Notes to the Group financial statements

for the year ended 31 March 2009

25. Other financial assets and liabilities

(a) The analysis of other financial assets and liabilities disclosed in the Group balance sheet is as follows:

Other financial assets	Current 2009 US$m	Non-current 2009 US$m	Current 2008 US$m	Non-current 2008 US$m
Bank deposits	–	29	–	–
Derivative financial instruments: Fair value hedge of borrowings – interest rate swaps	14	32	–	24
Derivatives used for hedging	14	32	–	24
Non-hedging derivatives - interest rate swaps	–	–	2	–
Non-hedging derivatives - foreign exchange contracts	7	–	4	–
Assets at fair value through the profit and loss account	7	–	6	–
Derivative financial instruments	21	32	6	24
Total other financial assets	21	61	6	24

The bank deposits included above comprise an amount held as collateral against one of the Group’s derivative contracts.

Other financial liabilities	Current 2009 US$m	Non-current 2009 US$m	Current 2008 US$m	Non-current 2008 US$m
Derivative financial instruments: Fair value hedge of borrowings – interest rate swaps	–	–	–	20
Derivatives used for hedging	–	–	–	20
Non-hedging derivatives – equity swaps	1	1	16	5
Non-hedging derivatives – foreign exchange contracts	12	–	32	–
Non-hedging derivatives – interest rate swaps	9	74	2	66
Liabilities at fair value through the profit and loss account	22	75	50	71
Derivative financial instruments	22	75	50	91
Put option in respect of acquisition of Serasa minority interest	–	424	–	583
Total other financial liabilities	22	499	50	674

The accounting policies for financial instruments set out in note 2 have been applied as appropriate to the above items.

There is no material difference between the fair values of these assets and liabilities and the book values stated above.

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.

(b) The fair value and notional principal amounts at the balance sheet dates in respect of the Group’s derivative financial instruments are as follows:

	2009				2008
	Financial assets		Financial liabilities		Financial assets		Financial liabilities
	Fair value US$m	Notional US$m	Fair value US$m	Notional US$m	Fair value US$m	Notional US$m	Fair value US$m	Notional US$m
Interest rate swaps	46	770	83	1,570	26	977	88	3,443
Equity swaps	–	29	2	11	–	–	21	72
Foreign exchange contracts	7	262	12	380	4	296	32	1,223
	53	1,061	97	1,961	30	1,273	141	4,738

At 31 March 2009	Less than 1 year US$m	1 – 2 years US$m	2 – 3 years US$m	3 – 4 years US$m	4 – 5 years US$m	Over 5 years US$m	Total US$m
Settled on a net basis:
Interest rate swaps	14	22	11	–	(5)	–	42
Equity swaps	1	1	–	–	–	–	2
	15	23	11	–	(5)	–	44
Settled on a gross basis – foreign exchange contracts	642	–	–	–	–	–	642
	657	23	11	–	(5)	–	686

At 31 March 2008	Less than 1 year US$m	1 – 2 years US$m	2 – 3 years US$m	3 – 4 years US$m	4 – 5 years US$m	Over 5 years US$m	Total US$m
Settled on a net basis:
Interest rate swaps	15	(5)	15	13	12	12	62
Equity swaps	19	5	2	–	–	–	26
	34	–	17	13	12	12	88
Settled on a gross basis – foreign exchange contracts	1,223	–	–	–	–	–	1,223
	1,257	–	17	13	12	12	1,311

The table above analyses the Group’s derivative liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed are the contractual undiscounted cash outflows/(inflows) and accordingly differ from the carrying values and fair values.

(d) Fair values of other financial assets and liabilities

Fair values of derivative financial instruments are set out in note (a).

The fair value of foreign exchange contracts 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.

The put option associated with the remaining 30% stake of Serasa is recognised as a liability of US$424m at 31 March 2009 (2008: US$583m) under IAS 39. The put is valued at the higher of 95% of the equity value of Serasa or the value of Serasa based on the P/E ratio of Experian and the latest earnings of Serasa. A Monte Carlo simulation has been used to calculate the liability. The key assumptions in arriving at the value of the put are the equity value of Serasa, the future P/E ratio of Experian at the date of exercise, the respective volatilities of Experian and Serasa and the risk free rate in Brazil. It is also assumed that the put may be exercised in June 2012 and thereafter recorded as a current liability. Gains in respect of the valuation of the put option since acquisition in June 2007 have been recorded as financing fair value remeasurements and relate to a fall in the expected future Experian P/E ratio since acquisition and changes in the risk free rate in Brazil. The gain in respect of the valuation arising in the year ended 31 March 2009 was US$21m (2008: US$69m) with a currency translation gain of US$138m (2008: US$61m loss) recognised in the Group statement of recognised income and expense.

(e) Amounts recognised in the Group income statement in connection with the Group’s hedging instruments are disclosed in note 9.