Notes to the accounts
22 Financial derivatives
The tables below set out the nominal amount and fair value of derivative contracts held by the Group, identifying the derivative contracts which qualify for hedge accounting treatment:
|
Contract or underlying |
Fair value |
||||
|
At 31 July 2008 |
|
Assets |
Liabilities |
Net |
|
|
Foreign exchange contracts (cash-flow hedges) |
222.2 |
3.8 |
(2.9) |
0.9 |
|
|
Foreign exchange contracts (not hedge accounted) |
130.1 |
1.4 |
(0.7) |
0.7 |
|
|
Total foreign exchange contracts |
352.3 |
5.2 |
(3.6) |
1.6 |
|
|
Cross-currency swaps (net investment hedges) |
371.4 |
1.5 |
(18.0) |
(16.5) |
|
|
Interest rate swaps (fair value hedges) |
75.7 |
1.2 |
1.2 |
||
|
Total financial derivatives |
799.4 |
7.9 |
(21.6) |
(13.7) |
|
|
Balance sheet entries: |
|||||
|
Non-current |
1.4 |
(0.1) |
1.3 |
||
Current |
6.5 |
(21.5) |
(15.0) |
||
|
Total financial derivatives |
7.9 |
(21.6) |
(13.7) |
||
|
Contract or underlying |
Fair value |
||||
|
At 31 July 2007 |
|
Assets |
Liabilities |
Net |
|
|
Foreign exchange contracts (cash-flow hedges) |
211.0 |
2.6 |
(0.8) |
1.8 |
|
|
Foreign exchange contracts (not hedge accounted) |
131.4 |
0.9 |
(1.7) |
(0.8) |
|
|
Total foreign exchange contracts |
342.4 |
3.5 |
(2.5) |
1.0 |
|
|
Cross-currency swaps (net investment hedges) |
238.2 |
9.0 |
9.0 |
||
|
Cross-currency swaps (not hedge accounted) |
17.7 |
1.4 |
1.4 |
||
|
Total cross-currency swaps |
255.9 |
10.4 |
10.4 |
||
|
Interest rate swaps (fair value hedges) |
73.7 |
(2.8) |
(2.8) |
||
|
Embedded derivatives |
15.8 |
0.2 |
(1.3) |
(1.1) |
|
|
Total financial derivatives |
687.8 |
14.1 |
(6.6) |
7.5 |
|
|
Balance sheet entries: |
|||||
|
Non-current |
0.4 |
(2.5) |
(2.1) |
||
|
Included in assets/(liabilities) of disposal group |
0.2 |
(1.3) |
(1.1) |
||
|
Current |
13.5 |
(2.8) |
10.7 |
||
|
Total financial derivatives |
14.1 |
(6.6) |
7.5 |
||
Accounting for other derivative contracts
Any foreign exchange contracts which are not formally designated as hedges and tested are classified as ‘held for trading’ and not hedge accounted.
Amounts recognised in 2007 in respect of embedded derivatives primarily represent the value of currency terms in commercial contracts between Smiths European subsidiaries and customers and suppliers outside the USA which are denominated in US dollars.