Interim Results

Experian Group Limited 15 November 2007 Experian Group Limited Half-yearly financial report for the six months ended 30 September 2007 Highlights â€¢ 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 â€¢ 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. â€¢ Total EBIT of $454m up 15%. Continuing EBIT up 12% at constant exchange rates. â€¢ EBIT margin from continuing activities, excluding FARES contribution, maintained at 21.9% during period of investment. â€¢ Profit before tax of $285m. Benchmark profit before tax of $396m. â€¢ Basic EPS of 22.2 cents. Benchmark EPS of 29.5 cents. â€¢ First interim dividend increased by 18% to 6.5 cents per share. â€¢ 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 first half of this year, further positioning the business to continue to deliver long term, sustainable growth.' Don Robert, Chief Executive Officer of Experian, said: 'In the first half of this year our business has demonstrated its resilience in the face of exceptionally difficult markets for US and UK financial services. Organic sales growth slowed in the second quarter and we expect further slowdown in the second half due to the market environment. We continue to focus on operational efficiency, and based on current trading conditions we remain on course to deliver full year profits in line with our previous expectations.' Enquiries Experian Don Robert Chief Executive Officer 44(0)20 3042 4215 Paul Brooks Chief Financial Officer Nadia Ridout-Jamieson Director of Investor Relations Finsbury Rollo Head 44(0)20 7251 3801 Nick Woodruff There will be a presentation today at 9.30am to analysts and investors at the Merrill Lynch Financial Centre, 2 King Edward Street, London, EC1A 1HQ. The presentation can be viewed live on the Experian website at www.experiangroup.com and can also be accessed live via a dial-in facility on 44 (0)20 8322 2180. The supporting slides and an indexed replay will also be available on the website later in the day. There will be a conference call to discuss the results at 3.00pm today (UK time), which will be broadcast live on the website with a recording available later. All relevant Experian announcements are available on www.experiangroup.com. Experian will update on trading on 16 January 2008 when it will issue the Interim Management Statement in respect of the Third Quarter. See Appendix 2 for definition of non-GAAP measures used throughout this announcement and Appendix 3 for reconciliation of sales and EBIT by geography. Roundings Certain financial data have been rounded within this announcement. As a result of this rounding, the totals of data presented may vary slightly from the actual arithmetic 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 of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements. CHIEF EXECUTIVE'S REVIEW Our business performed well across all regions of activity in the first half of this year, delivering sales growth from continuing activities of 14%, with organic sales growth of 6%. This growth was achieved against an increasingly challenging market backdrop in the US and the UK and demonstrates the strength and resilience of our business model. We maintained EBIT margins during the period while funding a number of new initiatives, which will help drive future growth at Experian. Portfolio balance provides resilience In these less benign markets for credit origination, we are seeing the benefits of previous strategic initiatives to diversify and broaden our business base. â€¢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. â€¢New vertical markets - In the UK we have secured rich new growth opportunities in vertical markets such as telecommunications and government. â€¢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 progress In the first half of the year we have again taken a number of important operational and strategic steps to deliver sustainable growth at Experian. â€¢ 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. â€¢ 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. â€¢ We continue to build our infrastructure in Asia Pacific to support growth in demand for both our Decision Analytics capabilities and Marketing Services activities. â€¢ 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. â€¢ 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 priorities In line with our strategy, we will continue to drive growth both via organic investment (through deeper client relationships, geographic and vertical expansion and product innovation) and to strengthen our market position through complementary acquisitions. Going forward our principal acquisition focus will be on credit bureaux, scarce datasets, enhanced analytics and marketing services. Financial performance Sales growth from continuing activities was 14% in the first half at constant exchange rates. Organic sales growth was 6%, with acquisitions contributing the balance. As previously indicated, organic investment through the income statement has been particularly weighted to the first half, and so EBIT margins were in line with the prior year at 21.9%. Investment initiatives included further emerging markets development, the first phase of the establishment of our near-shoring facility in Chile and further investment in the Canadian credit bureau. While we continue to invest, we expect the year as a whole to benefit from restructuring activities over the past year (particularly in Marketing Services), operational gearing in Marketing Services due to the business mix shift, data centre integration in the UK and Continental Europe, payback on the Chilean near-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 $330m to $350m expected for the full year. EBIT conversion into operating cash flow in the period was 70%, in what is the traditionally weaker half-year for cash generation. For the full year we are on track to meet our target of converting at least 85%. Acquisition expenditure in the first half was $1.7bn, including the acquisition of the stake in Serasa, together with Hitwise, Informarketing, Tallyman, Emailing Solution and other small infills. Experian also agreed a small disposal in the period of Loyalty Solutions in Germany. We expect the acquisition contribution to sales growth in the second half of the year to be in the low teens. First interim dividend of 6.5 cents announced The Board of Experian has announced a first interim dividend of 6.5 cents per share. This is consistent with our dividend policy to have cover (based on Benchmark 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 Profit Six months ended 30 September 2007 2006 2007 2006 $m $m $m $m ------------------------------------------------------------------------------ North America1 1,020 963 290 272 Latin America1, 2 102 2 24 (2) UK and Ireland 471 401 126 110 EMEA/Asia Pacific 318 263 34 29 ---------------------------------------- Sub total 1,911 1,629 474 408 Central activities - - (27) (21) ---------------------------------------- Continuing activities 1,911 1,629 447 387 Discontinuing 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 10.6 Weighted average number of Ordinary shares (million) 1,008 856 ------------------ 1 The segmental information presented in respect of the Americas for the six months ended 30 September 2006 is now further analysed to show North and Latin America as separate segments. 2 Profit includes $4m Serasa integration charge in six months ended 30 September 2007 3 Discontinuing activities include MetaReward, UK account processing and Loyalty Solutions 4 Pro forma net interest for 2006 would have been $30m in the six months ended 30 September 2006 assuming new capital structure in place on 1 April 2006, see Appendix 4 See Appendix 1 for analysis of sales and EBIT by principal activity and Appendix 3 for reconciliation of sales and EBIT by geography See 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/a Total North America 290 265 11% ----------------------------------------- EBIT margin2 25.6% 25.1% 1 Discontinuing activities include MetaReward 2 EBIT margin is for continuing direct business only and excludes FARES Operational review North America performed well, delivering good organic sales growth notwithstanding significant market headwinds. EBIT margins improved by 50 basis points, as operating leverage in Credit Services and Marketing Services offset margin compression at Interactive. Credit Services Includes consumer credit bureaux in the US and Canada, business information and automotive services The recent unprecedented disruption to the US mortgage market and subsequent liquidity freeze affected mortgage activity levels, with a sharp deterioration towards the end of the period. Consumer credit activity remained high across other credit products, such as credit cards and automotive finance. Overall, Credit Services demonstrated resilience, continuing its track record of low to mid-single digit organic growth, with organic sales growth of 3%. The slowdown in mortgage activity was offset by good growth in other origination products, as well as portfolio management and collections products. Business information also performed well in the first half, as did automotive, the latter reflecting share gains driven by increased adoption of Experian's AutoCheck vehicle history report. There was significant strategic progress in the period. The new bureau build in Canada is on track for launch later this fiscal year, VantageScore continues to perform well, both in test and in terms of billable revenue, and in September Experian announced an important new partnership with Visa to create more predictive bankruptcy scores. In terms of cost efficiencies, phase one of the establishment of a near-shoring facility in Santiago, Chile proceeded to plan, with approximately 300 employees hired since March 2007, and the initiative has progressed into its second phase. Decision Analytics Includes credit analytics, decision support software and fraud solutions Against exceptionally strong comparatives, which will remain strong for the balance of the year, Decision Analytics slowed during the period, with sales growth of 12% (H1 2006: 26%). Growth reflected increased market penetration of both decision support software and fraud prevention tools. In decision support software, Experian benefited from increased take-up of its application processing product (Transact) by a US credit card provider. Good progress was also made in fraud prevention, with the launch of a new authentication product, reflecting ongoing demand for Experian's identity verification and authentication tools. Marketing Services Includes data and data management, digital services, research services, internet marketing intelligence and business strategies Sales growth in Marketing Services was 6% in the first half. As anticipated, the trend in organic sales growth has continued to improve, up 2% year-on-year, as the business mix shifts in favour of newer media activities (digital services, research services and data integrity) and away from traditional direct mail activities. During the period, new media product lines delivered excellent growth, while there was some moderation in the rate of decline at the more traditional activities. Digital services (email marketing) benefited from volume increases, the addition of new clients and the expansion of email programmes with existing customers. There was good performance too in internet marketing intelligence (Hitwise), which benefited from new contract wins from existing Experian clients. Interactive Includes 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 strong growth in the period, reflecting increases in membership, improvement in retention rates and good traction from the launch of new products. The strategic focus at Consumer Direct is on innovation, with new child identity monitoring and ID theft protection products showing encouraging early take-up rates. Growth at PriceGrabber was driven by new co-brand partners such as AOL Shopping and CNET and strength in home and personal channel referrals. There was lower growth in the technology and entertainment segments, in line with retail market trends. As previously disclosed, sales at LowerMyBills declined significantly over the period, impacted by the severe downturn in the US sub-prime mortgage market as some lenders went out of business and others significantly tightened lending criteria. Market conditions are not expected to improve in the near term, but swift action on costs coupled with the variable nature of customer acquisition spend has meant the business has remained profitable, although with reduced margins. Meanwhile, diversification into non-mortgage segments continues, with good progress in the period from a relatively low base. Financial review Sales from continuing activities were $1,020m, up 6% compared to the same period last 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 the year, giving an EBIT margin of 25.6% (2006: 25.1%). Margin improvement reflected progress in all areas with the exception of Interactive, which was impacted by the 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 weak environment 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 Latin America 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 review The acquisition of a majority stake in Serasa has transformed Experian's activities in Latin America, and the region is now reported as a separate geographical segment. Credit Services Includes 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 exposure to one of the most attractive markets for credit products globally. The financial outlook for loan growth in Brazil continues to be positive, with strong growth in retail lending, personal loans, vehicle financing and mortgage financing. Sales in Credit Services were $96m. During the period Serasa performed well, in line with the acquisition buy plan. There was good progress on the integration plan, with the appointment of key personnel, progress towards back office consolidation and identification of revenue synergy opportunities. Decision Analytics Includes credit analytics and decision support software Decision Analytics made excellent progress in Latin America over the period from a low base, with sales growth of 46%. Client wins included Telefonica, the leading telecommunications provider in Brazil. Marketing Services Includes marketing data and analytics Sales in Marketing Services were $3m in the period following the acquisition of Informarketing in April 2007. The integration of Informarketing has progressed well, with good client wins in the period of ownership. Financial review Sales were $102m, reflecting the first time contribution from Serasa. Organic growth was 46%. EBIT in the period was $24m, delivering an EBIT margin of 23.5%. EBIT includes a favourable IFRS adjustment of $3m, principally in relation to the differential treatment of capitalisation of data assets for Serasa under Brazilian GAAP, with $9m expected for the nine months to 31 March 2008. Integration charges in relation to the Serasa acquisition of $4m were incurred in the period, with $11m expected 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/a Total UK and Ireland 132 125 (1)% ----------------------------------------- EBIT margin2 26.8% 27.4% 1 Discontinuing activities include UK account processing 2 EBIT margin is for continuing activities only 3 Growth at constant FX rates Operational review UK & Ireland delivered good growth in a challenging market environment. This resilience reflects the strength of Experian's market position and the diversity of its business model. Credit Services Includes consumer credit and business information bureaux and automotive and insurance services Experian's focus on new product development and investment in new verticals has enabled Credit Services to grow, notwithstanding a tough market environment for the financial services sector. Total sales growth was 5% in the half, with organic sales growth of 3%. Growth was supported by high levels of activity in collections and further expansion in the public sector vertical. In addition, product innovation and a renewed focus on sales execution has given rise to good sales momentum in business information. Acquisitions in the period included The pH Group (in July 2007), a provider of business-to-business marketing analytics, which has performed well in the period post acquisition. Decision Analytics Includes credit analytics, decision support software and fraud solutions Total sales for Decision Analytics increased by 5%, with a decrease of 1% on an organic basis. The decline in organic sales was mainly attributable to the timing of software deployment for certain clients which affects the period in which sales are recognised, as well as to delays in pipeline conversion due to conditions in the UK financial services market. New business won during the period was up strongly. There were multi-million dollar, multi-year contracts secured with blue-chip financial services clients in customer management (Probe) and application processing (Transact). During the period Experian acquired the Tallyman collections management software business (in May 2007) and N4 Solutions (in July 2007), a mortgage sector and financial services software provider. Significant opportunities exist to cross-sell products across Experian's customer base, and since the period end Tallyman has secured a significant win from Barclays Bank for its debt management and collections system. Marketing Services Includes data and data management, database management and analytics, digital services, 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 and Hitwise. Organic growth in data, data management and database continued to be tempered by the poor environment for the UK financial services sector, as customers have cut back on marketing-related expenditure. Other business lines, which account for the majority of UK Marketing Services, are less dependent on financial services and performed well. For example, there were a number of new data integrity wins for QAS in the public services sector. The restructuring announced last year has been completed. Interactive Comprises CreditExpert (online credit reports, scores and monitoring services sold direct to consumers) and comparison shopping (PriceGrabber) Total Interactive sales grew by 100%. CreditExpert continues to build on its market leading position, with an excellent performance in the first half. Growth has benefited from further increases in membership and higher volumes of credit reports delivered. Experian continues to invest in PriceGrabber UK, which performed well off a low base. Financial review Sales from continuing activities were $471m, up 9% at constant exchange rates compared to the same period last year. Organic growth was 5%. The contribution to sales growth from acquisitions during the period was 4%. EBIT from continuing activities was $126m, an increase of 7% at constant exchange rates over last year. The EBIT margin was 26.8% (2006: 27.4%), with the slight 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 credit bureaux 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 Solutions 2 EBIT margin is for continuing activities only 3 Growth at constant FX rates Operational review EMEA/Asia Pacific delivered a good performance, reflecting strength in credit bureaux activities and good progress in Decision Analytics, particularly in Eastern Europe and Asia Pacific. Experian continues to invest in the region to drive future growth. Credit Services Includes consumer credit bureaux in ten countries, business information bureaux in four countries and transaction processing in France Experian's focus on geographic expansion continues to bear fruit, with very strong credit bureau performances, particularly in Southern and Eastern Europe. Credit Services sales grew by 7% at constant exchange rates over the year, with organic growth of 6%. The acquisition contribution is primarily from the business and consumer credit bureau in Estonia acquired last year, which is performing to plan. During the period Experian also agreed the sale of Loyalty Solutions in Germany. Transaction processing, which accounts for nearly two thirds of Credit Services sales in EMEA/Asia Pacific, performed well over the period, as growth in business process outsourcing offset softness in cheque processing. There were several major client wins in the first half, including Carrefour and Credit Lyonnais. Decision Analytics Includes credit analytics, decision support software and fraud solutions There was strong momentum in the period in Decision Analytics, reflecting increased penetration of Experian's existing customer base and new client wins. Total sales growth was 21%, with organic sales growth of 15%. The acquisition contribution relates to Tallyman. There was good progress in Continental Europe in core markets for Experian such as Italy and Spain. Meanwhile in Germany, which is a development market for Experian, there was a significant client win from Metro Group, the international retailer. There was also excellent progress in Asia Pacific, with a number of wins in key markets, such as Rakuten KC, the credit card division of the Japanese internet services company, as well as a major financial institution in Australia. Marketing Services Includes digital services, business strategies, internet marketing intelligence and data integrity Sales increased by 68% in the period, with organic growth of 13%. The acquisition contribution relates principally to Emailing Solution (acquired in May 2007), which extends Experian's digital services capability in Continental Europe, and Hitwise, largely in Asia Pacific. Organic sales growth reflects strong performances in digital integrity and business strategies, which secured wins for Footfall and Mosaic. Financial review Sales from continuing activities were $318m, up 14% at constant exchange rates compared 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 principally reflects increased investment in Asia, including India, partially offset by a favourable contribution from acquisitions. OTHER ITEMS Central activities In the six months ended 30 September 2007, the reported costs of central activities were $27m. Central costs in 2006 were $21m, reflecting pre-demerger charges. Central activities costs are expected to be about $54m in this full financial year at prevailing exchange rates. The costs for the year to 31 March 2007 were $47m reflecting a lower run rate prior to demerger. Net debt and interest At 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 fund the 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 interest expense for the period includes a credit to interest of $10m (2006: $8m), relating to the expected return on pension assets less the interest on pension liabilities. 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 half year periods comprised mainly legal and professional fees in respect of the transaction and costs in respect of the cessation of the corporate functions of GUS plc. In April 2006, Experian announced the phased withdrawal from large-scale credit card and loan account processing in the UK. As previously disclosed, the costs of withdrawal of approximately $28m were charged in the six months ended 30 September 2006. During the period Experian subcontracted the provision of these services to First Data. This arrangement reduces risk around staff retention and client migration for continuing customer contracts. We expect this business to breakeven for the remainder of the period to closure in September 2009. All other restructuring costs have been charged against EBIT in the segments in which they are incurred. Amortisation of acquisition intangibles IFRS requires that, on acquisition, specific intangible assets are identified and recognised separately from goodwill and then amortised over their useful economic lives. These include items such as customer relationships, completed technology, data provider relationships, trademarks and brand names, to which value is first attributed at the time of acquisition. In the six months ended 30 September 2007, the charge for amortisation of acquisition intangibles was $50m (2006: $37m). Charges in respect of demerger-related equity incentive plans Charges in respect of demerger-related equity incentive plans of $24m relate to one-off grants made to senior management and all other staff levels at the time of demerger under a number of equity incentive plans. The cost of these one-off grants is being charged to the Group income statement over the five years following 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 is included in the definition of Benchmark PBT. Financing fair value remeasurements An element of Experian's derivatives is ineligible for hedge accounting. Gains or losses on these derivatives arising from market movements are charged or credited to the income statement. In the six months ended 30 September 2007, this charge amounted to $34m (2006: $12m). Taxation In the six months ended 30 September 2007, the effective rate of tax on Benchmark PBT, defined as the total tax expense adjusted for the tax impact of non-Benchmark items divided by Benchmark PBT, was 23.0%. Experian expects the effective rate of tax on Benchmark PBT to be approximately 23% for the current financial year. Earnings per share At 30 September 2007, Experian had approximately 1,023m ordinary shares in issue. The number of shares to be used for the purposes of calculating basic earnings per share going forward is 1,010m after deducting own shares held. In the six months ended 30 September 2007, Benchmark EPS was 29.5 cents and basic EPS for continuing operations was 22.2 cents. This was calculated on a weighted average number of shares of 1,008m. Comparatives for the six months ended 30 September 2006 reflect the GUS capital structure during the period. Benchmark EPS was 29.4 cents and basic EPS from continuing operations was 25.1 cents. This was calculated on a weighted average number of shares of 856m. Foreign exchange The Â£/$ exchange rate moved from an average of $1.84 in the six months ended 30 September 2006 to $1.99 in 2007. The â‚¬/$ exchange rate moved from an average of $1.27 in the six months ended 30 September 2006 to $1.35 in 2007. This increased reported sales by $63m during the period and EBIT by $12m. The closing Â£/$ exchange rate at 30 September 2007 was $2.04 (2006: $1.87), and the â‚¬/$ exchange rate was $1.42 (2006: $1.27). Seasonality Some activities at Experian exhibit seasonality. Credit Services activities in Latin America are weighted towards the first half of the year reflecting the timing of the holiday season in Brazil. Marketing Services activities in North America and the UK and Ireland are seasonally weighted towards the second half of the year, reflecting some exposure to the retail sector. PriceGrabber, which is reported within North America Interactive, is seasonally weighted towards the third quarter as online shopping volumes traditionally increase towards the Christmas period. RISKS AND UNCERTAINTIES Risks to Experian are anticipated and regularly assessed and our internal controls are enhanced where necessary to ensure that such risks are appropriately mitigated. The principal risks and uncertainties to Experian in the second half of the year remain those detailed on page 35 of our Annual Report for 2007, a copy of which is available on our website at www.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 - continuing activities 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 Loyalty Solutions 2 EBIT margin is for continuing direct business only, excluding FARES 3 Growth at constant FX rates 2. Use of non-GAAP financial information Experian has identified certain measures that it believes will assist understanding of the performance of the business. As the measures are not defined under IFRS they may not be directly comparable with other companies' adjusted measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance but management have included them as these are considered to be important comparables and key measures 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 profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, financing fair value remeasurements and taxation. It includes Experian's share of pre-tax profits of associates. Earnings before interest and tax (EBIT): EBIT is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, net financing costs and taxation. It includes Experian's share of pre-tax profits of associates. Exceptional items: The separate reporting of non-recurring items gives an indication of Experian's underlying performance. Exceptional items are those arising from the profit or loss on disposal of businesses or closure costs of material business units. All other restructuring costs have been charged against EBIT in the segments in which they are incurred. Discontinuing activities: Experian defines discontinuing activities as businesses sold, closed or identified for closure during a financial year. These are treated as discontinuing activities for both sales and EBIT purposes. Prior periods, where shown, are restated to exclude the results on discontinuing activities. This financial measure differs from the definition of discontinued operations set out in IFRS 5 (Non-current assets held for sale and discontinued operations). Under IFRS 5, a discontinued operation is: (i) a separate major line of business or geographical area of operations; (ii) part of a single plan to 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 not been 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 credit bureaux) until the first anniversary date of consolidation. Direct business: Direct business refers to Experian's business exclusive of the financial results of FARES. Constant currency: In order to illustrate its organic performance, Experian discusses its results in terms of constant exchange rate growth, unless otherwise stated. This represents growth calculated as if the exchange rates used to determine the results had remained unchanged from those used in the previous year. 3. Reconciliation of sales and EBIT by geography Six months ended 30 September 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 3 966 America Latin 102 - 102 2 - 2 America UK and 471 28 499 401 34 435 Ireland EMEA/Asia Pacific 318 8 326 263 8 271 ------------------------------------------------------------------- Total sales 1,911 36 1,947 1,629 45 1,674 ------------------------------------------------------------------- EBIT North America - direct 261 - 261 242 (7) 235 business FARES 29 - 29 30 - 30 ------------------------------------------------------------------- Total North America 290 - 290 272 (7) 265 ------------------------------------------------------------------- Latin America 28 - 28 (2) - (2) Serasa Integration charge (4) - (4) - - - ------------------------------------------------------------------- Total Latin America 24 - 24 (2) - (2) ------------------------------------------------------------------- UK and 126 6 132 110 15 125 Ireland EMEA/Asia Pacific 34 1 35 29 - 29 Central activities (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 acquisition intangibles (50) (37) Charges for demerger related equity incentive plans (24) - Financing fair value remeasurements (34) (12) Tax expense of associates (1) (2) ------ ------ Profit before tax 285 120 Group tax expense (56) (29) ------ ------ Profit after tax for the financial period from continuing operations 229 91 ------ ------ Profit for the period from discontinued 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 was completed by way of demerger. As part of this transaction, Experian Group Limited became the ultimate holding company of GUS plc and related subsidiaries. Experian Group Limited accounted for its insertion at the top of the group in accordance with the principles of merger accounting. As a result of the demerger, there are a number of presentational changes to the financial information as previously reported in the interim results released on 21 November 2006 and these are detailed in note 1 to the unaudited condensed Group half-yearly financial statements. The reported interest in the six months ended 30 September 2006 reflected the pre-demerger structure, prior to the receipt of the IPO proceeds. The interest for that period is therefore not comparable with the current year or representative of future periods. For the purposes of comparability a pro forma interest expense for the six months ended 30 September 2006 is included. The adjustment of $44m between reported 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 forma net interest expense of assuming that the new equity of Â£800m raised at the demerger had been issued at 1 April 2006. The financial impact of this is an adjustment to interest of $35m. In addition $9m of interest on bank balances managed centrally on a pooled basis is reported within discontinued activities and is also accordingly eliminated in arriving at the pro forma net interest expense. Unaudited condensed Group half-yearly financial statements Group income statement for the six months ended 30 September 2007 Six months ended 30 September Year ended 31 March 2007 2006 2007 (Represented) (Note 2) Notes US$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) Administrative expenses (456) (520) (1,026) -------- ------- --------- Operating expenses (631) (679) (1,327) -------------------------------------------------------------------------------- Operating profit 5 350 178 473 -------- ------- --------- Finance income 66 43 103 Finance expense (158) (129) (249) -------- ------- --------- Net financing costs (92) (86) (146) Share of post-tax profits of associates 27 28 67 -------------------------------------------------------------------------------- Profit before tax 5 285 120 394 Group tax expense 9 (56) (29) (68) ------------------------------------------------------------------------------- Profit after tax for the financial period from continuing operations 229 91 326 Profit for the financial period from discontinued operations 10 - 124 137 -------------------------------------------------------------------------------- Profit for the financial period 229 215 463 -------------------------------------------------------------------------------- Attributable to: Equity shareholders in the parent company 224 215 462 Minority interests 5 - 1 -------------------------------------------------------------------------------- Profit for the financial 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 share from continuing operations 11 cents cents cents - Basic 22.2 10.6 35.1 - Diluted 21.9 10.6 34.7 Non-GAAP measures Reconciliation 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$m -------------------------------------------------------------------------------- Profit before tax 5 285 120 394 exclude: exceptional items 8 2 151 162 exclude: amortisation of acquisition intangibles 8 50 37 76 exclude: goodwill adjustment 8 - - 14 exclude: charge in respect of the demerger-related equity incentive plans 8 24 - 24 exclude: financing fair value remeasurements 8 34 12 35 exclude: tax expense on share of profits of associates 5 1 2 9 -------------------------------------------------------------------------------- Benchmark PBT - continuing operations 5 396 322 714 -------------------------------------------------------------------------------- Benchmark earnings per share from continuing operations 11 cents cents cents - Basic 29.5 29.4 59.7 - Diluted 29.1 29.2 59.1 -------------------------------------------------------------------------------- cents cents cents Dividend per share (including announced first interim dividend) 12 6.5 5.5 17.0 -------------------------------------------------------------------------------- The notes on pages 25 to 36 form an integral part of these unaudited condensed Group half-yearly financial statements Group balance sheet at 30 September 2007 30 September 31 March 2007 2007 US$m US$m -------------------------------------------------------------------------------- Non-current assets Goodwill 3,637 2,219 Other intangible assets 1,439 804 Property, plant and equipment 599 519 Investment in associates 291 286 Deferred tax assets 107 103 Retirement benefit assets 151 85 Trade and other receivables 17 11 Other financial assets 41 74 -------------------------------------------------------------------------------- 6,282 4,101 -------------------------------------------------------------------------------- Current assets Inventories 5 4 Trade and other receivables 928 794 Current tax assets 22 17 Other financial assets 6 53 Cash and cash equivalents 192 907 -------------------------------------------------------------------------------- 1,153 1,775 -------------------------------------------------------------------------------- Current liabilities Trade 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 liabilities Trade 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 -------------------------------------------------------------------------------- Equity Share capital (note 15) 102 102 Share premium (note 15) 1,441 1,435 Retained earnings 16,044 16,341 Other reserves (15,666) (15,773) -------------------------------------------------------------------------------- Total shareholders' equity 1,921 2,105 Minority 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 condensed Group half-yearly financial statements Group statement of recognised income and expense for 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 equity Cash flow hedges - (9) (10) Net investment hedge - 101 84 Reversal of net investment hedge (7) - 4 Fair value losses on available for sale financial assets (2) (2) - Actuarial gains/(losses) in respect of defined benefit pension schemes 51 (26) 65 Currency translation differences 86 329 465 Tax charge in respect of items taken directly to equity (15) (17) (7) -------------------------------------------------------------------------------- Net income recognised directly in equity 113 376 601 Profit for the financial period 229 215 463 ------------------------------------------------------------------------------- Total income recognised in the period 342 591 1,064 -------------------------------------------------------------------------------- Total income recognised in the period attributable to: Equity shareholders in the parent company 331 591 1,063 Minority interests 11 - 1 ------------------------------------------------------------------------------- Total income recognised in the period 342 591 1,064 -------------------------------------------------------------------------------- The notes on pages 25 to 36 form an integral part of these unaudited condensed Group half-yearly financial statements Group cash flow statement for 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 activities Operating profit 350 178 473 Loss on sale of property, plant and equipment - - 10 Depreciation and amortisation 178 146 303 Goodwill adjustment - - 14 Charge in respect of equity incentive plans 38 34 91 Change in working capital (134) (64) 5 Exceptional items included in working capital (16) 103 46 -------------------------------------------------------------------------------- Cash generated from operations 416 397 942 Interest paid (85) (77) (133) Interest received 32 9 27 Dividends received from associates 23 22 39 Tax paid (37) (56) (121) -------------------------------------------------------------------------------- Net cash inflow from operating activities 349 295 754 -------------------------------------------------------------------------------- Cash flows from investing activities Purchase of property, plant and equipment (46) (44) (114) Purchase of other intangible assets (94) (74) (161) Purchase of other financial assets and investments in associates (1) (8) (42) Acquisition of subsidiaries, net of cash acquired (1,704) (80) (118) Disposal of subsidiaries (note 10) - 258 258 -------------------------------------------------------------------------------- Net cash flows (used in)/generated from investing activities (1,845) 52 (177) -------------------------------------------------------------------------------- Cash flows from financing activities Purchase of ESOP shares (6) - (75) Issue of Ordinary shares (including October 2006 IPO proceeds of US$1,441m) 6 54 1,525 Receipt of share option proceeds and sale of own shares 24 5 59 New borrowings 1,761 - - Repayment of borrowings (746) (765) (1,423) Capital element of finance lease rental payments (2) (2) (4) Net receipts from derivatives held to manage currency profile 83 21 39 Equity dividends paid (note 12) (115) (346) (401) -------------------------------------------------------------------------------- Net cash flows generated from/(used in) financing activities 1,005 (1,033) (280) -------------------------------------------------------------------------------- Exchange and other movements 13 91 166 -------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash equivalents - continuing operations (478) (595) 463 Net increase in cash and cash equivalents - discontinued operations - 529 550 Cash held by Home Retail Group at demerger - - (518) - 529 32 -------------------------------------------------------------------------------- Net (decrease)/increase in cash and cash equivalents (478) (66) 495 -------------------------------------------------------------------------------- Movement in cash and cash equivalents Cash and cash equivalents at 1 April 634 139 139 Net (decrease)/increase in cash and cash equivalents (478) (66) 495 -------------------------------------------------------------------------------- Cash and cash equivalents at the end of the financial period 156 73 634 ------------------------------------------------------------------------------- Non-GAAP measures Reconciliation of net Six months ended 30 September Year ended 31 March (decrease)/increase in ------------------------------ cash and cash 2007 2006 2007 equivalents to movement US$m US$m US$m in net debt -------------------------------------------------------------------------------- Net debt at 1 April (1,408) (3,437) (3,437) Net (decrease)/increase in cash and cash equivalents (478) (66) 495 (Increase)/decrease in debt (1,030) 782 1,427 Debt held by Home Retail Group at demerger - - 435 Exchange and other movements (including movements in respect of debt) (111) (235) (328) ------------------------------------------------------------------------------- Net debt at the end of the financial period (note 14) (3,027) (2,956) (1,408) -------------------------------------------------------------------------------- The notes on pages 25 to 36 form an integral part of these unaudited condensed Group half-yearly financial statements Notes to the unaudited condensed Group half-yearly financial statements for the six months ended 30 September 2007 1. General information Experian Group Limited is incorporated and registered in Jersey under Jersey Companies Law as a public company limited by shares. The Company's shares are listed on the London Stock Exchange. These unaudited condensed Group half-yearly financial statements were approved for issue on 14 November 2007. No significant events, other than those disclosed in this document, have occurred between 30 September 2007 and that date. These half-yearly financial statements do not constitute the Group's statutory financial statements. The Group's most recent statutory financial statements, which comprise the Experian Group Limited annual report and audited financial statements for 2007, were approved by the directors on 22 May 2007 and have been delivered to the Jersey Registrar of Companies. The auditors have reported on those financial statements and have given an unqualified report which does not contain a statement under Article 111(2) or Article 111(5) of the Companies (Jersey) Law 1991. 2. Basis of preparation These condensed Group half-yearly financial statements for the six months ended 30 September 2007 have been prepared in accordance with the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The condensed Group half-yearly financial statements should be read in conjunction with the Group's statutory financial statements for the year ended 31 March 2007, copies of which can be found on the Group's website at www.experiangroup.com/corporate/financial/reports, and are available upon request from the Company Secretary at Newenham House, Northern Cross, Malahide Road, Dublin 17, Ireland. The Group's statutory financial statements were prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted for use in the European Union. These are those standards, subsequent amendments and related interpretations issued and adopted by the International Accounting Standards Board that have been endorsed by the European Union. The unaudited condensed Group half-yearly financial statements of Experian Group Limited and its subsidiary undertakings (the 'Group') comprise the consolidated results of the Group for the six months ended 30 September 2007 and 30 September 2006 and for the year ended 31 March 2007. The financial information for the year ended 31 March 2007 has been extracted from the Group's statutory financial statements for that year. The Group's condensed half-yearly financial statements are unaudited but have been reviewed by the auditors and their report is set out on page 38. The Group's results for the six months ended 30 September 2006 have been extracted from Part Two of the Group's interim report for that period. That interim report was the first such Group report produced after the separation of Experian Group Limited and Home Retail Group by way of demerger. As part of the demerger, Experian Group Limited became the ultimate holding company of GUS plc and related subsidiaries on 6 October 2006. Accordingly Part Two of that interim report contained consolidated financial information in respect of GUS plc and its subsidiaries. That information was reported in Sterling as that was the reporting currency of GUS plc throughout that period. For the purposes of this document that information has been represented in US Dollars as this is the most representative currency of the Group's operations. The information for the six months ended 30 September 2006 has also been represented to reflect the reclassification of Home Retail Group as a discontinued operation and this change was also reflected in the Group's financial statements for the year ended 31 March 2007. Voluntary disclosure of the Group's balance sheet as at 30 September 2006 has not been included as it reflected the GUS plc balance sheet position prior to demerger and is therefore not comparable. These unaudited condensed Group half-yearly financial statements are presented in US Dollars, rounded to the nearest million. The financial information is prepared on the historical cost basis modified for the revaluation of certain financial instruments. The principal exchange rates used in preparing these unaudited 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 prepared applying the same accounting policies, significant judgements made by management in applying them, and key sources of estimation uncertainty applied by the Group that were used in the Group's statutory financial statements for the year ended 31 March 2007. These accounting policies were published within that document and are also available on the Group's website at www.experiangroup.com/corporate/ financial/reports. The preparation of half-yearly financial statements requires management to make estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the interim financial statements, deviate from actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. There have been no significant changes in the bases upon which estimates have been determined, compared to those applied at 31 March 2007 and no change in estimate has had a material effect on the current period. The Group has reviewed the valuation of its defined benefit pension scheme and in the light of changes in the key actuarial assumptions an adjustment, as required at 30 September 2007, is incorporated in these condensed Group half-yearly financial statements. The actuarial assumption with the most significant 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 2007 was 5.4%. The valuation will be updated at the year end to incorporate the results of the latest formal actuarial valuation which is currently being carried out. Goodwill held in the Group's balance sheet is tested annually for impairment at the year end. No circumstances have arisen in the six months ended 30 September 2007 to require additional impairment testing. The Group had no material or unusual related party or share-based payment transactions during the six months ended 30 September 2007. Disclosures in respect of the Group's related party transactions for the period are given in note 20 to these condensed Group half-yearly financial statements, and full details of share-based payment arrangements were provided in the Group's statutory financial statements for the year ended 31 March 2007. As indicated in the Group's statutory financial statements for the year ended 31 March 2007, there are a number of new accounting standards, amendments and interpretations effective for accounting periods beginning on or after 1 April 2007. None of these has had a material impact on the results or financial position of the Group for the period under review. Since the date of the annual report, IFRIC 13 'Customer Loyalty Programmes' and IFRIC 14 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction' have been issued. They are not effective for the current financial year and the impact of these interpretations on the Group will be considered in due course. There have been no other new International Financial Reporting Standards adopted since 1 April 2007. The financial information has accordingly been prepared on a consistent basis with that reported for the year ended 31 March 2007 although, following the acquisition of a 70% stake in Serasa, the segmental information presented in respect of the Americas in note 5 is now further analysed to show North and Latin America as separate segments. In connection with the acquisition of the stake in Serasa, the Group entered into a put/call option agreement over the remaining shares held by the minority shareholders. In accordance with IAS 39 'Financial Instruments: Recognition and Measurement' the put element is a liability stated at the net present value of the expected future payments and under IAS 32 'Financial Instruments: Disclosure and 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 and the 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 assist understanding of the performance of the business. The measures are not defined under IFRS and they may not be directly comparable with other companies' adjusted measures. The non-GAAP measures are not intended to be a substitute for, or superior to, any IFRS measures of performance but management has included them as they consider them to be important comparables and key measures used within the business for assessing performance. The following are the key non-GAAP measures identified by the Group: Benchmark Profit Before Tax ('Benchmark PBT') Benchmark PBT is defined as profit before amortisation of acquisition intangibles, goodwill impairments, charges in respect of the demerger-related equity incentive plans, exceptional items, financing fair value remeasurements and 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 equity incentive plans, exceptional items, net financing costs and taxation. It includes the Group's share of associates' pre-tax profit. Benchmark Earnings Per Share ('Benchmark EPS') Benchmark EPS represents Benchmark PBT less attributable taxation and minority interests divided by the weighted average number of shares in issue, and is disclosed to indicate the underlying profitability of the Group. Exceptional items The separate reporting of non-recurring exceptional items gives an indication of the Group's underlying performance. Exceptional items are those arising from the profit or loss on disposal of businesses or closure costs of material business units. All other restructuring costs are charged against EBIT in the segments in which they are incurred. Net debt Net debt is calculated as total debt less cash and cash equivalents. Total debt includes loans and borrowings (and the fair value of derivatives hedging loans and borrowings), overdrafts and obligations under finance leases. Interest payable on borrowings is excluded from net debt. 5. Segmental information - geographical segments Six 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 from external customers 1,020 102 499 326 - 1,947 ------------------------------------------------------------------------------- Profit Operating profit/(loss) 230 15 108 31 (34) 350 Net financing costs - - - - (92) (92) Share of post-tax profits of associates 27 - - - - 27 -------------------------------------------------------------------------------- Profit/(loss) before tax 257 15 108 31 (126) 285 -------------------------------------------------------------------------------- Group tax expense (56) -------------------------------------------------------------------------------- Profit for the financial period 229 -------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss) before tax EBIT 290 24 132 35 (27) 454 Net interest - - - - (58) (58) -------------------------------------------------------------------------------- Benchmark PBT 290 24 132 35 (85) 396 Exceptional items (note 8) - - - - (2) (2) Amortisation of acquisition intangibles (23) (9) (16) (2) - (50) Charge in respect of the demerger-related equity incentive plans (9) - (8) (2) (5) (24) Financing fair value remeasurements - - - - (34) (34) Tax expense on share of profit of associates (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 6,875 Inter-segment revenue3 - - (10) - - (10) - (10) ---------------------------------------------------------------------------------------------- Revenue from external customers 966 2 425 271 - 1,664 5,201 6,865 ---------------------------------------------------------------------------------------------- Profit Operating profit/(loss) 214 (2) 84 26 (144) 178 181 359 Net financing income/(costs) - - - - (86) (86) 25 (61) Share of post-tax profits of associates 28 - - - - 28 - 28 ---------------------------------------------------------------------------------------------- Profit/(loss) before tax 242 (2) 84 26 (230) 120 206 326 ------------------------------------------------------------- Group tax expense (29) (82) (111) ---------------------------------------------------------------------------------------------- Profit for the financial period 91 124 215 ---------------------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss)before tax - continuing operations EBIT 265 (2) 125 29 (21) 396 Net interest - - - - (74) (74) ------------------------------------------------------------------------------------------------- Benchmark PBT 265 (2) 125 29 (95) 322 Exceptional items (note 8) - - (28) - (123) (151) Amortisation of acquisition intangibles (21) - (13) (3) - (37) Financing fair value remeasurements - - - - (12) (12) Tax expense on share of profit of associates (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 North and 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 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 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-segment revenue3 - - (11) - - (11) - (11) ------------------------------------------------------------------------------------------------------------------------ Revenue from external customers 1,989 5 896 591 - 3,481 5,468 8,949 ------------------------------------------------------------------------------------------------------------------------ Profit Operating profit/(loss) 436 (4) 176 68 (203) 473 212 685 Net financing income/(costs) - - - - (146) (146) 16 (130) Share of post-tax profits of associates 67 - - - - 67 - 67 ------------------------------------------------------------------------------------------------------------------------ Profit/(loss) before tax 503 (4) 176 68 (349) 394 228 622 -------------------------------------------------------------------------------------- Group tax expense (68) (91) (159) ------------------------------------------------------------------------------------------------------------------------ Profit for the financial period 326 137 463 ------------------------------------------------------------------------------------------------------------------------ Reconciliation from EBIT to profit/(loss) before tax - continuing operations EBIT 566 (4) 236 74 (47) 825 Net interest - - - - (111) (111) -------------------------------------------------------------------------------------------------- Benchmark PBT 566 (4) 236 74 (158) 714 Exceptional items (note 8) 15 - (26) - (151) (162) Amortisation of acquisition intangibles (45) - (27) (4) - (76) Goodwill adjustment (14) - - - - (14) Charge in respect of the demerger-related equity incentive plans (10) - (7) (2) (5) (24) Financing fair value remeasurements - - - - (35) (35) Tax expense on share of profit of associates (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 Latin America 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 businesses operating within the UK & Ireland geographical segment. 3. Inter-segment revenue represents the provision of services between Experian and discontinued operations. 6. Segmental information - business segments Six 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 from external customers 913 219 397 418 - 1,947 -------------------------------------------------------------------------------------------------- Profit Operating profit/(loss) 237 77 22 67 (53) 350 Net financing costs - - - - (92) (92) Share of post tax profit of associates 27 - - - - 27 -------------------------------------------------------------------------------------------------- Profit/(loss) before tax 264 77 22 67 (145) 285 -------------------------------------------------------------------------------------- Group tax expense (56) -------------------------------------------------------------------------------------------------- Profit for the financial period 229 -------------------------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss) before tax EBIT 281 78 38 84 (27) 454 Net interest - - - - (58) (58) -------------------------------------------------------------------------------------------------- Benchmark PBT 281 78 38 84 (85) 396 Exceptional items (note 8) - - - - (2) (2) Amortisation of acquisition intangibles (16) (1) (16) (17) - (50) Charge in respect of the demerger-related equity incentive plans1 - - - - (24) (24) Financing fair value remeasurements - - - - (34) (34) Tax expense on share of profit of associates (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-segment revenue2 (10) - - - - (10) - (10) ----------------------------------------------------------------------------------------------------------------- Revenue from external customers 755 187 346 376 - 1,664 5,201 6,865 ----------------------------------------------------------------------------------------------------------------- Profit Operating profit/(loss) 176 69 17 60 (144) 178 181 359 Net financing income/(costs) - - - - (86) (86) 25 (61) Share of post-tax profits of associates 28 - - - - 28 - 28 ----------------------------------------------------------------------------------------------------------------- Profit/(loss) before tax 204 69 17 60 (230) 120 206 326 ----------------------------------------------------------------------------- Group tax expense (29) (82) (111) ----------------------------------------------------------------------------------------------------------------- Profit for the financial period 91 124 215 ----------------------------------------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss) before tax - continuing operations EBIT 243 69 30 75 (21) 396 Net interest - - - - (74) (74) ------------------------------------------------------------------------------------------ Benchmark PBT 243 69 30 75 (95) 322 Exceptional items (note 8) (28) - - - (123) (151) Amortisation of acquisition intangibles (9) - (13) (15) - (37) Financing fair value remeasurements - - - - (12) (12) Tax expense on share of profit of associates (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 30 September 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 ----------------------------------------------------------------------------------------------------------------- Revenue Total revenue 1,584 392 728 788 - 3,492 5,468 8,960 Inter-segment revenue2 (11) - - - - (11) - (11) ----------------------------------------------------------------------------------------------------------------- Revenue from external customers 1,573 392 728 788 - 3,481 5,468 8,949 ----------------------------------------------------------------------------------------------------------------- Profit Operating profit/(loss) 402 130 28 135 (222) 473 212 685 Net financing income/(costs) - - - - (146) (146) 16 (130) Share of post-tax profits of associates 67 - - - - 67 - 67 ----------------------------------------------------------------------------------------------------------------- Profit/(loss) before tax 469 130 28 135 (368) 394 228 622 ----------------------------------------------------------------------------------------------------------------- Group tax expense (68) (91) (159) ----------------------------------------------------------------------------------------------------------------- Profit for the financial period 326 137 463 ----------------------------------------------------------------------------------------------------------------- Reconciliation from EBIT to profit/(loss) before tax - continuing operations EBIT 505 136 64 167 (47) 825 Net interest - - - - (111) (111) ------------------------------------------------------------------------------------------ Benchmark PBT 505 136 64 167 (158) 714 Exceptional items (note 8) (11) - - - (151) (162) Amortisation of acquisition intangibles (16) (1) (27) (32) - (76) Goodwill adjustment - (5) (9) - - (14) Charge in respect of the demerger-related equity incentive plans3 - - - - (24) (24) Financing fair value remeasurements - - - - (35) (35) Tax expense on share of profit of associates (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 1.96 Euro 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 US Dollar are translated into US dollars at the rates of exchange ruling at the balance sheet date and the income statement is translated into US dollars at average rates of exchange (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rates on the dates of the transactions). 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 23 Other costs incurred relating to the demerger of Experian and Home Retail Group 2 108 126 Costs incurred in the closure of UK Account Processing - 28 26 Losses on disposal of businesses - - 2 Gain arising in associate on the partial disposal of its subsidiary - - (15) ---------------------------------------------------------------------------------------------- Total exceptional items 2 151 162 ---------------------------------------------------------------------------------------------- Other non-GAAP measures Amortisation of acquisition intangibles 50 37 76 Goodwill adjustment - - 14 Charge in respect of the demerger-related equity incentive plans 24 - 24 Financing fair value remeasurements 34 12 35 ---------------------------------------------------------------------------------------------- Total other non-GAAP measures 108 49 149 ---------------------------------------------------------------------------------------------- Exceptional items and other non-GAAP measures are in respect of continuing operations. Exceptional items Other costs incurred in the six months ended 30 September 2007 and in the year ended 31 March 2007 relating to the demerger of Experian and Home Retail Group comprised legal and professional fees in respect of the transaction, together with costs in connection with the cessation of the corporate functions of GUS plc. In April 2006, Experian announced the phased withdrawal from large scale credit card and loan account processing in the UK. The full cost of withdrawal of US$26m was charged in the year ended 31 March 2007 and was made up of a cost in cash of US$28m less the benefit of a US$2m pension curtailment credit which was recognised in the second half of that year. The losses on disposal of businesses primarily related to the sale of a minority stake 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 Estate Solutions division as part of the consideration for the acquisition of 82% of CoreLogic Solutions, Inc. The Group recognised US$15m, its 20% share of the gain. A deferred tax charge of US$6m was included in the FARES result for that year in respect of this gain. Other non-GAAP measures IFRS requires that, on acquisition, specific intangible assets are identified and recognised separately from goodwill and then amortised over their useful economic lives. These include items such as brand names and customer lists, to which value is first attributed at the time of acquisition. In the year ended 31 March 2007, a goodwill adjustment of US$14m arose under IFRS 3 'Business Combinations' on the recognition of previously unrecognised tax losses on prior years' acquisitions. The corresponding tax benefit reduced the tax charge for that year by US$14m. Charges in respect of demerger-related equity incentive plans relate to one-off grants made to senior management and at all staff levels at the time of the demerger, under a number of equity incentive plans. The cost of these one-off grants is being charged to the Group income statement over the five years from flotation in October 2006 but excluded from the definition of Benchmark PBT. The cost of all other grants is being charged to the Group income statement and included in the definition of Benchmark PBT. An element of the Group's derivatives is ineligible for hedge accounting under IFRS. Gains or losses on these derivatives arising from market movements are credited or charged to financing fair value remeasurements within finance income and 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 tax for the six months ended 30 September 2007 of US$285m (2006: US$120m). The effective 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 - 181 212 Net financing income - 25 16 ------------------------------------------------------------------------------------------ Profit before tax of discontinued operations - 206 228 Tax charge in respect of pre-tax profit - (67) (74) ------------------------------------------------------------------------------------------ Profit after tax of discontinued operations - 139 154 ------------------------------------------------------------------------------------------ Loss on disposal of discontinued operations: Tax charge in respect of disposals - (15) (17) ------------------------------------------------------------------------------------------ Loss after tax on disposals - (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 of a dividend in specie. As a consequence, the results of Home Retail Group for the six months ended 30 September 2006 have been reclassified as discontinued in the Group's income statement and cash flow statement. This change had been previously reflected in the Group's financial statements for the year ended 31 March 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 recoverable following earlier disposals. In addition the Group received the deferred consideration in respect of the disposal of home shopping and Reality businesses of $258m. (b) Operating profit of discontinued businesses is stated after charging: Six months ended 30 September Year ended 31 March ----------------------------- 2007 2006 2007 US$m US$m US$m ------------------------------------------------------------------------------------------ Cost of sales - 3,414 3,589 ------------------------------------------------------------------------------------------ Operating expenses: Distribution costs - 1,310 1,361 Administrative 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 - 684 705 From investing activities - (168) (168) From financing activities - (3) (3) Exchange and other movements - 16 16 Less cash held by Home Retail 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 to Ordinary shareholders of the Company by a weighted average number of the Ordinary shares in issue (excluding own shares held in Treasury in the period prior to demerger and own shares held in ESOP trusts, which are treated as cancelled). The calculation of diluted earnings per share reflects the potential dilutive effect of employee share incentive schemes. The earnings figures used in the calculations are unchanged for diluted earnings per share. The weighted average number of Ordinary shares in issue during the six months ended 30 September 2007 comprises the Company's Ordinary shares in issue during the period (excluding own shares held in ESOP trusts, which are treated as cancelled). The weighted average number of Ordinary shares in issue during the six months ended 30 September 2006 comprised Ordinary shares of GUS plc in issue during that period (excluding own shares held in Treasury in the period and own shares held in ESOP trusts, which are treated as cancelled). The weighted average number of Ordinary shares in issue during the year ended 31 March 2007 includes Ordinary shares of GUS plc in issue to the date of demerger and Ordinary shares of the Company in issue thereafter (excluding own shares held in Treasury 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 49.9 Exclude: discontinued operations - (14.5) (14.8) ------------------------------------------------------------------------------------------- Continuing operations 22.2 10.6 35.1 Add back of exceptional and other non-GAAP measures, net of tax 7.3 18.8 24.6 ------------------------------------------------------------------------------------------- Benchmark earnings per share from continuing operations - non-GAAP measure 29.5 29.4 59.7 ------------------------------------------------------------------------------------------- Diluted earnings per share: ------------------------------------------------------------------------------------------- Continuing and discontinued operations 21.9 24.9 49.3 Exclude: discontinued operations - (14.3) (14.6) ------------------------------------------------------------------------------------------- Continuing operations 21.9 10.6 34.7 Add back of exceptional and other non-GAAP measures, net of tax 7.2 18.6 24.4 ------------------------------------------------------------------------------------------- Benchmark diluted earnings per share from continuing 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 224 215 462 Exclude: discontinued operations - (124) (137) ------------------------------------------------------------------------------------------- Continuing operations 224 91 325 Add back of exceptional and other non-GAAP measures, 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 in issue during the period 1,007.7 855.9 927.3 Dilutive effect of share incentive awards 13.8 8.3 9.9 ------------------------------------------------------------------------------------------- Diluted weighted average number of shares in issue 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 as distributions to equity holders: First interim - - - - 5.5 55 Second interim 11.5 115 - - - - Final - - 40.3 346 40.3 346 --------------------------------------------------------------------------------------------- Ordinary dividends paid on equity shares 11.5 115 40.3 346 45.8 401 --------------------------------------------------------------------------------------------- Dividend in specie relating to the demerger of Home Retail Group - - 5,627 --------------------------------------------------------------------------------------------- First interim dividend per Ordinary share (announced) 6.5 66 --------------------------------------------------- Total dividends announced for the year ended 31 March 2007 17.0 170 --------------------------------------------------------------------------------------------- A first interim dividend of 6.5 cents per Ordinary share will be paid on 1 February 2008 to shareholders on the register at the close of business on 4 January 2008 and is not included as a liability in these financial statements. Unless shareholders elect by 4 January 2008 to receive US Dollars, their dividends will be paid in Sterling at a rate per share calculated on the basis of the exchange rate from US Dollars to Sterling on 11 January 2008. Pursuant to the Income Access Share arrangements put in place as part of the demerger, shareholders in Experian Group Limited are able to elect to receive their dividends from a UK source (the 'IAS election'). Shareholders who held 50,000 or fewer Experian shares (i) on the date of admission of the Company's shares to the London Stock Exchange in October 2006 and (ii) in the case of shareholders who did not own shares at that time, on the first dividend record date after they become shareholders in the Company, unless they elect otherwise, will be deemed to have elected to receive their dividends under the IAS arrangements. Shareholders who hold more than 50,000 shares and who wish to receive their dividends from a UK source must make an IAS election. All elections remain in force indefinitely unless revoked. The final dividend in respect of the year ended 31 March 2006 which was paid in August 2006 and the dividend in specie relating to the demerger of Home Retail Group were received by shareholders of GUS plc. 13. Capital expenditure and capital commitments During the six months ended 30 September 2007 the Group incurred capital expenditure of US$140m (2006: US$285m, including US$167m in respect of discontinued operations). In the year ended 31 March 2007, capital expenditure was 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 been placed of US$11m (2006: US$8m). At 31 March 2007, there were US$11m of such commitments. 14. Analysis of net debt - non-GAAP measure 30 September 31 March -------------------- ----------- 2007 2006 2007 US$m US$m US$m -------------------------------------------------------------------------------- Cash and cash equivalents (net of 156 73 634 overdrafts) 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 outstanding balance of the 4.125% Euronotes 2007 was repaid on their maturity at the par value of â‚¬548m. This repayment was financed from bank facilities that were in place 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 16,256 Shares issued pre demerger of Home Retail Group 5.5 1 53 Cancellation of treasury shares pre demerger of Home Retail Group (8.9) (1) (178) -------------------------------------------------------------------------------- At 30 September 2006 875.8 88 16,131 Shares issued pre demerger of Home Retail Group 1.6 - 22 Capital reduction - - (16,153) Shares issued by way of Global Offer 142.9 14 1,427 Employee share option schemes - proceeds from shares issued 2.0 - 8 -------------------------------------------------------------------------------- At 31 March 2007 1,022.3 102 1,435 Employee share option schemes - proceeds from 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 5,454 Profit for the financial period 229 215 463 Net income recognised directly in equity for the financial period 113 376 601 Share issues pre demerger of Home Retail Group - 54 76 Share issues by way of Global Offer - - 1,441 Employee share option schemes: - value of employee services 41 50 109 - proceeds from shares issued 6 - 8 Exercise of share options 25 - 59 Liability on put option over minority interests (466) - - Minority interest arising on business combinations 117 - - Decrease in minority interests arising due to corporate transactions (1) - - (Purchase)/disposal of ESOP shares (6) 6 (75) Equity dividends paid during the period (note 12) (115) (346) (401) Dividend in specie relating to the demerger of Home Retail Group - - (5,627) Dividends paid to minority shareholders - - (1) ------------------------------------------------------------------------------------------ Total equity at the end of the financial period 2,050 5,809 2,107 ------------------------------------------------------------------------------------------ Attributable to: Equity shareholders in the parent company 1,921 5,807 2,105 Minority interests 129 2 2 ------------------------------------------------------------------------------------------ Total equity at the end of the financial period 2,050 5,809 2,107 ------------------------------------------------------------------------------------------ 17. Acquisitions On 28 June 2007, the Group acquired an initial 65% stake in Serasa, the market-leading credit bureau in Brazil, from a consortium of Brazilian banks for US$1.2bn inclusive of transaction costs and net of cash and cash equivalents held by that business. Under the terms of the purchase agreement a further 5% of Serasa has been acquired since the date of the acquisition and, at 30 September 2007, the Group's interest in Serasa was 70%. There are put and call options associated with the shares held by the remaining principal shareholders of Serasa and these are exercisable for a period of five years from June 2012. As indicated in note 3, the net present value of the put option has been recognised as a non-current financial liability. At 30 September 2007 this liability was US$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 and made a number of other 100% acquisitions, none of which is considered individually material. In aggregate, the acquired businesses contributed revenues of US$131m, consisting of revenue from Serasa US$96m, Hitwise US$16m and other acquisitions US$19m, from the date of their acquisition to 30 September 2007. The acquisitions contributed aggregate profit after tax of US$18m, consisting of the profit 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 30 September 2007. If these acquisitions had been completed on 1 April 2007, further revenues of US$108m would have been reported. It has been impracticable to estimate the impact on Group profit had the acquired entities been owned from 1 April 2007, due to the acquired entities having different accounting policies prior to acquisition, previously reporting to different periods and, in the case of certain of the individually immaterial acquisitions, preparing financial information on a cash basis prior to acquisition. Details of the net assets acquired and the provisional goodwill are as follows: Serasa Hitwise Other acquisitions Total ------------- ------------ ------------------ ------------- Book Fair Book Fair Book Fair Book Fair value value value value value value value value US$m US$m US$m US$m US$m US$m US$m US$m ----------------------------------------------------------------------------------------------- Intangible assets 96 508 1 76 - 50 97 634 Property, plant and equipment 61 61 2 2 2 2 65 65 Deferred tax assets 8 14 - - - - 8 14 Trade and other receivables 57 53 15 15 31 30 103 98 Cash and cash equivalents 22 22 21 21 10 10 53 53 Trade and other payables (66) (67) (37) (37) (14) (14) (117) (118) Provisions (5) (23) - - - - (5) (23) Current tax liabilities (3) (3) - - (4) (4) (7) (7) Deferred tax liabilities (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 1,660 Acquisition expenses 41 2 3 46 Deferred consideration 7 - 14 21 Recognition of minority interest 117 - - 117 ------------------------------------------------------------------------------------------------ 1,393 262 189 1,844 ------------------------------------------------------------------------------------------------ The book values above are the carrying amounts of each class of asset and liability, determined in accordance with IFRS, immediately before the acquisition. The fair values set out above contain certain provisional amounts which will be finalised no later than one year after the date of acquisition. Provisional amounts have been included at 30 September 2007 as a consequence of the timing and complexity of the acquisitions and, in the case of Serasa, the need to complete the valuation of its property assets. Fair value adjustments in respect of acquisitions made during the period resulted in an increase to book value of US$349m and arose principally in respect of acquisition intangibles. Goodwill represents the synergies, assembled workforce and future growth potential of the businesses acquired. Deferred consideration is primarily payable in cash up to three years after the date of acquisition and in some cases is contingent on the businesses acquired achieving revenue and profit targets. The deferred consideration settled during the period on acquisitions made in previous years was US$47m. There have been no material gains, losses, error corrections or other adjustments recognised in the six months ended 30 September 2007, that relate to acquisitions that were effected in the current or previous periods. 18. Contingencies As was indicated in the annual report and financial statements 2007, there are a number of pending and threatened litigation claims involving the Group in the United States which are being vigorously defended. The directors do not believe that the outcome of any such pending or threatened litigation will have a material adverse effect on the Group's financial position. However, as is inherent in legal proceedings, there is a risk of outcomes unfavourable to the Group. In the case of unfavourable outcomes the Group would benefit from applicable insurance recoveries. 19. Seasonality The Group's revenue is subject to certain seasonal fluctuations, as described in the 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 and conditions that would be available to third parties, to First American Real Estate Solutions LLC ('FARES') and its associate First Advantage Corporation, of US$14m in the six months ended 30 September 2007 (2006: US$15m) and US$29m in the year ended 31 March 2007. There were no other material related party transactions. Home Retail Group is no longer a related party of the Group and there has been no charge in the period in respect of services provided under the terms of the demerger agreement. At 31 March 2007, there was an amount owed by the Group to Home Retail Group of $20m in respect of their corporation taxation liabilities at demerger and this balance remains outstanding. Other transactions with Home Retail Group are made on normal commercial terms and conditions available to third parties. 21. Corporate website The Company has a website which contains up to date information on Group activities and published financial results. The directors are responsible for the maintenance and integrity of statutory and audited information on this website. The work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the half-yearly financial report since it was initially presented on the website. Jersey legislation and the United Kingdom regulation governing the preparation and dissemination of financial information may differ from requirements in other jurisdictions. Statement of directors' responsibilities The directors confirm that these condensed financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union, and that the interim management report herein includes a fair 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 Limited statutory financial statements for the year ended 31 March 2007. There have been no subsequent changes of directors and a list of current directors is maintained on the Group's website at www.experiangroup.com. By Order of the Board John Peace Director 14 November 2007 Independent review report to Experian Group Limited Introduction We have been instructed by Experian Group Limited (the 'Company') to review the condensed Group half-yearly financial statements in the half-yearly financial report for the six months ended 30 September 2007, which comprise the Group income statement, the Group balance sheet, the Group statement of recognised income and expense, the Group cash flow statement and the related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed Group half-yearly financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed Group half-yearly financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed Group half-yearly financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed Group half-yearly financial statements in the half-yearly financial report for the six months ended 30 September 2007 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. PricewaterhouseCoopers LLP Chartered Accountants London, 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 communication Shareholders may register for Shareview, an electronic communication service provided 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 shareholder services online, including dividend payment information, the ability to check shareholdings, amend address or bank details and submit AGM proxy voting instructions. When registering for Shareview, shareholders can select their preferred communication method - post or email. All shareholders will receive a written notification of the availability on the Group's website of shareholder documents, such as the annual report, unless they have elected to either (i) receive such notification via email or (ii) receive paper copies of shareholder documents where such documents are available in that format. Dividend Reinvestment Plan ('DRIP') The DRIP enables shareholders to use their cash dividends to purchase Experian shares. Shareholders who wish to participate in the DRIP for the first time, in respect of the first interim dividend for the year ending 31 March 2008 to be paid on 1 February 2008, should return a completed and signed DRIP mandate form to be received by the Registrars, by no later than 4 January 2008. For further details, please contact the Registrars at the address below. Capital Gains Tax ('CGT') base cost for UK shareholders On 10 October 2006, GUS plc separated its Experian business from its Home Retail Group business by way of demerger. Following the demerger, GUS shareholders at 4.30pm on Friday 6 October 2006 were entitled to receive one share in Experian and one share in Home Retail Group plc for every share they held in GUS plc at that time. The previous base cost of any GUS plc shares held at 4.30pm on 6 October 2006 is apportioned for UK CGT purposes in the following ratio: 58.235% to Experian Group Limited shares and 41.765% to Home Retail Group plc shares (based on the closing prices of the respective shares on their first day of trading after their admission to the Official List of the London Stock Exchange on 11 October 2006). For GUS plc shares acquired prior to the demerger of Burberry on 13 December 2005 which are affected by both the Burberry demerger and the subsequent separation of Experian and Home Retail Group, the original CGT base cost is apportioned 50.604% to Experian Group Limited shares, 36.293% to Home Retail Group 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 York acts as Depository. The Level 1 ADR programme is not listed on a US stock exchange and trades in the over-the-counter market under the symbol EXPGY. Each ADR represents one Experian Group Limited Ordinary share. For further information, please contact: Shareholder Relations The Bank of New York PO Box 11248 Church Street Station New York NY 10286 - 1258 United States T: 1 610 382 7836 (from the US: 1-888-BNY-ADRS) Financial calendar First interim dividend record date 4 January 2008 Interim management statement - Third quarter 16 January 2008 First interim dividend to be paid 1 February 2008 Second half trading update 16 April 2008 Preliminary announcement of results 21 May 2008 Annual General Meeting 16 July 2008 Contacts Corporate headquarters: Registered office: Newenham House 22 Grenville Street Northern Cross St Helier Malahide Road Jersey JE4 8PX Dublin 17 Registered no. 93905 Ireland T: 353 1 846 9100 F: 353 1 846 9150 Registrars: Experian Shareholder Services Lloyds TSB (Jersey) Services Limited 11-12 Esplanade St Helier Jersey JE4 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 Exchange

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