BT 2015 Annual Report Download - page 190

188 BT Group plc
Annual Report 2015
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he oatin rate loans and borrowins bear interest rates fied in advance for periods ranin fro one da to one ear priaril b reference to
LIBOR and EURIBOR quoted rates.
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The group is exposed to volatility in the income statement and shareholders’ equity arising from changes in interest rates and foreign exchange rates.
To demonstrate this volatility, management have concluded that the following are reasonable benchmarks for performing sensitivity analysis:
– for interest, a 1% increase in interest rates and parallel shift in yield curves across Sterling, US Dollar and Euro currencies; and
– for forein echane a 10 strentheninweaenin in terlin aainst other currencies.
he ipact of a 1 chane in interest rates on the roups annual net finance epense was insinificant in both 011 and 011. he ipact
on equity, before tax, of a 1% increase in interest rates is as detailed below:
At 31 March
2015
£m
Increase
reduce)
2014
£m
Increase
reduce)
Sterling interest rates 428 337
US Dollar interest rates 00 1
Euro interest rates  1
A 1% decrease in interest rates would have broadly the same impact in the opposite direction.
he roups eposure to forein echane volatilit in the incoe stateent after hedin and within shareholders euit ecludin translation
eposures was insinificant in both 011 and 011.
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The group’s December 2016 and December 2030 bonds contain covenants which have required the group to pay higher rates of interest once the
roup ceased to be rated at least  in the case of oods or at least  in the case of tandard  oors . dditional interest of 0. per ear
accrues for each ratins cateor downrade b each aenc below those levels eective fro the net coupon date followin a downrade.
ased on the total notional value of debt outstandin of .bn at 1 arch 01 the roups finance epense would increasedecrease b
approiatel 1 a ear if s credit ratin were to be downradedupraded respectivel b one credit ratin cateor b both aencies fro
the current ratings.
The group’s credit ratings were as detailed below:
2015 2014
At 31 March Rating Outlook Rating Outlook
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Standard & Poor’s BBB Stable BBB Stable
Moody’s Baa2 Positive Baa2 Positive
he roup is taretin a aa1 credit ratin over the ediu ter.
Liquidity risk management
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he roup ensures its liuidit is aintained b enterin into short ediu and lon-ter financial instruents to support operational and other
funding requirements. The group determines its liquidity requirements by the use of both short and long-term cash forecasts. These forecasts are
suppleented b a financial headroo analsis which is used to assess fundin adeuac for at least a 1-onth period. n at least an annual basis
the oard reviews and approves the aiu lon-ter fundin of the roup and on an onoin basis considers an related atters. efinancin
ris is anaed b liitin the aount of borrowin that atures within an specified period and havin appropriate strateies in place to anae
refinancin needs as the arise. he aturit profile of the roups loans and borrowins at 1 arch 01 is disclosed in note . he roup has
ter debt aturities of 1.bn in 011.
Short and medium-term requirements are regularly reviewed and managed by the treasury operation within the parameters of the policies set by
theoard. The group holds cash, cash equivalents and current investments in order to manage short-term liquidity requirements. At 31 March
01 the roup had undrawn coitted borrowin facilities of 1.bn 011 1.bn aturin in epteber 019 and a further .bn
011 nil with an availabilit period to the earlier of the close of the proposed EE acquisition or August 2016, which is subject to certain
restrictions and can only be used to fund the transaction, including transaction costs.