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35. Financial instruments and risk management (continued)
The sterling ¢xed rate ¢nancial assets yield interest at a weighted average of 6.3% (2000 ^ 6.6%) for a weighted average period
of 30 months (2000 ^ 18 months).
The £oating rate ¢nancial assets bear interest at rates ¢xed in advance for periods up to one year by reference to LIBOR.
Currency exposures
The table below shows the currency exposures of the group’s net monetary assets (liabilities), in terms of those transactional
exposures that give rise to net currency gains and losses recognised in the pro¢t and loss account. Such exposures comprise the
monetary assets and monetary liabilities of the group that are not denominated in the operating (or ‘‘functional’’) currency of the
operating unit involved, other than certain non-sterling borrowings treated as hedges of net investments in non-UK operations.
At31March,theseexposureswereasfollows:
2001 2000
Sterling
£m
US dollar
£m
Euro
£m
Other
£m
Total
£m
Sterling
£m
US dollar
£m
Euro
£m
Other
£m
Total
£m
Functional currency of group
operation:
Sterling –3328– 13 117 29 159
Euro 1 (21) – (5) (25) 6 (1) – – 5
Other –2––2(10) – – – (10)
Total 1 (16) 3 (3) (15) (4) 12 117 29 154
The amounts shown in the table above take into account the e¡ect of any currency swaps, forward contracts and other
derivatives entered into to manage those currency exposures.
At 31 March 2001, the group also held various forward currency contracts that the group had taken out to hedge expected
future foreign currency purchases and sales.
Fair values of financial assets held for trading
2001
£m
2000
£m
Net gain included in profit and loss account 62 51
Fair value of financial assets held for trading at 31 March 530 980
The net gain was derived from government bonds, commercial paper and similar debt instruments. The average fair value of
¢nancial assets held during the year ended 31 March 2001 did not di¡er materially from the year end position.
Hedges
Gains and losses on instruments used for hedging are not recognised until the exposure that is being hedged is itself recognised.
Unrecognised and deferred gains and losses on instruments used for hedging and those recognised in the years ended 31 March
2001 and 31 March 2000 are as follows:
2001 2000(b)
Gains
£m
Losses
£m
Gains
£m
Losses
£m
Gains and losses:
recognised in the year but arising in previous years (a) 35 31 51 23
unrecognised at the balance sheet date 323 952 23 193
carried forward in the year end balance sheet, pending recognition in the
profit and loss account (a) 106 36 99 15
expected to be recognised in the following year:
unrecognised at balance sheet date 73 96 11 19
carried forward in the year end balance sheet pending, recognition in the profit and loss
account (a) 27 7 24 12
(a) Excluding gains and losses on hedges accounted for by adjusting the carrying amount of a fixed asset.
Notes to the financial statements
122 BT Annual report and Form 20-F