Experian 2007 Annual Report Download - page 66

Introduction | Business review | Governance | Financial statements
Notes to the Group financial statements
for the year ended 31 March 2007
64 |Experian Annual Report2007
1. Corporate information
Experian Group Limited (the ‘Company’), which is the ultimate parent company of the Experian Group, is incorporated and registered in Jersey
under the Jersey Companies Law as a public company limited by shares. The shares of the Company are listed on the London Stock Exchange’s
market for listed securities (‘the London Stock Exchange’). Experian is a business services group.
The consolidated financial statements for the Group were approved by the Board on 22 May 2007.
2. Basis of preparation and significant accounting policies
Basis of preparation
The Group financial statements are presented in US Dollars as this is the most representative currency of the Group’s operations. The financial
statements are rounded to the nearest million. They are prepared on the historical cost basis modified for the revaluation of certain financial
instruments. The principal exchange rates used in preparing the Group financial statements are set out in note 4.
In compliance with the requirements for companies whose shares are listed on the London Stock Exchange, the financial statements of Experian
Group Limited are included within the Group annual report and they are set out on pages 121 to 132. These are presented in Pounds Sterling as
that is the functional currency of that Company. In determining its functional currency, the directors have taken account of the fact that the
assets and liabilities and cash flows of Experian Group Limited are primarily denominated in Pounds Sterling. The Company has elected to prepare
its financial statements under UK accounting standards.
The consolidated financial statements of Experian Group Limited and its subsidiary undertakings (‘Experian’) are prepared in accordance with
International Financial Reporting Standards (‘IFRS’) as adopted for use in the European Union (the ‘EU’). These are those standards, subsequent
amendments and related interpretations issued and adopted by the International Accounting Standards Board (‘IASB’) that have been endorsed
by the European Union. Although Experian Group Limited is incorporated and registered in Jersey under the Jersey Companies Law, the Group
financial statements include disclosures sufficient to comply with those parts of the UK Companies Act 1985 applicable to companies reporting
under IFRS.
On 10 October 2006, the separation of Experian and Home Retail Group was completed by way of demerger. As part of the demerger, Experian
Group Limited became the ultimate holding company of GUS plc and related subsidiaries and shares in GUS plc ceased to be listed on the
London Stock Exchange on 6 October 2006. Trading of shares in Experian Group Limited on the London Stock Exchange commenced on
11 October 2006.
The demerger transaction falls outside the scope of IFRS 3 ‘Business Combinations’. Accordingly,following the guidance regarding the selection
of an appropriate accounting policy provided by IAS 8 ‘Accounting policies, changes in accounting estimates and errors’, the transaction has been
accounted for in these financial statements using the principles of merger accounting set out in FRS 6 ‘Acquisitions and Mergers’ and UK
Generally Accepted Accounting Practice (UK GAAP). This policy, which does not conflict with IFRS, reflects the economic substance of the
transaction. The distribution to GUS plc shareholders of shares in Home Retail Group plc has been accounted for as a dividend in specie in these
financial statements.
In accordance with the requirements of merger accounting, the comparative information in these Group financial statements has been extracted
from the GUS Group’s statutory financial statements for the year ended 31 March 2006. Those financial statements incorporated the results of
GUS plc and its subsidiary undertakings for the financial year then ended with the exception of Homebase where the GUS Group included its
results for the financial year to the end of February. This was done to facilitate comparability to avoid distortions related to the timing of Easter.
The statutory financial statements of GUS plc for the year ended 31 March 2006 were reported in Pounds Sterling but, to provide comparability
with the presentation currency of the Group, they are now represented in US Dollars.
In addition this information has been further represented as follows:
(a) the results of Home Retail Group have been reclassified as a discontinued operation in the Group income statement and the Group cash
flow statement as required by IFRS 5 ‘Non-current assets held for sale and discontinued operations’;
(b) there has been a reallocation of costs between cost of sales and operating expenses in the Group income statement to reflect the policies
adopted in the preparation of the historical financial information for the Experian prospectus which provides a more appropriate
classification of such items. The effect of this is to increase cost of sales and reduce operating expenses for the year ended 31 March 2006
by US$112m, with no effect on reported profit for the financial year; and
(c) there has been a reclassification of derivatives in the Group cash flow statement in order to more fairly state operating cash flows and to
reflect the approach adopted in the preparation of the historical financial information for the Experian prospectus. The effect of this has
been to increase net cash inflow from operating activities by US$70m, to reduce net cash flow generated from financing activities by
US$50m and to separately report an outflow for exchange and other movements of US$20m. The reduction in net cash flow generated
from financing activities comprises a reduction of US$63m in the cash inflow from new borrowings and a US$13m reclassification to
separately identify net receipts from derivatives held to manage the Group’s currency profile.