Tesco 2004 Annual Report Download - page 44

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42 TESCO PLC
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
NOTE 21 Financial instruments
An explanation of the objectives and policies for holding and issuing Þnancial instruments is set out in the Operating and Financial
Review on pages 2 to 5. Other than where these items have been included in the currency risk disclosures, short-term debtors
and creditors have been excluded from the following analysis.
Analysis of interest rate exposure and currency of Þnancial liabilities
The interest rate exposure and currency proÞle of the Þnancial liabilities of the Group at 28 February 2004, after taking into
account the effect of interest rate and currency swaps, were:
2004 2003
Floating rate Fixed rate Floating rate Fixed rate
liabilities liabilities Total liabilities liabilities Total
£m £m £m £m £m £m
Currency
Sterling 360 2,702 3,062 1,145 2,476 3,621
Euro 508 23 531 361 23 384
Thai Baht 561 561 447 447
Czech Krona 317 77 394 227 80 307
Korean Won 272 272 404 404
Other 265 105 370 205 7 212
Gross Liabilities 2,283 2,907 5,190 2,789 2,586 5,375
Fixed rate Þnancial liabilities
2004 2003
Weighted Weighted Weighted Weighted
average average time average average time
interest rate for which interest rate for which
28 Feb 2004 rate is Þxed 22 Feb 2003 rate is Þxed
% Years % Years
Currency
Sterling 5.3 6 5.8 7
Euro 5.4 1 5.4 3
Japanese Yen 1.05
Czech Krona 4.0 4 3.7 5
Taiwanese Dollar 4.5 2 4.5 2
Weighted average 5.3 6 5.8 7
Floating rate liabilities bear interest at rates based on relevant national LIBOR equivalents. During the year, proÞtable swaps-to-
ßoating rate were monetised for a consideration of £235m and replaced with swaps-to-ßoating at market value. The interest rate
proÞle of the Group has been further managed by the purchase of Euro interest rate collars with an aggregate notional principal
of £135m (2003  £135m). The average strike price of the interest rate caps purchased is 6.76%, while the average strike price
of the interest rate ßoors sold is 2.98%. The average maturity of the collars is three and a half years. The current value of these
contracts, if realised, is a loss of £2.6m (2003  £2.3m). Retail Price Index funding of £220m (2003  £212m), maturing 2016,
is outstanding and has been classiÞed as Þxed rate debt. The interest rate payable on this debt is 4% and the principal is linked
to the Retail Price Index. Limited Price Index funding, of £221m (2003  £215m), maturing 2025, is outstanding and has been
classiÞed as Þxed rate debt. The interest rate payable on this debt is 3.322% and the principal is linked to the Retail Price Index.
The maximum indexation of the principal in any one year is 5.0% and the minimum is 0.0%.