Marks and Spencer 2000 Annual Report Download - page 41

39 Annual Report and Financial Statements 2000
23. FINAN CIAL INSTRUMENTS AND RISK M ANAGEMENT
A Fair values of financial instruments
Set out below is a comparison of current and book values of all the Group’s financial instruments by category. Where market prices
are not available for a particular instrument, fair values have been calculated by discounting cash flows at prevailing interest rates and
exchange rates.
THE GROUP
2000 1999
BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE
£m £m £m £m
Assets/ (liabilities)
Customer advances falling due in more than one year 1,478.1 1,474.2 1,282.2 1,300.2
Current asset investments(1) 386.4 386.4 204.0 204.0
Fixed asset investments(2) 29.6 29.6 37.0 37.0
Cash at bank and in hand(1) 301.1 301.1 281.5 281.5
Borrowings due within one year(1) (1,196.1) (1,199.6) (934.7) (936.1)
Financial liabilities due after more than one year(1) (746.1) (737.4) (739.6) (745.4)
Interest rate swaps(3) – (2.6) – (12.7)
Forward foreign currency contracts(3) – 20.2 – 9.7
FTSE 100 put options(4) 2.2 3.1 4.2 8.4
(1) Current asset investments and cash at bank are predominantly short-term deposits placed with banks, financial institutions and
on money markets, and investments in short-term securities. Borrowings are at floating rates. Therefore, fair values closely
approximate book values.
(2) Fixed asset investments comprise listed securities held by a subsidiary.
(3) Interest rate swaps and forward foreign currency contracts have been marked to market to produce a fair value figure.
(4) FTSE 100 put options provide no loss guarantees on certain Unit Trust offers. The options are on a fully matched basis and are
not traded. They have been marked to market to produce a fair value figure.
B H edges of future transactions
As described in the Financial Review on page 5, the Group’s policy is to maintain foreign exchange cover in respect of exports from
the UK to subsidiaries. It does this using forward foreign currency contracts. At 31 March 2000, the Group had hedged approximately
80% of the foreign currency exports expected in the following 12 months.
At 31 March 2000, there were £20.2m of net gains on forward foreign currency contracts (last year £9.7m of net gains). None of
these were recognised at the balance sheet date. All outstanding net gains are expected to be dealt with in the profit and loss account
for the period ending 31 March 2001.
During the period ended 31 March 2000, all of the net gains not recognised at 31 March 1999 were dealt with in the profit and
loss account.
C Currency risk
The effect of currency exposures arising from the translation of overseas investments is mitigated by Group borrowings in the local
currencies of its main operating subsidiaries. Gains and losses arising on net investments in overseas subsidiaries are recognised in
the Statement of Total Recognised Gains and Losses.
After taking into account the effect of any hedging transactions entered into to manage transactional currency exposures, no Group
company had any material monetary assets or liabilities in currencies other than their functional currencies at the balance sheet date.
24. CALLED UP SHARE CAPITAL THE COMPANY
2000 1999
£m £m
Authorised:
3,200,000,000 ordinary shares of 25p each 800.0 800.0
Allotted, called up and fully paid:
2,874,587,298 ordinary shares of 25p each (last year 2,870,622,953) 718.6 717.7
3,964,345 ordinary shares having a nominal value of £0.9m were allotted during the year under the terms of the Company’s share
schemes which are described in note 10. The aggregate consideration received was £10.7m. Contingent rights to the allotment of
shares are also described in note 10.
Of the 3,964,345 ordinary shares referred to above, 3,671,774 ordinary shares were subscribed for by the Marks and Spencer p.l.c.
Qualifying Employee Share Ownership Trust (the ‘QUEST’) at market value of £11.2m. Of these shares, 3,203,511 were allocated to
employees, including executive directors, in satisfaction of options exercised under the Marks and Spencer United Kingdom Employees’
Save As You Earn Share Option Scheme. The Company provided £1.1m to the QUEST for this purpose. The cost of this contribution has
been transferred by the Company directly to the profit and loss account reserve (see note 25). At 31 March 2000, 468,263 shares were
held by the QUEST (see note 14).