Debt Capacity

Debt Capacity (2003)
Note that the indicated figures for extra debt capacity are totally dependent on the set of assumptions included in the Value column, which can be changed by the user.

• The two balance sheet measures combined indicate extra capacity of £48 million, which is particularly high because of the relatively large amount of SHG in Bushmead’s balance sheet.
• The estimated EUV(SH) indicator, based on the default figure for the rent multiple of 7.5, also indicates extra capacity of £36 million.
• The I and E measures indicate no extra capacity largely because, in this year, interest cover is below the limit at 0.95 and debt to EBITDA, at 12.3, is very close to the limit of 12.5.
• The two short-term cash flow cover measures are also below target, and indicate excess debt of £19 million on average.
• The two long-term cash flow measures also indicate no excess capacity. The LLCR
  (30 constant) indicates excess debt of £25 million but with the addition of the terminal value the HALCR gives a figure effectively of 0.
• The overall average is positive at £5.7 million, but the main message is that short-term surpluses and even the 30-year cash flows are relatively weak, impacting on the ability to service debt. However the balance sheet asset cover for debt is very good. Also the very long-term cash flow indicates Bushmead virtually at capacity.

Debt Capacity (2007)
By year five of the forecast all the measures except the LLCR (30 constant) indicate extra capacity. The overall average is £25 million with the HALCR at £3 million

Debt Capacity (2012)
The overall capacity indicated is £12 million, but the difference between the strength of the balance sheet and rental income on the one hand and the weakness of surplus and cash flow on the other, re-emerges, although the HALCR indicates £5 million extra capacity. Ultimately any extra debt capacity rests on the strength of the balance sheet assets and the very long-term cash flows.