.2m/US$117m cross currency swap which matured in August 2009, and a fair value loss of £10.3m was recognised on a US$117m forward foreign exchange contract. In March 2009 the Group entered into forward foreign exchange contracts amounting to US$50m which were designated as net investment hedges of US$50m of dollar denominated net assets. The forward exchange contracts matured in September 2009, resulting in a gain of £2.5m being recorded in other comprehensive income.
22. Derivative ﬁnancial instruments As at 31 December 2010 the Group held no derivative ﬁnancial instruments.
CHAIRMAN’S STATEMENT & BUSINESS REVIEW