BT 2014 Annual Report Download - page 176

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173
Financial statements
Financial statements
26. Financial instruments and risk management continued
The credit quality and credit concentration of cash equivalents, current asset investments and derivative nancial assets are detailed in the tables
below. Where the opinion of Moody’s and S&P dier, the lower rating is used.
Moody’s/S&P credit rating of counterparty
2014
£m
2013
£m
Aaa/AAA 1,774 530
Aa3/AA– 47 139
A1/A111 136
A2/A a434 583
A3/A–a– 591
Baa1/BBB376 –
Baa2/BBBa–397
2,742 2,376
a The group holds cash collateral of £174m (201213: £385m) in respect of derivative Ƭnancial assets with certain counterparties.
The concentration of credit risk for trading balances of the group is provided in note 16, which analyses outstanding balances by line of business.
Where multiple transactions are undertaken with a single nancial counterparty, or group of related counterparties the group has entered into
netting arrangements to reduce the group’s exposure to credit risk by making use of standard International Swaps and Derivatives Association (ISDA)
documentation. The group has also entered into credit support agreements with certain swap counterparties whereby on a weekly and monthly basis
the fair value position on notional £945m of long dated cross-currency swaps and interest rate swaps is collateralised. The related net cash outow
during the year was £209m (2012/13 cash inow of £33m). The collateral paid and received is recognised within cash and cash equivalents, and
loans and other borrowings, respectively.
Net nancial instruments
The table below shows the group’s nancial assets and liabilities that are subject to oset in the group’s balance sheet and the impact of enforceable
master netting or similar agreements.
Related amounts not set oƪ in the balance sheet
Financial assets and liabilities
At 31 March 2014
Gross
amounts
£m
Amounts
set o
£m
Amounts
presented in
the balance
sheet
£m
Right of set o with
derivative
counterparties
£m
Cash
collateral
£m
Net
amount
£m
Derivative nancial assets 653 – 653 (297) (174) 182
Derivative nancial liabilities (818) – (818) 297 20 (501)
Cash and cash equivalents 3,165 (2,470) 695 – – 695
Bank overdrafts (2,481) 2,470 (11) – – (11)
Total 519 –519 –(154) 365
Related amounts not set oƪ in the balance sheet
Financial assets and liabilities
At 31 March 2013
Gross
amounts
£m
Amounts
set o
£m
Amounts
presented in
the balance
sheet
£m
Right of set o with
derivative
counterparties
£m
Cash
collateral
£m
Net
amount
£m
Derivative nancial assets 1,250 – 1,250 (337) (385) 528
Derivative nancial liabilities (876) – (876) 337 26 (513)
Cash and cash equivalents 3,398 (2,474) 924 – – 924
Bank overdrafts (2,479) 2,474 (5) – – (5)
Total 1,293 –1,293 –(359) 934
Cash and cash equivalents and bank overdrafts include amounts set o of £2,470m (2012/13 £2,474m) as part of a master netting agreement
with BarclaysBankPlc. Balances held within this arrangement are notionally pooled and interest is paid or received on the net balance.