NATS-Annual-Report-2015

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