Experian 2013 Annual Report Download - page 111
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Business review Business overview Governance Financial statements
5. Significant accounting policies (continued)
Post-retirement healthcare obligations
Obligations in respect of post-retirement healthcare plans are calculated annually by independent qualified actuaries using an actuarial
methodology similar to that for the funded defined benefit pension arrangements.
Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions, are recognised in the Group statement
of comprehensive income. The pension cost recognised in the Group income statement only comprises interest on the obligation.
(o) Provisions (note 39)
Where 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.
(p) Own shares (note 42)
Shares in the Company purchased in connection with any share buyback programme, and held as treasury shares, are shown as a deduction
from total equity at cost.
The Group has a number of equity settled, share-based employee incentive plans and, in this connection, own shares are held by The Experian
plc Employee Share Trust and the Experian UK Approved All-Employee Share Plan. The assets of the trusts mainly comprise shares in the
Company and such shares are also shown as a deduction from total equity at cost.
(q) Assets and liabilities classified as held for sale (note 17)
Assets and liabilities are classified as held for sale when their carrying amounts are to be recovered or settled principally through a sale
transaction and a sale is considered highly probable. They are stated at the lower of the carrying amount and fair value less costs to sell.
(r) Revenue recognition
Revenue represents the fair value of consideration receivable on the sale of goods and services, net of value added tax and other sales taxes,
rebates and discounts. Revenue includes the provision and processing of data, subscriptions to services, software and database customisation
and development and the sale of software licences, maintenance and related consulting services.
Revenue in respect of the provision and processing of data is recognised in the year in which the service is provided. Subscription revenues, and
revenues in respect of services to be provided by an indeterminate number of acts over a specified period of time, are recognised on a straight
line basis over those periods. Customisation, development and consulting revenues are recognised by reference to the stage of completion of
the work generally on the basis of costs incurred to date as a percentage of estimated total costs. Revenue from software licences is recognised
upon delivery. Revenue from maintenance agreements is recognised on a straight line basis over the term of the maintenance period.
Where a single arrangement comprises a number of individual elements which are capable of operating independently of one another, the total
revenues are allocated amongst the individual elements based on an estimate of the fair value of each element. Where the elements are not
capable of operating independently, or reasonable measures of fair value for each element are not available, total revenues are recognised on a
straight line basis over the contract period to reflect the timing of services performed.
Sales are generally invoiced in the geographic area in which the customer is located and accordingly the geographic location of the invoicing
undertaking is used as the basis for attributing revenue to individual countries.
(s) Operating charges
Operating charges are reported by nature in the Group income statement as this reflects the composition of the Group’s cost base and cost
management globally.
Details of charges in respect of share incentive plans within labour costs are set out in note (v) below; those for pension and other post
employment benefits are set out in note (n) above.
Details of the Group’s depreciation and amortisation policy are given in notes (f) and (g) above.
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.
(t) Net finance costs (note 15)
Incremental transaction costs which are directly attributable to the issue of debt are capitalised and amortised over the expected life of the
borrowing using the effective interest rate method. All other borrowing costs are charged in the Group income statement in the year in which
they are incurred.
The interest element of finance lease payments is charged in the Group income statement over the lease period.