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17. Financial assets

Current 2009
£m
2008
£m
Cash flow hedges4 2.0 4.1
Currency swaps in relation to US$ denominated bonds5 0.4
Interest rate swaps in relation to GBP denominated bonds5 0.7
2.0 5.2
2009
£m
2008
£m
Non-current financial assets
Available for sale assets1 0.7 0.3
Investment loan2 36.7 35.3
Financial assets at fair value through the income statement3 1.6
Cash flow hedges4 8.8 21.6
Currency swaps in relation to US$ denominated bonds5 136.6 269.2
Interest rate swap in relation to GBP denominated bonds5 3.3 4.0
Investment in a joint venture6 0.2 0.4
186.3 332.4

1 Available for sale assets comprise investments in unlisted ordinary shares. The unlisted ordinary shares, for which there is no immediately identifiable market and which have no fixed maturity date or coupon rate, are carried at cost less provision for any impairment.

2 The Group has entered into a funding arrangement with Optima Legal Services Limited (OLSL) and during the year has provided it with an additional £1.4m (2008: £6.2m) to fund that company’s acquisition of further volume legal services businesses. In addition, the Group has entered into an option agreement to acquire the shares of OLSL for £1 in the event that Law Society rules are amended to allow the Group to own the shares in this type of legal services company. The Group believes that the option should be held at the fair value of £1 as the change in Law Society rules in favour of the Group is uncertain.

3 Financial assets at fair value through the income statement include investments in units, held in the Group’s insurance captives. The units are held in managed funds (comprising units of equities and other assets) which are traded with a quoted market price in an active market. An explanation of the Group’s accounting policy with regard to these assets is contained in note 2(m). During the year the Group made the decision to withdraw the funds invested in these assets, the remaining units were sold early in 2009, the Group therefore no longer holds units in these funds.

4 The cash flow hedges are used to hedge the exposure to currency fluctuations in the Group’s forecast transactional cash flows, principally in Indian rupees. Details of the cash flow hedges are contained in note 26.

5 The currency swaps are used to hedge the exposure to interest rate and currency fluctuations on the Group’s US$ denominated bonds. The uplift in the fair value of the underlying bonds due to changes in interest and currency rates is equivalent to the fair value of the currency swaps recognised above. The interest rate swaps are used to hedge the fair value of the Group’s GBP denominated bonds and the uplift in the fair value of the underlying bonds due to changes in interest rates is equivalent to the fair value of the interest rate swaps recognised above. Details of the interest rate swap, currency swaps and cash flow hedges are contained in note 26.

6 The investment in a joint venture disclosed represents the Group’s interest in a Syndicate (for which the Group provides administrative outsourcing services) operating in the Lloyd’s Market, through its joint venture ownership of Cobex Corporate Member No 1 Limited (Cobex) in conjunction with the Group’s insurance partners. The Group’s share of the net assets and liabilities of this Syndicate are set out in the following table.

2009
£m
2008
£m
Investments 16.4 8.9
Reinsurance assets 7.0 9.6
Other debtors 2.7 2.8
Cash and cash equivalents 0.7 10.0
Total assets 26.8 31.3
Technical provisions 22.0 23.6
Other creditors 4.3 6.9
Accruals and deferred income 0.3 0.4
Total liabilities 26.6 30.9
Net position 0.2 0.4

The Group, through Capita Commercial Insurance Services Limited (CCIS), a wholly owned subsidiary, has a 50.1% holding in Cobex Corporate Member No 1 Limited (Cobex). In addition to the assets and liabilities of the underlying Syndicate, Cobex has in place a quota share arrangement with its insurance partners such that only 8.86% of any profit or loss declared by the Syndicate, in respect of Cobex, would be attributable to the Group.

The Group has no rights over the assets or liabilities of the Syndicate other than to the extent that it will receive distributed profits or contribute to relieve losses. The Group has in place a letter of credit amounting to £1.0m (2008: £1.0m) which is the maximum exposure that the Group has to losses generated within the Syndicate.