Tesco 2006 Annual Report Download - page 78

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76 Tesco plc
Notes to the financial statements continued
Note 20 Financial instruments continued
Financial instruments under UK GAAP FRS 13 (relating to the comparative period ended 26 February 2005) continued
Analysis of interest rate exposure and currency profile of financial assets
The interest rate exposure and currency profile of the financial assets of the Group as at 26 February 2005 were:
2005
Cash at
bank and Short-term
in hand deposits Other Total
£m £m £m £m
Sterling 411 231 104 746
Other currencies 389 115 4 508
Total financial assets 800 346 108 1,254
An investment in collateralised Deutsche Bank preference shares of £150m was held at 26 February 2005, paying fixed interest
of 4.3%.
Other financial assets, in respect of amounts owed by undertakings in which the Company has a participating interest, attracted
arate of interest of 5.7% (being LIBOR plus a margin). Surplus funds as at 26 February 2005 were invested in accordance with
approved limits on security and liquidity and bore rates of interest based on relevant LIBOR equivalents. Cash at bank and in hand
included non-interest bearing cash and cash in transit.
Currency exposures
Within the Group, the principal differences on exchange arising, which are taken to the Income Statement, relate to purchases made
by Group companies in currencies other than their reporting currencies. After taking account of forward currency purchases used to
hedge these transactions, there were no significant balances on these exposures as at 26 February 2005. Also, rolling hedges of
up to18 months duration weremaintained against the value of investments in, and long-term intercompany loans to, overseas
subsidiaries and, to the extent permitted in IAS 21, differences on exchange were taken to the Statement of Recognised Income
and Expense.
Fair values of financial assets and financial liabilities
2005
Book value Fair value
£m £m
Primary financial instruments held or issued to finance the Group’s operations:
Short-term borrowings (471) (469)
Long-term borrowings (4,486) (4,696)
Finance leases (Group as lessee) (88) (88)
Short-term deposits 346 346
Cash at bank and in hand 800 800
Derivative financial instruments held to manage the interest rate and currency profile:
Interest rate swaps and similar instruments – (181)
Interest rate options 42
Forward foreign currency contracts – (15)
Currency options 2 (6)
(3,893) (4,307)