Tesco 2006 Annual Report Download - page 111

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109Tesco plc
Note 10 Derivative financial instruments
An explanation of the objectives and policies for holding and issuing financial instruments is set out in the Operating and financial
review on page 16.
Carrying values of derivative financial instruments in the Balance Sheet:
2006
Assets Liabilities
£m£m
Current
Interest rate swaps and similar instruments 11 (69)
Forward foreign currency contracts 59 (170)
70 (239)
Non-current
Interest rate swaps and similar instruments – (46)
Forward foreign exchange contracts – (2)
– (48)
Fair values
Fair value of financial assets and financial liabilities are disclosed below:
2006
Carrying Fair
value value
£m £m
Primary financial instruments held or issued to finance the Company’s operations:
Short-term borrowings (1,008) (1,003)
Long-term borrowings (3,560) (3,665)
Derivative financial instruments held to manage the interest rate and currency profile:
Interest rate swaps and similar instruments (104) (104)
Forward foreign currency contracts (113) (113)
(4,785) (4,885)
The fair value of financial instruments and derivatives has been determined by reference to prices available from the markets on
which the instruments are traded. The fair value of all other items has been calculated by discounting expected future cash flows
at prevailing interest rates.
Analysis of interest rate exposure of financial assets and liabilities
The interest rate exposure of financial assets and liabilities of the Company as at 25 February 2006, after taking into account the
effect of interest rate swaps, was:
More than
Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5 years Total
£m £m £m £m £m £m £m
Fixed rate
Bank and other loans (122) (133) – (98) (153) (861) (1,367)
Floating rate
Bank and other loans (886) (344) (634) (355) (555) (427) (3,201)