Tesco 2011 Annual Report Download - page 135

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NOTE 23 FINANCIAL RISK FACTORS CONTINUED
The following is an analysis of the undiscounted contractual cash flows payable under financial liabilities and derivatives. The potential cash outflow of
£17.1bn is considered acceptable as it is offset by financial assets and trade receivables of £13.2bn (2010 – £15.6bn offset by financial assets and trade
receivables of £12.9bn).
The undiscounted cash flows will differ from both the carrying values and fair value. Floating rate interest is estimated using the prevailing rate at the
balance sheet date. Cash flows in foreign currencies are translated using spot rates at the balance sheet date. For index-linked liabilities, inflation is
estimated at 4% for the life of the liability.
At 26 February 2011
Due
within
1 year
£m
Due
between
1 and 2
years
£m
Due
between
2 and 3
years
£m
Due
between
3 and 4
years
£m
Due
between
4 and 5
years
£m
Due
beyond
5 years
£m
Non-derivative financial liabilities
Bank and other borrowings (1,278) (1,587) (876) (622) – (6,647)
Interest payments on borrowings (518) (495) (395) (355) (326) (3,828)
Customer deposits – Tesco Bank (4,898) (173) (3) – – –
Deposits by banks – Tesco Bank (36) – – – – –
Finance leases (56) (36) (15) (15) (16) (205)
Trade and other payables (10,303) (84) (14) (7) (3) (73)
Derivative and other financial liabilities
Net settled derivative contracts – receipts 74 68 68 37 14 31
Net settled derivative contracts – payments (176) (109) (88) (76) (57) (697)
Gross settled derivative contracts – receipts 1,619 641 468 672 132 3,368
Gross settled derivative contracts – payments (1,404) (652) (341) (610) (60) (2,631)
Future purchases of non-controlling interests (85) (24) – – – –
Total (17,061) (2,451) (1,196) (976) (316) (10,682)
At 27 February 2010
Due
within
1 year
£m
Due
between
1 and 2
years
£m
Due
between
2 and 3
years
£m
Due
between
3 and 4
years
£m
Due
between
4 and 5
years
£m
Due
beyond
5 years
£m
Non-derivative financial liabilities
Bank and other borrowings (1,484) (1,078) (1,615) (845) (637) (7,267)
Interest payments on borrowings (554) (518) (491) (405) (370) (4,605)
Customer deposits – Tesco Bank (4,357) – – – – –
Deposits by banks – Tesco Bank (30) – – – – –
Finance leases (49) (47) (33) (11) (10) (178)
Trade and other payables (9,282) (56) (26) (4) (7) (67)
Derivative and other financial liabilities
Net settled derivative contracts – receipts 71 50 50 48 21 19
Net settled derivative contracts – payments (164) (119) (59) (35) (56) (695)
Gross settled derivative contracts – receipts 1,966 1,747 757 867 759 5,273
Gross settled derivative contracts – payments (1,703) (1,362) (689) (866) (653) (3,792)
Future purchases of non-controlling interests – (131) (25) – – –
Total (15,586) (1,514) (2,131) (1,251) (953) (11,312)
Foreign exchange risk
The Group is exposed to foreign exchange risk principally via:
• Transactional exposure, from the cost of future purchases of goods for resale, where those purchases are denominated in a currency other than the
functional currency of the purchasing company. Transactional exposures that could significantly impact the Group Income Statement are hedged.
These exposures are hedged via forward foreign currency contracts which are designated as cash flow hedges. The notional and fair value of these
contracts is shown in note 22.
• Net investment exposure, from the value of net investments outside the UK. The Group hedges a proportion of its investments in its international
subsidiaries via foreign currency transactions and borrowings in matching currencies, which are formally designated as net investment hedges.
• Loans to non-UK subsidiaries. These are hedged via foreign currency transactions and borrowings in matching currencies, which are not formally
designated as hedges, as gains and losses on hedges and hedged loans will naturally offset.
Overview Business review Governance Financial statements
TESCO PLC Annual Report and Financial Statements 2011
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