NATS-Annual-Report-2015

Annual Report and Accounts 2015 | NATS Holdings Limited
Strategic Report
19
Financial review
(continued)
Taxation
The tax charge of £43.4m (2014: £28.2m) was at an
effective rate of 21.7% (2014: 17.9%). This is higher than
the headline rate of 21%, mainly reflecting the goodwill
impairment charge, which is not tax deductible, partly offset
by a patent box claim relating to air traffic control software.
The prior year also included the deferred tax impact of the
reduction in the corporation tax rate to 20% from April
2015.
NATS taxes generally arise in the UK, though it undertakes
business in other countries. Wherever we operate we
organise our operations to pay the correct and appropriate
amount of tax at the right time, according to relevant
national laws, and ensure compliance with the group’s tax
policies and guidelines. The group’s tax strategy is reviewed
annually by a Tax Committee and covers the application
of all direct and indirect taxes to our business including
corporation tax, payroll taxes and value added tax.
The Tax Committee comprises the Finance Director, the
Head of Tax and other senior finance professionals and
takes advice from a professional firm.
Balance sheet
2015 2014
£m £m
Goodwill 302.0 319.0
Tangible and intangible fixed assets 977.3 934.1
Other non-current assets 67.4 72.4
Cash and short term deposits 267.0 241.3
Derivatives (net) (128.6) (128.8)
Pension scheme deficit (353.0) (12.3)
Borrowings (645.7) (649.2)
Deferred tax liability (19.2) (87.8)
Other net liabilities (33.5) (31.1)
Net assets 433.7 657.6
The principal changes in financial position since the prior
year have been a deterioration in the defined benefit
pension scheme funding position (net of related deferred
tax), which is explained below, capital investment of £153.5m
in the group’s air traffic services infrastructure net of
depreciation charges, and retained earnings. Movements
in cash and borrowings and derivatives are explained
elsewhere in this report.
Defined benefit pensions
a. IFRS – accounting basis
At 31 March 2015, measured under international accounting
standards and the associated best estimate assumptions,
the group’s defined benefit scheme was in deficit with
liabilities (£5,050.2m) exceeding assets (£4,697.2m) by
£353.0m (2014: £12.3m). Shown below is a reconciliation
from the prior year.
Defined benefit scheme liability £m
At 1 April 2014 (12.3)
Charge to income statement (105.0)
Actuarial gains/(losses):
– on scheme assets 308.3
– on scheme liabilities (682.7)
Employer contributions* 138.7
At 31 March 2015 (353.0)
Represented by:
Scheme assets 4,697.2
Scheme liabilities (5,050.2)
Deficit (353.0)
*including salary sacrifice
Given the size of the scheme relative to the group, changes
in market conditions can have relatively large impacts
on the results and financial position. Although the value
of scheme assets increased by 12.7% in the year this was
more than offset by the growth in liabilities mainly due to a
reduction in real discount rates.
Strategic Report