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  Pearson Annual Report 1997    

Notes to the Accounts

   
 

17. Borrowings

 

  1997 1996
All figures in millions Group Company Group Company
Borrowing summary (by maturity) Short term        
Loans or instalments due within one year 7.9 - 8.5 3.0
Bank loans, overdrafts and commercial paper 305.2 295.2 165.7 167.3





Total due within one year 313.1 295.2 174.2 170.3
Medium and long term        
Loans or instalments therof repayable:        
From one to two years 0.2 - 7.8 -
From two to five yeas 242.3 140.9 6.3 4.8
After five years not by instalments 366.3 100.0 541.1 184.3





Total due after more than one year 608.8 240.9 555.2 189.1





Total borrowing 921.9 536.1 729.4 359.4





Note: In the absence of enforceable contracts from the relevant lenders to refinance current advances as they fall due, at 31 December 1997 140.8m (1996: 84.3m) of debt currently classified from two to five years would be repayable within one year.

  1997 1996
All figures in millions    
Borrowing summary (by currency)    
US dollar 518.5 379.3
Sterling 317.5 210.2
Spanish pesetas 44.9 33.7
French francs 16.6 19.1
Canadian dollars 10.9 16.5
Hong Kong dollars 0.3 56.1
Other currencies 13.2 14.5



  921.9 729.4



 

  1997 1996
All figures in millions Group Company Group Company
Borrowing summary (by instrument)        
Secured        
Bank loans and overdrafts 0.3 - 0.1 -





Unsecured        
10.5% Euro-sterling Bond 2008 100.0 100.0 100.0 100.0
9.5% Euro-sterling Bonds 2004 117.3 - 113.2 -
10.75% Eoru-sterling Bonds 2002 100.0 - 100.0 -
Other unsecured borrowings 7.9 0.1 8.5 3.0
Unsecured bank loans and overdrafts, commercial paer and medium term notes 596.4 436.0 407.6 256.4





Total borrowings 921.9 536.1 729.4 359.4





Forward foreign exchange contracts
Foreign currency transactional cash flows are hedged using forward foreign exchange contracts. At 31 December 1997, the UK Group had contracted to exchange the equivalent of 66m and the estimated mark-to-market gain on these contracts at 31 December 1997 was 0.7m.

 





Interest rate hedging transactions Notional
principal
m
Weighted
avereage
rate %
Mark-to
-market
Value m




Swaps in force at 31 December 1997      
US dollar: converting fixed debt to floating 152 7.23 11
US dollar: converting floating debt to fixed 152 5.99 -
Sterling: conerting fixed debt to floating 120 6.74 5
Sterling: converting floating debt to fixed 40 7.16 -
Convertong fixed sterling debt to floating US dollar 117 10.41 19




      35




Note: All of the total mark-to-market gain on the above transactions of 35m arises from transactions that hedge debt issues for their entire lives. There is a mark-to-market loss on those issues of 55m included in the footnote below.

The following shows the amount of these contracts which are in force at the end of each year.

 

  1997 1998 1999 2000
All figures in million        
US dollar: converting fixed debt to floating 152 152 152 152
US dollar: converting floating debt to fixed 152 152 167 130
Sterling: conerting fixed debt to floating 120 120 120 120
Sterling: converting floating debt to fixed 40 40 40 -
Convertong fixed sterling debt to floating US dollar 117 117 117 117





 

As a result of the above transactions, the interest rate exposure of the borrowings of the Group at 31 December 1997 was as follow:





All figures in millions Total Gross
borrowing
Fixed
rate
Floating
rate
Sterling 317 120 197
US dollar 519 160 359
Other currencies 86 - 86




  922 280 642




Note: Of this total, 466m relates to long-term borrowings with a maturity of over four years. The current value of this debt at 31 December 1997, considering only the movements in risk-free interest rates, is 521m. The difference between the current and book values of these borrowings is partially offset by the mark-to-market gain on the related swaps detailed see above.

1997 Annual Report
* Group summary
* Information
* Education
* Entertainment
* Investment banking
* Chairman's statement
* Chief Executive's review
* Financial Review
* Financial Policy
* Consolidated profit and loss account
* Consolidated balance sheet
* Consolidated statement of cash flows
* Statement of total recognised gains and losses
* Note of historical cost profits and losses
* Reconciliation of movements in equity shareholders' funds
* Principal subsidiaries and associates
* Five year summary
* Shareholder information
   
* Notes to the accounts
 

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