The following information is taken from the annual report of a major listed company. Write a short explanation that is suitable for a private shareholder who does not have specialist accountancy training.

The mortgages are secured by charges over property, plant and equipment with net book values totalling £25m.

Finance director’s review

In the immediate future, the group’s debt facilities will be sourced from the banking market. We continue to examine the possibility of obtaining the long-term debt requirements through the corporate bond market by assuming that the terms and conditions are acceptable.

The group manages its exposure to interest rate fluctuations on its borrowings by the use of interest rate swaps. The group does not adopt a definitive stance on the balance of fixed and floating debt. At the financial statement date, 15 per cent of group borrowings were fixed in US dollars and 17 per cent in sterling. The percentage of fixed rate debt is lower than at the end of last year and the intention will be to increase the fixed rate proportion at a suitable opportunity.

Transcribed Image Text:

Note to the accounts: Non-current (long-term) liabilities Unsecured: Bank loans and overdrafts Unsecured loan notes, Year 2 to Year 14, 4.2% to 6.0% Secured: Mortgages, Year 2 to Year 5, 4.1% Year 2 m 373.8 3.9 377.7 10.9 388.6 Year 1 m 1,231.3 4.1 1,235.4 11.4 1,246.8