BT 2010 Annual Report Download - page 145

FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
143BT GROUP PLC ANNUAL REPORT & FORM 20-F
ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS REVIEW OF THE YEAR OVERVIEW
Fair value of financial instruments
The table below discloses the carrying amounts and fair values of all of the group’s financial instruments which are not carried at an
amount which approximates to their fair value on the balance sheet at 31 March 2010, 2009 and 2008. The carrying amounts are
included in the group balance sheet under the indicated headings. The fair values of listed investments were estimated based on quoted
market prices for those investments. The carrying amount of the short-term deposits and investments approximated to their fair values
due to the short maturity of the investments held. The carrying amount of trade receivables and payables approximated to their fair values
due to the short maturity of the amounts receivable and payable. The fair value of the group’s bonds, debentures, notes, finance leases
and other long-term borrowings has been estimated on the basis of quoted market prices for the same or similar issues with the same
maturities where they existed, and on calculations of the present value of future cash flows using the appropriate discount rates in effect at
the balance sheet dates, where market prices of similar issues did not exist. The fair value of the group’s outstanding swaps and foreign
exchange contracts were the estimated amounts, calculated using discounted cash flow models taking into account market rates of
interest and foreign exchange at the balance sheet date.
Carrying amount Fair value
2010 2009 2008 2010 2009 2008
At 31 March £m £m £m £m £m £m
Financial liabilities
Listed bonds, debentures and notes 12,157 12,189 9,298 13,304 11,384 9,436
Finance leases 304 332 320 343 366 347
Other loans and borrowings 330 1,386 1,724 354 1,338 1,690
The table below shows certain financial assets and financial liabilities that have been measured at fair value, analysed by the level of
valuation method. The three levels of valuation methodology used are:
Level 1 – uses quoted prices in active markets for identical assets or liabilities
Level 2 – uses inputs for the asset or liability other than quoted prices, that are observable either directly or indirectly
Level 3 – uses inputs for the asset or liability that are not based on observable market data such as internal models or other valuation
methods.
Level 1 Level 2 Level 3 Total
At 31 March 2010 £m £m £m £m
Financial assets at fair value
Non current and current derivative financial assets
Derivatives designated as accounting hedges – 1,594 – 1,594
Other derivatives – 106 – 106
Total current and non current derivative financial assets (note 19) – 1,700 – 1,700
Available-for-sale financial assets
Non current and current investments
Liquid investments – 258 – 258
Other investments 20 – 12 32
Total non current and current investments (note 14) 20 258 12 290
Total financial assets at fair value 20 1,958 12 1,990
Financial liabilities at fair value
Current and non current derivative financial liabilities
Derivatives designated as accounting hedges – 401 – 401
Other derivatives – 298 – 298
Total current and non current financial liabilities (note 19) – 699 – 699
Total financial liabilities at fair value – 699 – 699
32. Financial instruments and risk management continued