Marks and Spencer 2009 Annual Report Download - page 107

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22 Financial instruments continued
The contractual maturity of the Group’s non-derivative financial liabilities and derivatives is as follows:
Bank loans
and
overdrafts
£m
Syndicated
bank facility
£m
Medium-term
notes
£m
Finance lease
liabilities
£m
Partnership
liability to the
M&S UK
Pension
Scheme
£m Total £m
Derivative
assets
£m
Derivative
liabilities
£m Total £m
Timing of cash flows
Within one year (257.4) (615.0) (112.6) (11.6) (50.0) (1,046.6) 643.4 (663.7) (20.3)
Between one and two years – – (112.6) (19.2) (71.9) (203.7) 90.7 (90.9) (0.2)
Between two and five years – – (1,088.9) (26.2) (215.7) (1,330.8) 84.8 (83.0) 1.8
More than five years – – (1,866.5) (214.9) (719.0) (2,800.4) 747.3 (736.4) 10.9
(257.4) (615.0) (3,180.6) (271.9) (1,056.6) (5,381.5) 1,566.2 (1,574.0) (7.8)
Effect of discounting and foreign
exchange – – 1,321.4 188.4 333.4 1,843.2
At 29 March 2008 (257.4) (615.0) (1,859.2) (83.5) (723.2) (3,538.3)
Timing of cash flows
Within one year (147.9) (781.2) (123.8) (18.3) (71.9) (1,143.1) 949.4 (919.8) 29.6
Between one and two years (11.2) –(123.8) (16.9) (71.9) (223.8) 70.4 (63.6) 6.8
Between two and five years – –(1,476.8) (34.4) –(1,511.2) 114.0 (83.2) 30.8
More than five years – –(1,706.2) (209.4) –(1,915.6) 1,003.8 (708.9) 294.9
(159.1) (781.2) (3,430.6) (279.0) (143.8) (4,793.7) 2,137.6 (1,775.5) 362.1
Effect of discounting and foreign
exchange – –1,412.1 177.1 3.9 1,593.1
At 28 March 2009 (159.1) (781.2) (2,018.5) (101.9) (139.9) (3,200.6)
This table does not include trade and other payables (see note 20) due to the low associated liquidity risk.
(b) Counterparty risk
Counterparty risk exists where the Group can suffer financial loss through default or non-performance by financial institutions.
Exposures are managed through Group treasury policy which limits the value that can be placed with each approved counterparty to
minimise the risk of loss. The counterparties are limited to the approved institutions with secure long-term credit ratings A+/A1 or better
assigned by Moody’s and Standard & Poor’s respectively, unless approved on an exception basis by a Board director. Limits are reviewed
regularly by senior management. The credit risk of these financial instruments is estimated as the fair value of the assets resulting from
the contracts.
The table below analyses the Group’s cash and cash equivalents and derivative assets by credit exposure excluding bank balances, store
cash and cash in transit.
Credit rating of counterparty
AAA/Aaa
£m AA/Aaa £m AA/Aa1 £m AA-/Aa1 £m AA-/Aa2 £m AA-/Aa3 £m Total
Money market deposits1 – 3.4 63.6 – – – 67.0
Derivative assets2 5.2 11.6 6.2 – 0.6 0.6 24.2
At 29 March 2008 5.2 15.0 69.8 – 0.6 0.6 91.2
AAA/Aaa
£m AA/Aa1
£m AA/Aa2 £m A+/Aa3 £m A+/A1 £m A/A23
£m Total
Money market deposits1 – – 116.1 4.1 13.0 –133.2
Derivative assets2 105.4 25.9 27.7 142.0 8.8 9.8 319.6
At 28 March 2009 105.4 25.9 143.8 146.1 21.8 9.8 452.8
1 Includes cash on deposit in M&S Scottish Limited Partnership.
2 Excludes derivative asset option which is embedded within the £250m puttable callable reset medium-term notes due 2037.
3 Exposure to A/A2 counterparty approved as an exception to treasury policy.
The Group has very low retail credit risk due to transactions being principally of a high volume, low value and short maturity.
The maximum exposure to credit risk at the balance sheet date was as follows: trade receivables £84m (last year £85m), other receivables
£64m (last year £46m), cash and cash equivalents £423m (last year £318m) and derivatives £347m (last year £37m).