Annual Report & Accounts 2012 - Euromoney Institutional Investor ...

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Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com Notes to the Consolidated Financial Statements continued 19 Financial instruments and risk management continued The following table details the group’s liquidity analysis for its derivative financial instruments. The table has been drawn up based on the undiscounted net cash inflows and (outflows) on the derivative instrument that settle on a net basis and the undiscounted gross inflows and (outflows) on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the reporting date. 2012 Less than 1 month £000 1–3 months £000 3 months to 1 year £000 1–5 years £000 Net settled Interest rate swaps – (196) (375) (66) (637) Gross settled Foreign exchange forward contracts inflows 7,358 13,163 67,221 22,877 110,619 Foreign exchange forward contracts outflows (7,063) (12,769) (65,258) (22,500) (107,590) 295 198 1,588 311 2,392 Total £000 2011 Less than 1 month £000 1–3 months £000 3 months to 1 year £000 1–5 years £000 Net settled Interest rate swaps – (470) (758) (388) (1,616) Gross settled Foreign exchange forward contracts inflows 5,629 13,558 60,219 27,092 106,498 Foreign exchange forward contracts outflows (6,114) (14,494) (62,583) (27,473) (110,664) (485) (1,406) (3,122) (769) (5,782) Fair value of financial instruments The fair values of financial assets and financial liabilities are determined as follows: Level 1 ● The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quoted market prices. Level 2 ● The fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions and dealer quotes for similar instruments; ● Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted interest rates matching maturities of the contracts; and ● Interest rate swaps are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates. Level 3 ● If one or more significant inputs are not based on observable market date, the instrument is included in level 3. Total £000 As at September 30 2012 and the prior year, all the resulting fair value estimates have been included in level 2 other than the group’s acquisition option commitments which are classified as level 3. Other financial instruments not recorded at fair value The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values. 100
Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com Our Performance 20 Bank overdrafts and loans 2012 £000 2011 £000 Bank overdrafts – current liability – 1,549 Loan notes – current liability 1,228 1,617 Committed loan facility – current liability – 58,516 Committed loan facility – non-current liability 43,154 71,543 Total committed loan facility 43,154 130,059 Loan notes Loan notes were issued in October and November 2006 to fund the purchase of Metal Bulletin plc. Interest is payable on these loan notes at a variable rate of 0.75% below LIBOR, payable in June and December. Loan notes can be redeemed at the option of the loan note holder twice a year on the interest payment dates above. At least 20 business days’ written notice prior to the redemption date is required. During the year ended September 30 2012 £386,000 (2011: £420,000) of these loan notes were redeemed. Committed loan facility The group’s debt is provided through a dedicated $300 million multi-currency borrowing facility from Daily Mail and General Trust plc (DMGT). The facility is divided into US dollar and sterling funds and matures in December 2013. The total maximum borrowing capacity is $250 million (£155 million) and £33 million. Interest is payable on this facility at a variable rate of between 1.4% and 3.0% above LIBOR dependent on the ratio of adjusted net debt to EBITDA. The facility’s covenant requires the group’s net debt to be no more than four times adjusted EBITDA on a rolling 12 month basis. Failure to do so would result in the group being in breach of the facility, potentially resulting in the facility being withdrawn or impediment of management decision making by the lender. Management regularly monitor the covenant and prepare detailed debt forecasts to ensure that sufficient headroom is available and that the covenants are not close or potentially close to breach. At September 30 2012, the group’s net debt to adjusted EBITDA was 0.27 times. Under the DMGT facility, at September 30 2012, the group had £144.7 million of undrawn but committed facilities available. In the absence of any significant acquisitions, the group has no pressing requirement to arrange new finance before the facility expires in December 2013. In addition, the group has agreed terms with DMGT that provide it with access to additional funding should the group require it during the period from December 2013 through April 2016. There is a risk that the undrawn portion of the facility, or that the additional funding, may be unavailable or withdrawn if DMGT experience funding difficulties themselves. However, if DMGT were unable to fulfil its funding commitment to the group, the directors are confident that the group would be in a position to secure adequate external facilities, although probably at a higher cost of funding. Notes to the Consolidated Financial Statements Company Accounts Group Accounts Our Governance 101
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