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

Euromoney Institutional Investor PLC Annual Report and Accounts 2012
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Notes to the Consolidated
Financial Statements continued
25 Acquisition option commitments
The group is party to put options over the remaining non-controlling interest in subsidiaries. IAS 39 ‘Financial Instruments’ requires the group to
recognise the discounted present value of the remaining put option commitment. This discount is unwound as a notional interest charge to the Income
Statement. The group regularly performs a review of the underlying businesses with put option commitments to assess the impact on the fair value of
the respective put option commitment. Any resultant change in these fair values is reported as a finance income or expense in the Income Statement.
2012
£000
2011
£000
Acquisition option commitments at October 1 11,001 1,061
Additions from acquisitions during the year – 9,451
Net movements during the year following review of underlying business (note 8) (2,940) 358
Imputed interest (note 8) 977 181
Exercise of option commitments (831) (50)
Exchange differences (339) –
Acquisition option commitments at September 30 7,868 11,001
A net income of £1,963,000 (2011: expense of £539,000) was recorded in finance income and finance expense (note 8).
Maturity profile of acquisition option commitments:
2012
£000
2011
£000
Within one year 4,273 852
In more than one year 3,595 10,149
7,868 11,001
There is a deferred tax asset of £nil (2011: £3,800,000) related to the put option commitment as at September 30 2012.
As explained in note 2, key judgemental areas in preparing the financial statements, the value of the put option commitments is subject to a number
of assumptions. The directors estimate that a possible range of outcomes for the fair value of the NDR put option commitments, based on possible
changes in the assumptions, is as follows:
2012
£000
2011
£000
Estimated minimum – –
Estimated capped maximum 37,552 39,183
The put option agreement over the sale of Internet Securities, Inc. (ISI) shares between the company and the non-controlling shareholders of ISI is based
on the valuation of ISI as determined under a methodology provided by an independent financial adviser. Under the terms of the put option agreement
consideration caps have been put in place that require the maximum consideration payable to option holders to be capped at an amount such that the
results of any relevant class tests would, at the relevant time, fall below the requirement for shareholder approval.
Following a sensitivity analysis of the fair value of the acquisition option commitments applying reasonable possible assumptions, a 10% change
in expected profit, the liabilities at September 30 2012 range from £6,229,000 to £9,519,000 with the corresponding change to the value at
September 30 2012 charged or credited to the Income Statement in future periods.
110