annington annual rep 2019-web - Page 70



Financial statements | Notes to the financial statements
Notes to the financial statements
20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(CONTINUED)
Fair values
The fair values of the Group’s borrowings, cross currency swap and offsetting swaps are determined by a Level 2 valuation
technique.
Cash management and liquidity
Liquidity risk and financial maturity analysis
Cash levels are monitored to ensure sufficient resources
are available to meet the Group’s current and projected
operational commitments. Annington Funding plc provides
funding to Annington Homes Limited who in turn provides
intercompany loans at fixed interest rates to other entities in
the Group.
In respect of the net non-derivative financial liabilities, the
table below has been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on
which the Group can be required to pay or receive monies. The
table includes both interest and principal cash flows. In respect
of derivative financial instruments, the fair values have been
calculated using appropriate market discount rates to arrive
at the future cash flows.
AFP holds a £300 million liquidity facility that remains undrawn
as at 31 March 2019.
2019
Loans and borrowings
Finance lease liabilities
Total non-derivative financial liabilities
Unsecured bonds
Cross currency swap
Less than one year
£’000
One to five years
£’000
Total financial liabilities
37,310
37,310
-
-
4,842,892
101,444
791,239
3,950,209
265
128
137
-
4,880,467
138,882
791,376
3,950,209
37,989
6,013
24,053
7,923
4,918,456
144,895
815,429
3,958,132
Total
£’000
Less than one year
£’000
One to five years
£’000
More than five years
£’000
32,649
32,447
202
-
Loans and borrowings
4,922,351
102,656
804,550
4,015,145
Total non-derivative financial liabilities
4,955,000
135,103
804,752
4,015,145
2018
Non-derivative financial liabilities
Trade and other payables
Derivative financial instruments
Cross currency swap
Total financial liabilities
Fair value
£’000
3,001,260
2,974,173
3,029,517
400,000
396,904
400,000
3,401,260
3,371,077
3,429,517
-
4,647
4,647
3,401,260
3,375,724
3,434,164
Par value of debt
£’000
Balance sheet value
£’000
Fair value
£’000
3,001,260
2,981,489
3,020,152
400,000
396,010
400,000
3,401,260
3,377,499
3,420,152
-
(3,599)
(3,599)
3,401,260
3,373,900
3,416,553
More than five years
£’000
2018
Level 2
Non-derivative financial liabilities
Unsecured bonds
Unsecured term loan
Derivative financial instruments
Cross currency swap
Balance sheet value
£’000
Derivative financial liability
Non-derivative financial liabilities
Trade and other payables
Par value of debt
£’000
Level 2
Non-derivative financial liabilities
Unsecured term loan
Cash balances are invested in short-term to medium-term
money market deposits and are used to manage liquidity whilst
maximising the rate of return on cash resources, giving due
consideration to risk. Longer-term liquidity requirements are
forecast to be met out of future operational cash and
income streams.
Total
£’000
2019
25,176
4,644
18,576
1,956
4,980,176
139,747
823,328
4,017,101
Derivative financial asset
Cross currency swap

Unsecured bonds
Cross currency swaps
The volume of market trades of the Group’s bonds is not
considered sufficient to be an active market. Therefore,
listed bonds have been fair valued by a third party valuer
using a spread to a reference gilt curve. The reference gilt
curve is based upon observable market data. The spread is
determined with reference to comparable sector bond pricing.
This represents a Level 2 fair value measurement. Further
details, including covenant information have been mentioned
previously in this note.
The fair value of derivative financial instruments is based on
valuations by an independent valuer using the present value
of estimated future cash flows, which are discounted using the
applicable yield curves derived from quoted interest rates as at
31 March 2019.
Unsecured term loan
This loan relates to a £400 million term loan ending in July
2022 that is unsecured. Further details, including covenant
information have been mentioned previously in this note.

70 | Annington Limited Annual Report & Accounts 2019
Annington Limited Annual Report & Accounts 2019 | 71

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