Peachtree 2015 Annual Report Download - page 145

The Sage Group plc | Annual Report & Accounts 2015 143
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
13.3 Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 30 September in respect of which all conditions precedent
had been met at that date:
2015
£m
2014
£m
Expiring in more than two years but not more than five years 443.6 399.3
The facilities have been arranged to help finance the expansion of the Group’s activities. All these facilities incur commitment fees at
market rates. In addition, the Group maintains overdraft and uncommitted facilities to provide short-term flexibility and has also utilised
the US private placement market.
13.4 Other financial liabilities
Accounting policy
The Group makes use of contingent contracts for the purchase of its own shares. These derivative contracts are accounted for as
equity transactions and the contracts are not stated at their market values. The present value of the obligation to purchase the shares
is recognised in full at the inception of the contract, even when that obligation is conditional. Any subsequent reduction in the total
obligation arising from the early termination of a contract is credited back to equity at the time of termination.
Any embedded derivative assets arising out of any debt contracts are classified within other current and other non-current assets
according to when they can be exercised.
The Group makes use of put and call options as part of its ongoing acquisition activity. The fair value of these options are measured
at each reporting date and the fair value gains or losses are taken to the income statement.
2015
£m
2014
£m
Current liabilities : Close period share buyback programme –(60.1)
Total other financial liabilities –(60.1)
The prior year fair value of the close period share buyback programme was calculated based on the value of the contractual legal agreement
with Citigroup Global Markets Limited, which was also equal to the book value.
The put and call arrangement to acquire the remaining non-controlling interest’s 25% share in Folhamatic in Brazil was settled during 2014
for consideration of £50.4m, increasing the Group’s ownership of the Brazilian sub-Group to 100%:
2015
£m
2014
£m
Opening fair value at 1 October –54.2
Consideration paid –(50.4)
Imputed interest recognised in the Consolidated income statement within finance costs –0.8
Loss/(gain) on fair value adjustments –0.4
Exchange movement –(5.0)
Closing fair value at 30 September ––
13.5 Sensitivity analysis
Financial instruments affected by market risks include borrowings and deposits.
The following analysis, required by IFRS 7, “Financial Instruments: Disclosures”, is intended to illustrate the sensitivity to changes in market
variables, being sterling, US Dollar and Euro interest rates, and sterling/US Dollar and sterling/Euro exchange rates.
The sensitivity analysis assumes reasonable movements in foreign exchange and interest rates before the effect of tax. The Group considers
a reasonable interest rate movement in LIBOR to be 1%, based on interest rate history. Similarly, sensitivity to movements in sterling/US
Dollar and sterling/Euro exchange rates of 10% are shown, reflecting changes of reasonable proportion in the context of movement in those
currency pairs over the last year.
Using the above assumptions, the following table shows the illustrative effect on the consolidated income statement and equity.