Financial Statements
90
ITE Group plc
Annual Report and Accounts 2012
21 Financial instruments
continued
Maturity of financial instruments
In 2012, £4.5 million of the Yem Fuar put option had a maturity of one year or less, with the remaining £4.5 million having a
maturity of more than one year. Out of the total of £4.3 million of derivative financial assets, £2.1 million had a maturity of
one year or less and £2.2 million of one year or more.
In 2011, of the derivative financial liabilities, Ekin Fuar put option (£0.7 million) and an element of the derivative financial
instruments (£0.2 million) had a maturity of one year or less. The remaining derivative financial liabilities of £12.7 million had
a maturity of one year or more. Out of the total of £0.3 million of derivative financial assets, £0.2 million had a maturity of
one year or less and £0.1 million of one year or more.
The Directors consider that the carrying amounts of financial assets and liabilities recorded at amortised cost in the
financial statements approximate to their fair value due to the short maturity of the instruments.
Derivative assets
2012
£000
Contractual
amounts
2012
£000
Fair value
2011
£000
Contractual
amounts
2011
£000
Fair value
Foreign currency forward contracts
81,213
4,215
24,586
300
Equity option assets
1,669
52
Derivative liabilities
2012
£000
Contractual
amounts
2012
£000
Fair value
2011
£’000
Contractual
amounts
2011
£000
Fair value
Foreign currency forward contracts
57,789
977
Put option liabilities
8,982
8,892
12,642
12,642
The Group seeks to minimise the effects of foreign currency risks by using derivative financial instruments to hedge the risk
exposures. The use of financial derivatives is governed by the Group’s policies approved by the Board. Compliance with
policies and exposure limits is reviewed by the Board on a continuous basis. The Group does not enter into financial
instruments, including derivative financial instruments, for speculative purposes.
Fair value hierarchy
The following table categorises the Group’s financial instruments which are held at fair value into one of three levels to
reflect the degree to which observable inputs are used in determining their fair values:
Fair value
£000
Level 1
£000
Level 2
£000
Level 3
£000
Assets measured at fair value
Foreign currency forward contracts
4,215
4,215
Equity options
52
52
Total
4,267
4,215
52
Liabilities measured at fair value
Foreign currency forward contracts
Put options
8,982
8,982
Total
8,982
8,982
Level 1: Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Fair value measured using inputs, other than quoted prices included within Level 1 that are observable for the asset
or liability either directly or indirectly.
Level 3: Fair values measured using inputs for the asset or liability that are not based on observable market data.
Financial risk management
In the course of its business, the Group is exposed to a number of financial risks: market risk (including foreign currency
and interest rate), credit risk, liquidity risk and capital risk. This note presents the Group’s exposure to each of the above
risks. The Group’s objectives, policies and processes for measuring and managing risks can be found in the Business
Review on pages 32 to 37.
Notes to the consolidated accounts
continued
For the year ended 30 September 2012
1...,82,83,84,85,86,87,88,89,90,91 93,94,95,96,97,98,99,100,101,102,...112