Notes to the Financial Statements continued for the year ended 31 May 2022
25 Financial instruments continued Reconciliation of movements in liabilities to cash flows arising from financing activities
2022 £m
2021 £m
Group
Revolving credit facility/bank term loan: Drawdown on facility
120.7
12.0
(39.4)
Repayment of facility
(72.4)
(0.6)
Transaction costs
–
2.1
Interest costs (non-cash) Interest paid on borrowings
1.1
(2.1)
(1.1)
0.4
Release of deferred arrangement fees
0.2
11.3
Foreign exchange movement
(5.8)
Movement in borrowings
92.4
(66.0)
IFRS 16 lease liability: New leases entered into
3.5
3.1
–
Leases terminated
(0.9) (6.0) (1.2)
(5.3) (1.2)
Principal element of lease payments Interest element of lease payments
1.2
Interest cost (non-cash)
1.2
Movement in lease liabilities
(1.8)
(3.8)
Financial risk management The Group has exposure to the following risks from its use of financial instruments: • Credit risk
• Liquidity risk • Currency risk • Interest rate risk The Board has overall responsibility for establishing appropriate management of exposure to risk. The Audit Committee oversees how management identifies and addresses risks to the Group. Capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net (debt)/cash 1 divided by total capital. Net (debt)/ cash 1 is calculated as total borrowings as shown in the Consolidated Balance Sheet, less cash and cash equivalents. Total capital is calculated as equity, as shown in the Consolidated Balance Sheet, plus net debt 1 . As at 31 May 2022 the Group’s gearing ratio was 15.5% (2021: (45.5)%). Financial instruments policy All instruments utilised by the Company and Group are for financing purposes. The financial management and treasury activities of the Group are controlled centrally for all operations with local finance teams responsible for day-to-day banking activities. Fair value of financial instruments As at 31 May 2022 the Group and Company had no other financial instruments other than those disclosed below. In addition, no embedded derivatives have been identified. There have been no transfers between levels in the year. The following table presents the Group’s financial assets and liabilities that are measured at fair value by level of fair value hierarchy: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) • Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3) 1 S ee Note 3 for an explanation of Alternative Performance Measures (APMs) and adjusting items, including a reconciliation to statutory information. Further information is also contained within the Glossary of terms on pages 203 and 204.
188
NCC Group plc — Annual report and accounts for the year ended 31 May 2022
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