National Grid 2014 Annual Report Download - page 121

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Strategic Report Corporate Governance Financial Statements Additional Information
18. Cash and cash equivalents
Cash and cash equivalents includes cash balances, together with short-term investments with a maturity of less than three months
that are readily convertible to cash.
Net cash and cash equivalents reflected in the cash flow statement are net of bank overdrafts, which are reported in borrowings. The
carrying amounts of cash and cash equivalents and bank overdrafts approximate their fair values.
Cash at bank earns interest at floating rates based on daily bank deposit rates. Short-term deposits are made for periods varying between
one day and three months, depending on the immediate cash requirements, and earn interest at the respective short-term deposit rates.
Net cash and cash equivalents held in currencies other than sterling have been converted into sterling at year-end exchange rates.
Forfurther information on currency exposures, refer to note 30 (d).
2014
£m
2013
£m
Cash at bank 75 99
Short-term deposits 279 572
Cash and cash equivalents excluding bank overdrafts 354 671
Bank overdrafts (15) (23)
Net cash and cash equivalents 339 648
At 31 March 2014, £24m (2013: £21m) of cash and cash equivalents were restricted. This primarily relates to cash held in captive
insurance companies.
19. Borrowings
We borrow money primarily in the form of bonds and bank loans. These are for a fixed term and may have fixed or floating interest rates
or are linked to RPI. As indicated in note 15, we use derivatives to manage risks associated with interest rates and foreign exchange.
Our strategy in action
Our price controls and rate plans require us to fund our networks within a certain ratio of debt to equity and, as a result, we have
issued a significant amount of debt. As we continue to invest in our networks, the level of debt is expected to increase over time.
Tomaintain a strong balance sheet and to allow us to access capital markets at commercially acceptable interest rates, we balance
the amount of debt we issue with the value of our assets and take account of certain other metrics used by credit rating agencies.
Borrowings, which include interest-bearing and inflation linked debt and overdrafts are recorded at their initial fair value which normally
reflects the proceeds received, net of direct issue costs less any repayments. Subsequently these are stated at amortised cost, using
the effective interest method. Any difference between the proceeds after direct issue costs and the redemption value is recognised over
the term of the borrowing in the income statement using the effective interest method.
The Finance Committee controls refinancing risk by limiting the amount of our debt maturities arising from borrowings in any one year
which is demonstrated by our maturity profile.
2014
£m
2013
£m
Current
Bank loans 1,485 1,194
Bonds 1,730 1,761
Commercial paper 252 438
Finance leases 19 20
Other loans 10 12
Bank overdrafts 15 23
3,511 3,448
Non-current
Bank loans 1,414 1,863
Bonds 20,732 22,435
Finance leases 151 175
Other loans 142 174
22,439 24,647
Total 25,950 28,095
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