Experian 2008 Annual Report Download - page 79

77Experian Annual Report 2008
Introduction 2 – 5
Business review 6 – 37
Governance 38 – 64
Financial statements Group financial statements Financial statements Group financial statements
2. Basis of preparation and significant accounting policies (continued)
Deferred tax
Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Group financial statements. However, if the deferred tax arises from initial recognition of an asset
or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss, it is not accounted for. Deferred tax assets and liabilities are calculated at the tax rates that are
expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates and laws that have
been enacted or substantively enacted by the balance sheet date.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference
will not reverse in the foreseeable future.
Provisions
Provisions are recognised when:
The Group has a present legal or constructive obligation as a result of past events; and l
It is more likely than not that an outflow of resources will be required to settle the obligation; and l
The amount has been reliably estimated. l
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks
specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as
an interest expense.
Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset when the
reimbursement is certain.
Leases
Finance leases
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased
asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and
finance charges. The rental obligations, net of finance charges, are included in other payables. The interest element of the
lease payments is charged in the Group income statement over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each year.
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases.
Payments made under operating leases are charged in the Group income statement on a straight line basis over the period of
the lease. Incentives from lessors are recognised as a systematic reduction of the charge over the period of the lease.
Employee benefits
Defined benefit pension arrangements – funded schemes
The retirement benefit assets recognised in the Group balance sheet comprise the fair value of plan assets of funded
schemes less the present value of the related defined benefit obligation at the balance sheet date, together with adjustments
for past service costs. The defined benefit obligation is calculated annually by independent qualified actuaries using the
projected unit credit method.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using market
yields available at the assessment date on high-quality corporate bonds that are denominated in the currency in which the benefits
will be paid, and that have terms to maturity consistent with the estimated average term of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised
immediately in the Group statement of recognised income and expense.