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

Euromoney Institutional Investor PLC Annual Report and Accounts 2012
www.euromoneyplc.com
Our Performance
19 Financial instruments and risk management continued
Net debt to EBITDA* ratio
The group’s tax and treasury committee reviews the group’s capital structure at least twice a year. As part of the debt covenants under the loan facility
provided by Daily Mail and General Trust plc (DMGT), the board has to ensure that net debt to a rolling 12 month EBITDA* does not exceed four times.
The group expects to be able to remain within these limits during the life of the facility. The net debt to EBITDA covenant is defined to allow the rate
used in the translation of US dollar EBITDA, including hedging contracts, to be used also in the calculation of net debt, thereby removing any distortion
to the covenant from increases in net debt due to short-term movements in the US dollar.
The net debt to EBITDA* ratio at September 30 is as follows:
Committed loan facility (at weighted average exchange rate) (43,127) (123,022)
Loan notes (1,228) (1,617)
Total debt (44,355) (124,639)
Cash and cash equivalents 13,544 12,497
Net debt (30,811) (112,142)
EBITDA* 116,080 111,192
Net debt to EBITDA* ratio 0.27 1.01
* EBITDA (Earnings before interest, tax, depreciation, amortisation) = adjusted operating profit before depreciation and amortisation of licences and software, adjusted
for the timing impact of acquisitions and disposals.
Categories of financial instruments
The group’s financial assets and liabilities at September 30 are as follows:
Financial assets
Derivative instruments in designated hedge accounting relationships 3,011 1,344
Loans and receivables (including cash and cash equivalents) 72,592 79,402
75,603 80,746
Financial liabilities
Derivative instruments – fair value through profit and loss (362) (639)
Derivative instruments in designated hedge accounting relationships (535) (7,606)
Acquisition option commitments (note 25) (7,868) (11,001)
Loans and payables (including overdrafts) (140,361) (229,740)
(149,126) (248,986)
The fair value of the financial assets and liabilities above are classified as level 2 in the fair value hierarchy other than acquisition option commitments
which are classified as level 3 (page 100).
i) Market price risk
Market price risk is the possibility that changes in currency exchange rates, interest rates or commodity prices will adversely affect the value of the
group’s financial assets, liabilities or expected future cash flows. The group’s primary market risks are interest rate fluctuations and exchange rate
movements. Derivatives are used to hedge or reduce the risks of interest rate and exchange rate movements and are not entered into unless such risks
exist. Derivatives used by the group for hedging a particular risk are not specialised and are generally available from numerous sources. The fair values
of interest rate swaps, currency options and forward exchange contracts are set out in this note and represent the value for which an asset could be
sold or liability settled between knowledgeable willing parties in an arm’s length transaction calculated using the market rates of interest and exchange
at September 30 2012. The group has no other material market price risks.
2012
£000
2012
£000
2011
£000
2011
£000
Notes to the Consolidated Financial Statements
Company Accounts Group Accounts Our Governance
93