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Financial Statements
92 ITE Group plc Annual Report and Accounts 2012
21 Financial instruments continued
The following significant exchange rates versus Sterling applied during the year and in the prior year:
Average Reporting date
2012 2011 2012 2011
EUR 1.21 1.15 1.25 1.15
USD 1.58 1.61 1.61 1.56
RUB 48.85 47.04 50.51 49.86
Forward foreign exchange contracts
As at 30 September 2012 the notional amounts of outstanding foreign currency forward contracts that the Group has
committed to amounted to £81.2 million (2011: £82.4 million). These arrangements are designed to address significant
exchange exposures for the next 36 months and are renewed on a revolving basis as required, subject to not committing
the Group to less than six months or more than 36 months in the future.
At 30 September 2012, the fair value of these derivatives is estimated to be a net asset of approximately £4.2 million
(2011: net liability of £0.7 million). These amounts are based on market valuations.
The Group has taken out foreign currency overdrafts in Euros and US Dollars to act as a natural hedge against
certain currency trade receivable balances. These borrowings have not been designated as hedging instruments by
management. All foreign exchange movements on these borrowings and trade receivables are recognised directly in
the income statement.
Interest rate risk management
As the Group has no significant interest-bearing assets, other than cash, the Group’s income and operating cash flows
are substantially independent of changes in market interest rates. The Group is exposed to interest rate risk through its
borrowings at floating interest rates. This risk is managed by the Group by maintaining an appropriate level of floating
interest rate borrowings. The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in
the liquidity risk section of this note.
Interest structure of financial liabilities
2012
£000
2011
£000
Financial liabilities at variable rates:
Bank overdraft 15,418 13,948
Bank loan 13,306 14,483
The following average interest rates applied during the year and in the prior year:
Bank loan Bank overdraft
2012
%
2011
%
2012
%
2011
%
GBP – – 1.4 –
EUR 2.2 3.8 2.6 2.5
USD – – 2.1 2.5
Average interest rate applicable to cash balances were 3.7% in 2012 and 5.3% in 2011.
Notes to the consolidated accounts continued
For the year ended 30 September 2012