Experian 2008 Annual Report Download - page 27

25Experian Annual Report 2008
Financial statements 65 – 144
Governance 38 – 64
Introduction 2 – 5
Business review Financial review Business review Financial review
Net financing costs
At US$127m, net financing costs
excluding financing fair value
remeasurements were US$16m higher
than last year. The net interest expense
for the year ended 31 March 2008 reflects
the funding cost of the significant
acquisitions in the year.
That factor together with the changes
in capital structure resulting from the
settling of intra-group lending prior to
the demerger, the demerger itself and the
IPO mean that the prior year’s interest
expense is not directly comparable with
that for the current year. The reported net
interest expense benefits from a credit to
interest of US$23m relating to the excess
of the expected return on pension assets
over the interest on pension liabilities
(2007: US$16m).
Exceptional items
In January 2008, the Group
announced that it was launching
a programme of significant cost-
efficiency measures. Identified
efficiencies include offshoring of
development activity, restructuring of
core credit and marketing activities
and infrastructure consolidation.
Following the identification of
additional opportunities this
programme is expected to deliver
annualised cost savings in the region
of US$110m, of which approximately
US$50m is expected to be realised in
the year ending 31 March 2009. One-off
restructuring costs associated with
achieving these cost savings will be in
the region of US$140m, the majority
of which will be cash costs. Costs
of US$60m have been recognised
in the year in connection with this
programme with a related cash
outflow of US$18m. Of this charge,
US$36m related to redundancy
costs, US$12m related to asset
write-offs, and US$12m related to
other restructuring and infrastructure
consolidation costs.
Costs relating to the demerger of
Experian and 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
and, in the year ended 31 March 2007, a
charge of US$23m on the early vesting
and modification of share awards.
Other exceptional items are those
arising from the profit or loss on
disposal of businesses or closure of
material business units.
Other non-GAAP measures
IFRS requires that, on acquisition, specific
intangible assets are identified and
recognised separately from goodwill and
then amortised over their useful economic
lives. These include items such as brand
names and customer lists, to which value
is first attributed at the time of acquisition.
The Group has excluded amortisation
of these acquisition intangibles from its
definition of Benchmark PBT because
such a charge is based on uncertain
judgements about their value and
economic life.
A goodwill adjustment of US$2m
arose in accordance with IFRS 3
‘Business Combinations’ following
the recognition of a benefit in respect
of previously unrecognised tax losses
relating to prior year acquisitions. The
corresponding tax benefit reduced the
tax charge in the year by US$2m. The
equivalent adjustment in the prior year
was US$14m.
Charges in respect of demerger-
related equity incentive plans relate
to one-off grants made to senior
management and all other staff
levels at the time of demerger under
a number of equity incentive plans.
The cost of these one-off grants is
being charged to the Group income
statement over the five years following
the demerger, but excluded from the
definition of Benchmark PBT. The cost
of all other grants is being charged
to the Group income statement
and included in the definition of
Benchmark PBT.
Exceptional and other non-GAAP measures 2008 2007
US$m US$m
Exceptional items
Restructuring costs 60 –
Demerger related costs 6 149
Closure of UK account processing (2) 26
Net gain on disposal of businesses (1) (13)
Total exceptional items 63 162
Other non-GAAP measures
Amortisation of acquisition intangibles 121 76
Goodwill adjustment 2 14
Charges in respect of the demerger-related equity incentive plans 49 24
Financing fair value remeasurements 29 35
Total other non-GAAP measures 201 149