NATS-Annual-Report-2015

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Annual Report and Accounts 2015 | NATS Holdings Limited Financial Statements 124 Notes forming part of the consolidated accounts (continued) 19. Financial instruments (continued) The economic interest rate exposure of the group’s loans is presented below with and without the effect of derivatives, as follows: Excluding derivatives Total £m Variable rate £m Inflation rate £m Fixed rate £m Economic interest rate % Weighted average time rate is fixed years At 31 March 2015 Sterling: 5.25% guaranteed 498.0 - - 498.0 5.26% 6.3 secured bonds Bank loans 152.0 152.0 - - 1.55% 0.4 Total 650.0 152.0 - 498.0 At 31 March 2014 Sterling: 5.25% guaranteed 527.5 - - 527.5 5.26% 6.9 secured bonds Bank loans 127.0 127.0 - - 1.50% 0.4 Total 654.5 127.0 - 527.5 Including derivatives Variable rate Inflation rate Fixed rate Economic interest rate Weighted average time rate is fixed Total £m £m £m £m % years At 31 March 2015 Sterling: 5.25% guaranteed 298.0 - - 298.0 5.27% 6.3 secured bonds 5.25% guaranteed 200.0 - 200.0 - 4.91% 0.5 secured bonds Bank loans 152.0 152.0 - - 1.55% 0.4 Total 650.0 152.0 200.0 298.0 At 31 March 2014 Sterling: 5.25% guaranteed 327.5 - - 327.5 5.27% 6.9 secured bonds 5.25% guaranteed 200.0 - 200.0 - 4.86% 0.5 secured bonds Bank loans 127.0 127.0 - - 1.50% 0.4 Total 654.5 127.0 200.0 327.5 The interest rate payable under the index-linked swap is adjusted semi-annually in line with the movement in RPI. Financial Statements
Annual Report and Accounts 2015 | NATS Holdings Limited Financial Statements 125 Notes forming part of the consolidated accounts (continued) 19. Financial instruments (continued) The following table shows the percentage of fixed, index-linked and floating rate debt as a percentage of group net debt. Net debt is defined for this purpose as borrowings net of cash and short term investments, as distinct from the definition used for financial covenants purposes. 2015 2014 £m £m Net debt 378.7 407.9 £m % £m % Fixed (net of bond discount and issue costs) 294.8 77.8 323.9 79.4 Index-linked 200.0 52.8 200.0 49.0 Floating (net of cash, short term investments (116.1) (30.6) (116.0) (28.4) and facility costs) 378.7 100.0 407.9 100.0 At 31 March 2015, NERL had net debt, including an intercompany loan of £22.5m, of £561.3m (2014: net debt £570.5m), NATS Limited held cash balances of £6.2m (2014: cash £5.6m), NATS Services had cash of £152.8m (2014: cash £134.0m), NATSNav had cash of £0.6m (2014: cash £0.4m), NATS (USA) Inc had cash of £0.2m (2014: cash £0.1m) and NATS Services DMCC had cash of £0.3m (2014: £nil). The following table shows the percentage of fixed, index-linked and floating rate debt as a percentage of NERL net debt, reflecting the application of the interest rate risk management policies that are specific to NERL. 2015 2014 £m £m Net debt 561.3 570.5 £m % £m % Fixed (net of bond discount and issue costs) 294.8 52.5 323.9 56.8 Index-linked 200.0 35.6 200.0 35.1 Floating (net of cash, short term investments 66.5 11.9 46.6 8.1 and facility costs) 561.3 100.0 570.5 100.0 In order to reduce its exposure to interest rate risk on its cash balances, NERL adopts a strategy of hedging net debt rather than gross debt. This is an economic hedge whereby exposure to floating rate debt is offset by interest on cash balances. Interest rate sensitivity analysis The sensitivity analysis below has been determined based on the exposure to interest rates on floating rate assets and liabilities. The analysis is prepared assuming the amount of assets or liabilities at the balance sheet date was in place for the whole year. A 1% increase or decrease is considered to represent a reasonably possible change in interest rates. The following table shows the effect of a 1% increase in interest rates on the group’s cash and floating rate bank loans on profit for the year and on equity. A positive number represents an increase in profit and equity and a negative number a decrease in profit and equity. 2015 Impact 2014 Impact £m £m Cash at bank and short term deposits (2015: £267.0m, 2.7 2.4 2014: £241.3m) Borrowings (2015: £152.0m, 2014: £127.0m) (1.5) (1.3) 1.2 1.1 Overall the group’s sensitivity to interest rates is slightly higher than prior year, reflecting increased cash and reduced borrowing levels. Financial Statements
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NATS-Annual-Report-2015

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