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117
ANNUAL REPORT AND FINANCIAL STATEMENTS 2015
NOTES TO THE FINANCIAL STATEMENTS
CONTINUED
OUR BUSINESSOUR PERFORMANCE
GOVERNANCEFINANCIAL STATEMENTS
21 FINANCIAL INSTRUMENTS CONTINUED
Sensitivity analysis
The table below illustrates the estimated impact on the income statement and equity as a result of market movements in foreign exchange
and interest rates in relation to the Group’s fi nancial instruments. The directors consider that a 2% +/- (last year 2%) movement in interest
rates and a 20% +/- (last year 20%) weakening in sterling against the relevant currency represents a reasonable possible change. However
this analysis is for illustrative purposes only.
The table excludes fi nancial instruments that expose the Group to interest rate and foreign exchange risk where such risk is fully hedged
with another fi nancial instrument. Also excluded are trade receivables and payables as these are either sterling denominated or the foreign
exchange risk is hedged.
Interest rates: the impact in the income statement due to changes in interest rates refl ects the e ect on the Group’s fl oating rate debt as
at the balance sheet date. The impact in equity refl ects the fair value movement in relation to the Group’s cross-currency swaps.
Foreign exchange: the impact from foreign exchange movements refl ects the change in the fair value of the Group’s transactional foreign
exchange cash fl ow hedges and the net investment hedges at the balance sheet date. The equity impact shown for foreign exchange
sensitivity relates to derivative and non-derivative fi nancial instruments hedging net investments. This value is expected to be fully o set
by the re-translation of the hedged foreign currency net assets leaving a net equity impact of zero.
2% decrease in
interest rates
£m
2% increase in
interest rates
£m
20% weakening in
sterling
£m
20% strengthening
in sterling
£m
At 29 March 2014
Impact on income statement: gain/(loss) 4.2 (16.1) – –
Impact on other comprehensive income: (loss)/gain (17.9) 11.6 124.9 (141.3)
At 28 March 2015
Impact on income statement: gain/(loss) 9.2 (12.5) – –
Impact on other comprehensive income: (loss)/gain (15.2) 8.1 169.8 (113.2)
O setting of fi nancial assets and liabilities
The following tables set out the fi nancial assets and fi nancial liabilities which are subject to o setting, enforceable master netting
arrangements and similar agreements. Amounts which are set o against fi nancial assets and liabilities in the Group’s statement of
fi nancial position are set out below. For trade and other receivables and trade and other payables, amounts not o set in the statement
of fi nancial position but which could be o set under certain circumstances are also set out.
Gross fi nancial
assets/(liabilities)
£m
Gross fi nancial
(liabilities)/assets
set o
£m
Net fi nancial
assets/(liabilities)
per statement of
fi nancial position
£m
Related amounts
not set o in the
statement of
fi nancial position
£m
Net
£m
At 28 March 2015
Trade and other receivables 37.0 (37.0) – – –
Derivative fi nancial assets 170.0 – 170.0 (27.7) 142.3
Cash and cash equivalents 45.0 (42.1) 2.9 – 2.9
252.0 (79.1) 172.9 (27.7) 145.2
Trade and other payables (295.0) 37.0 (258.0) – (258.0)
Derivative fi nancial liabilities (27.7) – (27.7) 27.7 –
Bank loans and overdrafts (60. 3) 42 .1 (18 . 2) – (18 . 2)
(383.0) 79.1 (303.9) 27.7 (276.2)
Gross fi nancial
assets/(liabilities)
£m
Gross fi nancial
(liabilities)/assets
set o
£m
Net fi nancial
assets/(liabilities)
per statement of
fi nancial position
£m
Related amounts
not set o in the
statement of
fi nancial position
£m
Net
£m
At 29 March 2014
Trade and other receivables 33.5 (24.2) 9.3 (9.3) –
Derivative fi nancial assets 31.9 – 31.9 (31.9) –
Cash and cash equivalents 45.2 (39.0) 6.2 – 6.2
110.6 (63.2) 47.4 (41.2) 6.2
Trade and other payables (233.2) 24.2 (209.0) 9.3 (199.7)
Derivative fi nancial liabilities (126.9) – (126.9) 31.9 (95.0)
Bank loans and overdrafts (45.1) 39.0 (6.1) – (6.1)
(405.2) 63.2 (342.0) 41.2 (300.8)
The gross fi nancial assets and liabilities set o in the balance sheet primarily relate to cash pooling arrangements with banks. Amounts
which do not meet the criteria for o setting on the statement of fi nancial position but could be settled net in certain circumstances
principally relate to derivative transactions under ISDA (International Swaps and Derivatives Association) agreements where each party
has the option to settle amounts on a net basis in the event of default of the other party.