Experian 2013 Annual Report Download - page 165
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Business review Business overview Governance Financial statements
C. Significant accounting policies (continued)
Accounting for derivative financial instruments
The Company uses forward foreign exchange contracts to manage its exposures to fluctuations in foreign exchange rates. The interest
differential reflected in forward foreign exchange contracts is taken to interest receivable and similar income or interest payable and similar
charges. Forward foreign exchange contracts are recognised at fair value, based on forward foreign exchange market rates at the balance sheet
date. Gains or losses on forward foreign exchange contracts are taken to the profit and loss account in the year in which they arise.
Deferred tax
Deferred tax is provided in respect of timing differences that have originated but not reversed at the balance sheet date and is determined using
the tax rates that are expected to apply when the timing differences reverse. Deferred tax assets are recognised only to the extent that they are
expected to be recoverable.
Own shares
Shares in the Company purchased in connection with any share buyback programme, and held as treasury shares, are shown as a deduction
from total shareholders’ funds at cost.
The Group has a number of equity settled, share-based employee incentive plans and, in connection with these plans, shares in the Company
are held by The Experian plc Employee Share Trust and the Experian UK Approved All-Employee Share Plan. The assets, liabilities and
expenses of these separately administered trusts are included in the Company’s financial statements as if they were the Company’s own. The
assets of the trusts mainly comprise shares in the Company and such shares are also shown as a deduction from total shareholders’ funds
at cost.
Contractual obligations to purchase own shares are recognised at the net present value of expected future payments. Gains and losses in
connection with such obligations are recognised in the profit and loss account.
Profit and loss account format
Charges are reported by nature in the profit and loss account as this reflects the composition of the Company’s cost base.
Share incentive plans
The fair value of awards and options granted to employees of the Company in connection with share-based employee incentive plans Is
recognised over the vesting period. Fair value is measured at the date of grant using whichever of the Black-Scholes model, Monte Carlo
model and closing market price is most appropriate. The Company takes into account the best estimate of the number of awards and options
expected to vest and revises such estimates at each balance sheet date. Non-market performance conditions are included in the vesting
estimates. Market-based performance conditions are included in the fair value measurement on grant date but are not revised for
actual performance.
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 and not
capitalised. Payments made under operating leases are charged in the profit and loss account on a straight line basis over the period of
the lease.
D. Staff costs
2013
US$m
2012
US$m
Directors’ fees 2.5 2.2
Wages and salaries 1.1 1.2
Social security costs 0.3 0.1
Other pension costs 0.1 0.1
4.0 3.6
Executive directors of the Company are employed by other Group undertakings and details of their remuneration, together with that of the
non-executive directors, are given in the audited part of the report on directors’ remuneration. The Company had two employees throughout
both years.