Experian 2014 Annual Report Download - page 122

Financial statements • Notes to the Group financial statements
Notes to the Group financial statements
for the year ended 31 March 2014 continued
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7. Use of non-GAAP measures in the Group financial statements
As detailed below, the Group has identified and defined certain measures that it believes assist understanding of Experian’s
performance. The measures are not defined under IFRS and they may not be directly comparable with other companies’ adjusted
measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance but
management has included them as they consider them to be key measures used within the business to assess performance.
(a) Benchmark profit before tax (‘Benchmark PBT’)
Benchmark PBT is defined as profit before amortisation and impairment of acquisition intangibles, impairment of goodwill,
acquisition expenses, adjustments to contingent consideration, exceptional items, financing fair value remeasurements, tax and
discontinued operations. It includes the Group’s share of continuing associates’ pre-tax results.
An explanation of the basis on which Experian reports exceptional items is provided below. Other adjustments made to derive
Benchmark PBT can be explained as follows:
• The Group has excluded charges for the amortisation and impairment of acquisition intangibles from its definition of Benchmark
PBT because such charges are based on judgments about their value and economic life. Impairment of goodwill is similarly
excluded from the definition of Benchmark PBT.
• Acquisition expenses are excluded from the definition of Benchmark PBT as they bear no relation to the underlying performance
of the Group or to the performance of the acquired businesses. Adjustments to contingent consideration are similarly excluded
from the definition of Benchmark PBT.
• An element of the Group’s derivatives is ineligible for hedge accounting. Gains or losses on these derivatives arising from
market movements, together with gains and losses on put options in respect of acquisitions, are credited or charged to
financing fair value remeasurements within finance expense in the Group income statement and excluded from the definition
of Benchmark PBT.
(b) Earnings before interest and tax (‘EBIT’)
EBIT is defined as profit before amortisation and impairment of acquisition intangibles, impairment of goodwill, acquisition expenses,
adjustments to contingent consideration, exceptional items, net finance costs, tax and discontinued operations. It includes the
Group’s share of continuing associates’ pre-tax results.
(c) Earnings before interest, tax, depreciation and amortisation (‘EBITDA’)
EBITDA is defined as EBIT before depreciation and amortisation charged therein.
(d) Discontinuing activities
Discontinuing activities are businesses sold, closed or identified for closure during a financial year. These are treated as discontinuing
activities for both revenue and EBIT purposes. The results of discontinuing activities are disclosed separately with the results of the prior
period re-presented as appropriate. This measure differs from the definition of discontinued operations set out in IFRS 5.
(e) Continuing activities
Businesses trading at 31 March 2014, which have not been disclosed as discontinuing activities, are treated as
continuing activities.
(f) Constant exchange rates
To highlight its organic performance, Experian discusses its results in terms of constant exchange rate growth, unless otherwise
stated. This represents growth calculated as if the exchange rates used to determine the results had remained unchanged from
those used in the previous year.
(g) Total growth
This is the year-on-year change in the performance of Experian’s activities. Total growth at constant exchange rates removes the
translational foreign exchange effects arising on the consolidation of Experian’s activities.