Notes to the Accounts
21. Financial instruments
A full discussion on treasury policy is given in the Financial Review. Short-term debtors and creditors have been excluded from all the following disclosures, other than currency risk disclosures.
a. Maturity of borrowings and other financial liabilities
The maturity profile of the Groups borrowings and other financial liabilities is shown below.
note At 31 December 2000 £1,134m (1999: £547m) of debt, including commercial paper, currently classified from two to five years would be repayable within one year if refinancing contracts were not in place. The short-term bank loans and overdrafts of the Group are lower than those of the company because of bank offset arrangements.
b. Borrowings by instrument
c. Undrawn committed borrowing facilities
note All of the above committed borrowing facilities incur commitment fees at market rates.
d. Currency and interest rate risk profile
note The figures shown in the tables above take into account interest rate, currency swaps and forward rate contracts entered into by the Group. Variable rate borrowings bear interest at rates based on relevant national LIBOR equivalents.
note Variable rate financial liabilities bear interest at rates based on relevant national LIBOR equivalents.
note Floating rate cash and deposits earn interest based on relevant national LIBID equivalents. Fixed rate cash and deposits earn interest at rates between 4.5% and 12%. Of the total financial assets earning interest at fixed rates, £94m are US dollar denominated.
note Floating rate cash and deposits earn interest based on relevant national LIBID equivalents. Fixed rate cash and deposits earn interest at rates between 3% and 8.4%.
e. Currency exposures
The table below shows the extent to which Group companies have monetary assets and liabilities in currencies other than their local currency.
f. Fair values of financial assets and financial liabilities
The table below shows the book value and the fair value of the Groups financial assets and financial liabilities.
note Other financial assets, other financial liabilities, cash at bank and in hand, short-term deposits and short-term borrowings: the fair value approximates to the carrying value due to the short maturity periods of these financial instruments. Medium and long-term borrowings: the fair value is based on market values or, where these are not available, on the quoted market prices of comparable debt issued by other companies. Interest rate swaps: the fair value of interest rate swaps is based on market values. At 31 December 2000 the notional principal value of these swaps was £2,057m (1999: £1,818m). Currency swaps: the fair value of these contracts is based on market values. At 31 December 2000 the Group had £890m (1999: £473m) of such contracts outstanding.
The Groups policy on hedges is explained in the Financial Review. The table below shows the extent to which the Group has off-balance sheet (unrecognised) and on-balance sheet (deferred) gains and losses in respect of financial instruments used as hedges at the beginning and end of the year. It also shows the amount of such gains and losses which have been included in the profit and loss account for the year and those gains and losses which are expected to be included in next years or later profit and loss accounts.