It
En19. Loans and Borrowings
| 31 December 2016 | 31 December 2015 | |||||
|---|---|---|---|---|---|---|
| Non-current | Current | Total | Non-current | Current | Total | |
| Bonds | 3,737 | 638 | 4,375 | 4,276 | 121 | 4,397 |
| Bank loans and borrowings | 238 | 59 | 297 | 293 | 96 | 389 |
| Related party loans and borrowings (Note 34) | - | 502 | 502 | 2 | 399 | 401 |
| Other loans and borrowings | 36 | 68 | 104 | 36 | 83 | 119 |
| 4,011 | 1,267 | 5,278 | 4,607 | 699 | 5,306 | |
The main clauses that regulate the Group’s payables are reported in the section “Financial Transactions” of the Report on Operations. Changes in loans and borrowings are as follows:
| 1 January 2016 | Issues | Repayments/Payment of coupons | Other net increase (decrease) | Exchange differences and other movements | 31 December 2016 | |
|---|---|---|---|---|---|---|
| Bonds | 4,397 | - | (243) | 246 | (25) | 4,375 |
| Bank loans and borrowings | 389 | - | (59) | (33) | - | 297 |
| Related-party loans and borrowings | 401 | - | - | 101 | - | 502 |
| Other loans and borrowings | 119 | - | (14) | 1 | (2) | 104 |
| 5,306 | - | (316) | 315 | (27) | 5,278 |
| 1 January 2015 | Issues | Repayments/Payment of coupons | Other net increase (decrease) | Exchange differences and other movements | 31 December 2015 | |
|---|---|---|---|---|---|---|
| Bonds | 4,761 | - | (793) | 271 | 158 | 4,397 |
| Bank loans and borrowings | 472 | - | (79) | 3 | (7) | 389 |
| Related-party loans and borrowings | 431 | - | - | (30) | - | 401 |
| Other loans and borrowings | 106 | - | (5) | 27 | (9) | 119 |
| 5,770 | - | (877) | 271 | 142 | 5,306 |
Net changes for current liabilities. The items also include changes resulting from the application of the effective interest-rate method, which may not correspond with actual cash movements.
Bank loans and borrowings mainly included the loan executed with the European Investment Bank (EIB) (€mil. 280 compared to €mil. 327 at 31 December 2015), aimed at implementing development activities in the aeronautic segment.
Bonds
Below is the detail of the bonds at 31 December 2016 which shows the bonds issued by Leonardo (“LDO”) and Meccanica Holdings USA (“MH”):
| Issuer | Year of issue | Maturity | Currency | Outstanding nominal amount (mil.) (*) | Annual coupon | Type of offer | ||
|---|---|---|---|---|---|---|---|---|
| LDO (originally Fin Fin) | (**) | 2003 | 2018 | € | 500 | 5.750% | (1) | European institutional |
| LDO | (**) | 2005 | 2025 | € | 500 | 4.875% | European institutional | |
| LDO (originally Fin Fin) | (**) | 2009 | 2019 | GBP | 319 | 8.000% | (2) | European institutional |
| LDO (originally Fin Fin) | (**) | 2009 | 2022 | € | 555 | 5.250% | European institutional | |
| MH | (***) | 2009 | 2019 | USD | 434 | 6.250% | American institutional Rule 144A/Reg. S | |
| MH | (***) | 2009 | 2039 | USD | 275 | 7.375% | American institutional Rule 144A/Reg. S | |
| MH | (***) | 2009 | 2040 | USD | 457 | 6.250% | American institutional Rule 144A/Reg. S | |
| LDO (originally Fin Fin) | (**) | 2012 | 2017 | € | 521 | 4.375% | European institutional | |
| LDO (originally Fin Fin) | (**) | 2013 | 2021 | € | 739 | 4.500% | European institutional | |
(*) Nominal amounts decreased compared to the value of the original issues following the buy-back transactions
(**) Bonds listed on the Luxembourg Stock Exchange and issued as part of the EMTN programme for a maximum of €bil. 4. The transaction was authorised pursuant to Art. 129 of Legislative Decree 385/1993.
(***) Bonds issued under Rule 144A, Regulation S of the US Securities Act. The proceeds of this issue were entirely used by Meccanica Holdings USA to finance the purchase of the subsidiary DRS replacing the dollar-issue bonds originally issued by the company. These bonds were redeemed early following Leonardo’s purchase of DRS. As a result, these issues were not hedged against exchange rate risk, and no interest-rate transactions on the issue were performed.
(1) Rate derivative transactions were made on these bonds and led the effective cost of the loan to a fixed rate better than the coupon and corresponding to an average of some 5.6%.
(2) The proceeds of the issue were translated into euros and the exchange-rate risk arising from the transaction was fully hedged.
Movements in bonds are as follows:
| 1 January 2016 | New borrowings | Interest | Repayments/Repurchases | Payments of coupons | Effect of exchange rate | 31 December 2016 | Fair value | ||
|---|---|---|---|---|---|---|---|---|---|
| €mil. 500 LDO 2018 * | 500 | 30 | (29) | 501 | 500 | ||||
| €mil. 500 LDO 2025 * | 516 | 25 | (25) | 516 | 500 | ||||
| GBPmil. 400 LDO 2019 * | 434 | 34 | (2) | (35) | (62) | 369 | 372 | ||
| €mil. 600 Fin Fin 2022 * | 579 | 29 | (27) | 581 | 556 | ||||
| USDmil. 500 MH 2019 * | 408 | 26 | (25) | 13 | 422 | 412 | |||
| USDmil. 300 MH 2039 * | 255 | 18 | (18) | 9 | 264 | 261 | |||
| USDmil. 500 MH 2040 * | 426 | 25 | (27) | 15 | 439 | 433 | |||
| €mil. 600 LDO 2017 * | 519 | 24 | (22) | 521 | 521 | ||||
| €mil. 950 Fin Fin 2021 * | 760 | 35 | (33) | - | 762 | 739 | |||
| 4,397 | - | 246 | (2) | (241) | (25) | 4,375 | 4,294 | ||
| 1 January 2015 | New borrowings | Interest | Repayments/Repurchases | Payments of coupons | Effect of exchange rate | 31 December 2015 | Fair value | |
|---|---|---|---|---|---|---|---|---|
| €mil. 500 LDO 2018 * | 500 | 29 | (29) | 500 | 561 | |||
| €mil. 500 LDO 2025 * | 515 | 25 | (24) | 516 | 557 | |||
| GBPmil. 400 LDO 2019 * | 511 | 44 | (117) | (41) | 37 | 434 | 509 | |
| €mil. 600 Fin Fin 2022 * | 624 | 32 | (45) | (32) | 579 | 631 | ||
| USDmil. 500 MH 2019 * | 365 | 24 | (24) | 43 | 408 | 383 | ||
| USDmil. 300 MH 2039 * | 250 | 20 | (24) | (20) | 29 | 255 | 269 | |
| USDmil. 500 MH 2040 * | 419 | 27 | (41) | (28) | 49 | 426 | 457 | |
| €mil. 600 LDO 2017 * | 596 | 27 | (79) | (25) | 519 | 553 | ||
| €mil. 950 Fin Fin 2021 * | 981 | 43 | (211) | (53) | - | 760 | 806 | |
| 4,761 | - | 271 | (517) | (276) | 158 | 4,397 | 4,726 |
(*) Maturity date of bond.
The fair value of the bonds was determined on the basis of the quoted prices of the existing issues (Level 1 of the fair value hierarchy).
The Group’s financial liabilities are subject to the following exposures to interest-rate risk:
31 December 2016
| Bonds | Bank loans and borrowings | Related party loans and borrowings | Other loans and borrowings | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Floating | Fixed | Floating | Fixed | Floating | Fixed | Floating | Fixed | Floating | Fixed | |
| Within 1 year | - | 638 | 29 | 30 | 502 | - | 68 | - | 599 | 668 |
| 2 to 5 years | 2,023 | 82 | 109 | - | 31 | 1 | 113 | 2,133 | ||
| Beyond 5 years | - | 1,714 | 20 | 27 | - | - | 4 | - | 24 | 1,741 |
| Total | - | 4,375 | 131 | 166 | 502 | - | 103 | 1 | 736 | 4,542 |
31 December 2015
| Bonds | Bank loans and borrowings | Related party loans and borrowings | Other loans and borrowings | Totale | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Floating | Fixed | Floating | Fixed | Floating | Fixed | Floating | Fixed | Floating | Fixed | |
| Within 1 year | - | 121 | 66 | 30 | 399 | - | 83 | 548 | 151 | |
| 2 to 5 years | 1,845 | 105 | 109 | 2 | - | 29 | 1 | 136 | 1,955 | |
| Beyond 5 years | - | 2,431 | 24 | 55 | - | - | 6 | - | 30 | 2,486 |
| Total | - | 4,397 | 195 | 194 | 401 | - | 118 | 1 | 714 | 4,592 |
Below is the financial information required under CONSOB communication DEM/6064293 of 28 July 2006:
| 31 December 2016 | Of which with related parties | 31 December 2015 | Of which with related parties | |
|---|---|---|---|---|
| Cash and cash equivalents | (2,167) | (1,771) | ||
| Securities held for trading | - | - | ||
| Liquidity | (2,167) | (1,771) | ||
| Current loans and receivables | (98) | (40) | (167) | (122) |
| Current bank loans and borrowings | 59 | 96 | ||
| Current portion of non-current loans and borrowings | 638 | 121 | ||
| Other current loans and borrowings | 570 | 502 | 482 | 399 |
| Current financial debt | 1,267 | 699 | ||
| Net current financial debt (funds) | (998) | (1,239) | ||
| Non-current bank loans and borrowings | 238 | 293 | ||
| Bonds issued | 3,737 | 4,276 | ||
| Other non-current loans and borrowings | 36 | - | 38 | 2 |
| Non-current financial debt | 4,011 | 4,607 | ||
| Net financial debt | 3,013 | 3,368 |
The reconciliation between Net Financial Debt and Group Net Debt, used as KPI, is as follows:
| Notes | 31 December 2016 | 31 December 2015 | |
|---|---|---|---|
| Net financial debt com. CONSOB n. DEM/6064293 | 3,013 | 3,368 | |
| Fair value of the residual portion in portfolio of Ansaldo Energia | 16 | (138) | (131) |
| Hedging derivatives in respect of debt items | 16 | 35 | 41 |
| Non current financial receivables from Superjet | 12 | (65) | - |
| Group net debt (KPI) | 2,845 | 3,278 |