National Grid 2016 Annual Report Download - page 132

18. Cash and cash equivalents
Cash and cash equivalents include cash balances, together with short-term investments with an original 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).
2016
£m
2015
£m
Cash at bank 126 109
Short-term deposits 110
Cash and cash equivalents excluding bank overdrafts 127 119
Bank overdrafts (3) (3)
Net cash and cash equivalents 124 116
At 31 March 2016, £2m (2015: £1m) 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 value 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.
2016
£m
2015
£m
Current
Bank loans 1,179 561
Bonds 1,282 1,068
Commercial paper 1,092 1,349
Finance leases 53 44
Other loans 23
Bank overdrafts 33
3,611 3,028
Non-current
Bank loans 1,816 1,417
Bonds 22,556 21,156
Finance leases 190 159
Other loans 171 150
24,733 22,882
Total borrowings 28,344 25,910
Notes to the consolidated financial statements
– analysis of items in the primary statements continued
130 National Grid Annual Report and Accounts 2015/16 Financial Statements