NATS-Annual-Report-2015

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Annual Report and Accounts 2015 | NATS Holdings Limited Financial Statements 128 Notes forming part of the consolidated accounts (continued) 19. Financial instruments (continued) Liquidity risk management The responsibility for liquidity risk management, the risk that the group will have insufficient funds to meet its obligations as they fall due, rests with the Board with oversight provided by the Treasury Committee. The group manages liquidity by maintaining adequate reserves and borrowing facilities by monitoring actual and forecast cash flows, including contributions to the defined benefit pension scheme, and ensuring funding is diversified by source and maturity and available at competitive cost. Specific liquidity policies are maintained for NERL. NATS Services and NATS Limited had no debt at the year end. With regard to NERL, the group’s policy is to: a. maintain free cash equal to between one and two months of UK en route services revenues (see below). Free cash is defined as cash and cash equivalents and short term investments, excluding a debt service reserve account of £29.7m used to fund interest, fees and bond amortisation payments scheduled in the next six months and a liquidity reserve account of £21.3m held to provide liquidity in the event of certain pre-defined circumstances, particularly to ensure compliance with financial covenants; b. ensure access to bank facilities sufficient to meet 110% of forecast requirements that are not otherwise covered by operating cash flows or other sources of finance through the period of the business plan. At 31 March 2015 NERL had access to bank facilities totalling £275m available until 21 December 2016. The facilities comprise a £245m revolving term loan facility and a £30m revolving credit facility; c. ensure access to long term funding to finance its long term assets. This is achieved in the form of a £600m amortising sterling bond with a final maturity date of 2026; d. ensure that the ratio of bank funding to total gross borrowings does not exceed 75%; and e. maintain a portfolio of debt diversified by source and maturity. This is achieved through the issuance of a £600m sterling bond that started to amortise in 2012 and has a final maturity date of 2026 and by having available shorter dated committed bank facilities. The following table shows the ratio of free cash in NERL to average monthly UK en route services income during the year: 2015 2014 £m £m Average monthly UK en route services income 51.0 51.2 Free cash at 31 March 55.9 50.2 Ratio of free cash to UK en route services income 1.1 1.0 The following table shows the ratio of the group’s bank borrowings to its gross borrowings at 31 March: 2015 2014 £m £m Bank borrowings 152.0 127.0 Gross borrowings 650.0 654.5 Bank borrowings as a percentage of gross borrowings 23.4% 19.4% It is company policy not to issue new guarantees in respect of the borrowings of subsidiaries or to allow the creation of any new mortgages or other charges over group assets. Financial Statements
Annual Report and Accounts 2015 | NATS Holdings Limited Financial Statements 129 Notes forming part of the consolidated accounts (continued) 19. Financial instruments (continued) Maturity of borrowings The following table sets out the remaining contractual maturity of the group’s non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the group can be required to repay. The table includes both interest and principal cash flows. 2015 2014 Secured loans Other liabilities Total Secured loans Other liabilities Total £m £m £m £m £m £m Due within one year or less 59.9 132.3 192.2 60.1 116.9 177.0 Between one and two years 219.0 25.5 244.5 60.1 16.5 76.6 Due between two and five years 195.9 2.3 198.2 329.9 2.1 332.0 Due in more than five years 351.8 2.2 354.0 412.7 2.8 415.5 826.6 162.3 988.9 862.8 138.3 1,001.1 Effect of interest, discount and unamortised bond issue and bank facility arrangement fees (180.9) - (180.9) (213.6) - (213.6) 645.7 162.3 808.0 649.2 138.3 787.5 In order to manage the liquidity risk arising on the contractual maturity of its borrowings, it is the group’s intent to replace bank facilities and bonds with facilities of a similar nature at least 12 months in advance of contractual maturity. Financial Statements
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