Currency derivatives
The Group utilises currency derivatives to hedge significant future receipts
and payments from long–term contracts. The Group is a party to a variety
of foreign currency forward contracts in the management of its exchange rate
exposures. The instruments purchased are primarily denominated in the currencies
of the Group’s principal markets.
At 31 March the total notional amount of outstanding forward foreign exchange contracts to which the Group is committed are as below:
| 2008 | 2007 | 2008 | 2007 | |||
| £m | £m | £m | £m | |||
| Forward foreign exchange contracts | 1.4 | 0.4 | 1.4 | 0.4 | ||
These contracts cover a range of maturity dates from 1 month to 18 months (2007: 1 month to 30 months). A fair value loss of less than £0.1 million (2007: less than £0.1 million) has been recognised in the income statement.
Interest rate swaps
The Group uses interest rate swaps to manage its exposure to interest rate
movements on its bank borrowings. The notional amount of the outstanding interest
rate swap contracts as at 31 March 2008 is £10.0 million (2007: £5.0
million). The fixed interest payment rates vary from 5.2% to 5.3% (2007: 5.87%).
The floating rate receipts are at LIBOR.
The fair value of swaps entered into as at 31 March 2008 is estimated as a liability of £0.1 million (2007: asset of less than £0.1 million). These amounts are based on market estimates of equivalent instruments at the balance sheet date. These interest rate swaps are not designated as cash flow hedges and they are accounted for at fair value through the profit and loss. An amount of £0.1 million (2007: less than £0.1 million) has been charged to the income statement in the period.