Amadeus IT Holding, S.A. and Subsidiaries - Investor relations at ...

AMADEUS IT HOLDING, S.A. AND SUBSIDIARIES
DIRECTORS’ REPORT FOR THE YEAR ENDED DECEMBER 31, 2011
In 2011 there has been a significant increase in the sensitivity of the EUR denominated debt
to the movements of the interest rate curve with respect to the previous year. This increase
is due to the issuance of a fixed rate bond in the July 2011. Although the future flows of this
instrument are not sensitive to the changes in the level of interest rates, the fair value of the
instrument is very sensitive to these changes.
Note that in the case of the floating rate debt, the spread payable on this debt is fixed and
therefore its fair value is sensitive to changes in the level of interest rates.
According to the table above a 10 bps drop in the level of interest rates would cause a loss in
the fair value of the debt and the derivatives hedging it amounting to KEUR 5,715 at
December 31, 2011, and KEUR 3,611 at December 31, 2010 respectively. However, given
that changes in the fair value of the derivatives that qualify for hedge accounting are
recognized directly in equity and the hedged item (the underlying debt) is measured at
amortized cost, the impact of a 10 bps drop in the level of interest rate would imply no loss
recognized in profit and loss at December 31, 2011, due to all derivatives apply for hedge
accounting, and just KEUR 1 at December 31, 2010 respectively.
In cash flow terms, in the case of a parallel drop (or rise) in the level of interest rates the
lower (or higher) interests payable for the debt which is hedged, would be compensated by a
similar amount of higher (or lower) debt interests to be paid during the life of the hedges
(cash flow hedge concept).
7.5.3 Own shares price evolution risk
The Group has three different remuneration schemes outstanding which are referenced to
the Amadeus shares; the Value Sharing Plan (VSP), the Performance Share Plan (PSP) and
the Restricted Share Plan (RSP).
The VSP is a one-off incentive program given to those employees of the Group not entitled to
the first cycle of the PSP and having contractual relationship with Amadeus companies by
June 30, 2010. The value of this plan fluctuates with the changes in the Amadeus share
price. This value is expensed in the statement of comprehensive income within “Personnel
and related expenses” during the time period in which the plan is outstanding. In order to
reduce the volatility in the “Operating income” of the statement of comprehensive income
caused by the effect of the Amadeus share price fluctuations in the VSP, the Company
entered into an equity-forward transaction which hedges approximately 79.5% (2,300,000
shares) of the notional of the VSP to the fluctuations of the Amadeus share price.
Additionally, Amadeus has two recurring share-based plans known as the Performance
Share Plan (PSP) and the Restricted Share Plan (RSP). According to the rules of these
plans, when they mature their beneficiaries will receive a number of Amadeus’ shares which
for the plans granted in 2010 and 2011 will be (depending on the evolution of certain
performance conditions) between a maximum of 2,200,000 shares and a minimum of
650,000 shares, approximately. It is Amadeus intention to make use of the 2,093,760
treasury shares to settle these plans at their maturity.
7.5.4 Credit risk
Credit risk is the risk that a counterparty to a financial asset will cause a loss for the Group by
failing to discharge an obligation.
52