Tesco 2002 Annual Report Download - page 34

32 TESCO PLC
NOTE 21 Financial instruments continued
Analysis of interest rate exposure and currency of financial assets
The interest rate exposure and currency profile of the financial assets of the Group at 23 February 2002 were:
2002 2001
Cash at Cash at
bank and Short-term bank and Short-term
in hand deposits Other Total in hand deposits Other Total
£m £m £m £m £m £m £m £m
Sterling 151 50 68 269 94 22 43 159
Other 294 175 – 469 185 233 – 418
Total financial assets 445 225 68 738 279 255 43 577
Other financial assets are in respect of amounts owed by undertakings in which the company has a participating interest, which attract a rate
of interest of 5.0% (2001 – 6.7%). Surplus funds are invested in accordance with approved limits on security and liquidity and bear rates of
interest based on relevant LIBOR equivalents. Cash at bank and in hand includes non-interest bearing cash and cash in transit.
Borrowing facilities
The Group has the following undrawn committed facilities available at 23 February 2002 in respect of which all conditions precedent had
been met at that date:
2002 2001
£m £m
Expiring between one and two years 733 330
Expiring in more than two years 303 550
1,036 880
All facilities incur commitment fees at market rates and would provide funding at floating rates.
Currency exposures
Within the Group, the principal differences on exchange arising which are taken to the profit and loss account relate to purchases made by
Group companies in currencies other than their reporting currencies. After taking account of forward currency purchases used to hedge these
transactions, there were no significant balances on these exposures at year end. Also, rolling hedges of up to 18 months duration are
maintained against the value of investments in, and long-term intercompany loans to, overseas subsidiaries and, to the extent permitted in
SSAP 20, differences on exchange are taken to the statement of total recognised gains and losses.
Fair values of financial assets and financial liabilities
2002 2001
Book value Fair value Book value Fair value
£m £m £m £m
Primary financial instruments held or issued to finance the Group’s operations:
Short-term borrowings (1,489) (1,496) (1,413) (1,420)
Long-term borrowings (2,741) (2,804) (1,925) (1,974)
Short-term deposits 225 225 255 255
Cash at bank and in hand 445 445 279 279
Derivative financial instruments held to manage the interest rate and currency profile:
Interest rate swaps and similar instruments – (18) – 12
Forward foreign currency contracts – 1 (12) (18)
Swap profit crystallisation (2) (2) (7) (7)
(3,562) (3,649) (2,823) (2,873)
Other significant financial instruments outstanding at the year end are £247m (2001 – £220m) nominal value forward foreign exchange contracts
hedging the cost of foreign currency denominated purchases. On a mark-to-market basis, these contracts show a gain of £1m (2001 – £6m loss).
The fair values of interest rate swaps, forward foreign currency contracts and long-term sterling denominated fixed rate debt have been determined
by reference to prices available from the markets on which the instruments are traded. The fair values of all other items have been calculated by
discounting expected future cash flows at prevailing interest rates.
notes to the financial statements continued