Experian 2007 Annual Report Download

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600
2,000,000
24,00
60
6
20
Our Strategy
Management software
is used by over 600
organisations
worldwide
We support
clients in over
60 countries
On an average day,
Experian processes
two million credit
reference enquiries
More than
24 million
people visit
our Interactive
websites each
month
We have chosen six
essential responsibilities
to provide the focus for
our CR strategy
We introduced
over 20 new
products last year
Annual Report 2007
Figuring it out...
5
This was our fifth
consecutive year of
double-digit revenue
and profit growth

Table of contents

  • Page 1
    6 We introduced over 20 new products last year Annual Report 2007 Figuring it out... We have chosen six essential responsibilities to provide the focus for our CR strategy 24,00 Our Strategy Management software is used by over 600 organisations worldwide More than 24 million people visit our ...

  • Page 2
    ...2007 ...22 Experian Americas...24 Experian UK and Ireland ...26 Experian EMEA/Asia Pacific...28 Financial review...30 Risks and uncertainties ...35 $3.4bn Total continuing sales at constant exchange rates up 14% Governance Corporate responsibilities ...36 Board of directors ...38 Directors' report...

  • Page 3
    ... | Business review | Governance | Financial statements At the heart of Experian lies a vast store of information - about consumers and how they behave, about businesses and how they perform, and about motor vehicles, insurance policies and other valuable assets. Over the years, we have developed...

  • Page 4
    ... in making more informed financial and purchasing decisions. We employ more than 13,000 people through offices in 36 countries and support clients in over 60 countries. Our products and services are grouped under four principal activities: Credit Services, Decision Analytics, Marketing Solutions and...

  • Page 5
    ... working closely together to optimise returns on marketing spend, Interactive's largest cost All financial numbers relate to continuing activities only, with growth rates at constant exchange rates 24m Each month, 24 million people visit our Interactive websites Experian Annual Report 2007 | 03

  • Page 6
    Introduction | Business review | Governance | Financial statements Credit Services Credit Services helps organisations to evaluate the risks and rewards associated with providing credit to consumers and businesses. We enable clients to take better informed lending decisions and to make it easier ...

  • Page 7
    ... access to the mobile network and to leave the shop with a highly valuable 3G mobile phone. Experian provides 3 with a range of services to support its need for rapid decision-making at the point of sale. Central to this is Experian's credit database, which combines publicly available information...

  • Page 8
    ... over the Internet or by telephone. They also want fast decisions when applying for credit facilities, personal loans or other services. We help by instantly verifying a customer's identity and alerting our clients to discrepancies in the information provided. 06 | Experian Annual Report 2007

  • Page 9
    ... relevant information and customer requests against a wide array of regulatory, business and commercial requirements and objectives. "Experian's Strategy Management solution will become an integral part of our global business", explains Chris Hawkes, Head of Group Retail Credit & Risk at HSBC...

  • Page 10
    ...market opportunity for particular products and services, and to identify profitable locations for new branches or new sales initiatives. Our credit databases hold information about the credit status of more than 300 million consumers and about 30 million businesses around the world. 08 | Experian...

  • Page 11
    ... new online sales channels, Crate and Barrel has also needed an email service delivery solution that can help drive the same success in the digital world that it has experienced with direct mail. The company has therefore adopted Experian's CheetahMail services to deliver all of its email marketing...

  • Page 12
    ... millions of products and services. We also offer consumers the ability to view their credit report on line and to monitor changes to their credit records. Each month, we attract over 24 million visitors to our consumer websites. Experian owns a number of Internet businesses that assist consumers in...

  • Page 13
    ... United States. CreditExpert gives consumers unlimited online access to their Experian credit report, enabling them to see the same information that financial organisations use when making decisions about lending money. In return for a monthly subscription fee, CreditExpert users can monitor changes...

  • Page 14
    Introduction | Business review | Governance | Financial statements Chairman's statement Experian has made a good start in its new life as an independent company. The demerger last October was well received by shareholders, while the £800m of new equity that we raised from investors will provide ...

  • Page 15
    ... complement our existing businesses and accelerate their growth. Investing in people As part of the demerger, Experian employees were granted shares to enable them to associate even more closely with our goal of building shareholder value over the long term. Investing in data Information is at the...

  • Page 16
    Introduction | Business review | Governance | Financial statements Interview with Don Robert, Chief Executive Officer "We have so many great opportunities that probably our biggest challenge is deciding which ones to focus on next." 14 | Experian Annual Report 2007

  • Page 17
    ... for our marketing businesses and enables us to capitalise on investment in services such as email delivery and market research. The continuing growth of the Internet is creating tremendous opportunities for our Interactive businesses as consumers make greater use of this medium for information and...

  • Page 18
    .... • Financial services clients account for 53% of our sales, followed by 14% in direct-to-consumer, 11% for retail and home shopping, 7% from telecommunications, utilities and insurance and the balance from government, publishing and media and automotive. 16 | Experian Annual Report 2007 60 We...

  • Page 19
    ...leader in selling credit reports and services direct to consumers ahead of Equifax, TransUnion, Fair Isaac and other specialist providers. Our sales are more than twice the size of any of our competitors. The online lead generation market is fragmented and Experian has strong market positions in our...

  • Page 20
    ... use the same data and tools that Experian has successfully developed for the financial services industry. • Increased use of the Internet by consumers and businesses to both research and buy products and services; companies are switching more of their marketing spend to the Internet, which helps...

  • Page 21
    ...our business. Employees have a regular opportunity to give their views through the annual employee survey, which is reviewed by senior leaders and local teams and acted on accordingly. Data At the core of Experian are comprehensive databases of credit and marketing information on both consumers and...

  • Page 22
    ... the benefits of Experian's portfolio of activities around the world. In the year to 31 March 2007, Experian increased its EBIT by 11% at constant exchange rates to $825m. EBIT margin increased by 80 basis points to 21.8%, a further year of progress. 20 | Experian Annual Report 2007 8 % We...

  • Page 23
    ...corporate responsibility report at www.experiancrreport.com Our people are one of our key resources and sales per FTE is a key measure of our productivity. In the year to 31 March 2007, sales per FTE increased by 12%. 12 % Experian Annual Report 2007 Sales per FTE (full-time equivalent) employee...

  • Page 24
    ...Business review | Governance | Financial statements Progress in 2007 We have made excellent progress during the year against our strategic, operational and financial objectives. The demerger from GUS was a significant milestone in the development of Experian, allowing investors to benefit directly...

  • Page 25
    ..., successful business to Experian, and new unique data. Other acquisitions since the year end include Informarketing, a direct marketing services provider in Brazil; Emailing Solution, a leading French permissionbased email marketing company; and Tallyman, a collections management software business...

  • Page 26
    ...client win in the Internet payment space. Marketing Solutions Includes data and data management (consumer data, list processing and data integrity (including QAS), database management and analytics), digital services (CheetahMail), research services (Simmons and Vente), and business strategies Sales...

  • Page 27
    ... Includes Consumer Direct (online credit reports, scores and monitoring services) and lead generation businesses: LowerMyBills (mortgages), PriceGrabber (comparison shopping) and ClassesUSA (online education) Sales in Interactive grew by 37% during the year, contributing 38% of total Americas sales...

  • Page 28
    ... data management (consumer data, data integrity (QAS and Eiger Systems), database management (including ClarityBlue) and analytics), digital services (CheetahMail) and business strategies (including Mosaic consumer segmentation, economic forecasting and FootFall) Total sales in Marketing Solutions...

  • Page 29
    ... its acquisition in June 2006. We have previously announced our intention to integrate UK marketing data, processing and database management activities into a single business unit, Experian Integrated Marketing. This will provide a single point of sale for Experian's services, an improved customer...

  • Page 30
    ...Eastern Europe, South Africa and Asia Pacific balanced by slower growth in more mature markets such as Western Europe. Credit Services Includes consumer credit bureaux in ten countries, business information bureaux in four countries and transaction processing, mainly in France Credit Services sales...

  • Page 31
    ...'s leading banks. Demand for fraud prevention solutions continues to accelerate with, for example, material new multi-year, multi-million euro client wins in Spain. Marketing Solutions Includes business strategies, data integrity (QAS) and other marketing services around the world Sales increased...

  • Page 32
    ... | Business review | Governance | Financial statements Financial review Demerger On 10 October 2006, the separation of Experian Group Limited and Home Retail Group was completed by way of demerger. As part of the demerger, Experian Group Limited became the ultimate holding company of GUS plc. The...

  • Page 33
    ...is not comparable with the current year's. The reported net interest line benefits from a credit to interest of $16m relating to the excess of the expected return on pension assets over the interest on pension liabilities (2006: $9m). At 31 March 2007, Experian had net debt of $1,408m, including the...

  • Page 34
    ... on early vesting and modification of share awards at demerger of Experian and Home Retail Group Other costs incurred relating to the demerger of Experian and Home Retail Group Costs incurred in the closure of UK Account Processing Loss on disposal of businesses Gain arising in associate on the...

  • Page 35
    ... items Amortisation of acquisition intangibles Goodwill adjustment Charges for demerger-related equity incentive plans Financing fair value remeasurements Tax expense of associates Profit before tax (162) (76) (14) (24) (35) (9) 394 (7) (66) (2) (2) 550 Experian Annual Report 2007 | 33

  • Page 36
    Introduction | Business review | Governance | Financial statements Financial review cont. Reconciliation of sales and EBIT by business segment 12 months to 31 March 2007 $m 2006 $m Total growth4 Organic growth4 Sales Credit Services Decision Analytics Marketing Solutions Interactive Total - ...

  • Page 37
    ... government affairs departments work closely with senior management to adopt strategies to educate lawmakers and influence the public policy debate where appropriate around the world. Technology There could be security breaches of Experian's systems and processes or our systems could fail. Our data...

  • Page 38
    ... the principal contacts for the Head of Global CR to share information about relevant risks and opportunities, develop initiatives and report performance. Experian is currently listed in the FTSE4Good Index. We have produced a comprehensive CR Report online (accessible via the Company website and at...

  • Page 39
    ... member of the business and finance community, we have sponsored the UK National Debtline and the Citizens Advice service and the Money Advice service in Scotland. In the US we support Call for Action and the National Consumer's League of Identity Theft Hotline. Experian Annual Report 2007...

  • Page 40
    ... as Chief Executive Officer of Experian Group. Don Robert joined the Board of the former GUS plc in April 2005. His other business appointments include Director of First Advantage Corporation, member of the Chapman University Board of Counsellors and past Chairman of the Consumer Data Industry...

  • Page 41
    ...GUS plc from February 1997 until its demerger in October 2006. He is now a Non-Executive Director of Burberry Group plc and Reckitt Benckiser plc. He is a Fellow of the Chartered Institute of Management Accountants and a Member of the Association of Corporate Treasurers. Experian Annual Report 2007...

  • Page 42
    ...Experian Finance plc) separated its Experian business from its Home Retail Group business by way of demerger. As part of the demerger, Experian Group Limited became the ultimate holding company of GUS plc and related subsidiaries and shares in GUS plc ceased to be listed on the London Stock Exchange...

  • Page 43
    ...appointed will be proposed at the Annual General Meeting. By Order of the Board Charles Brown Company Secretary 22 May 2007 Corporate Headquarters: Newenham House Northern Cross Malahide Road Dublin 17 Registered Office: 22 Grenville Street St Helier Jersey JE4 8PX Experian Annual Report 2007 | 41

  • Page 44
    ... for the Board include: • Approval of interim and annual financial statements. • Treasury policies. • Internal controls and risk management. • Succession planning. • Corporate responsibility. The division of responsibilities between the Chairman and the Chief Executive Officer is clearly...

  • Page 45
    ...-executive directors, including the Chairman, are available for inspection by any person at the Company's registered office during normal business hours and at the Annual General Meeting (for 15 minutes prior to the meeting and during the meeting). Board committees The Board has appointed a number...

  • Page 46
    ... from listing to 31 March 2007, the Committee met twice. The Company Secretary is the Secretary to the Committee and the Group HR Director and Global Head of Reward usually attend. The application of corporate governance principles in relation to directors' remuneration is described in the report on...

  • Page 47
    ... Corporate Governance Committee are John Peace (Chairman), Don Robert (Chief Executive Officer), Sir Alan Rudge (the senior independent director) and Charles Brown (Company Secretary). Accountability and Audit The Board acknowledges that it is responsible for the Group's system of internal control...

  • Page 48
    ... this through its Annual and Interim Reports, at the Annual General Meeting ("AGM") and through the processes described below. Although most shareholder contact is with the Chief Executive Officer and the Chief Financial Officer, supported by management specialising in investor relations, it is the...

  • Page 49
    ... from the Company Secretary and are also published on the Group's website www.experiangroup.com. 1.2 Membership and meetings Since the date of demerger of GUS plc, the Remuneration Committee has comprised the following non-executive directors: Roger Davis (Chairman, appointed 1 January 2007) Fabiola...

  • Page 50
    ...: Element (a) Base salary Purpose - Reflects the competitive market salary level for the individual and their role. - Takes account of personal contribution, skill and performance. - Rewards the achievement of annual financial targets. - Provides opportunity to re-invest bonus in Experian shares...

  • Page 51
    ... Alliance Data Systems Bisys Group Capita Group Choicepoint Dun & Bradstreet Equifax Fair Isaac Fidelity National Financial Fimalac First American First Data Fiserv Global Payments Harte-Hanks IAC/Interactive Corp Moodys Reuters Group Thomson Total System Services Experian Annual Report 2007 | 49

  • Page 52
    ...| Financial statements Report on directors' remuneration cont. This bespoke comparator group consists of Experian's main competitors in the business areas and countries in which the Group operates. This part of the award will not vest if Experian's total shareholder return (defined as share price...

  • Page 53
    ... and retain high calibre non-executives. • Remuneration should be a combination of cash fees (paid quarterly) and Experian shares (bought annually in the first quarter of the financial year). • Non-executive directors are obliged to comply with a shareholding requirement explained below. Any...

  • Page 54
    ...the Company has met the cost of the tax payment on his taxable travel expenses where applicable. 7. David Tyler was appointed to the Board of Experian Group Limited on 6 July 2006. Until 31 March 2007, he was Group Finance Director of GUS plc. The figures in this table represent his salary, benefits...

  • Page 55
    ... regulatory reasons. Options granted to Don Robert prior to his date of appointment to the Board of GUS in April 2005 were granted under the GUS North America Stock Option Plan. The 2005 and 2006 grants were made under the GUS Executive Share Option Scheme. David Tyler was eligible to exchange his...

  • Page 56
    Introduction | Business review | Governance | Financial statements Report on directors' remuneration cont. The GUS exercise prices represent the average of the middle market quotations of a GUS share as derived from the Daily Official List of The London Stock Exchange for the three immediately ...

  • Page 57
    ... times salary were made to executive directors on demerger in October 2006. Both awards are outlined below. For awards granted under the rolled over GUS Performance Share Plan awards the performance condition is based on Total Shareholder Return (TSR) against the comparator group adopted by Experian...

  • Page 58
    ... employment. No further awards will be made under the Reinvestment Plan. For the year ending 31 March 2007, Don Robert and Paul Brooks received a bonus of 72 per cent of base salary and chose to invest the whole of their bonus under the GUS North America Co-investment plan. The invested shares...

  • Page 59
    ... benefits payable from 1 April 2007. Six former directors of GUS plc have been receiving unfunded pensions from the Company for a number of years. At demerger, the pensions of three of the former directors were transferred to the SURBS that provides security for the unfunded pensions of executives...

  • Page 60
    ... or debentures of the Company's subsidiaries. Experian Group Limited 31 March 2007 GUS shares at 10 October 2006 Chairman John Peace Executive directors Don Robert(2) Paul Brooks(2) Non-executive directors Fabiola Arredondo Laurence Danon Roger Davis Alan Jebson Sir Alan Rudge David Tyler Notes...

  • Page 61
    ... International Financial Reporting Standards (IFRSs) as adopted by the European Union, and for preparing the Company financial statements and the Report on Directors' Remuneration in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting...

  • Page 62
    Introduction | Business review | Governance | Financial statements Group income statement for the year ended 31 March 2007 2007 2006 (Represented) (Note 2) US$m 3,064 (1,507) 1,557 (272) (699) (971) 586 146 (248) (102) 66 550 (92) 458 606 1,064 Notes Revenue Cost of sales Gross profit Distribution...

  • Page 63
    ... balance sheet at 31 March 2007 2007 2006 (Represented) (Note 2) US$m Notes Non-current assets Goodwill Other intangible assets Property, plant and equipment Investment in associates Deferred tax assets Retirement benefit assets Trade and other receivables Other financial assets US$m 13 14 15...

  • Page 64
    ... | Business review | Governance | Financial statements Group statement of recognised income and expense for the year ended 31 March 2007 2007 2006 (Represented) (Note 2) US$m US$m Net income/(expense) recognised directly in equity Cash flow hedges Net investment hedge Reversal of Home Retail Group...

  • Page 65
    ... in debt Debt held by Home Retail Group at demerger Exchange and other movements (including movements in respect of debt) Net debt at the end of the financial year (note 22) 2007 US$m (3,437) 495 1,427 435 (328) (1,408) 2006 US$m (2,688) (349) (658) - 258 (3,437) Experian Annual Report 2007 | 63

  • Page 66
    ... Home Retail Group was completed by way of demerger. As part of the demerger, Experian Group Limited became the ultimate holding company of GUS plc and related subsidiaries and shares in GUS plc ceased to be listed on the London Stock Exchange on 6 October 2006. Trading of shares in Experian Group...

  • Page 67
    ... of value added tax and other sales taxes, rebates and discounts, including the provision and processing of data, subscriptions to services, software and database customisation and development and the sale of software licences, maintenance and related consulting services. Revenue in respect of the...

  • Page 68
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 2. Basis of preparation and significant accounting policies (continued) On consolidation, exchange differences arising from the translation of the net investment in...

  • Page 69
    ... of 20 years. Trade names Legally protected or otherwise separable trade names acquired as part of a business combination are capitalised at fair value on acquisition and amortised on a straight line basis over three to eight years based on management's expectations to retain trade names within the...

  • Page 70
    Introduction | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 2. Basis of preparation and significant accounting policies (continued) Accounting for derivative financial instruments and hedging activities The Group uses ...

  • Page 71
    ... hedging and risk management strategies pursued for the years then ended reflected this. Policies adopted since demerger reflect the significance of its US Dollar operations. Market risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk, primarily with...

  • Page 72
    Introduction | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 2. Basis of preparation and significant accounting policies (continued) Deferred tax Deferred tax is provided in full on temporary differences arising between...

  • Page 73
    ... for internal management purposes by geographical segment. The allocation is made to those CGUs or groups of CGUs that are expected to benefit from the business combination in which the goodwill arose. The Group tests goodwill for impairment annually or more frequently if events or changes in...

  • Page 74
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 2. Basis of preparation and significant accounting policies (continued). Share-based payments The Group has a number of equity settled share-based payment arrangements...

  • Page 75
    .... Secondary reporting format for Experian - business segments Experian operates across four key business segments: • Credit Services; • Decision Analytics; • Marketing Solutions; and • Interactive. In addition unallocated corporate head office costs, which include costs arising from finance...

  • Page 76
    Introduction | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 3. Segmental information (continued) Geographical segments (a) Income statement Year ended 31 March 2007 Continuing operations Americas US$m Revenue1 Total ...

  • Page 77
    ... 2007 Total segment assets Less: segment liabilities Segment net assets Net debt Tax Group net assets 2,776 (535) 2,241 Segment net assets for Central activities represents corporate head office balances including retirement benefit assets and derivative assets and liabilities. (c) Other Americas...

  • Page 78
    ... segments, Home Retail Group, principally operated in the UK & Ireland geographical segment. Discontinued operations include the results of Homebase for the year ended 28 February 2006. Additional information on discontinued operations is shown in note 10. 2. 3. 76 | Experian Annual Report 2007

  • Page 79
    ... 2006 Total segment assets Less: segment liabilities Segment net assets Net debt Tax Group net assets 2,727 (503) 2,224 Segment net assets for Central activities represents corporate head office balances including retirement benefit assets and derivative assets and liabilities. (c) Other Americas...

  • Page 80
    ... information on discontinued operations is given in note 10. 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. 78 | Experian Annual Report 2007

  • Page 81
    ... comprise the businesses Home Retail Group, Burberry and Lewis which were all individual segments. Discontinued operations include the results of Homebase for the year ended 28 February 2006. Additional information on discontinued operations is given in note 10. Experian Annual Report 2007 | 79

  • Page 82
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 3. Segmental information (continued) 2007 US$m 2006 US$m (b) Total segment assets Continuing operations Credit Services Decision Analytics Marketing Solutions Interactive...

  • Page 83
    ...for non-audit services are set out in the corporate governance statement on page 45. 6. Employee benefit costs and employee numbers (a) The aggregate employee costs for the continuing operations of the Group comprise: Notes Wages and salaries Social security costs Share-based payments Pension costs...

  • Page 84
    ... Home Retail Group comprise 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 2007. In April 2006, Experian announced the phased withdrawal from large scale credit card and loan account processing...

  • Page 85
    ... in Benchmark PBT 146 (35) 111 102 (2) 100 (c) Financing fair value remeasurements included in net financing costs comprise: Financing fair value gains Financing fair value losses Charge in respect of financing fair value remeasurements 7 (42) (35) 28 (30) (2) Experian Annual Report 2007 | 83

  • Page 86
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 9. Tax expense 2007 US$m (a) Analysis of expense recognised in the Group Income statement Current taxation: UK Corporation tax on income for the year Adjustments in...

  • Page 87
    ... assets of Home Retail Group were distributed by way of a dividend in specie. As a result, these operations have been reclassified as discontinued. The tax charge in respect of disposals related to taxation assets no longer recoverable following earlier disposals. Experian Annual Report 2007 | 85

  • Page 88
    ... in specie. The dividends in respect of the year ended 31 March 2006 were received by shareholders of GUS plc. The final dividend paid in August 2006 and the dividend in specie relating to the demerger of Home Retail Group were received by shareholders of GUS plc. 86 | Experian Annual Report 2007

  • Page 89
    ... the year ended 31 March 2007 includes Ordinary shares of GUS plc in issue to the date of the demerger and the Ordinary shares of the Company in issue thereafter. The weighted average number of Ordinary shares in issue during the year ended 31 March 2006 comprises Ordinary shares of GUS plc in issue...

  • Page 90
    ... | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 13. Goodwill Experian US$m At 1 April 2006 Differences on exchange Additions through business combinations (note 30 (a)) Reduction in goodwill relating to tax losses Demerger of Home Retail...

  • Page 91
    ...licences, trade names, customer relationships and completed technology. 15. Property, plant and equipment Freehold properties US$m Cost At 1 April 2006 Differences on exchange Additions through business combinations (note 30 (a)) Additions Transfers between assets Demerger of Home Retail Group (note...

  • Page 92
    ... for a maximum period of 24 months following First American Corporation giving notice. The impairment of trade or other receivables of US$7m in the year ended 31 March 2006 related to AA GUS Financial Services NV, an associated undertaking of Home Retail Group. 90 | Experian Annual Report 2007

  • Page 93
    ... other payables Current 2007 US$m Trade creditors VAT and other taxes payable Social security costs Accruals Other creditors 193 42 75 653 68 1,031 The analysis of the maturity profile for financial liabilities included within non-current items is given in note 26. Experian Annual Report 2007 2006...

  • Page 94
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 21. Loans and borrowings Current 2007 US$m 548m 4.125% Euronotes 2007 £350m 6.375% Eurobonds 2009 £334m 5.625% Euronotes 2013 Perpetual Securities (issued by Home Retail...

  • Page 95
    ... the 'GUS Money Purchase Pension Plan') which is a defined contribution scheme. In North America, benefits are determined in accordance with local practice and regulations and funding is provided accordingly. There are no other material pension arrangements. Experian Annual Report 2007 | 93

  • Page 96
    ...forms part of the dividend in specie on the demerger of Home Retail Group. The curtailment gain arises from the restructuring of the UK Account Processing and the UK Marketing Solutions businesses, as well as the cessation of certain corporate functions in GUS plc. 94 | Experian Annual Report 2007

  • Page 97
    ... benefit asset recognised in the Group balance sheet were as follows: UK 2007 US$m At 1 April Reclassification of obligation Other charge to profit and loss account reserve in respect of the Argos Pension Scheme Liabilities disposed with the sale of overseas businesses Differences on exchange...

  • Page 98
    ... and US$56m (2006: US$69m) in respect of the Group's unfunded arrangements. (vii) Changes in the market value of the plan assets are as follows: 2007 US$m Opening market value of plan assets Demerger of Home Retail Group Pension assets disposed with the sale of overseas businesses Expected return...

  • Page 99
    ... US$17m and the annual UK current service cost would decrease/increase by approximately US$1m. The discount rate is based on the market yields on high quality corporate bonds of equivalent currency and term to the defined benefit obligations. The IAS 19 valuation assumes that mortality will...

  • Page 100
    Introduction | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 24. Retirement benefit assets/obligations (continued) (a) Defined Benefit Schemes (continued) (ix) The assets of the Group's defined benefit schemes and the ...

  • Page 101
    ... is based on a comparison of the contractual and year end exchange rates. The fair values of other derivative financial instruments are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at the year end. Experian Annual Report 2007 | 99

  • Page 102
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 26 Financial instruments (a) Fair values of financial assets and liabilities Set out below is a comparison of carrying values and fair values of the Group's financial...

  • Page 103
    ...from this analysis. Analysed by currency: 2007 US$m 955 331 364 44 1,694 2006 US$m 1,415 315 392 42 2,164 2006 US$m 387 517 1,260 2,164 Sterling US Dollar Euro Other Analysed by interest rate profile: 2007 US$m 775 221 698 1,694 Floating Fixed Non-interest bearing Experian Annual Report 2007...

  • Page 104
    ... | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 26 (c) (i) Financial instruments (continued) Additional information on financial liabilities The contractual repricing dates of liabilities exposed to interest rate risk...

  • Page 105
    ... rate swaps1 Other At 31 March 2006 Loans and borrowings Effect of interest rate swaps1 Other Floating US$m 1,603 825 13 2,441 Fixed US$m 2,289 (825) 122 1,586 Total US$m 3,892 - 2,185 6,077 1. These represent the gross notional value of interest rate swaps. Experian Annual Report 2007 | 103

  • Page 106
    Introduction | Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 26 Financial instruments (continued) (c) Additional information on financial liabilities (continued) (iv) Analysis of financial liabilities by maturity ...

  • Page 107
    ... US$m At 1 April 2006 Differences on exchange Income statement charge Acquisition of subsidiaries Demerger of Home Retail Group (note 30(b)) Transfers Tax credited/(charged) to equity Other movements At 31 March 2007 6 - (1) - (2) - - - 3 Share option and award Intangibles schemes US$m US$m 164...

  • Page 108
    ... of Experian and Home Retail Group was completed by way of demerger. As part of the demerger, Experian Group Limited became the ultimate holding company of GUS plc and related subsidiaries and shares in GUS plc ceased to be listed on the London Stock Exchange on 6 October 2006. Trading of shares in...

  • Page 109
    ... of GUS plc capital GUS plc shares shown at Experian Group Limited nominal value Balances in Experian Group Limited at 1 April 2005 Profit for the financial year Net income/(expense) recognised directly in equity for the financial year Employee share option schemes: - value of employee services...

  • Page 110
    ... Relinquishment of Home Retail Group shares to employees and Home Retail Group Net income recognised directly in equity for the financial year Balance at 31 March 2007 Year ended 31 March 2006 Balances in GUS plc Group at 1 April 2005 Creation of merger reserve Balances in Experian Group Limited at...

  • Page 111
    ...the Group cash flow statement 2007 US$m (a) Cash generated from operations Profit after tax Adjustments for: Tax expense Share of post tax profits of associates Net financing costs Operating profit Loss on sale of property, plant and equipment Depreciation and amortisation Goodwill adjustment Charge...

  • Page 112
    ... of Home Retail Group (a) Acquisitions for the year ended 31 March 2007 During the year ended 31 March 2007, the Group made several acquisitions, none of which are considered individually material to the Group, including Eiger Systems a leading provider of bank validation/payment software in the UK...

  • Page 113
    ...and 4 years n/a n/a 10 years Share distribution 5% Market price over the 3 dealing days preceding the grant Three day averages are calculated by taking middle market quotations of an Experian Group Limited share from the London Stock Exchange daily official list. Experian Annual Report 2007 | 111

  • Page 114
    ... middle market quotations of a GUS plc share from the London Stock Exchange daily official list. Weighted average share price 2007 £ 2006 £ n/a n/a 9.32 2. 3. (ii) Weighted average share price of Experian Group Limited 1 GUS plc share price at demerger Weighted average share price of GUS plc...

  • Page 115
    31. Share-based payment arrangements (continued) Risk-free rate - Rates are obtained from the UK Government Debt Management Office website which details historical prices and yields for gilt strips. Expected option life to exercise: Experian Share Option Plans - The Experian Share Option Plans vest ...

  • Page 116
    ... have been rolled-over into Experian demerger plans, the 2007 inputs for share price at grant date and exercise price have been rebased to be comparable with the Experian Group Limited share price at demerger and reflect the consequent changes to option terms. Experian Annual Report 2007 114 |

  • Page 117
    ... volatility for Experian Group Limited. The fair value of awards was calculated as 52.3% of the weighted average share price for Experian Group Limited's first day of trading on the London Stock Exchange. The condition is applied to half of the awarded shares. 2. Experian Annual Report 2007 | 115

  • Page 118
    .... (ii) Information relating to share grant valuation techniques The majority of the grants were made on Experian Group Limited shares' first day of trading on the London Stock Exchange and trading was particularly volatile on this day. The weighted average share price for that day's trading is being...

  • Page 119
    ...) Number of options m 2007 Share awards in respect of shares in GUS plc outstanding at the beginning of the year New grants Vesting Awards in respect of shares in GUS plc at demerger Less awards rolled-over into Home Retail Group share plans GUS share awards to Experian participants at demerger...

  • Page 120
    ...| Business review | Governance | Financial statements Notes to the Group financial statements for the year ended 31 March 2007 31. Share-based payment arrangements (continued) (e) Summary of the total cost of share-based compensation in respect of Ordinary shares 2007 US$m Share option awards Share...

  • Page 121
    ... Since the demerger, the Group has charged US$0.3m to Home Retail Group in respect of these services. Since the date of demerger Experian has made sales of US$10m to Home Retail Group companies on normal commercial terms. Key management personnel Remuneration of key management personnel is disclosed...

  • Page 122
    ... and the related notes. These Group financial statements have been prepared under the accounting policies set out therein. We have reported separately on the parent company financial statements of Experian Group Limited for the period ended 31 March 2007. Respective responsibilities of directors and...

  • Page 123
    ... for the financial period E K C D £m (13.0) (13.0) 8.7 0.1 (4.2) - (4.2) The Company has no recognised gains and losses other than those included in the profit and loss account and therefore no separate statement of total recognised gains and losses has been presented. Experian Annual Report 2007...

  • Page 124
    ... Share premium account Profit and loss account Total equity shareholders' funds J J K 54.7 773.8 5,061.2 5,889.7 The financial statements on pages 121 to 132 were approved by the Board of Directors on 22 May 2007 and were signed on its behalf by: John Peace Director 122 | Experian Annual Report...

  • Page 125
    ... Experian Group, whose principal activity is business services. The shares of the Company are listed on the London Stock Exchange's market for listed securities (the 'London Stock Exchange') and trading in these shares commenced on 11 October 2006. B. Basis of preparation and significant accounting...

  • Page 126
    Introduction | Business review | Governance | Financial statements Notes to the parent company financial statements for the period ended 31 March 2007 B. Basis of preparation and significant accounting policies (continued) ESOP Trust shares The Experian Group Limited Employee Share Trust ('the ...

  • Page 127
    ... by the nature of its income and expenditure in subsequent accounting periods, and could be affected by changes in tax law. (iii) Tax effect of exceptional items The exceptional items included within the Company's expenses are not deductible for tax purposes. Experian Annual Report 2007 | 125

  • Page 128
    ...undertakings comprised the transfer of GUS plc and its subsidiary undertakings as part of the demerger process. (ii) (iii) Disposals comprised £3,497.6m in respect of the distribution of shares in Home Retail Group to the Company's shareholders by way of dividend in specie and a capital reduction...

  • Page 129
    .... J. Share capital and share premium Number of Ordinary shares of US 10 cents m At 30 June 2006 on incorporation Issued on demerger of Home Retail Group Capital reduction on 6 October 2006 Issued by way of Global Offer Global offer issuance costs Allotted under share option schemes At 31 March 2007...

  • Page 130
    ....4m were paid to those Experian Group Limited shareholders who did not elect to receive dividends under the Income Access Share ('IAS') arrangements. In total £28.5m of dividends were paid in the post demerger period of which £8.1m was paid by Experian Finance plc (formerly GUS plc) under the IAS...

  • Page 131
    ... been purchased by the Experian Group Limited Employee Share Trust to meet obligations under this plan. These awards include those granted to directors, further details of which are contained in the report on directors' remuneration on page 56. During the period ended 31 March 2007, 763,972 Ordinary...

  • Page 132
    Introduction | Business review | Governance | Financial statements Notes to the parent company financial statements for the period ended 31 March 2007 N. Share options and awards (continued) (v) Options under the Experian Share Option Plan Unexercised options granted under this scheme in respect ...

  • Page 133
    ...in the report on directors' remuneration on page 54. In addition 309,628 Ordinary shares were issued in connection with a savings based share scheme in the United States. (viii) Awards under the Experian UK Approved All-Employee Plan/Free Share Plan During the period ended 31 March 2007, awards were...

  • Page 134
    ... Finance plc (formerly GUS plc) Experian Holdings Limited Experian Limited ClarityBlue Limited QAS Limited Experian A/S Experian Holdings France S.A. CreditInform AS Experian North America, Inc. ConsumerInfo.com PriceGrabber.com LowerMyBills.com Experian Information Solutions Inc. Experian Services...

  • Page 135
    ... Limited We have audited the parent company financial statements of Experian Group Limited for the period ended 31 March 2007 which comprise the parent company balance sheet, the parent company profit and loss account and the related notes and those parts of the report on directors' remuneration...

  • Page 136
    ... As reported in the Annual Report and Financial Statements of GUS plc at 31 March 2006, represented in US$ at the exchange rate prevailing at 31 March 2006. Extracted from the balance sheet information at 31 March 2006, contained in the 2007 Preliminary Announcement of Home Retail Group plc issued...

  • Page 137
    ...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...

  • Page 138
    ... F: +44 (0) 115 934 4905 Experian 475 Anton Blvd. Costa Mesa CA 92626 United States T: +1 714 830 7000 F: +1 714 830 2449 Corporate Responsibility Report www.experiancrreport.com This comprehensive online report explains Experian's CR strategy and how we are managing our responsibilities in six key...