Vtech 2002 Annual Report Download - page 62

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VTech Holdings Ltd60
Notes to the Financial Statements
22. FINANCIAL INSTRUMENTS (continued)
The net fair values of derivative financial instruments at 31st March designated for cash flow hedges were as follows:
2002 2001
Positive Negative Positive Negative
fair value fair value fair value fair value
US$ million US$ million US$ million US$ million
Forward foreign exchange contracts 0.5 —0.8 (0.5)
Interest rate swaps —(0.9) ——
0.5 (0.9) 0.8 (0.5)
Forward foreign exchange contracts
The net fair value gains at 31st March 2002 on open forward foreign exchange contracts which hedge anticipated future foreign currency
sales and purchases will be transferred from the hedging reserve to the consolidated income statement when the forecasted sales and
purchases occur, at various dates between 1 month to 6 months from the balance sheet date.
The total contract amount of the outstanding forward foreign exchange contracts at 31st March 2002 was US$22.8 million (2001: US$40.8
million).
Interest rate swaps
The notional principal amount of the outstanding interest rate swap contracts at 31st March 2002 was US$40.0 million (2001: US$40.0
million).
At 31st March 2002, the fixed interest rate relating to interest rate swaps varied from 6.7% to 7.0% (2001: 6.7% to 7.0%).
Fair values
The fair values of the Group’s financial assets and liabilities, before taking account of hedging transactions, are summarized as follows:
2002 2001
Carrying Carrying
amount Fair value amount Fair value
US$ million US$ million US$ million US$ million
Financial assets:
Investments 0.3 0.3 0.5 0.5
Debtors 128.9 128.9 195.3 195.3
Cash at bank and deposits* 63.3 63.3 56.2 56.2
192.5 192.5 252.0 252.0
Financial liabilities:
Creditors and accruals 154.7 154.7 252.6 252.6
Bank overdrafts 0.2 0.2 2.8 2.8
Term loans 95.1 95.1 246.3 246.3
Obligations under finance leases 0.5 0.5 0.5 0.5
250.5 250.5 502.2 502.2
The fair value of debtors, bank balances, creditors and accruals and bank overdrafts approximate their carrying amounts due to the short-
term maturities of these assets and liabilities. The fair value of term loans and obligations under finance leases is estimated using the
expected future payments discounted at market interest rates.
* The weighted average effective interest rate on short term bank deposits was 1.8% (2001:4.7%) and these deposits have an average maturity of 1 day to
1 week.