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

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Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com Directors’ Report continued UNFORESEEN TAX LIABILITIES The group operates within many tax jurisdictions and earnings are therefore subject to taxation at differing rates across these jurisdictions. POTENTIAL IMPACT The directors endeavour to manage the tax affairs of the group in an efficient manner, however, due to an ever more complex international tax environment there will always be a level of uncertainty when provisioning for tax liabilities. There is also a risk of tax laws being amended by authorities in the different jurisdictions in which the group operates which could have an adverse effect on the financial results. MITIGATION External tax experts and in-house tax specialists, reporting to the tax and treasury committee, work together to review all tax arrangements within the group and keep abreast of changes in global tax legislation. 6. Future development in the business An indication of the trading outlook for the group is given in the Chairman’s Statement on page 6. In 2013 the directors will manage the business to facilitate growth and to continue to shape the business to remain competitive in the economic environments in which it operates. The group is well placed to diversify its product and geographical base and remains committed to its strategy set out on page 9. The board will continue to review the portfolio of businesses, disposing, closing or restructuring any under-performing businesses to allow the group to have the necessary resources and skills to remain acquisitive. The group will invest in technology and new businesses, particularly electronic information products, as well as in its internal systems. 7. Post balance sheet events Events arising after September 30 2012 are set out in note 30. 8. Directors and their interests The company’s Articles of Association give power to the board to appoint directors from time to time. In addition to the statutory rights of shareholders to remove a director by ordinary resolution, the board may also remove a director where 75% of the board give written notice to such director. The Articles of Association themselves may be amended by a special resolution of the shareholders. The directors who served during the year are listed on page 47. The directors’ interests are given on page 51. There were no changes in the executive or non-executive directors during the year. Following best practice under the June 2010 UK Corporate Governance Code and in accordance with the company’s Articles of Association, all directors submit themselves for re-election annually. Accordingly, all directors will retire at the forthcoming Annual General Meeting and, being eligible, will offer themselves for re-election. In addition, in accordance with the June 2010 UK Combined Code on Corporate Governance, before the re-election of a nonexecutive director, the chairman is required to confirm to shareholders that, following formal performance evaluation, the non-executive directors’ performance continues to be effective and demonstrates commitment to the role. Accordingly, the non-executive directors will retire at the forthcoming Annual General Meeting and, being eligible following a formal performance evaluation by the chairman, offer themselves for re-election. Details of the interests of the directors in the ordinary shares of the company and of options held by the directors to subscribe for ordinary shares in the company are set out in the Directors’ Remuneration Report on pages 41 to 52. 9. Customers and suppliers The group operates through a large number of businesses in many geographical locations. As such, the relationships with key customers and suppliers is decentralised such that there is no overarching policy on how the group manages these relationships. This enables each business to tailor their approach to suit customers’ and suppliers’ specific needs and requirements. Each key customer and supplier has an account manager allocated to them ensuring that open communication is maintained throughout the relationship. Each business agrees payment terms with its suppliers and it is group policy to make payments in accordance with these terms. The group had 59 days of purchases in creditors at September 30 2012 (2011: 77 days). 10. Employees’ involvement and training Equal opportunities The group is an equal opportunity employer. It seeks to employ a workforce which reflects the diverse community at large, because the contribution of the individual is valued, irrespective of sex, age, marital status, disability, sexual preference or orientation, race, colour, religion, ethnic or national origin. It does not discriminate in recruitment, promotion or other employee matters. The group endeavours to provide a working environment free from unlawful discrimination, victimisation or harassment. 24
Euromoney Institutional Investor PLC Annual Report and Accounts 2012 www.euromoneyplc.com Quality and integrity of employees The competence of people is ensured through high recruitment standards and a commitment to management and business skills training. The group has the advantage of running external training businesses and uses this in-house resource to train cost effectively its employees on a regular basis. Employees are also encouraged actively to seek external training as necessary. High-quality and honest personnel are an essential part of the control environment. The high ethical standards expected are communicated by management and through the employee handbook which is provided to all employees. The employee handbook includes specific policies on matters such as the use of the group’s information technology resources, data protection policy, the UK Bribery Act, and disciplinary and grievance procedures. The group operates an internal intranet site which is used to communicate with employees and provide guidance and assistance on day-to-day matters facing employees. The group has a specific whistle blowing policy that is supported by an externally monitored and run whistle blowing hotline. The whistle blowing policy is updated regularly and is reviewed by the audit committee. Human rights and health and safety requirements The group is committed to the health and safety and the human rights of its employees and communities in which it operates. Health and safety issues are monitored to ensure compliance with all local health and safety regulations. External health and safety advisers are used where appropriate. The UK businesses benefit from a regular assessment of the working environment by experienced assessors and regular training of all existing and new UK employees in health and safety matters. Disabled employees It is the group’s policy to give full and fair consideration to applications for employment from people who are disabled; to continue, wherever possible, the employment of, and to arrange appropriate training for, employees who become disabled; and to provide opportunities for the career development, training and promotion of disabled employees. 11. Going concern, debt covenants and liquidity The results of the group’s business activities, together with the factors likely to affect its future development, performance and financial position are set out in the Chairman’s Statement on pages 4 to 6. The financial position of the group, its cash flows and liquidity position are set out in detail in this report. The group meets its day-to-day working capital requirements through its US$300 million dedicated multi-currency borrowing facility with Daily Mail and General Trust plc group (DMGT). The facility is divided into US dollar and sterling funds with a total maximum borrowing capacity of US$250 million (£155 million) and £33 million respectively and matures in December 2013. 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. At September 30 2012, the group’s net debt to adjusted EBITDA covenant was 0.27 times and the committed undrawn facility available to the group was £144.7 million. In addition, the group has agreed terms with DMGT that provide it with access to US$300 million of funding should the group require it during the period from December 2013 through April 2016. The group’s forecasts and projections, looking out to September 2015 and taking account of reasonably possible changes in trading performance, show that the group should be able to operate within the level and covenants of its current borrowing facility. After making enquiries, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going Directors’ Report Company Accounts Group Accounts Our Governance Our Performance concern basis in preparing this annual report. 25
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