- Financial Statements
-
Group income
statement Group statement of comprehensive income Group balance sheet Group statement of changes in total equity Group cash flow
statement Notes to the unaudited condensed Group half-yearly financial
statements Statement of directors' responsibilities Independent review
report to Experian plc Shareholder information
Unaudited condensed Group half-yearly financial statements
Notes to the unaudited condensed Group half-yearly financial statements
for the six months ended 30 September 2009
- General information
- Basis of preparation
- Accounting policies and estimates
- Presentation of financial information
- Other recent accounting developments
- Use of non-GAAP measures
- Segment information
- Information on business segments (non-GAAP disclosures)
- Foreign currency
- Exceptional items and other non-GAAP measures
- Net financing costs
- Group tax expense
- Discontinued operations
- Basic and diluted earnings per share
- Dividends
- Capital expenditure, disposals and capital commitments
- Retirement benefit obligations and assets - defined benefit plans
- Notes to the Group cash flow statement
- Reconciliation of cash generated from operations to operating cash flow (non-GAAP measure)
- Net debt (non-GAAP measure)
- Share capital
- Acquisitions
- Contingencies
- Events occuring after the end of the reporting period
- Related parties
- Seasonality
- Corporate website
Experian plc (the ‘Company’) is incorporated and registered in Jersey under Jersey Companies Law as a public company limited by shares. The Company’s shares are traded on the London Stock Exchange's Regulated Market.
These unaudited condensed Group half-yearly financial statements were approved for issue on 17 November 2009. No significant events impacting the Group, other than those disclosed in this document, have occurred between 30 September 2009 and that date.
These unaudited condensed Group half-yearly financial statements do not constitute the Group’s statutory financial statements. The Group’s most recent statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 March 2009, were approved by the directors on 19 May 2009 and have been delivered to the Jersey Registrar of Companies. The auditors have reported on those financial statements and have given an unqualified report which does not contain a statement under Article 111(2) or Article 111(5) of the Companies (Jersey) Law 1991. These condensed Group half-yearly financial statements have been reviewed, not audited.
These unaudited condensed Group half-yearly financial statements for the six months ended 30 September 2009 have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority and with International Accounting Standard ('IAS') 34 ‘Interim Financial Reporting’ as adopted by the European Union ('EU'). The unaudited condensed Group half-yearly financial statements should be read in conjunction with the Group’s statutory financial statements for the year ended 31 March 2009, copies of which can be found on the Company’s website at www.experianplc.com/investor-centre/reports/investor-reports/2009.aspx, and are available upon request from the Company Secretary at Newenham House, Northern Cross, Malahide Road, Dublin 17, Ireland. The Group’s statutory financial statements were prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted for use in the EU and as issued by the International Accounting Standards Board (‘IASB’). These are those standards, subsequent amendments and related interpretations issued and adopted by the IASB that have been endorsed by the EU.
The unaudited condensed Group half-yearly financial statements of Experian plc and its subsidiary undertakings (‘Experian’ or the ‘Group’) comprise the consolidated results of the Group for the six months ended 30 September 2009 and 30 September 2008 and for the year ended 31 March 2009. The financial information for the year ended 31 March 2009 has been extracted from the Group’s statutory financial statements for that year. The Group’s condensed half-yearly financial statements are unaudited but have been reviewed by the auditors and their report is set out in the Independent Review Report.
These unaudited condensed Group half-yearly financial statements are presented in US dollars, rounded to the nearest million, as the US dollar is the most representative currency of the Group’s operations. As indicated in the annual report and audited financial statements for the year ended 31 March 2009, the functional currency of the Company has changed to US dollars at 1 April 2009 as the US dollar has become the dominant currency to which the Company is now exposed. The unaudited condensed Group half-yearly financial statements are prepared on the historical cost basis modified for the revaluation of certain financial instruments. The principal exchange rates used in preparing the unaudited condensed Group half-yearly financial statements are set out in note 9. Except as indicated in note 4, the financial information has been prepared on a basis consistent with that reported for the six months ended 30 September 2008 and the year ended 31 March 2009.
These unaudited condensed Group half-yearly financial statements have been prepared applying the same accounting policies, significant judgments made by management in applying them, and key sources of estimation uncertainty applied by the Group that were used in the Group’s statutory financial statements for the year ended 31 March 2009. These accounting policies were published within that document and are also available on the Company’s website at www.experianplc.com/investor-centre/reports/investor-reports/2009.aspx.
The preparation of half-yearly financial statements requires management to make estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management’s best judgment at the date of the half-yearly financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. There have been no significant changes in the bases upon which estimates have been determined, compared to those applied at 31 March 2009 and no change in estimate has had a material effect on the current period.
The Group has reviewed the valuation of its principal defined benefit pension plan and in the light of changes in the key actuarial assumptions an adjustment, as required at 30 September 2009, is incorporated in these unaudited condensed Group half-yearly financial statements. The actuarial assumption with the most significant impact at 30 September 2009 is the discount rate and a rate of 5.5% (2008: 7.3%) has been used at that date. The discount rate used in the year ended 31 March 2009 was 6.9%. An analysis of amounts reported within retirement benefit assets and obligations, together with an analysis of movements in the period, is given in note 17 together with the key actuarial assumptions.
Goodwill held in the Group’s balance sheet is tested annually for impairment at the year end. No circumstances have arisen in the six months ended 30 September 2009 which indicate additional impairment testing is required.
The Group had no material or unusual related party or share-based payment transactions during the six months ended 30 September 2009. Disclosures in respect of the Group’s related party transactions for the period are given in note 25 and full details of share-based payment arrangements were provided in the Group’s statutory financial statements for the year ended 31 March 2009.
There have been two significant developments in financial reporting which became effective for Experian at the start of the current financial year and these have been taken into account in the presentation of the unaudited condensed Group half-yearly financial statements:
| a) | IAS 1 ‘Amendment – Presentation of Financial Statements’ This revised standard requires that the Group statement of changes in total equity is now presented as a primary statement. The standard also prohibits the presentation of items of income and expense within this statement and requires such ‘non-owner changes in equity’ to be presented separately from 'owner changes in equity'. Accordingly the standard requires that all ‘non-owner changes in equity’ are shown in a performance statement and, as permitted by the standard, the Group has elected to comply with this requirement by presenting an income statement and a statement of comprehensive income. |
| b) | Segmental reporting – adoption of IFRS 8 ‘Operating segments’ The segmental information presented in notes 7 and 8 has been prepared in accordance with the requirements of IFRS 8. Experian is organised into, and managed on a worldwide basis over, the following five operating segments, based on geographical areas, supported by its central Group functions:
|
The chief operating decision-maker, identified in accordance with the requirements of IFRS 8, assesses the performance of the above operating segments on the basis of EBIT, as defined in note 6.
The ‘All other segments’ category required to be disclosed under IFRS 8 has been captioned in these financial statements as EMEA/Asia Pacific. This combines information in respect of the EMEA and the Asia Pacific segments as, on the basis of their share of the Group’s results and net assets, neither of these operating segments is individually reportable under IFRS 8. Accordingly the information given in respect of this category is comparable to that previously disclosed under IAS 14 in respect of EMEA/Asia Pacific.
Experian separately presents information equivalent to segment disclosures in respect of the costs of its central Group functions under the caption of ‘Central Activities’, as management believes that the reporting of this information is helpful to users of the financial statements. Information disclosed under Central Activities includes costs arising from finance, treasury and other global functions.
Information presented to meet the requirements of IFRS 8 additionally includes analysis of the Group’s revenues over groups of service lines within note 8. This is supplemented by additional voluntary disclosure of the profitability of those same groups of service lines, and is equivalent to disclosures previously provided of segmental information analysed by business segment under IAS 14. For ease of reference, Experian continues to use the term ‘business segments’ when discussing the results of groups of service lines.
The North America and the UK and Ireland segments derive revenues from all of the Group’s major service lines. The Latin America, EMEA and Asia Pacific segments currently do not derive revenue from the Interactive service line.
| The following accounting standards, amendments and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee (the ‘IFRIC’) are effective for the Group’s accounting periods beginning on or after 1 April 2009 but have had no material effect on the results or financial position of the Group disclosed within these unaudited condensed Group half-yearly financial statements: |
|
| In addition, the amendment to IFRS 7 ‘Improving disclosures about financial instruments’, the amendments to IFRIC 9 and IAS 39 ‘Embedded derivatives’ and IFRIC 18 ‘Transfers of assets to customers’ are also now effective for the Group but have not yet received EU endorsement. |
| At the balance sheet date, a number of new standards, amendments and interpretations were in issue but are not yet effective for the Group and have not been early adopted: |
|
| The amendments to IAS 27 and IFRS 3 will impact the accounting treatment of acquisitions in the Group financial statements. If they had been adopted, the other new standards, amendments or interpretations would have had no material effect on the results or financial position of the Group disclosed within these financial statements although a number would lead to additional or revised disclosures. |
The Group has identified certain measures that it believes will assist understanding of the performance of the business. 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 important comparables and key measures used within the business for assessing performance.
The following are the key non-GAAP measures identified by the Group:
Benchmark profit before tax (‘Benchmark PBT’)
Benchmark PBT is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, financing fair value remeasurements, tax and discontinued operations. It includes the Group’s share of associates’ pre-tax profit.
Earnings before interest and tax (‘EBIT’)
EBIT is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, net financing costs, tax and discontinued operations. It includes the Group’s share of associates’ pre-tax profit.
Benchmark earnings
Benchmark earnings represents Benchmark PBT less attributable tax and minority interests. Benchmark earnings attributable to minority interests represents that portion of Benchmark earnings that relate to minority interests.
Benchmark earnings per share (‘Benchmark EPS’)
Benchmark EPS represents Benchmark PBT less attributable tax and minority interests divided by the weighted average number of shares in issue, and is disclosed to indicate the underlying profitability of the Group.
Exceptional items
The separate reporting of non-recurring exceptional items gives an indication of the Group’s underlying performance. Exceptional items are those arising from the profit or loss on disposal of businesses, closure costs of major business units or costs of significant restructuring programmes. All other restructuring costs are charged against EBIT in the segments in which they are incurred.
Operating cash flow
Operating cash flow is calculated as cash generated from operations adjusted for outflows in respect of the purchase of property, plant and equipment and other intangible assets and adding dividends from associates but excluding any cash inflows and outflows in respect of exceptional items. It is defined as EBIT less changes in working capital, plus depreciation/amortisation, less capital expenditure, less profit retained in associates.
Net debt
Net debt is calculated as total debt less cash and cash equivalents and other highly liquid bank deposits with original maturities greater than three months. Total debt includes loans and borrowings (and the fair value of derivatives hedging loans and borrowings), overdrafts and obligations under finance leases. Accrued interest is excluded from net debt.
Six months ended 30 September 2009
| Continuing operations1 | ||||||||||||||
| North America US$m |
Latin America US$m |
UK & Ireland US$m |
EMEA/ Asia Pacific3 US$m |
Total operating segments US$m |
Central Activities US$m |
Total continuing operations US$m |
||||||||
| Revenue from external customers2 | 1,017 | 255 | 397 | 205 | 1,874 | - | 1,874 | |||||||
| Profit/(loss) before tax | 243 | 56 | 85 | 2 | 386 | (35 | ) | 351 | ||||||
| Reconciliation from EBIT to profit/(loss) before tax - continuing operations | ||||||||||||||
| EBIT | 303 | 75 | 106 | 19 | 503 | (25 | ) | 478 | ||||||
| Net interest | - | - | - | - | - | (41 | ) | (41 | ) | |||||
| Benchmark PBT | 303 | 75 | 106 | 19 | 503 | (66 | ) | 437 | ||||||
| Exceptional items (note 10) | (27 | ) | - | (3 | ) | (10 | ) | (40 | ) | (6 | ) | (46 | ) | |
| Amortisation of acquisition intangibles | (25 | ) | (19 | ) | (14 | ) | (6 | ) | (64 | ) | - | (64 | ) | |
| Charges in respect of the demerger-related equity incentive plans | (7 | ) | - | (4 | ) | (1 | ) | (12 | ) | (3 | ) | (15 | ) | |
| Financing fair value remeasurements | - | - | - | - | - | 40 | 40 | |||||||
| Tax expense on share of profit of associates | (1 | ) | - | - | - | (1 | ) | - | (1 | ) | ||||
| Profit/(loss) before tax | 243 | 56 | 85 | 2 | 386 | (35 | ) | 351 | ||||||
| 1 | A loss before tax of US$8m arose in respect of discontinued operations, which comprised the Group's transaction processing activities in France. Further information on discontinued operations is shown in note 13. |
| 2 | Revenue from external customers arose principally from the provision of services. |
| 3 | EMEA/Asia Pacific represents all other operating segments. |
Six months ended 30 September 2008
| Continuing operations1 | ||||||||||||||
| North America US$m |
Latin America US$m |
UK & Ireland US$m |
EMEA/ Asia Pacific3 US$m |
Total operating segments US$m |
Central Activities US$m |
Total continuing operations US$m |
||||||||
| Revenue from external customers2 | 1,037 | 263 | 505 | 212 | 2,017 | - | 2,017 | |||||||
| Profit/(loss) before tax | 251 | 46 | 85 | 6 | 388 | (70 | ) | 318 | ||||||
| Reconciliation from EBIT to profit/(loss) before tax - continuing operations | ||||||||||||||
| EBIT | 295 | 68 | 123 | 17 | 503 | (27 | ) | 476 | ||||||
| Net interest | - | - | - | - | - | (60 | ) | (60 | ) | |||||
| Benchmark PBT | 295 | 68 | 123 | 17 | 503 | (87 | ) | 416 | ||||||
| Exceptional items (note 10) | (11 | ) | - | (15 | ) | (3 | ) | (29 | ) | (4 | ) | (33 | ) | |
| Amortisation of acquisition intangibles | (24 | ) | (22 | ) | (18 | ) | (6 | ) | (70 | ) | - | (70 | ) | |
| Charges in respect of the demerger-related equity incentive plans | (8 | ) | - | (5 | ) | (2 | ) | (15 | ) | (6 | ) | (21 | ) | |
| Financing fair value remeasurements | - | - | - | - | - | 27 | 27 | |||||||
| Tax expense on share of profit of associates | (1 | ) | - | - | - | (1 | ) | - | (1 | ) | ||||
| Profit/(loss) before tax | 251 | 46 | 85 | 6 | 388 | (70 | ) | 318 | ||||||
| 1 | Additional revenue from external customers of US$174m and a loss before tax of US$4m arose in respect of discontinued operations, which comprised the Group’s transaction processing activities in France. Further information on discontinued operations is shown in note 13. |
| 2 | Revenue from external customers arose principally from the provision of services. |
| 3 | EMEA/Asia Pacific represents all other operating segments. |
Year ended 31 March 2009
| Continuing operations1 | ||||||||||||||
| North America US$m |
Latin America US$m |
UK & Ireland US$m |
EMEA/ Asia Pacific3 US$m |
Total operating segments US$m |
Central Activities US$m |
Total continuing operations US$m |
||||||||
| Revenue from external customers2 | 2,083 | 462 | 902 | 426 | 3,873 | - | 3,873 | |||||||
| Profit/(loss) before tax | 502 | 80 | 140 | 12 | 734 | (156 | ) | 578 | ||||||
| Reconciliation from EBIT to profit/(loss) before tax - continuing operations |
||||||||||||||
| EBIT | 616 | 118 | 213 | 49 | 996 | (57 | ) | 939 | ||||||
| Net interest | - | - | - | - | - | (96 | ) | (96 | ) | |||||
| Benchmark PBT | 616 | 118 | 213 | 49 | 996 | (153 | ) | 843 | ||||||
| Exceptional items (note 10) | (49 | ) | - | (30 | ) | (22 | ) | (101 | ) | (16 | ) | (117 | ) | |
| Amortisation of acquisition intangibles | (48 | ) | (38 | ) | (34 | ) | (12 | ) | (132 | ) | - | (132 | ) | |
| Goodwill adjustment | (1 | ) | - | - | - | (1 | ) | - | (1 | ) | ||||
| Charges in respect of the demerger-related equity incentive plans | (14 | ) | - | (9 | ) | (3 | ) | (26 | ) | (6 | ) | (32 | ) | |
| Financing fair value remeasurements | - | - | - | - | - | 19 | 19 | |||||||
| Tax expense on share of profit of associates | (2 | ) | - | - | - | (2 | ) | - | (2 | ) | ||||
| Profit/(loss) before tax | 502 | 80 | 140 | 12 | 734 | (156 | ) | 578 | ||||||
| 1 | Additional revenue from external customers of US$201m and profit before tax of US$26m arose in respect of discontinued operations, which comprised the Group’s transaction processing activities in France. Further information on discontinued operations is shown in note 13. |
| 2 | Revenue from external customers arose principally from the provision of services. |
| 3 | EMEA/Asia Pacific represents all other operating segments. |
Six months ended 30 September 2009
| Continuing operations1 | ||||||||||||||
| Credit Services US$m |
Decision Analytics US$m |
Marketing Services US$m |
Interactive US$m |
Total operating segments US$m |
Central Activities US$m |
Total continuing operations US$m |
||||||||
| Revenue from external customers2 | 814 | 211 | 341 | 508 | 1,874 | - | 1,874 | |||||||
| Profit/(loss) before tax | 241 | 53 | 9 | 95 | 398 | (47 | ) | 351 | ||||||
| Reconciliation from EBIT to profit/(loss) before tax - continuing operations | ||||||||||||||
| EBIT | 302 | 57 | 32 | 112 | 503 | (25 | ) | 478 | ||||||
| Net interest | - | - | - | - | - | (41 | ) | (41 | ) | |||||
| Benchmark PBT | 302 | 57 | 32 | 112 | 503 | (66 | ) | 437 | ||||||
| Exceptional items (note 10) | (31 | ) | (2 | ) | (6 | ) | (1 | ) | (40 | ) | (6 | ) | (46 | ) |
| Amortisation of acquisition intangibles | (29 | ) | (2 | ) | (17 | ) | (16 | ) | (64 | ) | - | (64 | ) | |
| Charges in respect of the demerger-related equity incentive plans3 | - | - | - | - | - | (15 | ) | (15 | ) | |||||
| Financing fair value remeasurements | - | - | - | - | - | 40 | 40 | |||||||
| Tax expense on share of profit of associates | (1 | ) | - | - | - | (1 | ) | - | (1 | ) | ||||
| Profit/(loss) before tax | 241 | 53 | 9 | 95 | 398 | (47 | ) | 351 | ||||||
| 1 | A loss before tax of US$8m arose in respect of discontinued operations, which comprised the Group's transaction processing activites in France. Further information on discontinued operations is shown in note 13. |
| 2 | Revenue from external customers arose principally from the provision of services. |
| 3 | No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by segment. |
Six months ended 30 September 2008
| Continuing operations1 | ||||||||||||||
| Credit Services US$m |
Decision Analytics US$m |
Marketing Services US$m |
Interactive US$m |
Total operating segments US$m |
Central Activities US$m |
Total continuing operations US$m |
||||||||
| Revenue from external customers2 | 889 | 261 | 400 | 467 | 2,017 | - | 2,017 | |||||||
| Profit/(loss) before tax | 246 | 72 | 4 | 81 | 403 | (85 | ) | 318 | ||||||
| Reconciliation from EBIT to profit/(loss) before tax - continuing operations | ||||||||||||||
| EBIT | 286 | 82 | 35 | 100 | 503 | (27 | ) | 476 | ||||||
| Net interest | - | - | - | - | - | (60 | ) | (60 | ) | |||||
| Benchmark PBT | 286 | 82 | 35 | 100 | 503 | (87 | ) | 416 | ||||||
| Exceptional items (note 10) | (9 | ) | (7 | ) | (10 | ) | (3 | ) | (29 | ) | (4 | ) | (33 | ) |
| Amortisation of acquisition intangibles | (30 | ) | (3 | ) | (21 | ) | (16 | ) | (70 | ) | - | (70 | ) | |
| Charges in respect of the demerger-related equity incentive plans3 | - | - | - | - | - | (21 | ) | (21 | ) | |||||
| Financing fair value remeasurements | - | - | - | - | - | 27 | 27 | |||||||
| Tax expense on share of profit of associates | (1) | - | - | - | (1 | ) | - | (1 | ) | |||||
| Profit/(loss) before tax | 246 | 72 | 4 | 81 | 403 | (85 | ) | 318 | ||||||
| 1 | Additional revenue from external customers of US$174m and a loss before tax of US$4m arose in respect of discontinued operations, which comprised the Group’s transaction processing activities in France. Further information on discontinued operations is shown in note 13. |
| 2 | Revenue from external customers arose principally from the provision of services. |
| 3 | No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by segment. |
Year ended 31 March 2009
| Continuing operations1 | ||||||||||||||
| Credit Services US$m |
Decision Analytics US$m |
Marketing Services US$m |
Interactive US$m |
Total operating segments US$m |
Central Activities US$m |
Total continuing operations US$m |
||||||||
| Revenue from external customers2 | 1,666 | 487 | 770 | 950 | 3,873 | - | 3,873 | |||||||
| Profit/(loss) before tax | 457 | 120 | 24 | 171 | 772 | (194 | ) | 578 | ||||||
| Reconciliation from EBIT to profit/(loss) before tax - continuing operations | ||||||||||||||
| EBIT | 554 | 142 | 88 | 212 | 996 | (57 | ) | 939 | ||||||
| Net interest | - | - | - | - | - | (96 | ) | (96 | ) | |||||
| Benchmark PBT | 554 | 142 | 88 | 212 | 996 | (153 | ) | 843 | ||||||
| Exceptional items (note 10) | (41 | ) | (16 | ) | (23 | ) | (9 | ) | (89 | ) | (28 | ) | (117 | ) |
| Amortisation of acquisition intangibles | (54 | ) | (6 | ) | (40 | ) | (32 | ) | (132 | ) | - | (132 | ) | |
| Goodwill adjustment | - | - | (1 | ) | - | (1 | ) | - | (1 | ) | ||||
| Charges in respect of the demerger-related equity incentive plans | - | - | - | - | - | (32 | ) | (32 | ) | |||||
| Financing fair value remeasurements | - | - | - | - | - | 19 | 19 | |||||||
| Tax expense on share of profit of associates | (2 | ) | - | - | - | (2 | ) | - | (2 | ) | ||||
| Profit/(loss) before tax | 457 | 120 | 24 | 171 | 772 | (194 | ) | 578 | ||||||
| 1 | Additional revenue from external customers of US$201m and profit before tax of US$26m arose in respect of discontinued operations, which comprised the Group’s transaction processing activities in France. Further information on discontinued operations is shown in note 13. |
| 2 | Revenue from external customers arose principally from the provision of services. |
| 3 | No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by segment. |
The principal exchange rates used are as follows:
| Average | Closing | ||||||
| Six months ended 30 September | Year ended 31 March | 30 September | 31 March | ||||
| 2009 | 2008 | 2009 | 2009 | 2008 | 2009 | ||
| Sterling : US dollar | 1.57 | 1.93 | 1.69 | 1.60 | 1.79 | 1.43 | |
| US dollar : Brazilian real | 1.99 | 1.68 | 1.96 | 1.78 | 1.92 | 2.30 | |
| Euro : US dollar | 1.40 | 1.53 | 1.41 | 1.46 | 1.41 | 1.33 | |
Assets and liabilities of undertakings whose functional currency is not the US dollar are translated into US dollars at the rates of exchange ruling at the balance sheet date. Their income statements are translated into US dollars at average rates of exchange (unless these averages are not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transactions).
| Six months ended 30 September | Year ended 31 March | ||||||
| 2009 | 2008 | 2009 | |||||
| US$m | US$m | US$m | |||||
| Exceptional items | |||||||
| Restructuring costs | 21 | 30 | 92 | ||||
| Cessation of bureau activities | 3 | - | 15 | ||||
| Loss on disposal of businesses | 22 | 3 | 3 | ||||
| Demerger and related restructuring costs | - | - | 7 | ||||
| Total exceptional items | 46 | 33 | 117 | ||||
| Other non-GAAP measures | |||||||
| Amortisation of acquisition intangibles | 64 | 70 | 132 | ||||
| Goodwill adjustment | - | - | 1 | ||||
| Charges in respect of the demerger-related equity incentive plans | 15 | 21 | 32 | ||||
| Financing fair value remeasurements | (40 | ) | (27 | ) | (19 | ) | |
| Total other non-GAAP measures | 39 | 64 | 146 | ||||
Exceptional items and other non-GAAP measures are in respect of continuing operations. Exceptional items are charged to administrative expenses.
Exceptional items
Expenditure of US$21m (2008: US$30m) arose in the period in connection with the Group’s strategic programme of cost efficiency measures. Of this US$9m (2008: US$13m) related to redundancy, US$12m (2008: US$15m) related to offshoring activities, infrastructure consolidations and other restructuring activities and US$nil (2008: US$2m) related to asset write-offs. In the year ended 31 March 2009, expenditure of US$92m arose in connection with this programme comprising US$51m in respect of redundancy, US$34m relating to offshoring activities, infrastructure and other restructuring activities and US$7m relating to asset write-offs.
During the period, and as previously announced, Experian completed the closure of its Canadian credit bureau and terminated its joint venture bureau in Japan with final closure costs of US$3m. Charges associated with the closure of the bureaux in the year ended 31 March 2009 included US$13m of fixed asset write-offs, including the related investment in associate, and a further US$2m of closure costs.
The loss on disposal of businesses in the period primarily arose as a result of the disposal of the National Business database in North America.
Demerger and related restructuring costs in the year ended 31 March 2009 comprised legal and professional fees, together with costs in connection with the cessation of a number of subsidiaries of the former GUS plc.
Cash outflows in respect of exceptional items are analysed in note 18(d).
Other non-GAAP measures
IFRS requires that, on acquisition, specific intangible assets are identified and recognised separately from goodwill and then amortised over their useful economic lives. These include items such as brand names and customer lists, to which value is first attributed at the time of acquisition. The Group has excluded amortisation of these acquisition intangibles from its definition of Benchmark PBT because such a charge is based on judgments about their value and economic life.
In the year ended 31 March 2009, a goodwill adjustment of US$1m arose under IFRS 3 ‘Business Combinations’ on the recognition of previously unrecognised tax losses on prior years’ acquisitions. The corresponding tax benefit reduced the tax charge for that year by US$1m.
Charges in respect of demerger-related equity incentive plans relate to one-off grants made to senior management and at all staff levels at the time of the demerger, under a number of equity incentive plans. The cost of these one-off grants is being charged to the Group income statement over the five years from flotation in October 2006, but excluded from the definition of Benchmark PBT. The cost of all other grants is being charged to the Group income statement and included in the definition of Benchmark PBT.
An element of the Group’s derivatives is ineligible for hedge accounting under IFRS. Gains or losses on these derivatives arising from market movements, together with gains and losses on put options in respect of acquisitions, are credited or charged to financing fair value remeasurements within finance income and finance expense in the Group income statement.
| Six months ended 30 September | Year ended 31 March | |||
| 2009 US$m |
2008 US$m |
2009 US$m |
||
| Interest income: | ||||
| Expected return on pension plan assets | 22 | 40 | 69 | |
| Other interest income | 8 | 14 | 28 | |
| Interest income | 30 | 54 | 97 | |
| Financing fair value gains: | ||||
| Movement in fair value of Serasa put option | - | 7 | 21 | |
| Other financing fair value gains | 55 | 38 | 64 | |
| Financing fair value gains | 55 | 45 | 85 | |
| Finance income | 85 | 99 | 182 | |
| Interest expense: | ||||
| Interest expense on pension plan liabilities | 24 | 30 | 52 | |
| Other interest expense | 47 | 84 | 141 | |
| Interest expense | 71 | 114 | 193 | |
| Financing fair value losses: | ||||
| Movement in fair value of Serasa put option | 8 | - | - | |
| Other financing fair value losses | 7 | 18 | 66 | |
| Financing fair value losses | 15 | 18 | 66 | |
| Finance expense | 86 | 132 | 259 | |
| Net financing costs | 1 | 33 | 77 | |
The effective rate of tax is 22.2% (2008: 13.2%) based on the profit before tax for the six months ended 30 September 2009 of US$351m (2008: US$318m) and the Group tax expense of US$78m (2008: US$42m). The effective rate of tax based on Benchmark PBT of US$437m (2008: US$416m) and the associated tax charge of US$96m (2008: US$87m), excluding the effect of a one-off corporation tax credit of US$nil (2008: US$20m) in respect of prior periods, is 22.0% (2008: 20.9%). The one-off corporation tax credit was excluded from the calculation of the effective rate of tax based on Benchmark PBT in the prior year as it related to arrangements involving entities no longer part of the Group.
The tax expense recognised in the period is based on management’s best estimate of the tax rate for the full financial year. The effective rate of tax for the year ended 31 March 2009 was 14.5% based on the profit before tax for that year of US$578m and the Group tax expense of US$84m. The effective rate of tax for the year ended 31 March 2009 based on Benchmark PBT of US$843m and the associated tax charge of US$184m, excluding the effect of the one-off corporation tax credit, was 21.8%.
The reconciliation of the tax expense reported in the Group income statement to the Benchmark tax charge is as follows:
| Six months ended 30 September | Year ended 31 March | |||
| 2009 | 2008 | 2009 | ||
| US$m | US$m | US$m | ||
| Group tax expense | 78 | 42 | 84 | |
| Add: one-off corporation tax credit | - | 20 | 20 | |
| Add: tax relief on exceptional items | 3 | - | 25 | |
| Add: tax relief on other non-GAAP measures | 14 | 24 | 53 | |
| Tax expense on share of profit of associates | 1 | 1 | 2 | |
| Tax on Benchmark PBT | 96 | 87 | 184 | |
The Group disposed of its transaction processing activities in France on 31 October 2008. As a consequence, the results and cash flows of that business for the six months ended 30 September 2008 and the year ended 31 March 2009 were classified as discontinued, and the assets and liabilities at 30 September 2008 were separately reported as held for sale in the Group balance sheet.
Results for discontinued operations
There was a net cash inflow on the disposal of the transaction processing activities in France of US$191m in the year ended 31 March 2009 which occurred primarily in the second half of that year on the completion of the sale and a further cash outflow of US$17m in the six months ended 30 September 2009 on the settlement of additional related costs. These cash flows are disclosed within net cash flows used in investing activities from continuing operations in the Group cash flow statement.
Cash flows attributable to discontinued operations
Assets and liabilities classified as held for sale at 30 September 2008 |
US$m | |
| Assets classified as held for sale: | ||
| Goodwill | 57 | |
| Other intangible assets | 31 | |
| Property, plant and equipment | 17 | |
| Tax assets | 6 | |
| Trade and other receivables | 156 | |
| Assets classified as held for sale | 267 | |
| Liabilities classified as held for sale: | ||
| Trade and other payables | 102 | |
| Loans and borrowings | 6 | |
| Liabilities classified as held for sale | 108 |
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders of the Company by a weighted average number of the ordinary shares in issue (excluding own shares held in employee trusts, which are treated as cancelled).
The calculation of diluted earnings per share reflects the potential dilutive effect of employee share incentive plans. The earnings figures used in the calculations are unchanged for diluted earnings per share.
| Six months ended 30 September | Year ended 31 March | |||||
| Basic earnings per share: | 2009 US cents |
2008 US cents |
2009 US cents |
|||
| Continuing and discontinued operations | 24.5 | 25.5 | 48.0 | |||
| Exclude: discontinued operations | 0.8 | 0.4 | (1.2 | ) | ||
| Continuing operations | 25.3 | 25.9 | 46.8 | |||
| Add back of exceptional and other non-GAAP measures, net of tax | 6.3 | 4.8 | 15.5 | |||
| Benchmark earnings per share from continuing operations (non-GAAP measure) | 31.6 | 30.7 | 62.3 | |||
| Six months ended 30 September | Year ended 31 March | |||||
| Diluted earnings per share: | 2009 US cents |
2008 US cents |
2009 US cents |
|||
| Continuing and discontinued operations | 24.1 | 25.2 | 47.5 | |||
| Exclude: discontinued operations | 0.8 | 0.4 | (1.2 | ) | ||
| Continuing operations | 24.9 | 25.6 | 46.3 | |||
| Add back of exceptional and other non-GAAP measures, net of tax | 6.3 | 4.8 | 15.3 | |||
| Benchmark diluted earnings per share from continuing operations (non-GAAP measure) | 31.2 | 30.4 | 61.6 | |||
| Six months ended 30 September | Year ended 31 March | |||||
| Earnings: | 2009 US$m |
2008 US$m |
2009 US$m |
|||
| Continuing and discontinued operations | 249 | 258 | 486 | |||
| Exclude: discontinued operations | 8 | 4 | (12 | ) | ||
| Continuing operations | 257 | 262 | 474 | |||
| Add back of exceptional and other non-GAAP measures, net of tax | 64 | 48 | 157 | |||
| Benchmark earnings (non-GAAP measure) | 321 | 310 | 631 | |||
| Six months ended 30 September | Year ended 31 March | |||||
| Earnings attributable to minority interests: | 2009 US$m |
2008 US$m |
2009 US$m |
|||
| Continuing and discontinued operations | 16 | 14 | 20 | |||
| Add back of amortisation of acquisition intangibles, net of tax | 4 | 5 | 8 | |||
| Benchmark earnings attributable to minority interests (non-GAAP measure) | 20 | 19 | 28 | |||
| Six months ended 30 September | Year ended 31 March | |||||
| Weighted average number of ordinary shares in issue: | 2009 m |
2008 m |
2009 m |
|||
| Weighted average number of ordinary shares in issue during the period | 1,014.9 | 1,011.4 | 1,012.6 | |||
| Dilutive effect of share incentive awards | 14.2 | 11.0 | 12.3 | |||
| Diluted weighted average number of shares in issue during the period | 1,029.1 | 1,022.4 | 1,024.9 | |||
| Six months ended 30 September | Year ended 31 March | ||||||
| 2009 | 2009 | 2008 | 2008 | 2009 | 2009 | ||
| US cents per share |
US$m | US cents per share |
US$m | US cents per share |
US$m | ||
| Amounts recognised and paid as distributions to equity shareholders: | |||||||
| First interim – paid in January 2009 | - | - | - | - | 6.75 | 68 | |
| Second interim – paid in July 2009 (2008: July 2008) | 13.25 | 135 | 12.00 | 121 | 12.00 | 121 | |
| Ordinary dividends paid on equity shares | 13.25 | 135 | 12.00 | 121 | 18.75 | 189 | |
| First interim dividend per ordinary share (announced) | 7.00 | 71 | 6.75 | 68 | |||
| Full year dividend for the year ended 31 March 2009 | 20.00 | 203 | |||||
A first interim dividend of 7.00 US cents per ordinary share will be paid on 29 January 2010 to shareholders on the register at the close of business on 4 January 2010 and is not included as a liability in these financial statements.
Unless shareholders elect by 4 January 2010 to receive US dollars, their dividends will be paid in sterling at a rate per share calculated on the basis of the exchange rate from US dollars to sterling on 8 January 2010.
Pursuant to the Income Access Share arrangements put in place as part of the demerger of Experian and Home Retail Group in October 2006, shareholders in the Company can elect to receive their dividends from a UK source (the ‘IAS election’). Shareholders who held 50,000 or fewer Experian shares (i) on the date of admission of the Company’s shares to listing on the London Stock Exchange and (ii) in the case of shareholders who did not own shares at that time, on the first dividend record date after they become shareholders in the Company, unless they elect otherwise, will be deemed to have elected to receive their dividends under the IAS election arrangements. Shareholders who hold more than 50,000 shares and who wish to receive their dividends from a UK source must make an IAS election. All elections remain in force indefinitely unless revoked. Unless shareholders have made an IAS election, or are deemed to have made an IAS election, dividends will be received from an Irish source and will be taxed accordingly.
Further details in respect of the Company’s Dividend Reinvestment Plan are given in Shareholder information.
During the six months ended 30 September 2009 the Group incurred capital expenditure of US$135m (2008: US$155m, including US$9m in respect of discontinued operations). In the year ended 31 March 2009, capital expenditure was US$315m, including US$10m in respect of discontinued operations.
The book value of other intangible fixed assets and property, plant and equipment disposed of in the six months ended 30 September 2009 was US$28m and the amount realised was US$25m.
At 30 September 2009, the Group had capital commitments in respect of property, plant and equipment and intangible assets and for which contracts had been placed of US$18m (2008: US$10m). At 31 March 2009, there were US$22m such commitments.
a) Amounts recognised in the Group balance sheet
| 30 September | 31 March | |||||||
| Retirement benefit (deficit)/surplus - funded plans: | 2009 US$m |
2008 US$m |
2009 US$m |
|||||
| Market value of funded plans’ assets | 815 | 856 | 595 | |||||
| Present value of funded plans’ liabilities | (887 | ) | (747 | ) | (614 | ) | ||
| (Deficit)/surplus in the funded plans | (72 | ) | 109 | (19 | ) | |||
| Retirement benefit obligations – unfunded plans: | ||||||||
| Present value of unfunded pension arrangements | (41 | ) | (34 | ) | (26 | ) | ||
| Liability for post-retirement healthcare | (16 | ) | (13 | ) | (13 | ) | ||
| Retirement benefit obligations – unfunded plans | (57 | ) | (47 | ) | (39 | ) | ||
| Net retirement benefit (obligations)/assets | (129 | ) | 62 | (58 | ) | |||
b) Amounts disclosed in the Group balance sheet
| 30 September | 31 March | |||||||
| 2009 US$m |
2008 US$m |
2009 US$m |
||||||
| Retirement benefit assets | - | 109 | - | |||||
| Retirement benefit obligations | (129 | ) | (47 | ) | (58 | ) | ||
| Net retirement benefit (obligations)/assets | (129 | ) | 62 | (58 | ) | |||
The Group’s retirement benefit obligations and assets are denominated primarily in sterling.
c) Movements during the period in the net retirement benefit (obligations)/assets
| 30 September | 31 March | |||||||
| 2009 US$m |
2008 US$m |
2009 US$m |
||||||
| At 1 April | (58 | ) | 132 | 132 | ||||
| Differences on exchange | (10 | ) | (8 | ) | (9 | ) | ||
| Amounts recognised in Group income statement | (7 | ) | 1 | 7 | ||||
| Actuarial losses recognised in Group comprehensive income statement | (61 | ) | (72 | ) | (202 | ) | ||
| Contributions paid by the Group | 7 | 9 | 14 | |||||
| At balance sheet date | (129 | ) | 62 | (58 | ) | |||
d) Amounts recognised in Group income statement
| Six months ended 30 September | 31 March | |||||||
| 2009 US$m |
2008 US$m |
2009 US$m |
||||||
| Administrative costs before exceptional income | 5 | 9 | 13 | |||||
| Exceptional income | - | - | (3 | ) | ||||
| Administrative costs | 5 | 9 | 10 | |||||
| Net financing costs/(income) | 2 | (10 | ) | (17 | ) | |||
| Total charge/(credit) to the Group income statement | 7 | (1 | ) | (7 | ) | |||
e) Actuarial assumptions
| Six months ended 30 September | Year ended 31 March |
|||||||
| 2009 % |
2008 % |
2009 % |
||||||
| Rate of inflation | 3.4 | 3.7 | 3.4 | |||||
| Rate of increase for salaries | 5.2 | 5.5 | 5.2 | |||||
| Rate of increase of pensions in payment and deferred pensions | 3.4 | 3.7 | 3.4 | |||||
| Rate of increase in medical costs | 6.5 | 6.5 | 6.5 | |||||
| Discount rate | 5.5 | 7.3 | 6.9 | |||||
The mortality assumptions used at 30 September 2009 remain broadly unchanged from those used at 31 March 2009.
| Six months ended 30 September | Year ended 31 March | ||||||||
| Notes | 2009 US$m |
2008 US$m |
2009 US$m |
||||||
| a) Cash generated from operations | |||||||||
| Operating profit | 316 | 331 | 613 | ||||||
| Loss on sale of property, plant and equipment | 2 | 4 | 6 | ||||||
| Loss on sale of other intangible assets | 1 | - | 3 | ||||||
| Loss on disposal of businesses | 22 | 3 | 3 | ||||||
| Depreciation and amortisation | 195 | 213 | 420 | ||||||
| Goodwill adjustment | - | - | 1 | ||||||
| Write down of investment in associate | - | - | 5 | ||||||
| Charge in respect of equity incentive plans | 31 | 36 | 52 | ||||||
| Change in working capital | 18(b) | (84 | ) | (93 | ) | 7 | |||
| Exceptional items included in working capital | (11 | ) | (18 | ) | (8 | ) | |||
| Cash generated from operations | 472 | 476 | 1,102 | ||||||
| b) Change in working capital | |||||||||
| Increase in inventories | (2 | ) | (1 | ) | (2 | ) | |||
| Decrease in receivables | 30 | 49 | 24 | ||||||
| Decrease in payables | (110 | ) | (141 | ) | (11 | ) | |||
| Difference between pension contributions paid and amounts recognised in Group income statement | (2 | ) | - | (4 | ) | ||||
| Change in working capital | (84 | ) | (93 | ) | 7 | ||||
| c) Purchase of other intangible assets | |||||||||
| Databases | 73 | 81 | 153 | ||||||
| Internally generated software | 20 | 22 | 38 | ||||||
| Internal use software | 20 | 9 | 39 | ||||||
| Purchase of other intangible assets | 113 | 112 | 230 | ||||||
| d) Cash outflow in respect of exceptional items | |||||||||
| Total exceptional items | 10 | 46 | 33 | 117 | |||||
| Working capital movements | 11 | 18 | 8 | ||||||
| Asset write-offs | (3 | ) | (2 | ) | (15 | ) | |||
| Loss in respect of associates | - | - | (5 | ) | |||||
| Loss on disposal of businesses | (22 | ) | (3 | ) | (3 | ) | |||
| Cash outflow in respect of exceptional items | 32 | 46 | 102 | ||||||
Cash and cash equivalents in the Group cash flow statement are reported net of overdrafts. The loss on disposal of businesses in the six months ended 30 September 2008 has now been separately reported within notes 18(a) and 18(d) above on a basis consistent with that used in the year ended 31 March 2009.
| Six months ended 30 September | Year ended 31 March | |||||||
| 2009 | 2008 | 2009 | ||||||
| Notes | US$m | US$m | US$m | |||||
| Cash generated from operations | 18(a) | 472 | 476 | 1,102 | ||||
| Purchase of property, plant and equipment | (22 | ) | (34 | ) | (75 | ) | ||
| Purchase of other intangible assets | 18(c) | (113 | ) | (112 | ) | (230 | ) | |
| Dividends received from associates | 27 | 20 | 28 | |||||
| Sale of property, plant and equipment | 25 | - | - | |||||
| Net cash outflow from exceptional items | 18(d) | 32 | 46 | 102 | ||||
| Operating cash flow | 421 | 396 | 927 | |||||
At 30 September 2009, the Group had committed borrowing facilities of US$2,530m (2008: US$2,530m) which expire more than two years after the balance sheet date, of which US$865m (2008: US$934m) was undrawn. At 31 March 2009, the amount undrawn under these facilities was US$1,050m.
During the six months ended 30 September 2009, 6.375% Eurobonds 2009 with a par value of £203m were redeemed at their date of maturity.
| Number of shares m |
Share capital US$m |
Share premium account US$m |
Total US$m |
|
| At 1 April 2008 | 1,023.4 | 102 | 1,442 | 1,544 |
| Employee share option plans – proceeds from shares issued | 1.2 | - | 7 | 7 |
| At 30 September 2008 | 1,024.6 | 102 | 1,449 | 1,551 |
| Employee share option plans – proceeds from shares issued | 0.7 | - | - | - |
| At 31 March 2009 | 1,025.3 | 102 | 1,449 | 1,551 |
| Employee share option plans – proceeds from shares issued | 0.7 | - | 4 | 4 |
| At 30 September 2009 | 1,026.0 | 102 | 1,453 | 1,555 |
The Group made no acquisitions during the six months ended 30 September 2009. No further goodwill was recognised in the period in connection with adjustments to contingent consideration in respect of acquisitions made in previous years. Deferred consideration of US$9m was settled during the period on acquisitions made in previous years.
There have been no material gains, losses, error corrections or other adjustments recognised in the six months ended 30 September 2009 that relate to acquisitions made in previous years.
As was indicated in the annual report and financial statements for the year ended 31 March 2009, there are a number of pending and threatened litigation claims involving the Group in North America and Latin America which are being vigorously defended. The directors do not believe that the outcome of any such pending or threatened litigation will have a materially adverse effect on the Group’s financial position. However, as is inherent in legal proceedings, there is a risk of outcomes unfavourable to the Group. In the case of unfavourable outcomes the Group would benefit from applicable insurance recoveries.
Details of the first interim dividend approved since the end of the reporting period are given in note 15.
On 29 October 2009, the Group announced the following arrangements in respect of First American Real Estate Solutions LLC ('FARES'), which is owned 20% by Experian and 80% by The First American Corporation (‘FAC’), and in respect of First Advantage Corporation (‘FADV’), an associate of FARES:
|
The Group made net sales and recharges, under normal commercial terms and conditions that would be available to third parties, to FARES and its associate FADV, of US$14m in the six months ended 30 September 2009 (2008: US$11m) and US$25m in the year ended 31 March 2009. There were no other significant related party transactions.
The Group’s revenue is subject to certain seasonal fluctuations, as described in the commentary in the Business Review - other items.
The Company has a website which contains up-to-date information on Group activities and published financial results. The directors are responsible for the maintenance and integrity of statutory and audited information on this website. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half-yearly financial report since it was initially presented on the website. Jersey legislation and the United Kingdom regulation governing the preparation and dissemination of financial information may differ from requirements in other jurisdictions.