Experian 2013 Annual Report Download - page 50
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Please find page 50 of the 2013 Experian annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Accounting policies and developments
The principal accounting policies
used are shown in note 5 to the Group
financial statements and these have
been applied consistently.
Two significant strategic transactions
have been completed during the
year – the acquisition of the further
29.6% interest in Serasa and the sale
of the comparison shopping and lead
generation businesses. The treatment
of these transactions is detailed in notes
46 and 47 respectively to the Group
financial statements and is consistent
with both previously adopted policies for
such transactions and with International
Financial Reporting Standards (‘IFRS’).
The year under review has seen little
impact on the Group from developments
in IFRS but the Group is adopting IAS 19
(revised) with effect from 1 April 2013. The
results for the year ended 31 March 2013
will be re-presented accordingly in the
annual report for the year ending 31 March
2014 and it is anticipated that there will be
a small reduction in reported profit before
tax for the year ended 31 March 2013 as
the rate used to determine the expected
return on pension plan assets will fall.
Accounting estimates and assumptions
Details of critical accounting estimates
and assumptions are shown in note 6(a) to
the Group financial statements. The most
significant of these relate to tax, pension
benefits and goodwill and the key
features can be summarised as follows:
•Estimates made in respect of tax assets
and liabilities include the consideration
of transactions in the ordinary course
of business for which the ultimate tax
determination is uncertain.
•The recognition of pension benefits
involves the selection of appropriate
actuarial assumptions, changes to which
may impact on the amounts disclosed in
the Group financial statements.
•The assumptions used in the cash
flow projections underpinning the
impairment testing of goodwill include
assumptions in respect of profitability
and future growth, together with
pre-tax discount rates specific to the
Group’s operating segments.
Financial risk management
The risks and uncertainties that are specific
to our business, together with more general
risks, are set out in the protecting our
business section of this report. Our financial
risk management continues to focus on
the unpredictability of financial markets
and seeks to minimise potentially adverse
effects on our financial performance.
We seek to reduce exposures to foreign
exchange, interest rate and other
financial risks. Detailed narrative and
numeric disclosures in respect of such
risks are included in the notes to the
Group financial statements and the key
features are summarised below.
Foreign exchange risk is managed by:
•Entering into forward foreign exchange
contracts in the relevant currencies in
respect of investments in entities with
functional currencies other than US
dollars, whose net assets are exposed
to foreign exchange translation risk;
•Swapping the proceeds of certain bonds
issued in sterling and euros into US dollars;
•Denominating internal loans in relevant
currencies to match the currencies of
assets and liabilities in entities with
different functional currencies; and
•Using forward foreign exchange
contracts for certain future
commercial transactions.
Interest rate risk is managed by:
•Using both fixed and floating rate
borrowings;
•Using interest rate swaps to adjust
the balance of fixed and floating rate
liabilities; and
•Mixing the duration of borrowings
and interest rate swaps to smooth the
impact of interest rate fluctuations.
Credit risk is managed by:
•Dealing only with banks and financial
institutions with strong credit ratings,
within limits set for each organisation; and
•Closely controlling dealing activity
with counterparty positions monitored
regularly.
Liquidity risk is managed by:
•Entering into long-term committed
bank borrowing facilities to ensure
that sufficient funds are available for
operations and planned expansion; and
•Monitoring of rolling forecasts of
projected cash flows to ensure
that adequate undrawn committed
facilities are available.
2012 NET FUNDING BY CURRENCY2013 NET FUNDING BY CURRENCY
2012 EBIT BY CURRENCY2013 EBIT BY CURRENCY
2012 NET FUNDING BY INTEREST RATE2013 NET FUNDING BY INTEREST RATE
Financial review continued
US dollar 56%
Brazilian real 27%
Sterling 10%
Other 7%
US dollar 57%
Brazilian real 26%
Sterling 10%
Other 7%
US dollar 76%
Sterling 17%
Euro 4%
Other 3%
US dollar 79%
Sterling 16%
Euro 1%
Other 4%
Fixed 69%
Floating 31%
Fixed 76%
Floating 24%
48 Experian Annual Report 2013 Business review