Experian 2010 Annual Report Download - page 101

99
Introduction 2 – 11
Business review 12 – 51
Governance 52 – 84
Financial statements 85 – 160
4. Signicant accounting policies (continued)
Minority interests
The minority interests in the Group balance sheet represent the share of net assets of subsidiary undertakings held outside
the Group. The movement in the year comprises the prot attributable to such interests together with any dividends paid,
movements in respect of corporate transactions and related exchange differences.
Where put/call option agreements are in place in respect of shares held by the minority shareholders, the put element of the
liability is measured in accordance with the requirements of IAS 39 ‘Financial Instruments: Recognition and Measurement’ and
is stated at the net present value of the expected future payments. In accordance with the requirements of IAS 32 ‘Financial
Instruments: Disclosure and Presentation’ this liability is shown as a non-current nancial liability in the Group balance sheet.
The change in the net present value of such options in the year is recognised in the Group income statement within net nance
costs.
Critical accounting estimates and judgments
Critical accounting estimates and assumptions
In preparing the Group nancial statements, management is required to make estimates and assumptions that affect the
reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. The resulting
accounting estimates, which are based on management’s best judgment at the date of the Group nancial statements, will,
by denition, seldom equal the related actual results. The estimates and assumptions that have a signicant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next nancial year are discussed below.
Ta x e s
The Group is subject to taxes in numerous jurisdictions. Signicant judgment is required in determining the related provision for
income taxes as there are transactions in the ordinary course of business and calculations for which the ultimate tax determination
is uncertain. The Group recognises liabilities based on estimates of whether additional taxes will be due. Where the nal tax
outcome of these matters is different from the amounts that were initially recognised, such differences will impact on the results for
the year and the respective income tax and deferred tax assets or provisions in the year in which such determination is made.
Pension benets
The present value of the dened benet assets and obligations depends on factors that are determined on an actuarial basis
using a number of assumptions. The assumptions used in determining the dened benet assets and obligations and net
pension costs include the expected long-term rate of return on the plan assets and the discount rate. Any changes in these
assumptions may impact on the amounts disclosed in the Group nancial statements.
The expected return on plan assets is calculated by reference to the plan investments at the balance sheet date and is a
weighted average of the expected returns on each main asset type based on market yields available on these asset types at the
balance sheet date.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate used to calculate the
present value of estimated future cash outows expected to be required to settle the dened benet obligations. In determining
the discount rate, the Group has considered the prevailing market yields of high-quality corporate bonds that are denominated in
the currency in which the benets will be paid, and that have terms to maturity consistent with the estimated average term of the
related pension liability. In determining the discount rate, management has accordingly derived an appropriate discount rate by
consideration of the average annualised yield on medium and longer term AA rated corporate bonds in the UK as published by
iBoxx, together with consideration of the average yields from Euro Sterling AA, Financial AA and Bank AA indices.
Other key assumptions for dened benet obligations and pension costs are based in part on market conditions at the relevant
balance sheet dates and additional information is disclosed in note 30.
Fair value of derivatives and other nancial instruments
The fair value of derivatives and other nancial instruments that are not traded in an active market (for example, over-the-
counter derivatives) is determined using valuation techniques. The Group uses its judgment to select a variety of methods and
makes assumptions that are mainly based on market conditions existing at each balance sheet date.
The assumptions in respect of the valuation of the put option associated with the remaining 30% stake of Serasa are set out in
note 5.
Goodwill
Goodwill is allocated to CGUs and monitored for internal management purposes by operating segment. The allocation is made
to those CGUs or groups of CGUs that are expected to benet from the business combination in which the goodwill arose.
The Group tests goodwill for impairment annually or more frequently if events or changes in circumstances indicate that
the goodwill may be impaired. The recoverable amount of each CGU is generally determined on the basis of value-in-use
calculations which require the use of cash ow projections based on nancial budgets approved by management, looking
forward up to ve years. Management determines budgeted gross margin based on past performance and its expectations for
the market development. Cash ows are extrapolated using estimated growth rates beyond a ve year period. The growth rates
used do not exceed the long-term average growth rate for the markets in which the segment operates. The discount rates used
reect the segment’s weighted average cost of capital (‘WACC’).