Marks and Spencer 2003 Annual Report Download - page 48

46 Marks and Spencer Gro up p.l.c.
Notes to the financial statements
22. Provisions for liabilities and charges continued
4The deferred tax balance comprises the following: 2003 2002
£m £m
Accelerated capital allowances 67.1 69.0
Pension prepayment 48.4 50.8
Other short-term timing differences (10.2) (13.4)
105.3 106.4
Deferred tax is not provided in respect of liabilities which might arise on the distribution of unappropriated profits
of international subsidiaries.
The Group is claiming UK tax relief for losses incurred by some of its current and former European subsidiaries. The case has
been referred to the European Court of Justice, and it may take several years for the issue to be resolved. Were the Group to
be ultimately successful, the Group would receive a corporation tax refund, before interest, of at least £30m. No asset has
been recognised in respect of this claim.
23. Financial instruments and risk management
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. Group
2003 2002
Book value Fair value Book value Fair value
Assets/(liabilities) £m £m £m £m
Customer advances falling due in more than one year 1,481.6 1,495.0 1,603.1 1,610.9
Current asset investments1304.0 304.0 272.7 272.7
Fixed asset investments220.9 20.9 29.6 29.6
Cash at bank and in hand1167.9 167.9 543.4 543.4
Other financial assets due after more than one year 13.5 13.5 11.3 11.3
Borrowings due within one year1(628.3) (652.8) (677.7) (675.6)
B shares (118.2) (118.2) (276.0) (276.0)
Financial liabilities due after more than one year1(1,677.4) (1,763.2) (2,046.6) (2,081.1)
Cross currency swaps3– 90.1 – 24.5
Interest rate swaps3– (24.9) – (7.6)
Forward foreign currency contracts3– (8.0) – 2.1
FTSE 100 put options4––0.4 1.3
1Current 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 predominantly at floating rates. Therefore, these fair values closely
approximate book values.
2Fixed asset investments comprise listed securities held by a subsidiary which are stated at market value.
3Interest rate, cross currency swaps and forward foreign currency contracts have been marked to market to produce a fair value figure.
4FTSE 100 put options provided no loss guarantees on certain Unit Trust offers. The options were on a fully matched basis and were not traded.
They were marked to market to produce a fair value figure.
B Hedges of future transactions
Unrecognised gains and losses on instruments used for hedging and those recognised in the period ended 29 March 2003
are as follows: 2003 2002
Gains Losses Net total Gains Losses Net total
£m £m £m £m £m £m
Unrecognised gains/(losses) on hedges at
beginning of the period 66.5 (46.6) 19.9 55.9 (33.2) 22.7
(Gains)/losses arising in previous years recognised
in the period (13.7) 15.4 1.7 (6.2) 13.3 7.1
Gains/(losses) in previous years not recognised
in the period 52.8 (31.2) 21.6 49.7 (19.9) 29.8
Gains/(losses) arising in the period 62.0 (26.4) 35.6 16.8 (26.7) (9.9)
Unrecognised gains/(losses) on hedges
at end of the period 114.8 (57.6) 57.2 66.5 (46.6) 19.9
Of which:
Gains/(losses) expected to be recognised
within one year 26.1 (12.7) 13.4 13.7 (15.6) (1.9)
Gains/(losses) expected to be recognised
after one year 88.7 (44.9) 43.8 52.8 (31.0) 21.8