Basis of preparation

The Consolidated Group and Parent Company Financial Statements of International Personal Finance plc and its subsidiaries (‘IPF’ or the ‘Group’) have been prepared in accordance with European Union endorsed International Financial Reporting Standards (‘IFRSs’), International Financial Reporting Interpretations Committee (‘IFRIC’) interpretations and the Companies Act 2006 applicable to companies reporting under IFRS.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 January 2010, but do not have any impact on the Group:

IFRS 1 (revised) ‘First-time adoption’

IFRS 2 (amendment) ‘Group cash-settled share-based payment transactions’

IFRS 3 (revised), ‘Business combinations’

IFRS 5 (amendment) ‘Non-current assets held for sale and discontinued operations’

IFRIC 18 ‘Transfers of assets from customers’

IAS 1 (amendment) ‘Presentation of Financial Statements’

IAS 38 (amendment) ‘Intangible assets’

IAS 36 (amendment) ‘Impairment of assets’

IAS 27 (revised) ‘Consolidated and separate Financial Statements’

IFRIC 17 ‘Distributions of non-cash assets to owners’

The following standards, interpretations and amendments to existing standards are not yet effective and have not been early adopted by the Group:

IFRS 1 (amendment) ‘Hyperinflation and fixed dates’

IFRS 7 (amendment) ‘Financial instruments disclosures’

IFRS 9 ‘Financial instruments’. This standard is the first step in the process to replace IAS 39, ‘Financial instruments: recognition and measurement’. IFRS 9 introduces new requirements for classifying and measuring financial assets and is likely to affect the Group’s accounting for its financial assets. The standard is not applicable until 1 January 2013 but is available for early adoption. However, the standard has not yet been endorsed by the EU. The Group is in the process of assessing IFRS 9’s full impact.

IAS 12 (amendment) ‘Income Taxes’

IAS 24 (revised) ‘Related party disclosures’

IAS 32 (amendment) ‘Classification of rights issues’

IFRIC 14 (amendment) ‘Prepayments of a minimum funding requirement’

IFRIC 19 ‘Extinguishing financial liabilities with equity instruments’

Accounting convention

The Consolidated Financial Statements have been prepared under the historical cost convention, as modified by the revaluation of derivative financial instruments at fair value. The principal accounting policies, which have been applied consistently, are set out in the following paragraphs.

Consolidation

These consolidated Financial Statements include the financial results of all companies which are controlled by the Group. Control exists where the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. All companies are 100% owned by IPF plc Group companies. A list of the principal subsidiaries in the Group is included within note 13.

Finance costs

Finance costs comprise the interest on external borrowings which are recognised on an effective interest rate (‘EIR’) basis, and gains or losses on derivative contracts taken to the income statement.

Segment reporting

The Group’s operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of operating segments, has been identified as the Board. This information is geographical. A geographical segment is a component of the Group that operates within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.