BT 2002 Annual Report Download - page 126

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36. Financial instruments and risk management continued
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. At 31 March, these exposures were as follows:
2002 2001
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 ± 1 (1) ± ± ± 3 3 2 8
Euro 27 (42) ± 8 (7) 1 (21) ± (5) (25)
Other ±±±±±± 2 ± ± 2
Total 27 (41) (1) 8 (7) 1 (16) 3 (3) (15)
The amounts shown in the table above take into account the effect of any currency swaps, forward contracts and other
derivatives entered into to manage those currency exposures.
At 31 March 2002, 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 ®nancial assets held for trading 2002
£m
2001
£m
Net gain included in pro®t and loss account 50 62
Fair value of ®nancial assets held for trading at 31 March 1,510 530
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 2002 did not differ 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 2002 and 31 March 2001 are as follows:
2002 2001
Gains
£m
Losses
£m
Gains
£m
Losses
£m
Gains and losses:
recognised in the year but arising in previous years
a
27 7 35 31
unrecognised at the balance sheet date 99 772 323 973
carried forward in the year end balance sheet, pending recognition in the
pro®t and loss account
a
71 73 106 36
expected to be recognised in the following year:
unrecognised at balance sheet date 22 61 73 96
carried forward in the year end balance sheet, pending recognition in
the pro®t and loss account
a
16 27 27 7
a
Excluding gains and losses on hedges accounted for by adjusting the carrying amount of a ®xed asset.
Average effective interest rates
The interest basis of interest rate swap agreements used, the notional amounts, their average maturities and weighted
average interest rates are shown below:
Average
maturity
Notional
amount
£m
Average
interest
receivable
rate
%
Average
interest
payable
rate
%
Pay ®xed interest and receive variable interest Over 5 years 7,120 6.5 4.2
Pay variable interest and receive ®xed interest Under 5 years 750 5.5 6.4
Notes to the financial statements
BT Group Annual Report and Form 20-F 2002 125