BT 2006 Annual Report Download - page 112

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33. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT continued
Financial assets
After taking into account the various interest rate swaps and forward foreign currency contracts entered into by the group, the
interest rate profile of the group’s financial assets at 31 March 2005 was:
2005
Fixed rate Floating rate Financial assets
financial Financial on which no
assets assets interest is paid Total
Currency: £m £m £m £m
Sterling 106 4,697 8 4,811
Euro ––11
Other ––44
Total 106 4,697 13 4,816
The sterling fixed rate financial assets yield interest at a weighted average of 4.4% for a weighted average period of 22 months.
The floating rate financial assets bear interest at rates fixed in advance for periods up to one year by reference to LIBOR.
Fair values of financial assets held for trading
2005
£m
Net gain included in profit and loss account 18
Fair value of financial assets held for trading at 31 March 546
The net gain was derived from government bonds,commercial paper and similar debt instruments. The average fair value of
financial assets held during the year ended 31 March 2005 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
2005 are as follows:
2005
Gains Losses
£m £m
Gains and losses:
recognised in the year but arising in previous years
a
124 59
unrecognised at the balance sheet date 47 799
carried forward in the year end balance sheet, pending recognition in the profit and loss account
a
545 165
expected to be recognised in the following year:
unrecognised at balance sheet date 36 51
carried forward in the year end balance sheet, pending recognition in the profit and loss account
a
136 39
aExcluding gains and losses on hedges accounted for by adjusting the carrying amount of a fixed asset.
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 profit 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 2005, these exposures were as follows:
2005
Sterling US dollar Euro Other Total
£m £m £m £m £m
Functional currency of group operation:
Sterling – (53) 6 (1) (48)
Euro 2 –––2
Total 2 (53) 6 (1) (46)
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.
BT Group plc Annual Report and Form 20-F 2006 Notes to the consolidated financial statements110