annington annual rep 2019-web - Page 18



Strategic report | Business review
Business review
BUSINESS REVIEW
FINANCING
The financing structure can be simplified using the diagram shown below:
The Group is financed by shareholder’s equity, external bonds and a term loan. In
July 2017, Annington Funding plc (“AFP”) issued five tranches totalling £3 billion
of corporate, unsecured bonds under an Euro Medium Term Note (“EMTN”)
programme (rated BBB) and drew down a term loan totalling £400 million, also
unsecured. Arranged as part of the refinancing, a £300 million five-year revolving
credit facility, which is currently undrawn, is available to Annington Funding plc.
Source of funds
MoD & private rent, income from properties less property holding costs & overheads
AFP has issued bonds in the following denominations, maturities and fixed interest
rates:
Currency
Principal Amount
Final Maturity
Coupon
Pound Sterling (£)
Annington Homes Limited
Holding company
Euro (€)
625m
600m
625m
625m
600m
12-Jul-25
12-Jul-29
12-Jul-34
12-Jul-47
12-Jul-24
2.646%
3.184%
3.685%
3.935%
1.650%
Annington Funding plc
Special purpose vehicle
Service of debt
Cross currency swaps are in place for the €600 million bond, converting its initial
nominal balance to £526.3 million. These swaps also mitigate volatility of foreign
currency movements in future interest and capital repayments. The function of these
swaps increases the effective interest rate of the Euro tranche debt to 2.764%, fixed
for the life of the bond. The debt obligation in cash for the bonds and swaps is
£97.8 million per annum and the obligation for the term loan, based on LIBOR
rates at 31 March 2019, is £9.2 million (2018: £8.8 million).
Financing instruments
Finance costs
2.646% 2025 GBP Bonds
Fixed interest on bonds
3.184% 2029 GBP Bonds
LIBOR + 1.5% Interest
on £400m facility
3.685% 2034 GBP Bonds
3.935% 2047 GBP Bonds
1.650% 2024 EUR Bonds
Commitment fees
on £300m facility
2.764% Cross currency swap 2024
£400m Facility (Drawn) 2022
£300m Facility (Undrawn) 2022
The debt has a number of covenants to comply with under both the bonds and loan facility. These are described in detail in the
Going Concern section of this report. The Group did not breach any covenants as at 31 March 2019 and have no expectation to
do so in the foreseeable future.
18 | Annington Limited Annual Report & Accounts 2019
Annington Limited Annual Report & Accounts 2019 | 19

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