21. Financial liabilities

The aggregate bond value above of £953.1m includes the GBP value of the US$ denominated bonds at 31 December 2008. To remove the Group’s exposure to currency fluctuations it has entered into currency swaps which effectively hedge any movement in the underlying bond fair value. The fair value of the currency swaps is disclosed in note 15 – Financial assets in the current year (2007: Financial liability – above).

The Group has insurance debtors which are subject to a securitisation agreement. The purpose of this arrangement is to securitise customer receivables, derived through the provision of instalment credit facilities to insurance customers of the Group. The Group sells these receivables, with no immediate effect on the income statement, for cash to a third party (Gresham in this case). Gresham takes on the rights and responsibilities of these receivables such that the terms of this agreement dictate that Gresham has no recourse to the Group beyond 14% of the total receivable securitised.

The obligations under finance leases are secured on the assets being financed. The bank overdraft, bonds and loan notes are unsecured. The bonds effectively bear a floating interest charge at a rate based on 6 month LIBOR.

Loan notes issued during the year amounted to £5.3m (2007: £5.9m), further loan notes of £nil (2007: £8.2m) were assumed through business acquisition and £3.3m (2007: £34.6m) were repaid. The interest rates attributable to the loan notes are fixed for each new issue. These rates ranged from 3.45% to 5.25%. The loan notes issued in the year bear interest at a weighted average rate, based on the Bank of England base rate. The outstanding loan notes totalling £3.7m are repayable on demand and have a final weighted average maturity of 1 year .

The Group has issued guaranteed unsecured bonds as follows:

All series are unsecured and rank pari passu in all respects apart from those detailed above.

* The Group has entered into an interest rate swap to convert the interest cost to floating rate based on 6 month LIBOR.

** The Group has entered into currency swaps for the US$ issues to achieve a floating rate of interest based on 6 month LIBOR. Further disclosure on the Group’s use of hedges is included in note 24.

*** Subsequently, the Group has entered a series of interest rate swaps to convert these issues from paying a floating rate based on 6 month LIBOR to fixed rates. See note 24 for further details of these callable swaps.

The issue costs incurred during the year amounted to £0.7m (2007: £0.3m). Issue costs are spread over the life of the bonds to their maturity. The unamortised balance of issue costs at the year end totalled £1.4m (2007: £0.8m).