15th Nov 2007 07:03
Experian Group Limited15 November 2007 Experian Group Limited Half-yearly financial report for the six months ended 30 September 2007 Highlights • Good first half progress - good organic sales growth across all four regions - investment to drive future growth and operating efficiency - Serasa acquisition increases emerging markets exposure • Total sales growth of 16% to $1.9bn. Sales from continuing activities up 14% at constant exchange rates to $1.9bn, with 6% organic growth. • Total EBIT of $454m up 15%. Continuing EBIT up 12% at constant exchange rates. • EBIT margin from continuing activities, excluding FARES contribution, maintained at 21.9% during period of investment. • Profit before tax of $285m. Benchmark profit before tax of $396m. • Basic EPS of 22.2 cents. Benchmark EPS of 29.5 cents. • First interim dividend increased by 18% to 6.5 cents per share. • Net debt of $3.0bn after funding acquisitions of $1.7bn, mainly Serasa and Hitwise. John Peace, Chairman of Experian, said: "Experian has made significant operational and strategic progress in the firsthalf of this year, further positioning the business to continue to deliver longterm, sustainable growth." Don Robert, Chief Executive Officer of Experian, said: "In the first half of this year our business has demonstrated its resilience inthe face of exceptionally difficult markets for US and UK financial services.Organic sales growth slowed in the second quarter and we expect further slowdownin the second half due to the market environment. We continue to focus onoperational efficiency, and based on current trading conditions we remain oncourse to deliver full year profits in line with our previous expectations." Enquiries ExperianDon Robert Chief Executive Officer 44(0)20 3042 4215Paul Brooks Chief Financial OfficerNadia Ridout-Jamieson Director of Investor Relations FinsburyRollo Head 44(0)20 7251 3801Nick Woodruff There will be a presentation today at 9.30am to analysts and investors at theMerrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. Thepresentation can be viewed live on the Experian website at www.experiangroup.comand can also be accessed live via a dial-in facility on 44 (0)20 8322 2180. Thesupporting slides and an indexed replay will also be available on the websitelater in the day. There will be a conference call to discuss the results at 3.00pm today (UKtime), which will be broadcast live on the website with a recording availablelater. All relevant Experian announcements are available onwww.experiangroup.com. Experian will update on trading on 16 January 2008 when it will issue theInterim Management Statement in respect of the Third Quarter. See Appendix 2 for definition of non-GAAP measures used throughout thisannouncement and Appendix 3 for reconciliation of sales and EBIT by geography. RoundingsCertain financial data have been rounded within this announcement. As a resultof this rounding, the totals of data presented may vary slightly from the actualarithmetic totals of such data. Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual events or results to differmaterially from any expected future events or results referred to in theseforward looking statements. CHIEF EXECUTIVE'S REVIEW Our business performed well across all regions of activity in the first half ofthis year, delivering sales growth from continuing activities of 14%, withorganic sales growth of 6%. This growth was achieved against an increasinglychallenging market backdrop in the US and the UK and demonstrates the strengthand resilience of our business model. We maintained EBIT margins during theperiod while funding a number of new initiatives, which will help drive futuregrowth at Experian. Portfolio balance provides resilienceIn these less benign markets for credit origination, we are seeing the benefitsof previous strategic initiatives to diversify and broaden our business base. •New services - Our decision to build up our collections activities in North America is paying off as financial services customers have become more risk averse, and have switched their focus to managing risk in existing credit portfolios. •New vertical markets - In the UK we have secured rich new growth opportunities in vertical markets such as telecommunications and government. •Geographic expansion - The strategic move to expand our operations geographically means we are less reliant on any single country and have increased our exposure to faster growing emerging markets. Strategic and operational progressIn the first half of the year we have again taken a number of importantoperational and strategic steps to deliver sustainable growth at Experian. • The acquisition of a majority stake in Serasa, the market-leading credit bureau in Brazil, is transformational for Experian. It provides us with access to this important emerging credit economy and consolidates our global leadership in Credit Services. In our brief period of ownership Serasa has performed well, and we have identified numerous synergy and cross-selling opportunities. • We have won a number of major new contracts with clients including Barclays, Carrefour and Rakuten KC, the Japanese internet services company, and have made further progress in the UK public sector with three new contracts to assist in fraud control and identity verification. • We continue to build our infrastructure in Asia Pacific to support growth in demand for both our Decision Analytics capabilities and Marketing Services activities. • As the transformation of our Marketing Services activities gains momentum we have made infill acquisitions to extend our footprint in France and Brazil. Meanwhile the acquisition of Hitwise brings us new, unique datasets with many cross-selling opportunities. • Under new leadership at Interactive, we have integrated LowerMyBills and our education vertical lead generation activities onto a single platform. This will facilitate future diversification into new verticals. Future investment prioritiesIn line with our strategy, we will continue to drive growth both via organicinvestment (through deeper client relationships, geographic and verticalexpansion and product innovation) and to strengthen our market position throughcomplementary acquisitions. Going forward our principal acquisition focus willbe on credit bureaux, scarce datasets, enhanced analytics and marketingservices. Financial performanceSales growth from continuing activities was 14% in the first half at constantexchange rates. Organic sales growth was 6%, with acquisitions contributing thebalance. As previously indicated, organic investment through the income statement hasbeen particularly weighted to the first half, and so EBIT margins were in linewith the prior year at 21.9%. Investment initiatives included further emergingmarkets development, the first phase of the establishment of our near-shoringfacility in Chile and further investment in the Canadian credit bureau. While wecontinue to invest, we expect the year as a whole to benefit from restructuringactivities over the past year (particularly in Marketing Services), operationalgearing in Marketing Services due to the business mix shift, data centreintegration in the UK and Continental Europe, payback on the Chileannear-shoring and aggressive action on direct and discretionary costs. We also continue to invest through capital expenditure and via acquisition.Capital expenditure in the first half was $140m (2006: $118m), with some $330mto $350m expected for the full year. EBIT conversion into operating cash flow inthe period was 70%, in what is the traditionally weaker half-year for cashgeneration. For the full year we are on track to meet our target of convertingat least 85%. Acquisition expenditure in the first half was $1.7bn, including the acquisitionof the stake in Serasa, together with Hitwise, Informarketing, Tallyman,Emailing Solution and other small infills. Experian also agreed a small disposalin the period of Loyalty Solutions in Germany. We expect the acquisitioncontribution to sales growth in the second half of the year to be in the lowteens. First interim dividend of 6.5 cents announcedThe Board of Experian has announced a first interim dividend of 6.5 cents pershare. This is consistent with our dividend policy to have cover (based onBenchmark EPS) of at least three times on an annual basis. GROUP FINANCIAL HIGHLIGHTS Sales from continuing activities up 14% at constant exchange rates to $1.9bn, 6%organic growth. Total sales $1.9bn EBIT from continuing activities up 12% at constant exchange rates to $447m Total EBIT up 15% to $454m EBIT margin from continuing activities maintained at 21.9%, excluding FARES Profit before taxation of $285m Effective tax rate of 23.0% based on Benchmark PBT Sales ProfitSix months ended 30 September 2007 2006 2007 2006 $m $m $m $m------------------------------------------------------------------------------North America1 1,020 963 290 272Latin America1, 2 102 2 24 (2)UK and Ireland 471 401 126 110EMEA/Asia Pacific 318 263 34 29 ----------------------------------------Sub total 1,911 1,629 474 408Central activities - - (27) (21) ----------------------------------------Continuing activities 1,911 1,629 447 387Discontinuing activities3 36 45 7 9 ----------------------------------------Total 1,947 1,674 454 396 ----------------------------------------Net interest4 (58) (74) ------------------Benchmark PBT 396 322 Exceptional items (2) (151)Amortisation of acquisition intangibles (50) (37)Charges for demerger related equity incentive plans (24) -Financing fair value remeasurements (34) (12)Tax expense of associate (1) (2) ------------------Profit before taxation 285 120 Taxation (56) (29) ------------------Profit after taxation for continuing operations 229 91 ------------------Benchmark EPS (cents) 29.5 29.4 Basic EPS for continuing operations (cents) 22.2 10.6Weighted average number of Ordinary shares (million) 1,008 856 ------------------ 1 The segmental information presented in respect of the Americas for the sixmonths ended 30 September 2006 is now further analysed to show North and LatinAmerica as separate segments.2 Profit includes $4m Serasa integration charge in six months ended 30 September20073 Discontinuing activities include MetaReward, UK account processing and LoyaltySolutions4 Pro forma net interest for 2006 would have been $30m in the six months ended30 September 2006 assuming new capital structure in place on 1 April 2006, seeAppendix 4 See Appendix 1 for analysis of sales and EBIT by principal activity and Appendix3 for reconciliation of sales and EBIT by geographySee Appendix 2 for definition of non-GAAP measures NORTH AMERICA Sales from continuing activities up 6%; 5% organic EBIT from continuing activities up 8% excluding FARES; up 7% including FARES EBIT margin excluding FARES up 50 basis points Robust performance from Credit Services despite headwinds in the mortgage sector Double-digit sales growth in Decision Analytics against strong comparatives Improvement in Marketing Services as transition gains momentum Interactive organic sales growth of 8% Six months ended 30 September 2007 2006 Growth Organic growth $m $m % %------------------------------------------------------------------------- Sales - Credit Services 409 395 3% 3%- Decision Analytics 40 36 12% 12%- Marketing Services 183 173 6% 2%- Interactive 388 359 8% 8% -----------------------------------------Total - continuing activities 1,020 963 6% 5%Discontinuing activities1 - 3 n/a -----------------------------------------Total North America 1,020 966 6% -----------------------------------------EBIT- Direct business 261 242 8%- FARES 29 30 (1)% -----------------------------------------Total - continuing activities 290 272 7% -----------------------------------------Discontinuing activities1 - (7) n/aTotal North America 290 265 11% -----------------------------------------EBIT margin2 25.6% 25.1% 1 Discontinuing activities include MetaReward2 EBIT margin is for continuing direct business only and excludes FARES Operational reviewNorth America performed well, delivering good organic sales growthnotwithstanding significant market headwinds. EBIT margins improved by 50 basispoints, as operating leverage in Credit Services and Marketing Services offsetmargin compression at Interactive. Credit ServicesIncludes consumer credit bureaux in the US and Canada, business information andautomotive services The recent unprecedented disruption to the US mortgage market and subsequentliquidity freeze affected mortgage activity levels, with a sharp deteriorationtowards the end of the period. Consumer credit activity remained high acrossother credit products, such as credit cards and automotive finance. Overall,Credit Services demonstrated resilience, continuing its track record of low tomid-single digit organic growth, with organic sales growth of 3%. The slowdownin mortgage activity was offset by good growth in other origination products, aswell as portfolio management and collections products. Business information alsoperformed well in the first half, as did automotive, the latter reflecting sharegains driven by increased adoption of Experian's AutoCheck vehicle historyreport. There was significant strategic progress in the period. The new bureau build inCanada is on track for launch later this fiscal year, VantageScore continues toperform well, both in test and in terms of billable revenue, and in SeptemberExperian announced an important new partnership with Visa to create morepredictive bankruptcy scores. In terms of cost efficiencies, phase one of theestablishment of a near-shoring facility in Santiago, Chile proceeded to plan,with approximately 300 employees hired since March 2007, and the initiative hasprogressed into its second phase. Decision AnalyticsIncludes credit analytics, decision support software and fraud solutions Against exceptionally strong comparatives, which will remain strong for thebalance of the year, Decision Analytics slowed during the period, with salesgrowth of 12% (H1 2006: 26%). Growth reflected increased market penetration ofboth decision support software and fraud prevention tools. In decision supportsoftware, Experian benefited from increased take-up of its applicationprocessing product (Transact) by a US credit card provider. Good progress wasalso made in fraud prevention, with the launch of a new authentication product,reflecting ongoing demand for Experian's identity verification andauthentication tools. Marketing ServicesIncludes data and data management, digital services, research services, internetmarketing intelligence and business strategies Sales growth in Marketing Services was 6% in the first half. As anticipated, thetrend in organic sales growth has continued to improve, up 2% year-on-year, asthe business mix shifts in favour of newer media activities (digital services,research services and data integrity) and away from traditional direct mailactivities. During the period, new media product lines delivered excellentgrowth, while there was some moderation in the rate of decline at the moretraditional activities. Digital services (email marketing) benefited from volumeincreases, the addition of new clients and the expansion of email programmeswith existing customers. There was good performance too in internet marketingintelligence (Hitwise), which benefited from new contract wins from existingExperian clients. InteractiveIncludes Consumer Direct (online credit reports, scores and monitoring services)and lead generation businesses (LowerMyBills, online education and PriceGrabber) Sales in Interactive grew by 8% in the first half. Consumer Direct consolidated its market-leading position, delivering very stronggrowth in the period, reflecting increases in membership, improvement inretention rates and good traction from the launch of new products. The strategicfocus at Consumer Direct is on innovation, with new child identity monitoringand ID theft protection products showing encouraging early take-up rates. Growthat PriceGrabber was driven by new co-brand partners such as AOL Shopping andCNET and strength in home and personal channel referrals. There was lower growthin the technology and entertainment segments, in line with retail market trends. As previously disclosed, sales at LowerMyBills declined significantly over theperiod, impacted by the severe downturn in the US sub-prime mortgage market assome lenders went out of business and others significantly tightened lendingcriteria. Market conditions are not expected to improve in the near term, butswift action on costs coupled with the variable nature of customer acquisitionspend has meant the business has remained profitable, although with reducedmargins. Meanwhile, diversification into non-mortgage segments continues, withgood progress in the period from a relatively low base. Financial reviewSales from continuing activities were $1,020m, up 6% compared to the same periodlast year, with organic growth of 5%. Acquisitions, predominantly Hitwise,contributed 1% to sales growth. EBIT from direct businesses was $261m (2006: $242m), an increase of 8% in theyear, giving an EBIT margin of 25.6% (2006: 25.1%). Margin improvement reflectedprogress in all areas with the exception of Interactive, which was impacted bythe sales decline at LowerMyBills. EBIT from FARES, the 20%-owned real estate information associate, was $29m (2006$30m). This reflected good growth in Property Information and Default Services,coupled with continued cost action, which helped offset the very weakenvironment for mortgage origination. LATIN AMERICA Sales of $102m EBIT of $24m EBIT margin of 23.5% Acquisition of 70% stake in Serasa transforms Experian's presence in LatinAmerica Six months ended 30 September 2007 2006 Growth1 Organic growth1 $m $m % %------------------------------------------------------------------------- Sales - Credit Services 96 - n/a n/a- Decision Analytics 3 2 46% 46%- Marketing Services 3 - n/a n/a -----------------------------------------Total Latin America 102 2 4,066% 46% ----------------------------------------- EBIT- Latin America 28 (2) 1,751%- Serasa integration charge (4) - n/a -----------------------------------------Total Latin America 24 (2) 1,494% -----------------------------------------EBIT margin 23.5% n/a 1 Growth at constant FX rates Operational reviewThe acquisition of a majority stake in Serasa has transformed Experian'sactivities in Latin America, and the region is now reported as a separategeographical segment. Credit ServicesIncludes consumer credit and business information bureaux The acquisition of a 65% stake in Serasa in June 2007 (since increased to 70%)provides Experian with the market-leading credit bureau in Brazil, and exposureto one of the most attractive markets for credit products globally. Thefinancial outlook for loan growth in Brazil continues to be positive, withstrong growth in retail lending, personal loans, vehicle financing and mortgagefinancing. Sales in Credit Services were $96m. During the period Serasa performed well, inline with the acquisition buy plan. There was good progress on the integrationplan, with the appointment of key personnel, progress towards back officeconsolidation and identification of revenue synergy opportunities. Decision AnalyticsIncludes credit analytics and decision support software Decision Analytics made excellent progress in Latin America over the period froma low base, with sales growth of 46%. Client wins included Telefonica, theleading telecommunications provider in Brazil. Marketing ServicesIncludes marketing data and analytics Sales in Marketing Services were $3m in the period following the acquisition ofInformarketing in April 2007. The integration of Informarketing has progressedwell, with good client wins in the period of ownership. Financial reviewSales were $102m, reflecting the first time contribution from Serasa. Organicgrowth was 46%. EBIT in the period was $24m, delivering an EBIT margin of 23.5%. EBIT includes afavourable IFRS adjustment of $3m, principally in relation to the differentialtreatment of capitalisation of data assets for Serasa under Brazilian GAAP, with$9m expected for the nine months to 31 March 2008. Integration charges inrelation to the Serasa acquisition of $4m were incurred in the period, with $11mexpected for the nine months to 31 March 2008. UK AND IRELAND Sales from continuing activities up 9%; 5% organic EBIT from continuing activities up 7% EBIT margin of 26.8% Challenging market environment for Credit Services and Marketing Services Decision Analytics organic sales affected by delays to pipeline conversion Interactive sales doubled at constant exchange rates Six months ended 30 September 2007 2006 Growth3 Organic growth3 $m $m % %------------------------------------------------------------------------- Sales - Credit Services 144 128 5% 3%- Decision Analytics 119 105 5% (1)%- Marketing Services 177 154 7% 2%- Interactive 30 14 100% 100% -----------------------------------------Total - continuing activities 471 401 9% 5% -----------------------------------------Discontinuing activities1 28 34 n/a -----------------------------------------Total UK and Ireland 499 435 6% -----------------------------------------EBIT - continuing activities 126 110 7% -----------------------------------------Discontinuing activities1 6 15 n/aTotal UK and Ireland 132 125 (1)% -----------------------------------------EBIT margin2 26.8% 27.4% 1 Discontinuing activities include UK account processing2 EBIT margin is for continuing activities only3 Growth at constant FX rates Operational reviewUK & Ireland delivered good growth in a challenging market environment. Thisresilience reflects the strength of Experian's market position and the diversityof its business model. Credit ServicesIncludes consumer credit and business information bureaux and automotive andinsurance services Experian's focus on new product development and investment in new verticals hasenabled Credit Services to grow, notwithstanding a tough market environment forthe financial services sector. Total sales growth was 5% in the half, withorganic sales growth of 3%. Growth was supported by high levels of activity incollections and further expansion in the public sector vertical. In addition,product innovation and a renewed focus on sales execution has given rise to goodsales momentum in business information. Acquisitions in the period included ThepH Group (in July 2007), a provider of business-to-business marketing analytics,which has performed well in the period post acquisition. Decision AnalyticsIncludes credit analytics, decision support software and fraud solutions Total sales for Decision Analytics increased by 5%, with a decrease of 1% on anorganic basis. The decline in organic sales was mainly attributable to thetiming of software deployment for certain clients which affects the period inwhich sales are recognised, as well as to delays in pipeline conversion due toconditions in the UK financial services market. New business won during theperiod was up strongly. There were multi-million dollar, multi-year contractssecured with blue-chip financial services clients in customer management (Probe)and application processing (Transact). During the period Experian acquired the Tallyman collections management softwarebusiness (in May 2007) and N4 Solutions (in July 2007), a mortgage sector andfinancial services software provider. Significant opportunities exist tocross-sell products across Experian's customer base, and since the period endTallyman has secured a significant win from Barclays Bank for its debtmanagement and collections system. Marketing ServicesIncludes data and data management, database management and analytics, digitalservices, internet marketing intelligence and business strategies Total sales in Marketing Services were up 7%, with organic growth of 2%.Acquisitions contributed 5% to total sales growth, primarily Eiger Systems andHitwise. Organic growth in data, data management and database continued to betempered by the poor environment for the UK financial services sector, ascustomers have cut back on marketing-related expenditure. Other business lines,which account for the majority of UK Marketing Services, are less dependent onfinancial services and performed well. For example, there were a number of newdata integrity wins for QAS in the public services sector. The restructuringannounced last year has been completed. InteractiveComprises CreditExpert (online credit reports, scores and monitoring servicessold direct to consumers) and comparison shopping (PriceGrabber) Total Interactive sales grew by 100%. CreditExpert continues to build on itsmarket leading position, with an excellent performance in the first half. Growthhas benefited from further increases in membership and higher volumes of creditreports delivered. Experian continues to invest in PriceGrabber UK, whichperformed well off a low base. Financial reviewSales from continuing activities were $471m, up 9% at constant exchange ratescompared to the same period last year. Organic growth was 5%. The contributionto sales growth from acquisitions during the period was 4%. EBIT from continuing activities was $126m, an increase of 7% at constantexchange rates over last year. The EBIT margin was 26.8% (2006: 27.4%), with theslight decline reflecting adverse acquisition mix. EMEA/ASIA PACIFIC Sales from continuing activities up 14%; 8% organic EBIT from continuing activities up 9% at $34m EBIT margin of 10.7% after investment in infrastructure in Asia Pacific Good organic sales growth in Credit Services, reflecting strong growth in creditbureaux and contract wins in French business process outsourcing Strong performance in Decision Analytics, as market penetration deepens Six months ended 30 September 2007 2006 Growth3 Organic growth3 $m $m % %-------------------------------------------------------------------------Sales - Credit Services 228 200 7% 6%- Decision Analytics 56 44 21% 15%- Marketing Services 33 19 68% 13% -----------------------------------------Total - continuing activities 318 263 14% 8% -----------------------------------------Discontinuing activities1 8 8 n/a -----------------------------------------Total EMEA/Asia Pacific 326 271 13% -----------------------------------------EBIT - continuing activities 34 29 9% -----------------------------------------Discontinuing activities1 1 - n/a -----------------------------------------Total EMEA/Asia Pacific 35 29 10% -----------------------------------------EBIT margin2 10.7% 11.0% 1 Discontinuing activities include Loyalty Solutions2 EBIT margin is for continuing activities only3 Growth at constant FX rates Operational reviewEMEA/Asia Pacific delivered a good performance, reflecting strength in creditbureaux activities and good progress in Decision Analytics, particularly inEastern Europe and Asia Pacific. Experian continues to invest in the region todrive future growth. Credit ServicesIncludes consumer credit bureaux in ten countries, business information bureauxin four countries and transaction processing in France Experian's focus on geographic expansion continues to bear fruit, with verystrong credit bureau performances, particularly in Southern and Eastern Europe.Credit Services sales grew by 7% at constant exchange rates over the year, withorganic growth of 6%. The acquisition contribution is primarily from thebusiness and consumer credit bureau in Estonia acquired last year, which isperforming to plan. During the period Experian also agreed the sale of LoyaltySolutions in Germany. Transaction processing, which accounts for nearly two thirds of Credit Servicessales in EMEA/Asia Pacific, performed well over the period, as growth inbusiness process outsourcing offset softness in cheque processing. There wereseveral major client wins in the first half, including Carrefour and CreditLyonnais. Decision AnalyticsIncludes credit analytics, decision support software and fraud solutions There was strong momentum in the period in Decision Analytics, reflectingincreased penetration of Experian's existing customer base and new client wins.Total sales growth was 21%, with organic sales growth of 15%. The acquisitioncontribution relates to Tallyman. There was good progress in Continental Europe in core markets for Experian suchas Italy and Spain. Meanwhile in Germany, which is a development market forExperian, there was a significant client win from Metro Group, the internationalretailer. There was also excellent progress in Asia Pacific, with a number ofwins in key markets, such as Rakuten KC, the credit card division of theJapanese internet services company, as well as a major financial institution inAustralia. Marketing ServicesIncludes digital services, business strategies, internet marketing intelligenceand data integrity Sales increased by 68% in the period, with organic growth of 13%. Theacquisition contribution relates principally to Emailing Solution (acquired inMay 2007), which extends Experian's digital services capability in ContinentalEurope, and Hitwise, largely in Asia Pacific. Organic sales growth reflectsstrong performances in digital integrity and business strategies, which securedwins for Footfall and Mosaic. Financial reviewSales from continuing activities were $318m, up 14% at constant exchange ratescompared to the same period last year. Organic growth was 8%. EBIT from continuing activities was $34m, up 9% at constant exchange rates,giving an EBIT margin of 10.7% (2006: 11.0%). Margin dilution principallyreflects increased investment in Asia, including India, partially offset by afavourable contribution from acquisitions. OTHER ITEMS Central activitiesIn the six months ended 30 September 2007, the reported costs of centralactivities were $27m. Central costs in 2006 were $21m, reflecting pre-demergercharges. Central activities costs are expected to be about $54m in this fullfinancial year at prevailing exchange rates. The costs for the year to 31 March2007 were $47m reflecting a lower run rate prior to demerger. Net debt and interestAt 30 September 2007, Experian had net debt of $3,027m (March 2007: $1,408m).The increase in the period primarily reflects the additional borrowings to fundthe acquisitions of Serasa and Hitwise. In the six months ended 30 September 2007, the reported net interest expense was$58m (2006: $74m), before financing fair value remeasurements. The net interestexpense for the period includes a credit to interest of $10m (2006: $8m),relating to the expected return on pension assets less the interest on pensionliabilities. Exceptional items Six months ended 30 September 2007 2006 $m $m------------------------------------------------------------------------Demerger-related costs (2) (123)UK account processing closure costs - (28)------------------------------------------------------------------------Total (2) (151)------------------------------------------------------------------------ Costs relating to the demerger of Experian and Home Retail Group in the halfyear periods comprised mainly legal and professional fees in respect of thetransaction and costs in respect of the cessation of the corporate functions ofGUS plc. In April 2006, Experian announced the phased withdrawal from large-scale creditcard and loan account processing in the UK. As previously disclosed, the costsof withdrawal of approximately $28m were charged in the six months ended 30September 2006. During the period Experian subcontracted the provision of theseservices to First Data. This arrangement reduces risk around staff retention andclient migration for continuing customer contracts. We expect this business tobreakeven for the remainder of the period to closure in September 2009. All other restructuring costs have been charged against EBIT in the segments inwhich they are incurred. Amortisation of acquisition intangiblesIFRS requires that, on acquisition, specific intangible assets are identifiedand recognised separately from goodwill and then amortised over their usefuleconomic lives. These include items such as customer relationships, completedtechnology, data provider relationships, trademarks and brand names, to whichvalue is first attributed at the time of acquisition. In the six months ended 30September 2007, the charge for amortisation of acquisition intangibles was $50m(2006: $37m). Charges in respect of demerger-related equity incentive plansCharges in respect of demerger-related equity incentive plans of $24m relate toone-off grants made to senior management and all other staff levels at the timeof demerger under a number of equity incentive plans. The cost of these one-offgrants is being charged to the Group income statement over the five yearsfollowing the demerger, but is excluded from the definition of Benchmark PBT.The cost of all other grants is charged to the Group income statement and isincluded in the definition of Benchmark PBT. Financing fair value remeasurementsAn element of Experian's derivatives is ineligible for hedge accounting. Gainsor losses on these derivatives arising from market movements are charged orcredited to the income statement. In the six months ended 30 September 2007,this charge amounted to $34m (2006: $12m). TaxationIn the six months ended 30 September 2007, the effective rate of tax onBenchmark PBT, defined as the total tax expense adjusted for the tax impact ofnon-Benchmark items divided by Benchmark PBT, was 23.0%. Experian expects theeffective rate of tax on Benchmark PBT to be approximately 23% for the currentfinancial year. Earnings per shareAt 30 September 2007, Experian had approximately 1,023m ordinary shares inissue. The number of shares to be used for the purposes of calculating basicearnings per share going forward is 1,010m after deducting own shares held. In the six months ended 30 September 2007, Benchmark EPS was 29.5 cents andbasic EPS for continuing operations was 22.2 cents. This was calculated on aweighted average number of shares of 1,008m. Comparatives for the six months ended 30 September 2006 reflect the GUS capitalstructure during the period. Benchmark EPS was 29.4 cents and basic EPS fromcontinuing operations was 25.1 cents. This was calculated on a weighted averagenumber of shares of 856m. Foreign exchangeThe £/$ exchange rate moved from an average of $1.84 in the six months ended 30September 2006 to $1.99 in 2007. The •/$ exchange rate moved from an average of$1.27 in the six months ended 30 September 2006 to $1.35 in 2007. This increasedreported sales by $63m during the period and EBIT by $12m. The closing £/$ exchange rate at 30 September 2007 was $2.04 (2006: $1.87), andthe •/$ exchange rate was $1.42 (2006: $1.27). SeasonalitySome activities at Experian exhibit seasonality. Credit Services activities inLatin America are weighted towards the first half of the year reflecting thetiming of the holiday season in Brazil. Marketing Services activities in NorthAmerica and the UK and Ireland are seasonally weighted towards the second halfof the year, reflecting some exposure to the retail sector. PriceGrabber, whichis reported within North America Interactive, is seasonally weighted towards thethird quarter as online shopping volumes traditionally increase towards theChristmas period. RISKS AND UNCERTAINTIES Risks to Experian are anticipated and regularly assessed and our internalcontrols are enhanced where necessary to ensure that such risks areappropriately mitigated. The principal risks and uncertainties to Experian inthe second half of the year remain those detailed on page 35 of our AnnualReport for 2007, a copy of which is available on our website atwww.experiangroup.com. There has been no change to these principal risks. APPENDIX 1. Sales and EBIT by principal activity Six months ended 30 September 2007 2006 Total Organic growth3 growth3--------------------------------------------------------------------- $m $m % %Sales- Credit Services 877 723 17% 4%- Decision Analytics 219 187 11% 6%- Marketing Services 397 346 11% 3%- Interactive 418 373 12% 12% -----------------------------------------Total - continuing activities 1,911 1,629 14% 6%Discontinuing activities1 36 45 n/a -----------------------------------------Total 1,947 1,674 12% ----------------------------------------- EBIT - Credit Services direct business 249 197 23%- Serasa integration charge (4) - n/a ------------------------------------------ Total Credit Services direct business 245 197 21%- FARES 29 30 (1)% ------------------------------------------ Total Credit Services 274 227 18% ------------------------------------------ Decision Analytics 78 69 5%- Marketing Services 38 30 26%- Interactive 84 82 2%- Central activities (27) (21) (19)% -----------------------------------------Total - continuingactivities 447 387 12% Discontinuing activities1 7 9 n/a ----------------------------------------- Total 454 396 12% ----------------------------------------- EBIT margin - Credit Services - direct business 27.9% 27.2%- Decision Analytics 35.6% 36.9%- Marketing Services 9.6% 8.7%- Interactive 20.1% 22.0% -----------------------------------------Total EBIT margin2 21.9% 21.9% ----------------------------------------- 1 Discontinuing activities include MetaReward, UK account processing and LoyaltySolutions2 EBIT margin is for continuing direct business only, excluding FARES3 Growth at constant FX rates 2. Use of non-GAAP financial information Experian has identified certain measures that it believes will assistunderstanding of the performance of the business. As the measures are notdefined under IFRS they may not be directly comparable with other companies'adjusted measures. The non-GAAP measures are not intended to be a substitutefor, or superior to, any IFRS measures of performance but management haveincluded them as these are considered to be important comparables and keymeasures used within the business for assessing performance. The following are the key non-GAAP measures identified by Experian: Benchmark profit before tax (Benchmark PBT): Benchmark PBT is defined as profitbefore amortisation of acquisition intangibles, goodwill impairments, charges inrespect of the demerger-related equity incentive plans, exceptional items,financing fair value remeasurements and taxation. It includes Experian's shareof pre-tax profits of associates. Earnings before interest and tax (EBIT): EBIT is defined as profit beforeamortisation of acquisition intangibles, goodwill impairments, charges inrespect of the demerger-related equity incentive plans, exceptional items, netfinancing costs and taxation. It includes Experian's share of pre-tax profits ofassociates. Exceptional items: The separate reporting of non-recurring items gives anindication of Experian's underlying performance. Exceptional items are thosearising from the profit or loss on disposal of businesses or closure costs ofmaterial business units. All other restructuring costs have been charged againstEBIT in the segments in which they are incurred. Discontinuing activities: Experian defines discontinuing activities asbusinesses sold, closed or identified for closure during a financial year. Theseare treated as discontinuing activities for both sales and EBIT purposes. Priorperiods, where shown, are restated to exclude the results on discontinuingactivities. This financial measure differs from the definition of discontinuedoperations set out in IFRS 5 (Non-current assets held for sale and discontinuedoperations). Under IFRS 5, a discontinued operation is: (i) a separate majorline of business or geographical area of operations; (ii) part of a single planto dispose of a major line of business or geographical area of operations; or(iii) a subsidiary acquired exclusively with a view to resale. Continuing activities: Businesses trading at 30 September 2007 that have notbeen disclosed as discontinuing activities are treated as continuing activities. Organic growth: This is the year-on-year change in continuing activities sales,at constant exchange rates, excluding acquisitions (other than affiliate creditbureaux) until the first anniversary date of consolidation. Direct business: Direct business refers to Experian's business exclusive of thefinancial results of FARES. Constant currency: In order to illustrate its organic performance, Experiandiscusses its results in terms of constant exchange rate growth, unlessotherwise stated. This represents growth calculated as if the exchange ratesused to determine the results had remained unchanged from those used in theprevious year. 3. Reconciliation of sales and EBIT by geography Six monthsended 30September 2007 2006 ------------------------------- --------------------------------- Continuing Discontinuing Total Continuing Discontinuing Total activities activities activities activities $m $m $m $m $m $m---------------------------------------------------------------------------------Sales North 1,020 - 1,020 963 3 966AmericaLatin 102 - 102 2 - 2AmericaUK and 471 28 499 401 34 435IrelandEMEA/AsiaPacific 318 8 326 263 8 271 -------------------------------------------------------------------Total sales 1,911 36 1,947 1,629 45 1,674 ------------------------------------------------------------------- EBIT NorthAmerica- direct 261 - 261 242 (7) 235businessFARES 29 - 29 30 - 30 -------------------------------------------------------------------Total NorthAmerica 290 - 290 272 (7) 265 ------------------------------------------------------------------- Latin America 28 - 28 (2) - (2)Serasa Integrationcharge (4) - (4) - - - -------------------------------------------------------------------Total LatinAmerica 24 - 24 (2) - (2) ------------------------------------------------------------------- UK and 126 6 132 110 15 125IrelandEMEA/AsiaPacific 34 1 35 29 - 29Centralactivities (27) - (27) (21) - (21) -------------------------------------------------------------------Total EBIT 447 7 454 387 9 396 ------------------------------------------------------------------- Net interest (58) (74) ------ ------Benchmark PBT 396 322 ------ ------Exceptional items (2) (151)Amortisation of acquisitionintangibles (50) (37)Charges for demerger related equity incentive plans (24) -Financing fair valueremeasurements (34) (12)Tax expense of associates (1) (2) ------ ------Profit before tax 285 120Group tax expense (56) (29) ------ ------Profit after tax for the financial period from continuing operations 229 91 ------ ------Profit for the period fromdiscontinued operations - 124 ------ ------Profit for the financial period 229 215 ------ ------ 4. Overview of structure of financial information On 10 October 2006, the separation of Experian and Home Retail Group wascompleted by way of demerger. As part of this transaction, Experian GroupLimited became the ultimate holding company of GUS plc and related subsidiaries.Experian Group Limited accounted for its insertion at the top of the group inaccordance with the principles of merger accounting. As a result of the demerger, there are a number of presentational changes to thefinancial information as previously reported in the interim results released on21 November 2006 and these are detailed in note 1 to the unaudited condensedGroup half-yearly financial statements. The reported interest in the six months ended 30 September 2006 reflected thepre-demerger structure, prior to the receipt of the IPO proceeds. The interestfor that period is therefore not comparable with the current year orrepresentative of future periods. For the purposes of comparability a pro forma interest expense for the sixmonths ended 30 September 2006 is included. The adjustment of $44m betweenreported net interest expense ($74m) and pro forma net interest expense ($30m)in the six months ended 30 September 2006 includes the impact on the pro formanet interest expense of assuming that the new equity of £800m raised at thedemerger had been issued at 1 April 2006. The financial impact of this is anadjustment to interest of $35m. In addition $9m of interest on bank balancesmanaged centrally on a pooled basis is reported within discontinued activitiesand is also accordingly eliminated in arriving at the pro forma net interestexpense. Unaudited condensed Group half-yearly financial statements Group income statementfor the six months ended 30 September 2007 Six months ended 30 September Year ended 31 March 2007 2006 2007 (Represented) (Note 2) Notes US$m US$m US$m--------------------------------------------------------------------------------Revenue 5 1,947 1,664 3,481 Cost of sales (966) (807) (1,681)--------------------------------------------------------------------------------Gross profit 981 857 1,800 -------- ------- ---------Distribution costs (175) (159) (301)Administrativeexpenses (456) (520) (1,026) -------- ------- --------- Operating expenses (631) (679) (1,327)--------------------------------------------------------------------------------Operating profit 5 350 178 473 -------- ------- ---------Finance income 66 43 103Finance expense (158) (129) (249) -------- ------- ---------Net financingcosts (92) (86) (146)Share of post-taxprofits ofassociates 27 28 67--------------------------------------------------------------------------------Profit before tax 5 285 120 394Group tax expense 9 (56) (29) (68)-------------------------------------------------------------------------------Profit after taxfor the financialperiod from continuing operations 229 91 326 Profit for thefinancial periodfrom discontinuedoperations 10 - 124 137--------------------------------------------------------------------------------Profit for thefinancial period 229 215 463--------------------------------------------------------------------------------Attributable to:Equityshareholders inthe parent company 224 215 462Minority interests 5 - 1--------------------------------------------------------------------------------Profit for thefinancial period 229 215 463--------------------------------------------------------------------------------Earnings per share 11 cents cents cents - Basic 22.2 25.1 49.9 - Diluted 21.9 24.9 49.3 Earnings per sharefrom continuingoperations 11 cents cents cents - Basic 22.2 10.6 35.1 - Diluted 21.9 10.6 34.7 Non-GAAP measuresReconciliation of profit Six months ended 30 September Year ended before tax to Benchmark PBT ----------------------------- 31 March 2007 2006 2007 Notes US$m US$m US$m--------------------------------------------------------------------------------Profit before tax 5 285 120 394exclude:exceptional items 8 2 151 162exclude:amortisation ofacquisitionintangibles 8 50 37 76exclude: goodwilladjustment 8 - - 14exclude: charge inrespect of thedemerger-relatedequity incentiveplans 8 24 - 24exclude: financingfair valueremeasurements 8 34 12 35exclude: taxexpense on shareof profits ofassociates 5 1 2 9--------------------------------------------------------------------------------Benchmark PBT -continuingoperations 5 396 322 714--------------------------------------------------------------------------------Benchmark earningsper share from continuing operations 11 cents cents cents - Basic 29.5 29.4 59.7 - Diluted 29.1 29.2 59.1-------------------------------------------------------------------------------- cents cents centsDividend per share(includingannounced firstinterim dividend) 12 6.5 5.5 17.0--------------------------------------------------------------------------------The notes on pages 25 to 36 form an integral part of these unaudited condensedGroup half-yearly financial statements Group balance sheetat 30 September 2007 30 September 31 March 2007 2007 US$m US$m--------------------------------------------------------------------------------Non-current assetsGoodwill 3,637 2,219Other intangible assets 1,439 804Property, plant and equipment 599 519Investment in associates 291 286Deferred tax assets 107 103Retirement benefit assets 151 85Trade and other receivables 17 11Other financial assets 41 74-------------------------------------------------------------------------------- 6,282 4,101--------------------------------------------------------------------------------Current assetsInventories 5 4Trade and other receivables 928 794Current tax assets 22 17Other financial assets 6 53Cash and cash equivalents 192 907-------------------------------------------------------------------------------- 1,153 1,775--------------------------------------------------------------------------------Current liabilitiesTrade and other payables (1,030) (1,031)Loans and borrowings (72) (1,025)Current tax liabilities (217) (166)Provisions (15) (9)Other financial liabilities (25) --------------------------------------------------------------------------------- (1,359) (2,231)--------------------------------------------------------------------------------Net current liabilities (206) (456)--------------------------------------------------------------------------------Non-current liabilitiesTrade and other payables (37) (52)Loans and borrowings (3,142) (1,348)Deferred tax liabilities (267) (68)Provisions (39) (30)Other financial liabilities (541) (40)-------------------------------------------------------------------------------- (4,026) (1,538)--------------------------------------------------------------------------------Net assets 2,050 2,107--------------------------------------------------------------------------------EquityShare capital (note 15) 102 102Share premium (note 15) 1,441 1,435Retained earnings 16,044 16,341Other reserves (15,666) (15,773)--------------------------------------------------------------------------------Total shareholders' equity 1,921 2,105Minority interests in equity 129 2--------------------------------------------------------------------------------Total equity (note 16) 2,050 2,107-------------------------------------------------------------------------------- The notes on pages 25 to 36 form an integral part of these unaudited condensedGroup half-yearly financial statements Group statement of recognised income and expensefor the six months ended 30 September 2007 Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 (Represented) (Note 2) US$m US$m US$m--------------------------------------------------------------------------------Net income/(expense) recognised directly in equityCash flow hedges - (9) (10)Net investment hedge - 101 84Reversal of netinvestment hedge (7) - 4Fair value losses onavailable for salefinancial assets (2) (2) -Actuarial gains/(losses)in respect of defined benefit pension schemes 51 (26) 65Currency translationdifferences 86 329 465Tax charge in respect ofitems taken directly toequity (15) (17) (7)--------------------------------------------------------------------------------Net income recogniseddirectly in equity 113 376 601Profit for the financialperiod 229 215 463-------------------------------------------------------------------------------Total income recognisedin the period 342 591 1,064-------------------------------------------------------------------------------- Total income recognised in the periodattributable to:Equity shareholders inthe parent company 331 591 1,063Minority interests 11 - 1-------------------------------------------------------------------------------Total income recognisedin the period 342 591 1,064-------------------------------------------------------------------------------- The notes on pages 25 to 36 form an integral part of these unaudited condensedGroup half-yearly financial statements Group cash flow statementfor the six months ended 30 September 2007 Six months ended 30 September Year ended -------------------- 31 March 2007 2006 2007 (Represented) (Note 2) US$m US$m US$m -------------------------------- -------- ---------- -------------Cash flows from operating activitiesOperating profit 350 178 473Loss on sale ofproperty, plant andequipment - - 10Depreciation andamortisation 178 146 303Goodwill adjustment - - 14Charge in respect ofequity incentive plans 38 34 91Change in workingcapital (134) (64) 5Exceptional itemsincluded in workingcapital (16) 103 46--------------------------------------------------------------------------------Cash generated fromoperations 416 397 942Interest paid (85) (77) (133)Interest received 32 9 27Dividends received fromassociates 23 22 39Tax paid (37) (56) (121)--------------------------------------------------------------------------------Net cash inflow fromoperating activities 349 295 754--------------------------------------------------------------------------------Cash flows from investing activities Purchase of property, plant and equipment (46) (44) (114) Purchase of otherintangible assets (94) (74) (161) Purchase of otherfinancial assets andinvestments inassociates (1) (8) (42) Acquisition ofsubsidiaries, net ofcash acquired (1,704) (80) (118) Disposal of subsidiaries (note 10) - 258 258--------------------------------------------------------------------------------Net cash flows (usedin)/generated frominvesting activities (1,845) 52 (177)-------------------------------------------------------------------------------- Cash flows fromfinancing activities Purchase of ESOP shares (6) - (75) Issue of Ordinary shares(including October 2006IPO proceeds ofUS$1,441m) 6 54 1,525Receipt of share optionproceeds and sale of ownshares 24 5 59New borrowings 1,761 - -Repayment of borrowings (746) (765) (1,423) Capital element offinance lease rentalpayments (2) (2) (4) Net receipts fromderivatives held tomanage currency profile 83 21 39Equity dividends paid (note 12) (115) (346) (401)--------------------------------------------------------------------------------Net cash flows generatedfrom/(used in) financingactivities 1,005 (1,033) (280)--------------------------------------------------------------------------------Exchange and othermovements 13 91 166--------------------------------------------------------------------------------Net (decrease)/increasein cash and cashequivalents - continuingoperations (478) (595) 463 Net increase in cash andcash equivalents -discontinued operations - 529 550Cash held by Home RetailGroup at demerger - - (518) - 529 32--------------------------------------------------------------------------------Net (decrease)/increasein cash and cashequivalents (478) (66) 495-------------------------------------------------------------------------------- Movement in cash and cash equivalents Cash and cashequivalents at 1 April 634 139 139Net (decrease)/increasein cash and cashequivalents (478) (66) 495--------------------------------------------------------------------------------Cash and cashequivalents at the endof the financial period 156 73 634------------------------------------------------------------------------------- Non-GAAP measuresReconciliation of net Six months ended 30 September Year ended 31 March(decrease)/increase in ------------------------------ cash and cash 2007 2006 2007equivalents to movement US$m US$m US$min net debt --------------------------------------------------------------------------------Net debt at 1 April (1,408) (3,437) (3,437)Net (decrease)/increasein cash and cashequivalents (478) (66) 495(Increase)/decrease indebt (1,030) 782 1,427Debt held by Home RetailGroup at demerger - - 435Exchange and othermovements (includingmovements in respect ofdebt) (111) (235) (328)-------------------------------------------------------------------------------Net debt at the end ofthe financial period(note 14) (3,027) (2,956) (1,408)-------------------------------------------------------------------------------- The notes on pages 25 to 36 form an integral part of these unaudited condensedGroup half-yearly financial statements Notes to the unaudited condensed Group half-yearly financial statementsfor the six months ended 30 September 2007 1. General information Experian Group Limited is incorporated and registered in Jersey under JerseyCompanies Law as a public company limited by shares. The Company's shares arelisted on the London Stock Exchange. These unaudited condensed Group half-yearly financial statements were approvedfor issue on 14 November 2007. No significant events, other than those disclosedin this document, have occurred between 30 September 2007 and that date. These half-yearly financial statements do not constitute the Group's statutoryfinancial statements. The Group's most recent statutory financial statements,which comprise the Experian Group Limited annual report and audited financialstatements for 2007, were approved by the directors on 22 May 2007 and have beendelivered to the Jersey Registrar of Companies. The auditors have reported onthose financial statements and have given an unqualified report which does notcontain a statement under Article 111(2) or Article 111(5) of the Companies (Jersey) Law 1991. 2. Basis of preparation These condensed Group half-yearly financial statements for the six months ended30 September 2007 have been prepared in accordance with the Disclosure andTransparency Rules of the United Kingdom Financial Services Authority and withIAS 34 'Interim Financial Reporting' as adopted by the European Union. Thecondensed Group half-yearly financial statements should be read in conjunctionwith the Group's statutory financial statements for the year ended 31 March2007, copies of which can be found on the Group's website atwww.experiangroup.com/corporate/financial/reports, and are available uponrequest from the Company Secretary at Newenham House, Northern Cross, MalahideRoad, Dublin 17, Ireland. The Group's statutory financial statements wereprepared in accordance with International Financial Reporting Standards ('IFRS')as adopted for use in the European Union. These are those standards, subsequentamendments and related interpretations issued and adopted by the InternationalAccounting Standards Board that have been endorsed by the European Union. The unaudited condensed Group half-yearly financial statements of Experian GroupLimited and its subsidiary undertakings (the 'Group') comprise the consolidatedresults of the Group for the six months ended 30 September 2007 and 30 September2006 and for the year ended 31 March 2007. The financial information for theyear ended 31 March 2007 has been extracted from the Group's statutory financialstatements for that year. The Group's condensed half-yearly financial statementsare unaudited but have been reviewed by the auditors and their report is set outon page 38. The Group's results for the six months ended 30 September 2006 have beenextracted from Part Two of the Group's interim report for that period. Thatinterim report was the first such Group report produced after the separation ofExperian Group Limited and Home Retail Group by way of demerger. As part of thedemerger, Experian Group Limited became the ultimate holding company of GUS plcand related subsidiaries on 6 October 2006. Accordingly Part Two of that interimreport contained consolidated financial information in respect of GUS plc andits subsidiaries. That information was reported in Sterling as that was thereporting currency of GUS plc throughout that period. For the purposes of thisdocument that information has been represented in US Dollars as this is the mostrepresentative currency of the Group's operations. The information for the sixmonths ended 30 September 2006 has also been represented to reflect thereclassification of Home Retail Group as a discontinued operation and thischange was also reflected in the Group's financial statements for the year ended31 March 2007. Voluntary disclosure of the Group's balance sheet as at 30September 2006 has not been included as it reflected the GUS plc balance sheetposition prior to demerger and is therefore not comparable. These unaudited condensed Group half-yearly financial statements are presentedin US Dollars, rounded to the nearest million. The financial information isprepared on the historical cost basis modified for the revaluation of certainfinancial instruments. The principal exchange rates used in preparing theseunaudited condensed Group half-yearly financial statements are set out in note 7. 3. Accounting policies and estimates These condensed Group half-yearly financial statements have been preparedapplying the same accounting policies, significant judgements made by managementin applying them, and key sources of estimation uncertainty applied by the Groupthat were used in the Group's statutory financial statements for the year ended31 March 2007. These accounting policies were published within that document andare also available on the Group's website at www.experiangroup.com/corporate/financial/reports. The preparation of half-yearly financial statements requires management to makeestimates and assumptions that affect the reported amount of revenues, expenses,assets and liabilities and the disclosure of contingent liabilities. If in thefuture such estimates and assumptions, which are based on management's bestjudgement at the date of the interim financial statements, deviate from actualcircumstances, the original estimates and assumptions will be modified asappropriate in the period in which the circumstances change. There have been nosignificant changes in the bases upon which estimates have been determined,compared to those applied at 31 March 2007 and no change in estimate has had amaterial effect on the current period. The Group has reviewed the valuation of its defined benefit pension scheme andin the light of changes in the key actuarial assumptions an adjustment, asrequired at 30 September 2007, is incorporated in these condensed Grouphalf-yearly financial statements. The actuarial assumption with the mostsignificant impact at 30 September 2007 is the discount rate and a rate of 5.9%was used at that date. The discount rate used in the year ended 31 March 2007was 5.4%. The valuation will be updated at the year end to incorporate theresults of the latest formal actuarial valuation which is currently beingcarried out. Goodwill held in the Group's balance sheet is tested annually for impairment atthe year end. No circumstances have arisen in the six months ended 30 September2007 to require additional impairment testing. The Group had no material or unusual related party or share-based paymenttransactions during the six months ended 30 September 2007. Disclosures inrespect of the Group's related party transactions for the period are given innote 20 to these condensed Group half-yearly financial statements, and fulldetails of share-based payment arrangements were provided in the Group'sstatutory financial statements for the year ended 31 March 2007. As indicated in the Group's statutory financial statements for the year ended 31March 2007, there are a number of new accounting standards, amendments andinterpretations effective for accounting periods beginning on or after 1 April2007. None of these has had a material impact on the results or financialposition of the Group for the period under review. Since the date of the annualreport, IFRIC 13 'Customer Loyalty Programmes' and IFRIC 14 'IAS 19 - The Limiton a Defined Benefit Asset, Minimum Funding Requirements and their Interaction'have been issued. They are not effective for the current financial year and theimpact of these interpretations on the Group will be considered in due course.There have been no other new International Financial Reporting Standards adoptedsince 1 April 2007. The financial information has accordingly been prepared on aconsistent basis with that reported for the year ended 31 March 2007 although,following the acquisition of a 70% stake in Serasa, the segmental informationpresented in respect of the Americas in note 5 is now further analysed to showNorth and Latin America as separate segments. In connection with the acquisition of the stake in Serasa, the Group enteredinto a put/call option agreement over the remaining shares held by the minorityshareholders. In accordance with IAS 39 'Financial Instruments: Recognition andMeasurement' the put element is a liability stated at the net present value ofthe expected future payments and under IAS 32 'Financial Instruments: Disclosureand Presentation' this liability is shown as a non-current financial liability.The net present value of the put option was reassessed at 30 September 2007 andthe change was recognised in the income statement within finance expense. 4. Use of non-GAAP measures The Group has identified certain measures that it believes will assistunderstanding of the performance of the business. The measures are not definedunder IFRS and they may not be directly comparable with other companies'adjusted measures. The non-GAAP measures are not intended to be a substitutefor, or superior to, any IFRS measures of performance but management hasincluded them as they consider them to be important comparables and key measuresused 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 acquisitionintangibles, goodwill impairments, charges in respect of the demerger-relatedequity incentive plans, exceptional items, financing fair value remeasurementsand taxation. 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 equityincentive plans, exceptional items, net financing costs and taxation. Itincludes the Group's share of associates' pre-tax profit. Benchmark Earnings Per Share ('Benchmark EPS')Benchmark EPS represents Benchmark PBT less attributable taxation and minorityinterests divided by the weighted average number of shares in issue, and isdisclosed to indicate the underlying profitability of the Group. Exceptional itemsThe separate reporting of non-recurring exceptional items gives an indication ofthe Group's underlying performance. Exceptional items are those arising from theprofit or loss on disposal of businesses or closure costs of material businessunits. All other restructuring costs are charged against EBIT in the segments inwhich they are incurred. Net debtNet debt is calculated as total debt less cash and cash equivalents. Total debtincludes loans and borrowings (and the fair value of derivatives hedging loansand borrowings), overdrafts and obligations under finance leases. Interestpayable on borrowings is excluded from net debt. 5. Segmental information - geographical segmentsSix months ended 30 September 2007 North Latin UK & EMEA/ Central Total America1 America1 Ireland Asia Pacific activities Group US$m US$m US$m US$m US$m US$m -------------------------------------------------------------------------------Revenue fromexternalcustomers 1,020 102 499 326 - 1,947-------------------------------------------------------------------------------Profit Operating profit/(loss) 230 15 108 31 (34) 350Net financingcosts - - - - (92) (92)Share of post-taxprofits ofassociates 27 - - - - 27--------------------------------------------------------------------------------Profit/(loss)before tax 257 15 108 31 (126) 285--------------------------------------------------------------------------------Group taxexpense (56)--------------------------------------------------------------------------------Profit for thefinancialperiod 229-------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss) before tax EBIT 290 24 132 35 (27) 454Net interest - - - - (58) (58)--------------------------------------------------------------------------------Benchmark PBT 290 24 132 35 (85) 396 Exceptionalitems (note 8) - - - - (2) (2)Amortisationof acquisitionintangibles (23) (9) (16) (2) - (50)Charge inrespect of thedemerger-related equityincentiveplans (9) - (8) (2) (5) (24)Financing fairvalueremeasurements - - - - (34) (34)Tax expense onshare ofprofit ofassociates (1) - - - - (1)--------------------------------------------------------------------------------Profit/(loss)before tax 257 15 108 31 (126) 285-------------------------------------------------------------------------------- 1. As indicated in note 3 to these condensed Group half-yearly financial statements, an additional segment has been included for the six months ended 30 September 2007 to report activity in Latin America. Six months ended 30 September 2006 Continuing operations --------------------------------------------------------------------------------- North Latin UK & EMEA/ Central Total Discontinued Total America1 America1 Ireland Asia activities continuing operations2 group Pacific US$m US$m US$m US$m US$m US$m US$m US$m----------------------------------------------------------------------------------------------Revenue Total revenue 966 2 435 271 - 1,674 5,201 6,875Inter-segmentrevenue3 - - (10) - - (10) - (10)----------------------------------------------------------------------------------------------Revenue fromexternalcustomers 966 2 425 271 - 1,664 5,201 6,865---------------------------------------------------------------------------------------------- Profit Operatingprofit/(loss) 214 (2) 84 26 (144) 178 181 359Net financingincome/(costs) - - - - (86) (86) 25 (61)Share ofpost-taxprofits ofassociates 28 - - - - 28 - 28----------------------------------------------------------------------------------------------Profit/(loss)before tax 242 (2) 84 26 (230) 120 206 326-------------------------------------------------------------Group taxexpense (29) (82) (111)----------------------------------------------------------------------------------------------Profit for thefinancialperiod 91 124 215---------------------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss)before tax - continuing operations EBIT 265 (2) 125 29 (21) 396Net interest - - - - (74) (74)-------------------------------------------------------------------------------------------------Benchmark PBT 265 (2) 125 29 (95) 322 Exceptionalitems (note 8) - - (28) - (123) (151)Amortisationof acquisitionintangibles (21) - (13) (3) - (37)Financing fair valueremeasurements - - - - (12) (12)Tax expense onshare ofprofit ofassociates (2) - - - - (2)------------------------------------------------------------------------------------------------- Profit/(loss)before tax 242 (2) 84 26 (230) 120 1. As indicated in note 3 to these condensed Group half-yearly financial statements, the segmental information presented in respect of the Americas for the six months ended 30 September 2006 is now further analysed to show Northand Latin America as separate segments.2. As indicated in note 2 to these condensed Group half-yearly financial statements, the segmental information for the six months ended 30 September 2006 has also been restated to reflect the reclassification of Home Retail Group as adiscontinued operation. Additional information on discontinued operations, which also include a tax charge in respect of disposals (which was reported within discontinued operations in the interim report for the six months ended 30 September 2006), is shown in note 10. The results of discontinued operations are in respect of businesses operating within the UK & Ireland geographical segment.3. Inter-segment revenue represents the provision of services between Experian and discontinued operations. Year ended 31 March 2007 Continuing operations ---------------------------------------------------------------------------------------------------- North Latin America1 UK & Ireland EMEA/ Central Total Discontinued Total America1 Asia Pacific activities continuing operations2 Group US$m US$m US$m US$m US$m US$m US$m US$m------------------------------------------------------------------------------------------------------------------------Revenue Total revenue 1,989 5 907 591 - 3,492 5,468 8,960 Inter-segmentrevenue3 - - (11) - - (11) - (11)------------------------------------------------------------------------------------------------------------------------ Revenue fromexternalcustomers 1,989 5 896 591 - 3,481 5,468 8,949------------------------------------------------------------------------------------------------------------------------ Profit Operatingprofit/(loss) 436 (4) 176 68 (203) 473 212 685Net financingincome/(costs) - - - - (146) (146) 16 (130)Share ofpost-taxprofits ofassociates 67 - - - - 67 - 67------------------------------------------------------------------------------------------------------------------------Profit/(loss)before tax 503 (4) 176 68 (349) 394 228 622--------------------------------------------------------------------------------------Group taxexpense (68) (91) (159)------------------------------------------------------------------------------------------------------------------------Profit for thefinancialperiod 326 137 463------------------------------------------------------------------------------------------------------------------------ Reconciliation from EBIT to profit/(loss) before tax - continuing operations EBIT 566 (4) 236 74 (47) 825Net interest - - - - (111) (111)--------------------------------------------------------------------------------------------------Benchmark PBT 566 (4) 236 74 (158) 714 Exceptionalitems (note 8) 15 - (26) - (151) (162)Amortisationof acquisitionintangibles (45) - (27) (4) - (76)Goodwilladjustment (14) - - - - (14)Charge inrespect of thedemerger-related equityincentiveplans (10) - (7) (2) (5) (24)Financing fairvalueremeasurements - - - - (35) (35)Tax expense onshare of profit ofassociates (9) - - - - (9)-------------------------------------------------------------------------------------------------- Profit/(loss)before tax 503 (4) 176 68 (349) 394 1. As indicated in note 3 to these condensed Group half-yearly financial statements, the segmental information presented in respect of the Americas for the year ended 31 March 2007 is now further analysed to show North and LatinAmerica as separate segments.2. Additional information on discontinued operations, which comprise Home Retail Group together with a tax charge in respect of disposals, is given in note 10. The results of discontinued operations are in respect of businessesoperating within the UK & Ireland geographical segment.3. Inter-segment revenue represents the provision of services between Experian and discontinued operations. 6. Segmental information - business segmentsSix months ended 30 September 2007-------------------------------------------------------------------------------------------------- Credit Decision Marketing Interactive Central Total Group Services Analytics Services activities US$m US$m US$m US$m US$m US$m--------------------------------------------------------------------------------------------------Revenue fromexternal customers 913 219 397 418 - 1,947-------------------------------------------------------------------------------------------------- ProfitOperatingprofit/(loss) 237 77 22 67 (53) 350Net financingcosts - - - - (92) (92)Share of posttax profit ofassociates 27 - - - - 27--------------------------------------------------------------------------------------------------Profit/(loss)before tax 264 77 22 67 (145) 285--------------------------------------------------------------------------------------Group taxexpense (56)--------------------------------------------------------------------------------------------------Profit for thefinancialperiod 229-------------------------------------------------------------------------------------------------- Reconciliation from EBIT toprofit/(loss) before taxEBIT 281 78 38 84 (27) 454Net interest - - - - (58) (58)--------------------------------------------------------------------------------------------------Benchmark PBT 281 78 38 84 (85) 396 Exceptionalitems (note 8) - - - - (2) (2)Amortisationof acquisitionintangibles (16) (1) (16) (17) - (50)Charge inrespect of thedemerger-related equity incentiveplans1 - - - - (24) (24)Financing fairvalueremeasurements - - - - (34) (34)Tax expense onshare of profit ofassociates (1) - - - - (1)--------------------------------------------------------------------------------------------------Profit/(loss)before tax 264 77 22 67 (145) 285-------------------------------------------------------------------------------------------------- 1. 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 geographical segment. Six months ended 30 September 2006 Continuing operations----------------------------------------------------------------------------------------------------------------- Credit Decision Marketing Interactive Central Total Discontinued Total Services Analytics Services activities continuing operations1 Group US$m US$m US$m US$m US$m US$m US$m US$m-----------------------------------------------------------------------------------------------------------------Revenue Total revenue 765 187 346 376 - 1,674 5,201 6,875 Inter-segmentrevenue2 (10) - - - - (10) - (10)----------------------------------------------------------------------------------------------------------------- Revenue fromexternalcustomers 755 187 346 376 - 1,664 5,201 6,865----------------------------------------------------------------------------------------------------------------- ProfitOperatingprofit/(loss) 176 69 17 60 (144) 178 181 359Net financingincome/(costs) - - - - (86) (86) 25 (61)Share ofpost-taxprofits ofassociates 28 - - - - 28 - 28-----------------------------------------------------------------------------------------------------------------Profit/(loss)before tax 204 69 17 60 (230) 120 206 326-----------------------------------------------------------------------------Group taxexpense (29) (82) (111)-----------------------------------------------------------------------------------------------------------------Profit for thefinancial period 91 124 215----------------------------------------------------------------------------------------------------------------- Reconciliation fromEBIT to profit/(loss)before tax - continuingoperationsEBIT 243 69 30 75 (21) 396Net interest - - - - (74) (74)------------------------------------------------------------------------------------------Benchmark PBT 243 69 30 75 (95) 322Exceptionalitems (note 8) (28) - - - (123) (151)Amortisationof acquisitionintangibles (9) - (13) (15) - (37)Financing fairvalueremeasurements - - - - (12) (12)Tax expense onshare ofprofit ofassociates (2) - - - - (2)------------------------------------------------------------------------------------------Profit/(loss)before tax 204 69 17 60 (230) 120 1. As indicated in note 2 to these condensed Group half-yearly financial statements, the segmental information for the six months ended 30 September 2006 has been restated to reflect the reclassification of Home Retail Group as a discontinued operation. Additional information on discontinued operations,which also include a tax charge in respect of disposals (which was reported within discontinued operations in the interim report for the six months ended 30September 2006), is shown in note 10. 2. Inter-segment revenue represents the provision of services between Experian and discontinued operations. Year ended 31 March 2007 Continuing operations----------------------------------------------------------------------------------------------------------------- Credit Decision Marketing Interactive Central Total Discontinued Total Services Analytics Services activities continuing operations1 Group US$m US$m US$m US$m US$m US$m US$m US$m -----------------------------------------------------------------------------------------------------------------RevenueTotal revenue 1,584 392 728 788 - 3,492 5,468 8,960Inter-segmentrevenue2 (11) - - - - (11) - (11)-----------------------------------------------------------------------------------------------------------------Revenue fromexternalcustomers 1,573 392 728 788 - 3,481 5,468 8,949----------------------------------------------------------------------------------------------------------------- ProfitOperatingprofit/(loss) 402 130 28 135 (222) 473 212 685Net financingincome/(costs) - - - - (146) (146) 16 (130)Share ofpost-taxprofits ofassociates 67 - - - - 67 - 67-----------------------------------------------------------------------------------------------------------------Profit/(loss)before tax 469 130 28 135 (368) 394 228 622-----------------------------------------------------------------------------------------------------------------Group taxexpense (68) (91) (159)-----------------------------------------------------------------------------------------------------------------Profit for thefinancial period 326 137 463----------------------------------------------------------------------------------------------------------------- Reconciliation from EBITto profit/(loss) beforetax - continuingoperationsEBIT 505 136 64 167 (47) 825Net interest - - - - (111) (111)------------------------------------------------------------------------------------------Benchmark PBT 505 136 64 167 (158) 714Exceptionalitems (note 8) (11) - - - (151) (162)Amortisationof acquisitionintangibles (16) (1) (27) (32) - (76)Goodwilladjustment - (5) (9) - - (14)Charge inrespect of thedemerger-related equityincentive plans3 - - - - (24) (24)Financing fairvalueremeasurements - - - - (35) (35)Tax expense onshare of profit ofassociates (9) - - - - (9)------------------------------------------------------------------------------------------Profit/(loss)before tax 469 130 28 135 (368) 394 1. Discontinued operations comprise Home Retail Group together with a tax charge in respect of disposals. Additional information on discontinued operations is given in note 10.2. Inter-segment revenue represents the provision of services between Experian and discontinued operations.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 geographical segment. 7. Foreign currency The principal exchange rates used were as follows: Average Closing ------------------------------ ------------------------------- Six months ended Year ended 30 September 31 March 30 September 31 March ----------------- ------------- --------- 2007 2006 2007 2007 2006 2007----------------------------------------------------------------------------------------- Sterling to US Dollar 1.99 1.84 1.89 2.04 1.87 1.96Euro to US Dollar 1.35 1.27 1.29 1.42 1.27 1.33------------------------------------------------------------------------------------------ Assets and liabilities of undertakings whose functional currency is not the USDollar are translated into US dollars at the rates of exchange ruling at thebalance sheet date and the income statement is translated into US dollars ataverage rates of exchange (unless this average is not a reasonable approximationof the cumulative effect of the rates prevailing on the transaction dates, inwhich case income and expenses are translated at the rates on the dates of thetransactions). 8. Exceptional items and other non-GAAP measures Six months ended 30 September Year ended 31 March------------------------------------------------------------------------ 2007 2006 2007 US$m US$m US$m---------------------------------------------------------------------------------------------- Exceptional items Charge on early vesting of share awards at demerger of Experian and Home Retail Group - 15 23Other costs incurred relating to the demerger of Experian and HomeRetail Group 2 108 126Costs incurred in the closure of UK Account Processing - 28 26Losses on disposal of businesses - - 2Gain arising in associate on the partialdisposal of its subsidiary - - (15)---------------------------------------------------------------------------------------------- Total exceptional items 2 151 162---------------------------------------------------------------------------------------------- Other non-GAAP measuresAmortisation ofacquisition intangibles 50 37 76Goodwill adjustment - - 14Charge in respect of thedemerger-related equityincentive plans 24 - 24Financing fair valueremeasurements 34 12 35---------------------------------------------------------------------------------------------- Total other non-GAAPmeasures 108 49 149---------------------------------------------------------------------------------------------- Exceptional items and other non-GAAP measures are in respect of continuingoperations. Exceptional itemsOther costs incurred in the six months ended 30 September 2007 and in the yearended 31 March 2007 relating to the demerger of Experian and Home Retail Groupcomprised legal and professional fees in respect of the transaction, togetherwith costs in connection with the cessation of the corporate functions of GUSplc. In April 2006, Experian announced the phased withdrawal from large scale creditcard and loan account processing in the UK. The full cost of withdrawal ofUS$26m was charged in the year ended 31 March 2007 and was made up of a cost incash of US$28m less the benefit of a US$2m pension curtailment credit which wasrecognised in the second half of that year. The losses on disposal of businesses primarily related to the sale of a minoritystake in Experian's South African business. In the year ended 31 March 2007, First American Real Estate Solutions LLC('FARES') recognised a gain of US$77m on the partial disposal of its Real EstateSolutions division as part of the consideration for the acquisition of 82% ofCoreLogic Solutions, Inc. The Group recognised US$15m, its 20% share of thegain. A deferred tax charge of US$6m was included in the FARES result for thatyear in respect of this gain. Other non-GAAP measuresIFRS requires that, on acquisition, specific intangible assets are identifiedand recognised separately from goodwill and then amortised over their usefuleconomic lives. These include items such as brand names and customer lists, towhich value is first attributed at the time of acquisition. In the year ended 31 March 2007, a goodwill adjustment of US$14m arose underIFRS 3 'Business Combinations' on the recognition of previously unrecognised taxlosses on prior years' acquisitions. The corresponding tax benefit reduced thetax charge for that year by US$14m. Charges in respect of demerger-related equity incentive plans relate to one-offgrants made to senior management and at all staff levels at the time of thedemerger, under a number of equity incentive plans. The cost of these one-offgrants is being charged to the Group income statement over the five years fromflotation in October 2006 but excluded from the definition of Benchmark PBT. Thecost of all other grants is being charged to the Group income statement andincluded in the definition of Benchmark PBT. An element of the Group's derivatives is ineligible for hedge accounting underIFRS. Gains or losses on these derivatives arising from market movements arecredited or charged to financing fair value remeasurements within finance incomeand finance expense in the Group income statement. 9. Taxation The effective rate of tax is 19.6% (2006: 24.2%) based on the profit before taxfor the six months ended 30 September 2007 of US$285m (2006: US$120m). Theeffective rate of tax based on Benchmark PBT of US$396m (2006: US$322m) is 23.0%(2006: 21.7%). 10. Discontinued operations - Home Retail Group (a) The results for discontinued operations were as follows: Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 US$m US$m US$m------------------------------------------------------------------------------------------ Revenue - 5,201 5,468------------------------------------------------------------------------------------------ Operating profit - 181 212Net financing income - 25 16------------------------------------------------------------------------------------------Profit before tax ofdiscontinued operations - 206 228Tax charge in respect ofpre-tax profit - (67) (74)------------------------------------------------------------------------------------------Profit after tax ofdiscontinued operations - 139 154------------------------------------------------------------------------------------------Loss on disposal of discontinuedoperations:Tax charge in respect of disposals - (15) (17)------------------------------------------------------------------------------------------Loss after tax ondisposals - (15) (17)------------------------------------------------------------------------------------------Profit for the financial period from discontinued operations - 124 137------------------------------------------------------------------------------------------ In October 2006, the net assets of Home Retail Group were distributed by way ofa dividend in specie. As a consequence, the results of Home Retail Group for thesix months ended 30 September 2006 have been reclassified as discontinued in theGroup's income statement and cash flow statement. This change had beenpreviously reflected in the Group's financial statements for the year ended 31March 2007. In the six months ended 30 September 2006 and the year ended 31 March 2007,there was a tax charge in respect of taxation assets no longer recoverablefollowing earlier disposals. In addition the Group received the deferredconsideration in respect of the disposal of home shopping and Reality businessesof $258m. (b) Operating profit of discontinued businesses is stated after charging: Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 US$m US$m US$m------------------------------------------------------------------------------------------Cost of sales - 3,414 3,589------------------------------------------------------------------------------------------ Operating expenses:Distribution costs - 1,310 1,361Administrative expenses - 296 306------------------------------------------------------------------------------------------Operating expenses - 1,606 1,667------------------------------------------------------------------------------------------ (c) The cash flows attributable to discontinued operations comprise: Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 US$m US$m US$m------------------------------------------------------------------------------------------From operating activities - 684 705From investing activities - (168) (168)From financing activities - (3) (3)Exchange and other movements - 16 16Less cash held by HomeRetail Group at demerger - - (518)------------------------------------------------------------------------------------------Net increase in cash and cash equivalents in discontinued operations - 529 32------------------------------------------------------------------------------------------ 11. Basic and diluted earnings per share Basic earnings per share is calculated by dividing the earnings attributable toOrdinary shareholders of the Company by a weighted average number of theOrdinary shares in issue (excluding own shares held in Treasury in the periodprior to demerger and own shares held in ESOP trusts, which are treated ascancelled). The calculation of diluted earnings per share reflects the potential dilutiveeffect of employee share incentive schemes. The earnings figures used in thecalculations are unchanged for diluted earnings per share. The weighted average number of Ordinary shares in issue during the six monthsended 30 September 2007 comprises the Company's Ordinary shares in issue duringthe period (excluding own shares held in ESOP trusts, which are treated ascancelled). The weighted average number of Ordinary shares in issue during thesix months ended 30 September 2006 comprised Ordinary shares of GUS plc in issueduring that period (excluding own shares held in Treasury in the period and ownshares held in ESOP trusts, which are treated as cancelled). The weightedaverage number of Ordinary shares in issue during the year ended 31 March 2007includes Ordinary shares of GUS plc in issue to the date of demerger andOrdinary shares of the Company in issue thereafter (excluding own shares held inTreasury in the period prior to demerger and own shares held in ESOP trusts,which are treated as cancelled). Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 Basic earnings per share: cents cents cents-------------------------------------------------------------------------------------------Continuing and discontinued operations 22.2 25.1 49.9Exclude: discontinued operations - (14.5) (14.8)-------------------------------------------------------------------------------------------Continuing operations 22.2 10.6 35.1Add back of exceptional and other non-GAAPmeasures, net of tax 7.3 18.8 24.6-------------------------------------------------------------------------------------------Benchmark earnings per share from continuingoperations - non-GAAP measure 29.5 29.4 59.7------------------------------------------------------------------------------------------- Diluted earnings per share:-------------------------------------------------------------------------------------------Continuing and discontinued operations 21.9 24.9 49.3Exclude: discontinued operations - (14.3) (14.6)-------------------------------------------------------------------------------------------Continuing operations 21.9 10.6 34.7Add back of exceptional and other non-GAAPmeasures, net of tax 7.2 18.6 24.4-------------------------------------------------------------------------------------------Benchmark diluted earnings per share fromcontinuing operations - non-GAAP measure 29.1 29.2 59.1------------------------------------------------------------------------------------------- Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 US$m US$m US$m Earnings:-------------------------------------------------------------------------------------------Continuing and discontinued operations 224 215 462Exclude: discontinued operations - (124) (137)-------------------------------------------------------------------------------------------Continuing operations 224 91 325Add back of exceptional and other non-GAAPmeasures, net of tax 73 161 229-------------------------------------------------------------------------------------------Benchmark earnings - non-GAAP measure 297 252 554------------------------------------------------------------------------------------------- Six months ended 30 September Year ended 31 March ----------------------------- Weighted average number of Ordinary shares in issue: 2007 2006 2007 m m m-------------------------------------------------------------------------------------------Weighted average number of Ordinary shares inissue during the period 1,007.7 855.9 927.3Dilutive effect of share incentive awards 13.8 8.3 9.9-------------------------------------------------------------------------------------------Diluted weighted average number of shares inissue during the period 1,021.5 864.2 937.2------------------------------------------------------------------------------------------- 12. Dividends Six months ended 30 September Year ended 31 March -------------------------------------- 2007 2007 2006 2006 2007 2007 cents US$m cents US$m cents US$m per share per share per share---------------------------------------------------------------------------------------------Amounts recognised and paid asdistributions to equity holders:First interim - - - - 5.5 55Second interim 11.5 115 - - - -Final - - 40.3 346 40.3 346---------------------------------------------------------------------------------------------Ordinary dividendspaid on equity shares 11.5 115 40.3 346 45.8 401--------------------------------------------------------------------------------------------- Dividend in specierelating to thedemerger of HomeRetail Group - - 5,627--------------------------------------------------------------------------------------------- First interim dividend per Ordinaryshare (announced) 6.5 66---------------------------------------------------Total dividends announced for theyear ended 31 March 2007 17.0 170--------------------------------------------------------------------------------------------- A first interim dividend of 6.5 cents per Ordinary share will be paid on 1February 2008 to shareholders on the register at the close of business on 4January 2008 and is not included as a liability in these financial statements. Unless shareholders elect by 4 January 2008 to receive US Dollars, theirdividends will be paid in Sterling at a rate per share calculated on the basisof the exchange rate from US Dollars to Sterling on 11 January 2008. Pursuant to the Income Access Share arrangements put in place as part of thedemerger, shareholders in Experian Group Limited are able to elect to receivetheir dividends from a UK source (the 'IAS election'). Shareholders who held50,000 or fewer Experian shares (i) on the date of admission of the Company'sshares to the London Stock Exchange in October 2006 and (ii) in the case ofshareholders who did not own shares at that time, on the first dividend recorddate after they become shareholders in the Company, unless they elect otherwise,will be deemed to have elected to receive their dividends under the IASarrangements. Shareholders who hold more than 50,000 shares and who wish toreceive their dividends from a UK source must make an IAS election. Allelections remain in force indefinitely unless revoked. The final dividend in respect of the year ended 31 March 2006 which was paid inAugust 2006 and the dividend in specie relating to the demerger of Home RetailGroup were received by shareholders of GUS plc. 13. Capital expenditure and capital commitments During the six months ended 30 September 2007 the Group incurred capitalexpenditure of US$140m (2006: US$285m, including US$167m in respect ofdiscontinued operations). In the year ended 31 March 2007, capital expenditurewas US$448m, including US$173m in respect of discontinued operations. At 30 September 2007, the Group had capital commitments in respect of property,plant and equipment and intangible assets and for which contracts had beenplaced of US$11m (2006: US$8m). At 31 March 2007, there were US$11m of suchcommitments. 14. Analysis of net debt - non-GAAP measure 30 September 31 March -------------------- ----------- 2007 2006 2007 US$m US$m US$m--------------------------------------------------------------------------------Cash and cash equivalents (net of 156 73 634overdrafts)Derivatives hedging loans and borrowings (45) 7 (6)Debt due within one year (30) (1,418) (729)Finance leases (18) (4) (1)Debt due after more than one year (3,090) (1,614) (1,306)--------------------------------------------------------------------------------Net debt at the end of the financial (3,027) (2,956) (1,408)period -------------------------------------------------------------------------------- Continuing operations (3,027) (3,036) (1,408)Discontinued operations - 80 ---------------------------------------------------------------------------------Net debt at the end of the financial (3,027) (2,956) (1,408)period -------------------------------------------------------------------------------- During the six months ended 30 September 2007, the whole of the outstandingbalance of the 4.125% Euronotes 2007 was repaid on their maturity at the parvalue of €548m. This repayment was financed from bank facilities that were inplace at 31 March 2007. 15. Share capital and share premium Number of Share Share shares capital premium m US$m US$m --------------------------------------------------------------------------------At 1 April 2006 879.2 88 16,256Shares issued pre demerger of Home RetailGroup 5.5 1 53Cancellation of treasury shares predemerger of Home Retail Group (8.9) (1) (178)--------------------------------------------------------------------------------At 30 September 2006 875.8 88 16,131Shares issued pre demerger of Home RetailGroup 1.6 - 22Capital reduction - - (16,153)Shares issued by way of Global Offer 142.9 14 1,427Employee share option schemes - proceedsfrom shares issued 2.0 - 8--------------------------------------------------------------------------------At 31 March 2007 1,022.3 102 1,435Employee share option schemes - proceedsfrom shares issued 0.9 - 6--------------------------------------------------------------------------------At 30 September 2007 1,023.2 102 1,441-------------------------------------------------------------------------------- 16. Group reconciliation of movements in total equity Six month ended 30 September Year ended 31 March ---------------------------- ------------------- 2007 2006 2007 presented) (Note 2) US$m US$m US$m------------------------------------------------------------------------------------------Total equity at 1 April 2,107 5,454 5,454Profit for the financial period 229 215 463Net income recognised directly in equity for the financial period 113 376 601Share issues pre demergerof Home Retail Group - 54 76Share issues by way ofGlobal Offer - - 1,441Employee share option schemes: - value of employee services 41 50 109 - proceeds from shares issued 6 - 8Exercise of share options 25 - 59Liability on put optionover minority interests (466) - -Minority interest arisingon business combinations 117 - -Decrease in minorityinterests arising due tocorporate transactions (1) - -(Purchase)/disposal ofESOP shares (6) 6 (75)Equity dividends paidduring the period (note 12) (115) (346) (401)Dividend in specierelating to the demergerof Home Retail Group - - (5,627)Dividends paid tominority shareholders - - (1)------------------------------------------------------------------------------------------Total equity at the endof the financial period 2,050 5,809 2,107------------------------------------------------------------------------------------------ Attributable to:Equity shareholders inthe parent company 1,921 5,807 2,105Minority interests 129 2 2------------------------------------------------------------------------------------------Total equity at the endof the financial period 2,050 5,809 2,107------------------------------------------------------------------------------------------ 17. Acquisitions On 28 June 2007, the Group acquired an initial 65% stake in Serasa, themarket-leading credit bureau in Brazil, from a consortium of Brazilian banks forUS$1.2bn inclusive of transaction costs and net of cash and cash equivalentsheld by that business. Under the terms of the purchase agreement a further 5% ofSerasa has been acquired since the date of the acquisition and, at 30 September2007, the Group's interest in Serasa was 70%. There are put and call optionsassociated with the shares held by the remaining principal shareholders ofSerasa and these are exercisable for a period of five years from June 2012. Asindicated in note 3, the net present value of the put option has been recognisedas a non-current financial liability. At 30 September 2007 this liability wasUS$499m. In addition the Group acquired the whole of the issued share capital of Hitwise,a leading internet market intelligence company, for US$260m on 8 June 2007 andmade a number of other 100% acquisitions, none of which is consideredindividually material. In aggregate, the acquired businesses contributed revenues of US$131m,consisting of revenue from Serasa US$96m, Hitwise US$16m and other acquisitionsUS$19m, from the date of their acquisition to 30 September 2007. Theacquisitions contributed aggregate profit after tax of US$18m, consisting of theprofit after tax of Serasa US$14m, Hitwise US$2m and other acquisitions US$2m,to the Group for the periods from their respective acquisition dates to 30September 2007. If these acquisitions had been completed on 1 April 2007,further revenues of US$108m would have been reported. It has been impracticableto estimate the impact on Group profit had the acquired entities been owned from1 April 2007, due to the acquired entities having different accounting policiesprior to acquisition, previously reporting to different periods and, in the caseof certain of the individually immaterial acquisitions, preparing financialinformation on a cash basis prior to acquisition. Details of the net assets acquired and the provisional goodwill are as follows: Serasa Hitwise Other acquisitions Total ------------- ------------ ------------------ ------------- Book Fair Book Fair Book Fair Book Fair value value value value value value value value US$m US$m US$m US$m US$m US$m US$m US$m-----------------------------------------------------------------------------------------------Intangibleassets 96 508 1 76 - 50 97 634Property,plant andequipment 61 61 2 2 2 2 65 65Deferred taxassets 8 14 - - - - 8 14Trade and otherreceivables 57 53 15 15 31 30 103 98Cash and cashequivalents 22 22 21 21 10 10 53 53Trade andother payables (66) (67) (37) (37) (14) (14) (117) (118)Provisions (5) (23) - - - - (5) (23)Current taxliabilities (3) (3) - - (4) (4) (7) (7)Deferred taxliabilities (31) (171) - (16) - (14) (31) (201)------------------------------------------------------------------------------------------------ 139 394 2 61 25 60 166 515 ----- ------ ------- ------Goodwill 999 201 129 1,329------------------------------------------------------------------------------------------------ 1,393 262 189 1,844------------------------------------------------------------------------------------------------Satisfied by:Cash 1,228 260 172 1,660Acquisitionexpenses 41 2 3 46 Deferredconsideration 7 - 14 21Recognition ofminorityinterest 117 - - 117------------------------------------------------------------------------------------------------ 1,393 262 189 1,844------------------------------------------------------------------------------------------------ The book values above are the carrying amounts of each class of asset andliability, determined in accordance with IFRS, immediately before theacquisition. The fair values set out above contain certain provisional amounts which will befinalised no later than one year after the date of acquisition. Provisionalamounts have been included at 30 September 2007 as a consequence of the timingand complexity of the acquisitions and, in the case of Serasa, the need tocomplete the valuation of its property assets. Fair value adjustments in respectof acquisitions made during the period resulted in an increase to book value ofUS$349m and arose principally in respect of acquisition intangibles. Goodwillrepresents the synergies, assembled workforce and future growth potential of thebusinesses acquired. Deferred consideration is primarily payable in cash up to three years after thedate of acquisition and in some cases is contingent on the businesses acquiredachieving revenue and profit targets. The deferred consideration settled duringthe period on acquisitions made in previous years was US$47m. There have been no material gains, losses, error corrections or otheradjustments recognised in the six months ended 30 September 2007, that relate toacquisitions that were effected in the current or previous periods. 18. Contingencies As was indicated in the annual report and financial statements 2007, there are anumber of pending and threatened litigation claims involving the Group in theUnited States which are being vigorously defended. The directors do not believethat the outcome of any such pending or threatened litigation will have amaterial adverse effect on the Group's financial position. However, as isinherent in legal proceedings, there is a risk of outcomes unfavourable to theGroup. In the case of unfavourable outcomes the Group would benefit fromapplicable insurance recoveries. 19. Seasonality The Group's revenue is subject to certain seasonal fluctuations, as described inthe commentary on page 16. 20. Related parties The Group's related parties are its associates and key management personnel. The Group made net sales and recharges, under normal commercial terms andconditions that would be available to third parties, to First American RealEstate Solutions LLC ('FARES') and its associate First Advantage Corporation, ofUS$14m in the six months ended 30 September 2007 (2006: US$15m) and US$29m inthe year ended 31 March 2007. There were no other material related partytransactions. Home Retail Group is no longer a related party of the Group and there has beenno charge in the period in respect of services provided under the terms of thedemerger agreement. At 31 March 2007, there was an amount owed by the Group toHome Retail Group of $20m in respect of their corporation taxation liabilitiesat demerger and this balance remains outstanding. Other transactions with HomeRetail Group are made on normal commercial terms and conditions available tothird parties. 21. Corporate website The Company has a website which contains up to date information on Groupactivities and published financial results. The directors are responsible forthe maintenance and integrity of statutory and audited information on thiswebsite. The work carried out by the auditors does not involve consideration ofthese matters and, accordingly, the auditors accept no responsibility for anychanges that may have occurred to the half-yearly financial report since it wasinitially presented on the website. Jersey legislation and the United Kingdomregulation governing the preparation and dissemination of financial informationmay differ from requirements in other jurisdictions. Statement of directors' responsibilities The directors confirm that these condensed financial statements have beenprepared in accordance with IAS 34 'Interim Financial Reporting' as adopted bythe European Union, and that the interim management report herein includes afair review of the information required by DTR 4.2.7 and DTR 4.2.8. The directors of Experian Group Limited are listed in the Experian Group Limitedstatutory financial statements for the year ended 31 March 2007. There have beenno subsequent changes of directors and a list of current directors is maintainedon the Group's website at www.experiangroup.com. By Order of the Board John PeaceDirector14 November 2007 Independent review report to Experian Group Limited IntroductionWe have been instructed by Experian Group Limited (the 'Company') to review thecondensed Group half-yearly financial statements in the half-yearly financialreport for the six months ended 30 September 2007, which comprise the Groupincome statement, the Group balance sheet, the Group statement of recognisedincome and expense, the Group cash flow statement and the related notes. We haveread the other information contained in the half-yearly financial report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed Group half-yearlyfinancial statements. Directors' responsibilitiesThe half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority. As disclosed in note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed Group half-yearly financial statements included in this half-yearlyfinancial report has been prepared in accordance with International AccountingStandard 34 'Interim Financial Reporting', as adopted by the European Union. Our responsibilityOur responsibility is to express to the Company a conclusion on the condensedGroup half-yearly financial statements in the half-yearly financial report basedon our review. This report, including the conclusion, has been prepared for andonly for the Company for the purpose of the Disclosure and Transparency Rules ofthe Financial Services Authority and for no other purpose. We do not, inproducing this report, accept or assume responsibility for any other purpose orto any other person to whom this report is shown or into whose hands it may comesave where expressly agreed by our prior consent in writing. Scope of reviewWe conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. ConclusionBased on our review, nothing has come to our attention that causes us to believethat the condensed Group half-yearly financial statements in the half-yearlyfinancial report for the six months ended 30 September 2007 is not prepared, inall material respects, in accordance with International Accounting Standard 34as adopted by the European Union and the Disclosure and Transparency Rules ofthe United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLPChartered AccountantsLondon, United Kingdom 14 November 2007 Notes: (a) The maintenance and integrity of the Experian Group Limited website is the responsibility of the directors; 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 interim report since it was initially presented on the website. (b) Legislation in Jersey and the United Kingdom governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions. Shareholder information Experian website A full range of investor information is available at www.experiangroup.com. Electronic shareholder communicationShareholders may register for Shareview, an electronic communication serviceprovided by Equiniti Limited on behalf of the Company's Registrar, Lloyds TSB (Jersey) Services Limited. Registration is via the Group's website,www.experiangroup.com, or direct via www.experianshareview.com. The service enables shareholders to access a comprehensive range of shareholderservices online, including dividend payment information, the ability to checkshareholdings, amend address or bank details and submit AGM proxy votinginstructions. When registering for Shareview, shareholders can select their preferredcommunication method - post or email. All shareholders will receive a writtennotification of the availability on the Group's website of shareholderdocuments, such as the annual report, unless they have elected to either (i)receive such notification via email or (ii) receive paper copies of shareholderdocuments where such documents are available in that format. Dividend Reinvestment Plan ('DRIP')The DRIP enables shareholders to use their cash dividends to purchase Experianshares. Shareholders who wish to participate in the DRIP for the first time, inrespect of the first interim dividend for the year ending 31 March 2008 to bepaid on 1 February 2008, should return a completed and signed DRIP mandate formto be received by the Registrars, by no later than 4 January 2008. For furtherdetails, please contact the Registrars at the address below. Capital Gains Tax ('CGT') base cost for UK shareholdersOn 10 October 2006, GUS plc separated its Experian business from its Home RetailGroup business by way of demerger. Following the demerger, GUS shareholders at4.30pm on Friday 6 October 2006 were entitled to receive one share in Experianand one share in Home Retail Group plc for every share they held in GUS plc atthat time. The previous base cost of any GUS plc shares held at 4.30pm on 6 October 2006 isapportioned for UK CGT purposes in the following ratio: 58.235% to ExperianGroup Limited shares and 41.765% to Home Retail Group plc shares (based on theclosing prices of the respective shares on their first day of trading aftertheir admission to the Official List of the London Stock Exchange on 11 October2006). For GUS plc shares acquired prior to the demerger of Burberry on 13 December2005 which are affected by both the Burberry demerger and the subsequentseparation of Experian and Home Retail Group, the original CGT base cost isapportioned 50.604% to Experian Group Limited shares, 36.293% to Home RetailGroup plc shares and 13.103% to Burberry Group plc shares. Shareholder information American Depository Receipts ('ADR')Experian has a sponsored Level 1 ADR programme, for which The Bank of New Yorkacts as Depository. The Level 1 ADR programme is not listed on a US stockexchange and trades in the over-the-counter market under the symbol EXPGY. EachADR represents one Experian Group Limited Ordinary share. For furtherinformation, please contact: Shareholder RelationsThe Bank of New YorkPO Box 11248Church Street StationNew YorkNY 10286 - 1258United States T: 1 610 382 7836 (from the US: 1-888-BNY-ADRS)Financial calendarFirst interim dividend record date 4 January 2008Interim management statement - Third quarter 16 January 2008First interim dividend to be paid 1 February 2008Second half trading update 16 April 2008Preliminary announcement of results 21 May 2008Annual General Meeting 16 July 2008 ContactsCorporate headquarters: Registered office:Newenham House 22 Grenville StreetNorthern Cross St HelierMalahide Road Jersey JE4 8PXDublin 17 Registered no. 93905Ireland T: 353 1 846 9100F: 353 1 846 9150 Registrars:Experian Shareholder ServicesLloyds TSB (Jersey) Services Limited11-12 EsplanadeSt HelierJerseyJE4 8PH T: 44 121 415 7586(or 0845 601 0810 from the UK) Text phone facility: 44 121 415 7028(or 0870 600 3950 from the UK) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Experian