Tesco 2003 Annual Report Download - page 44

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42 TESCO PLC
NOTE 20 Financial instruments continued
Other significant financial instruments outstanding at the year end are £240m (2002 – £247m) nominal value forward foreign
exchange contracts hedging the cost of foreign currency denominated purchases. On a mark-to-market basis, these contracts
show a gain of £1m (2002 – £1m).The fair values of interest rate swaps, forward foreign exchange contracts and long-term
sterling denominated fixed rate debt have been determined by reference to prices available from the markets on which the
instruments are traded.The fair values of all other items have been calculated by discounting expected future cash flows at
prevailing interest rates.
Hedges
As explained in the operating and financial review on pages 2 to 5, the Group hedges exposures to interest rate and currency
risk. The table below shows the amount of such gains and losses which have been included in the profit and loss account for
the year and those gains and losses which are expected to be included in next year’s or later profit and loss accounts.
All the gains and losses on the hedging instruments are expected to be matched by losses and gains on the hedged
transactions or positions.
Unrecognised gains and losses on instruments used for hedging and those recognised in the year ended 22 February 2003
are as follows:
Unrecognised Total net Deferred Total net
Gains Losses gains/(losses) Gains Losses gains/(losses)
£m £m £m £m £m £m
At 23 February 2002 69 (86) (17) 2 – 2
Arising in previous years and recognised
in the year ended 22 February 2003 (17) 18 1 (2) – (2)
Arising in the period to be recognised
in future years 170 (59) 111–––
At 22 February 2003 222 (127) 95–––
Expected to be recognised in the year
ended 28 February 2004 33 (18) 15 – – –
NOTE 21 Provisions for liabilities and charges
Property Deferred
Provisions taxation Total
£m £m £m
At 23 February 2002 – 440 440
Currency retranslation –22
Acquisition of group companies 16 (3) 13
Amount charged in year –6666
At 22 February 2003 16 505 521
Property provisions comprise future rents payable net of rents receivable on onerous and vacant property leases, provisions for
terminal dilapidations and provisions for future rents above market value on unprofitable stores.The majority of the provision is
expected to be utilised over the period to 2017.
Amount provided
2003 2002
£m £m
Deferred taxation
Excess capital allowances over depreciation 526 432
Other timing differences (14) 8
Losses carried forward (7) –
505 440
notes to the financial statements continued