Notes to the Accounts

19. Financial Instruments

Short term debtors and creditors have been excluded from all the following disclosures, other than currency risk disclosures.

	Group	Company	Group	Company
Maturity of borrowings Short term
Loans or instalments due within one year	–	–	8	–
Bank loans, overdrafts and commercial paper	72	172	305	295
Total due within one year	72	172	313	295
Medium and long term Loans or instalments thereof repayable:
From one to two years	151	151	1	–
From two to five years	2,036	1,935	242	141
After five years not by instalments	365	100	366	100
Total due after more than one year	2,552	2,186	609	241
Total borrowings	2,624	2,358	922	536

NOTE: In the absence of enforceable contracts from the relevant lenders to refinance current advances as they fall due, at 31 December 1998 £755m (1997:£141m) of debt currently classified from two to five years would be repayable within one year. The short term bank loans, overdrafts and commercial paper of the Group are lower than those of the Company because of bank offset arrangements.

Maturity of other financial liabilities	Group finance leases	Group other financial  liabilities	Group total
Amounts falling due:
In one year or less or on demand	9	–	9
In more than one year but not more than two years	5	32	37
In more than two years but not more than five years	4	3	7
In more than five years	1	–	1
	19	35	54

	Group	Company	Group	Company
Borrowing by instrument Secured Bank loans and overdrafts	–	–	1	–
Unsecured
10.5% Euro-sterling Bonds 2008	100	100	100	100
9.5% Euro-sterling Bonds 2004	117	–	117	–
10.75% Euro-sterling Bonds 2002	100	–	100	–
Other unsecured borrowings	–	–	8	–
Unsecured bank loans and overdrafts, commercial paper and medium term notes	2,307	2,258	596	436
Total borrowings	2,624	2,358	922	536

Undrawn committed borrowing facilities
Expiring within one year	–
Expiring between one and two years	3
Expiring in more than two years	832
	835

NOTE: All of the above committed borrowing facilities incur commitment fees at market rates.

				Fixed rate borrowings
Currency and interest rate risk profile of borrowings	Borrowings £m	Total  variable  rate £m	Total at   fixed rate   £m	Weighted  average interest rate per cent	Weighted average  period for which  rate is fixed – years
US dollar	1,964	1,365	599	6.0	4.6
Sterling	492	372	120	9.4	6.3
Spanish peseta	95	95	–	–	–
French franc	62	62	–	–	–
Other currencies	11	11	–	–	–
	2,624	1,905	719

The figures shown in the table above take into account interest rate and currency swaps entered into by the Group. Variable rate borrowings bear interest at rates based on relevant national LIBOR equivalents.

	Other financial liabilities	Total variable rate	Total fixed rate	Total no interest paid
Currency and interest rate risk profile of other financial liabilities
US dollar	45	–	19	26
Sterling	5	–	–	5
Spanish peseta	2	2	–	–
Other currencies	2	–	–	2
	54	2	19	33

NOTE: Variable rate financial liabilities bear interest at rates based on relevant national LIBOR equivalents.

	Net foreign monetary assets/(liabilities)
	Sterling	US dollar	French  franc	Spanish  peseta	Other	Total
Functional currency of entity
Sterling	–	42	1	2	17	62
US dollar	(133)	–	1	–	12	(120)
Spanish peseta	(1)	–	–	–	–	(1)
Other currencies	(8)	(8)	–	–	–	(16)
	(142)	34	2	2	29	(75)

	Cash at bank and  in hand	Short term  deposits	Other  financial assets	Total
Currency and interest rate risk profile of financial assets
US dollar	123	10	2	135
Sterling	32	17	–	49
Spanish peseta	67	–	–	67
French franc	17	3	1	21
Other currencies	66	10	1	77
	305	40	4	349
Floating rate	199	4	–	203
Fixed rate	89	36	–	125
No interest paid	17	–	4	21
	305	40	4	349

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 7.5%.

	Book value	Fair value
Primary financial instruments held or issued  to finance the Group’s operations
Other financial assets	4	4
Other financial liabilities	54	54
Cash at bank and in hand	305	305
Short term deposits	40	40
Short term borrowings	72	72
Medium and long term borrowings	2,552	2,635
Derivative financial instruments held to manage  the interest rate and currency profile
Interest rate swaps	–	(15)
Currency swaps	–	24

NOTE: Other financial assets, other financial liabilities, cash at bank and in hand and short term deposits: the fair value approximates to the carrying value due to the short maturity periods of these financial instruments.  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 1998 the notional principal value of these swaps was £368m.  Currency swaps: the fair value of these contracts is based on market values. At 31 December 1998 the Group had £117m of such contracts outstanding. The unrecognised net gain on hedges as at 31 December 1998 amounted to £9m, none of which is expected to be recognised in 1999.