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 Company Accounts continued 9 Share capital 2012 £000 2011 £000 Allotted, called up and fully paid 124,349,531 ordinary shares of 0.25p each (2011: 121,247,380 ordinary shares of 0.25p each) 311 303 During the year, 3,102,151 ordinary shares of 0.25p each (2011: 2,755,469 ordinary shares) with an aggregate nominal value of £7,755 (2011: £6,889) were issued as follows: 2,381,410 ordinary shares (2011: 2,226,089) under the company’s 2009 scrip dividend alternative for a cash consideration of £nil (2011: £nil); and 720,741 ordinary shares (2011: 529,380 ordinary shares) following the exercise of share options granted under the company’s share option schemes for a cash consideration of £1,058,834 (2011: £718,392). 10 Share-based payments An explanation of the company’s share-based payment arrangements are set out in the Directors’ Remuneration Report on pages 42 to 45. The number of shares under option, the fair value per option granted and the assumptions used to determine their values is given in note 24 to the group accounts. Their dilutive effect on the number of weighted average shares of the company is given in note 11 to the group accounts. Share option schemes The executive and Save as You Earn (SAYE) Options were valued using the Black–Scholes option-pricing model. Expected volatility was determined by calculating the historical volatility of the group’s share price over a 15 year period. The executive options’ fair values have been discounted at a rate of 10% to reflect their performance conditions. The expected term of the option used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The charge recognised in the year in respect of these options was £97,000 (2011: £96,000). Details of the executive and SAYE options are set out in note 24 to the group accounts. Capital Appreciation Plan 2004 (CAP 2004) The CAP 2004 options were valued using a fair value model that adjusted the share price at the date of grant for the net present value of expected future dividend streams up to the date of expected exercise. The expected term of the option used in the models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share-based credit in the year for the CAP 2004 options was £1,809,000 (2011: £nil). Details of the CAP 2004 options are set out in note 24 to the group accounts. Capital Appreciation Plan 2010 (CAP 2010) and Company Share Option Plan 2010 (CSOP 2010) The CAP 2010 and CSOP 2010 options were valued using a fair value model that adjusted the share price at the date of grant for the net present value of expected future dividend streams up to the date of expected exercise. The expected term of the option used in the models has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The share-based expense recognised in the year for the CAP 2010 and CSOP 2010 options was £nil (2011: £nil). Details of the CAP 2010 and CSOP 2010 options are set out in note 24 to the group accounts (excludes ISI and cash-settled options). There is no cost or liability for the cash element of the CAP 2010 option scheme. These are borne by the company’s subsidiary undertakings. A reconciliation of the options outstanding at September 30 2012 is detailed in note 24 to the group accounts. 128
Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com 11 Commitments and contingent liability At September 30 the company has committed to make the following payments in respect of operating leases on land and buildings: Operating leases which expire: Within one year – – Between two and five years 690 707 Over five years 242 242 932 949 Cross-guarantee The company, together with the ultimate parent company and certain other companies in the Euromoney Institutional Investor PLC group, have given an unlimited cross-guarantee in favour of its bankers. 12 Financial instruments Derivative financial instruments The derivative financial assets/(liabilities) at September 30 comprised: Assets £000 2012 £000 2012 2011 Liabilities £000 Assets £000 2011 £000 Liabilities £000 Interest rate swaps – (645) – (2,566) Current portion – (439) – (1,251) Non-current portion – (206) – (1,315) The company holds all the interest rate swaps for the group and full details regarding these can be found in note 19 to the group accounts. There were no derivatives outstanding at the balance sheet date that were designated as fair value hedges. Hedge of net investment in foreign entity The company has US dollar denominated borrowings which it has designated as a hedge of the net investment of its subsidiaries which have US dollars as their functional currency. The change in fair value of these hedges resulted in a decreased liability of £1,888,000 (2011: increase in liability of £914,000) which has been deferred in reserves where it is offset by the translation of the related investment and will only be recognised in the company’s profit and loss account if the related investment is sold. There are no differences in these hedges charged to the profit and loss account in the current and prior year. Fair values of non-derivative financial assets and financial liabilities Where market values are not available, fair values of financial assets and financial liabilities have been calculated by discounting expected future cash flows at prevailing interest rates and by applying year end exchange rates. The carrying amounts of short-term borrowings approximate the book value. Notes to the Company Accounts Company Accounts Group Accounts Our Governance Our Performance 129
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