Preliminary Results to 31 Mar
Experian plc
Preliminary results for the year
ended 31 March 2009
Highlights
-
Strong performance driven by the breadth of the product portfolio, the geographic diversity and the early actions on cost control.
-
Revenue, profit, EPS and cash growth delivered against exceptionally difficult market conditions.
-
Total Group revenue of US$3.9bn. Revenue from continuing activities up 8% at constant exchange rates to US$3.8bn. Organic revenue growth of 3%.
-
Good margin progression, EBIT margin from continuing activities up 50 basis points to 23.3%, excluding FARES contribution.
-
Continuing EBIT up 8% at constant exchange rates. Total EBIT of US$939m, up 3% at actual exchange rates.
-
Profit before tax from continuing operations of US$578m (2008: US$521m). Benchmark profit before tax of US$843m, up 8%.
-
Basic EPS of 48.0 US cents (2008: 43.3 US cents). Benchmark EPS of 62.3 US cents, up 8%.
-
Cost efficiency programme ahead of plan. Savings of US$80m delivered in the year and guidance for total annualised savings raised by US$20m to US$150m.
-
Cash conversion of 99%, 98% in prior year.
-
Net debt reduced by US$0.6bn to US$2.1bn.
-
Second interim dividend of 13.25 US cents per ordinary share, to give full-year dividend of 20.00 US cents per ordinary share, up 8%.
John Peace, Chairman of Experian, said:
'Experian delivered a strong financial performance in the face of extraordinary market conditions. This impressive achievement demonstrates the resilience of the business and the breadth of the portfolio, as well as our ability to adapt quickly to changed circumstances. The dividend increase announced today underscores our confidence in the prospects for the business.'
Don Robert, Chief Executive Officer of Experian, said:
'I am proud of the robust performance of Experian during the year, delivering top line organic growth, and good profit and cash performances. We also continued to invest in our business, helping to distinguish Experian competitively and positioning the business well for future growth. There is more stability today in US and UK financial services than over the past 12 months, but this has yet to translate into significant change in client behaviour, and the near-term economic outlook remains weak. While we expect little organic revenue growth in the first half, for the year as a whole our objective is again to broadly maintain margins, grow profits at constant currency and deliver strong cash flow conversion.'
Enquiries
Experian
Don Robert Chief Executive Officer +44(0)20 3042 4215
Paul Brooks Chief Financial Officer
Nadia Ridout-Jamieson Director of Investor Relations
Alex Brog Head of Media Relations
Finsbury
Rollo Head +44(0)20 7251 3801
Don Hunter
There will be a presentation today at 9.30am (UK time) 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.experianplc.com and can also be accessed live via a dial-in facility on +44 (0)20 3037 9164. 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.experianplc.com.
Experian will update on first quarter trading on 13 July 2009, when it will issue an Interim Management Statement.
See Appendix 2 for definition of non-GAAP measures used throughout this announcement and Appendix 3 for reconciliation of revenue and EBIT by geography.
As previously disclosed, the reported revenues and profits have been restated to reflect the treatment of transaction processing activities in France as a discontinued operation. In addition, there have been a number of small changes to the Group's four business segments reflecting evolving business profile and changes in the reporting structure of recent acquisitions. Notes 3 and 8 of the Group financial statements detail these changes and their impact on the financial reporting.
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
Experian performed well in 2009. Our organic revenue growth was 3%, we expanded our margins by 50 basis points to 23.3% and we delivered strong free cash flow of US$736m, up 11%. Benchmark EPS grew 8% to 62.3 US cents per ordinary share and we have raised our full-year dividend by 8% to 20.00 US cents per ordinary share.
This performance has been delivered in a challenging and uncertain environment, caused by unprecedented disruption within the global financial system. Our performance is attributable to the breadth of our business and our ability to adapt to new market conditions. We were quick to refocus our organisation towards changing client needs and to reduce our cost base. The benefits from our cost efficiency programme are exceeding our plan. We delivered US$80m of cost savings in 2009, and today we raise our expectation for total annualised savings from fiscal year 2010 onwards by US$20m to US$150m.
Global growth strategy
For now, challenges remain for some of our clients and in some of the regions in which we operate. In the US and UK, lenders remain focused on account management and collections and on addressing costs. More broadly across these two economies, rising unemployment is slowing consumer demand.
However, as the external environment begins to stabilise, our strategic focus increasingly is on nurturing, building and harvesting growth opportunities for our business. During 2009, we invested significantly in new growth opportunities, and our plan is to invest at a similar level in the year ending 31 March 2010.
Focus on data and analytics
Over the past year, Experian has further extended its industry-leading market position. Innovation is our lifeblood, and each year we fund a series of new initiatives, as well as upgrading products to keep our portfolio fresh and vital. The proportion of Group revenue arising from products developed in the past five years has steadily trended upwards and now stands at over 20%.
Over the coming year, we will fund a number of new initiatives organically, including identity theft management tools within Consumer Direct; marketing and analytical product extensions in Latin America and Asia Pacific; and value-added products in North America.
We are also highly focused on extending our geographic footprint. We are very pleased to have been awarded a provisional licence to operate a bureau in India, and over the next year we will focus on establishing our joint venture company and gathering data ahead of launch. We are also investing in new data sources to support the migration of our Spanish bureau to a positive data market and in new bureau investments in Morocco and Eastern Europe.
Drive profitable growth
The majority of our growth today stems from more established investments and our aim is to sustain this growth. Within our B2B businesses we aim to be a strategic partner to our clients, delivering value-added products, through strong sales execution, enhanced client experience and flawless delivery. Across our B2C operations, our strategy is to enhance the consumer experience and deliver greater value, while building brand equity.
We continue to see significant opportunity for growth across:
-
new geographies, such as Latin America, where the addressable market for both credit risk management and high return on investment ('RoI') marketing is large and under-penetrated;
-
new vertical markets, where we have increased our investment in UK public sector, utilities, US healthcare payments and capital markets;
-
new products, for example in scoring, risk management, fraud prevention, contact data management and customer segmentation tools.
Our success here will help offset short-term headwinds from financial services consolidation and recessionary market conditions.
Optimise capital efficiency
We remain committed to maintaining a prudent but efficient balance sheet. Net debt at the end of the year was US$2,110m, after funding capital expenditure of US$305m and acquisition spend of US$179m.
Our cash flow is typically second-half weighted and we expect net debt to remain at a similar level for the next six months, excluding any acquisition activity.
Dividend
For the year ended 31 March 2009, we have announced a second interim dividend of 13.25 US cents per share. This gives a full-year dividend of 20.00 US cents per share, up 8%, and 3.1 times covered by Benchmark EPS. The second interim dividend will be paid on 24 July 2009 to shareholders on the register at the close of business on 26 June 2009.
Our people
This has been a difficult year, one of the most challenging in our history. The consistency and strength of our performance reflects the commitment and hard work of our people, and I would like to take this opportunity to thank all our employees for their dedication, support and outstanding accomplishments over the past year.
GROUP FINANCIAL HIGHLIGHTS
Revenue and EBIT by geography
|
Year ended 31 March |
Revenue |
EBIT |
||||
|
|
2009 US$m |
2008 US$m |
Growth1 % |
2009 US$m |
2008 US$m |
Growth1 % |
|
North America |
2,083 |
2,061 |
1 |
616 |
608 |
1 |
|
Latin America |
462 |
324 |
51 |
118 |
75 |
67 |
|
UK and Ireland |
850 |
959 |
5 |
213 |
226 |
10 |
|
EMEA/Asia Pacific2 |
426 |
368 |
19 |
49 |
50 |
3 |
|
Sub total |
3,821 |
3,712 |
8 |
996 |
959 |
9 |
|
Central Activities3 |
- |
- |
- |
(57) |
(57) |
|
|
Continuing activities |
3,821 |
3,712 |
8 |
939 |
902 |
8 |
|
Discontinuing activities4 |
52 |
77 |
n/a |
- |
6 |
n/a |
|
Total |
3,873 |
3,789 |
8 |
939 |
908 |
8 |
|
|
|
|
|
|||
|
EBIT margin5 |
23.3% |
22.8% |
|
|||
|
|
|
|
|
|||
1 Total growth at constant exchange rates
2 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
3 Central Activities comprise costs of central corporate functions
4 Discontinuing activities include UK account processing, Loyalty Solutions and other smaller discontinuing activities
5 EBIT margin is for continuing business only, excluding FARES. Further analysis can be found in Appendix 1
Reconciliation of EBIT - continuing operations
|
Year ended 31 March |
|
EBIT |
||
|
|
|
|
2009 US$m |
2008 US$m |
|
EBIT from continuing operations1 |
939 |
908 |
||
|
Net interest1 |
(96) |
(125) |
||
|
Benchmark PBT |
843 |
783 |
||
|
Exceptional items1 |
(117) |
(55) |
||
|
Amortisation of acquisition intangibles |
(132) |
(121) |
||
|
Goodwill adjustment |
(1) |
(2) |
||
|
Charges for demerger-related equity incentive plans |
(32) |
(49) |
||
|
Financing fair value remeasurements |
19 |
(29) |
||
|
Tax expense on share of profits of associates |
(2) |
(6) |
||
|
Profit before tax |
578 |
521 |
||
|
Group tax expense1 |
(84) |
(91) |
||
|
Profit after tax for continuing operations |
494 |
430 |
||
|
Benchmark EPS (US cents) 1 |
62.3 |
57.5 |
||
|
Basic EPS for continuing operations (US cents) 1 |
46.8 |
41.1 |
||
|
Weighted average number of ordinary shares (million) |
1,013 |
1,009 |
||
1 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
See Appendix 1 for analysis of revenue and EBIT by principal activity and Appendix 3 for reconciliation of revenue and EBIT by geography
See Appendix 2 for definition of non-GAAP measures
NORTH AMERICA
Experian North America delivered modest organic revenue growth during a time of exceptionally challenging market conditions. There was good progress on margins, up 40 basis points, reflecting excellent delivery on cost efficiency initiatives.
|
Year ended 31 March |
2009 US$m |
2008 US$m |
Total growth1 % |
Organic |
|
Revenue |
|
|
|
|
|
- Credit Services2 |
740 |
771 |
(4) |
(5) |
|
- Decision Analytics2 |
119 |
118 |
1 |
1 |
|
- Marketing Services2 |
358 |
360 |
(1) |
(2) |
|
- Interactive2 |
866 |
812 |
7 |
7 |
|
Total North America |
2,083 |
2,061 |
1 |
1 |
|
|
|
|
|
|
|
EBIT |
|
|
|
|
|
- Direct business |
568 |
554 |
3 |
|
|
- FARES |
48 |
54 |
(11) |
|
|
Total North America |
616 |
608 |
1 |
|
|
|
|
|
|
|
|
EBIT margin3 |
27.3% |
26.9% |
|
|
1 Growth at constant exchange rates
2 2008 restated for the reclassification of certain businesses between segments, see note 3 to the Group financial statements
3 EBIT margin is for continuing business only, excluding FARES
Credit Services
Total revenue at Credit Services declined by 4%, with organic revenue down 5%. Prospecting activity by financial services clients remained weak throughout the year, due to the depressed market environment for lending. Mortgage origination revenue also declined, although there were occasional surges in volumes linked to consumer refinancing activity. These factors were partially offset by growth in account management and collections, with good traction from new countercyclical products such as bankruptcy scores and business delinquency notification services. In addition, there was a resilient performance from the automotive vertical, which benefited from market-share gains in the sale of vehicle history reports.
During the year, Experian continued to focus on strengthening its market position and on expanding into new growth verticals. In addition, through the acquisition of SearchAmerica in December 2008, Experian is extending its core data and analytics to the fast-growth healthcare payments sector.
As previously announced, Experian has discontinued efforts to launch a credit bureau in Canada. This reflects the reduced attractiveness of the opportunity following the global financial crisis, which has caused lender needs in Canada to change.
Decision Analytics
Revenue growth at Decision Analytics was 1%. There was good progress during the year across custom analytics, as well as account management, commercial lending and fraud prevention software. This helped to offset weaker demand for loan origination products. Experian further penetrated the market during the year, with a number of new business wins. In addition, Experian is developing its presence in new verticals, such as capital markets, by building relationships with lenders, ratings agencies and regulators.
Marketing Services
Total revenue at Marketing Services declined by 1%, while organic revenue declined by 2%. Recessionary conditions and cutbacks in discretionary retail spend impacted the traditional activities of list processing, data and database, which declined during the year. New media businesses delivered good growth reflecting deeper market penetration through new business wins and good retention rates.
Interactive
Revenue growth at Interactive was 7%. Consumer Direct delivered a very strong performance, with growth in excess of 20%, further extending Experian's market lead. Growth was driven by higher memberships, growth in the affinity channel, plus contribution from one-off data breach contracts. During the year, Experian has invested in enhancing the value of the customer experience as well as in new product introductions, such as identity management tools.
In lead generation, Experian Interactive Media continued to experience very weak market conditions as lenders exited the market for subprime mortgage leads. Comparison shopping revenues were impacted by the weak retail environment and by adverse business mix as shoppers switched to lower value items.
Financial review
Revenue from continuing activities was US$2,083m, up 1%, with organic revenue growth of 1%.
EBIT from direct businesses was US$568m (2008: US$554m), an increase of 3% in the year, giving an EBIT margin of 27.3% (2008: 26.9%). The margin improvement reflected progress on cost efficiency initiatives, including offshoring of administrative and development roles to Chile and Costa Rica and technology efficiencies.
EBIT from FARES, the 20%-owned real estate information associate, was US$48m (2008: US$54m). The reduction reflected the very weak environment for mortgage origination.
LATIN AMERICA
There was excellent organic performance across all activities within Latin America. The strong uplift in margins reflected positive operating leverage. On EBIT, both Serasa and Informarketing exceeded their respective acquisition buy-plans.
|
Year ended 31 March |
2009 US$m |
2008 US$m |
Total growth1 % |
Organic growth1 |
|
Revenue |
|
|
|
|
|
- Credit Services |
437 |
305 |
51 |
17 |
|
- Decision Analytics |
10 |
8 |
31 |
31 |
|
- Marketing Services |
15 |
10 |
56 |
56 |
|
Total Latin America |
462 |
324 |
51 |
18 |
|
|
|
|
|
|
|
EBIT |
|
|
|
|
|
Total Latin America |
118 |
75 |
67 |
|
|
|
|
|
|
|
|
EBIT margin |
25.5% |
23.1% |
|
|
1 Growth at constant exchange rates
Credit Services
There was strong growth in Credit Services in Brazil. Total revenue increased by 51% at constant exchange rates. Organic revenue growth was 17%, following the annualisation of the acquisition of Serasa (acquired in June 2007). While lending conditions tightened progressively during the year, revenue continued to grow strongly reflecting the relative under-penetration of credit reference products in Brazil. In consumer information, there was excellent progress across both financial and non-financial verticals, as well as a growing contribution from countercyclical products such as collection notifications. Growth at business information was driven by strong demand for richer reports, which help to better assess risk. In addition, Experian benefited from deeper inroads into the small and mid-sized channel, where penetration of credit risk management products is low.
Decision Analytics
There was a good performance at Decision Analytics, with organic revenue up 31% from a low base. Growth was driven by higher penetration of loan origination software, as well as rising demand for customer segmentation and account management tools.
Marketing Services
There was very strong growth at Marketing Services, where organic revenue increased by 56%. Growth reflected a significant increase in new business wins for data and data enhancement.
Financial review
Revenue was US$462m for Latin America, up 51% at constant exchange rates, reflecting the first full-year contribution from Serasa (Serasa was acquired in June 2007). Organic revenue growth was 18%.
EBIT in the year was US$118m, up 67% at constant exchange rates. The EBIT margin was 25.5% (2008: 23.1%). The margin improvement reflects strong positive operating leverage.
UK AND IRELAND
At constant currency, there was good progress during the year across UK and Ireland, notwithstanding exceptionally challenging market conditions for financial services clients. Performance benefited from growth in non-financial verticals, good demand for countercyclical products and further market penetration at Consumer Direct. Strong execution on cost efficiency measures helped to deliver a significant uplift in margins of 150 basis points.
|
Year ended 31 March |
2009 US$m |
2008 US$m |
Total growth1 % |
Organic growth1 |
|
Revenue |
|
|
|
|
|
- Credit Services2 |
265 |
316 |
- |
(2) |
|
- Decision Analytics |
227 |
247 |
9 |
6 |
|
- Marketing Services2 |
274 |
328 |
(2) |
(3) |
|
- Interactive |
84 |
68 |
47 |
47 |
|
Total - continuing activities |
850 |
959 |
5 |
3 |
|
Discontinuing activities3 |
52 |
65 |
n/a |
|
|
Total UK and Ireland |
902 |
1,024 |
4 |
|
|
|
|
|
|
|
|
EBIT - continuing activities |
213 |
226 |
10 |
|
|
Discontinuing activities3 |
- |
6 |
n/a |
|
|
Total UK and Ireland |
213 |
232 |
8 |
|
|
|
|
|
|
|
|
EBIT margin4 |
25.1% |
23.6% |
|
|
1 Growth at constant exchange rates
2 2008 restated for reclassification of certain businesses between segments, see note 3 to the Group financial statements
3 Discontinuing activities include UK account processing and other smaller activities. We anticipate that the closure of UK account processing will be completed in the year ending 31 March 2010
4 EBIT margin is for continuing activities only
Credit Services
The major disruption in the financial services industry during the year caused a significant reduction in lending as well as major client consolidations. Total revenue for Credit Services was flat at constant exchange rates, while organic revenue declined by 2%. The relatively modest rate of decline was reflective of growth in non-financial verticals such as public sector and utilities, growth in revenue from countercyclical initiatives and a resilient performance within business information. Strategic initiatives during the year included further investment in sales infrastructure across the public sector and utilities verticals, and re-orientation of existing sales resource towards countercyclical opportunities.
Decision Analytics
Total revenue at Decision Analytics increased by 9% at constant exchange rates, with organic revenue growth of 6%. The acquisition contribution related to Tallyman and N4 Solutions, both of which performed ahead of plan. Growth was driven by strong demand for countercyclical products, including fraud prevention and collections software, and there was good progress in non-financial verticals such as telecommunications and public sector. During the year, there were large contract wins with Anglian Water and Vanquis Bank, for example.
Marketing Services
Total revenue in Marketing Services decreased by 2% at constant exchange rates. Organic revenue declined by 3%. Traditional marketing activities were further affected by the downturn in the financial services market. New media activities performed well, with double-digit growth across contact data management, email services and online competitive intelligence. There was good strategic progress during the year across new media, with further penetration of the public sector by the Mosaic segmentation tool and enhancements to contact data tools.
Interactive
Interactive performed strongly, delivering organic revenue growth of 47%. Growth was driven by increased direct memberships, reflecting product enhancements, greater market segmentation and investment in branding and customer acquisition. Experian has also made good progress in growing indirect memberships with a number of affinity partnership wins in the year.
Financial review
Revenue from continuing activities was US$850m, up 5% at constant exchange rates. Organic revenue growth was 3%. The contribution to revenue growth from acquisitions during the period was 2%. The acquisition contribution related to Tallyman, N4 Solutions, pH Group and Hitwise.
EBIT from continuing activities was US$213m, up 10% at constant exchange rates. The EBIT margin was 25.1% (2008: 23.6%). The improvement in margin was due to strong execution on cost efficiency initiatives, including outsourcing to India, organisational delayering and technology efficiencies.
EMEA/ASIA PACIFIC
EMEA/Asia Pacific delivered a good performance during the year, reflecting solid progress within credit-related activities, and excellent performance within marketing-related activities, which have now reached critical mass. Margin dilution reflects investment across the EMEA/Asia Pacific region as well as business mix effects.
|
Year ended 31 March |
2009 US$m |
2008 US$m |
Total growth1 % |
Organic growth1 |
|
Revenue |
|
|
|
|
|
- Credit Services2 |
172 |
154 |
14 |
4 |
|
- Decision Analytics |
131 |
132 |
4 |
4 |
|
- Marketing Services |
123 |
83 |
50 |
13 |
|
Total - continuing activities |
426 |
368 |
19 |
6 |
|
Discontinuing activities3 |
- |
12 |
n/a |
|
|
Total EMEA/Asia Pacific |
426 |
380 |
15 |
|
|
|
|
|
|
|
|
EBIT - continuing activities |
49 |
50 |
3 |
|
|
Discontinuing activities3 |
- |
- |
n/a |
|
|
Total EMEA/Asia Pacific |
49 |
50 |
2 |
|
|
|
|
|
|
|
|
EBIT margin4 |
11.5% |
13.6% |
|
|
1 Growth at constant exchange rates
2 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
3 Discontinuing activities include Loyalty Solutions
4 EBIT margin is for continuing activities only
Credit Services
Total revenue for Credit Services grew 14% at constant exchange rates, with organic revenue growth of 4%. The acquisition contribution relates to KreditInform in South Africa and an increase to majority control of Experian's stake in Sinotrust in China. There was good progress across both established and emerging markets, even though conditions were tough. There were a number of important wins during the year, including a strategic win in the Netherlands to underpin growth in the automotive vertical. Experian also launched a consumer credit bureau in Morocco.
The partnership with CCB in Japan has not developed as expected and the Group is in discussions to terminate the joint venture bureau platform partnership. Experian remains committed to Japan, and plans further product launches over the coming year.
Decision Analytics
Total growth at Decision Analytics was 4% at constant exchange rates, with organic revenue growth of 4%. Despite challenging market conditions, there was good progress, with a number of significant wins during the year and a pipeline which, while slow to convert, is encouraging. Large wins included a multi-country contract for collections software from a large global bank seeking to standardise on the Experian platform, a contract from an Eastern European bank for a suite of software products, the first telecommunications win in Asia Pacific, a large analytics win in South Korea and a large collections contract in South Africa.
Marketing Services
Total Marketing Services revenue increased by 50% over the year at constant exchange rates, with organic revenue growth of 13%. The acquisition contribution related primarily to Emailing Solution, Sinotrust and Hitwise. There was excellent progress over the year, reflecting strong demand and deeper market penetration through a number of new client wins. There were wins across all product lines, including contact data, email, competitive intelligence and customer segmentation tools.
Financial review
Revenue from continuing activities was US$426m, up 19% at constant exchange rates. Organic revenue growth was 6%. The acquisition contribution relates mainly to Sinotrust and KreditInform.
EBIT from continuing activities was US$49m, up 3% at constant exchange rates, with an EBIT margin of 11.5% (2008: 13.6%). Margin dilution principally reflects increased investment across the EMEA/Asia Pacific region as well as business mix effects.
OTHER ITEMS
Balance sheet
Reported net assets amounted to US$1,899m (2008: US$2,117m), which is equivalent to US$1.87 per share (2008: US$2.09), excluding own shares held by employee trusts.
Cash flow and net debt
Experian has continued to be strongly cash generative in the year with operating cash flow of US$927m (2008: US$886m) and a cash flow conversion of 99%. Free cash flow in the year ended 31 March 2009 was US$736m compared with US$665m in 2008.
Free cash flow was used to fund acquisitions of US$179m and equity dividends of US$189m. During the year, the Group completed a number of acquisitions, including SearchAmerica, a leading provider of data and analytics to the US healthcare industry, and KreditInform, a commercial credit information and analytics provider in South Africa, and settled deferred consideration of US$59m in respect of its increased investment in Sinotrust and prior-year acquisitions. In addition, the Group purchased a 40% stake in DP Information Group, a bureau in Singapore.
On 31 October 2008, the Group received US$203m on completion of the disposal of the transaction processing business in France. At 31 March 2009, net debt was US$2,110m (2008: US$2,699m) with undrawn committed borrowing facilities of US$1,050m (2008: US$1,121m). In the year ended 31 March 2009, the related net interest expense was US$96m (2008: US$125m). This expense is stated after crediting US$17m (2008: US$23m) in respect of the expected return on pension assets less the interest on pension obligations. The decline of US$35m in the other elements of the Group's net interest expense stems from the benefit of the Group's strong cash flow performance, together with the environment of declining global interest rates.
During the year ended 31 March 2009, 6.375% Eurobonds 2009 with a par value of £147m were redeemed out of free cash flow. The balance of these Eurobonds, which was £203m at 31 March 2009, falls due for repayment in July 2009. It is expected that this will be funded by drawing on existing committed bank facilities. No other borrowings are due for repayment until July 2012.
Exceptional items - continuing operations
|
Year ended 31 March |
2009 US$m |
2008 US$m |
|
Restructuring costs1 |
92 |
52 |
|
Cessation of bureau activities |
15 |
- |
|
Demerger and related restructuring costs |
7 |
6 |
|
Closure of UK account processing |
- |
(2) |
|
Net loss/(gain) on disposal of businesses |
3 |
(1) |
|
Total exceptional items |
117 |
55 |
1 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
Exceptional restructuring expenditure of US$92m (2008: US$52m) arose in the year in connection with the Group's strategic programme of cost efficiency measures. Of this, US$51m (2008: US$34m) related to redundancy, US$34m (2008: US$6m) related to offshoring activities, infrastructure consolidations and other restructuring activities and US$7m (2008: US$12m) related to asset write-offs.
During the year Experian initiated the closure of its Canadian credit bureau and is in discussions to terminate the joint venture bureau in Japan. Charges associated with the closure of the bureaux total US$15m.
Other non-GAAP measures - continuing operations
|
Year ended 31 March |
2009 US$m |
2008 US$m |
|
Amortisation of acquisition intangibles |
132 |
121 |
|
Goodwill adjustment |
1 |
2 |
|
Charges in respect of the demerger-related equity incentive plan |
32 |
49 |
|
Financing fair value remeasurements |
(19) |
29 |
|
Total other non-GAAP measures |
146 |
201 |
See Appendix 2 for definition of non-GAAP measures
Tax
The Group's effective rate of tax for the year based on Benchmark PBT was 21.8% (2008: 23.4%). This rate is defined as the total tax expense adjusted for the tax impact of non-Benchmark items and further excluding the benefit of a one-off corporation tax credit of US$20m that relates to arrangements involving entities no longer part of the Group, divided by Benchmark PBT. The Group's cash tax rate for continuing operations (based on tax paid in the year and Benchmark PBT for continuing operations) was 4.6% (2008: 10.1%).
Earnings per share
At 31 March 2009, Experian had approximately 1,025m ordinary shares in issue (2008: 1,023m). The number of shares to be used for the purposes of calculating basic earnings per share going forward is 1,015m after deducting own shares held by employee trusts.
Basic earnings per share were 48.0 US cents (2008: 43.3 US cents), including 1.2 US cents (2008: 2.2 US cents) in respect of discontinued operations. Benchmark earnings per share increased to 62.3 US cents from 57.5 US cents last year, up 8%.
Foreign exchange
The £/US$ exchange rate moved from an average of US$2.01 in the year ended 31 March 2008 to US$1.69 in 2009. The US$/Brazilian real ('R$') exchange rate moved from an average of R$1.86 in the year ended 31 March 2008 to R$1.96 in 2009. The €/US$ exchange rate moved from an average of US$1.42 in the year ended 31 March 2008 to US$1.41 in 2009. The effect of these exchange rate changes on the results for the year is to decrease reported revenue by US$204m and EBIT by US$38m.
At 31 March 2009 the closing £/US$ exchange rate was US$1.43 (2008: US$1.99), the US$/Brazilian real exchange rate was R$2.30 (2008: R$1.75) and the closing €/US$ exchange rate was US$1.33 (2008: US$1.58).
If the spot exchange rates prevailing at 31 March 2009 remain for the whole of the year ending 31 March 2010, the adverse foreign exchange variance to Benchmark EBIT would be c.US$50m, relative to average rates in FY09.
Pension assets and obligations
There is a net pension obligation at 31 March 2009 of US$58m (2008: asset of US$132m). Further details of the movements during the year and the assumptions used in determining pension assets and obligations are included in note 16 to the Group financial statements.
Comparative financial information
As a consequence of the disposal of the Group's transaction processing activities in France in October 2008, those activities are now classified as discontinued in accordance with the definition of discontinued operations set out in IFRS 5 'Non-current assets held for sale and discontinued operations' and the comparative information given within this report has been restated as appropriate. Details of further restatements of comparative information are set out in notes 3 and 8 to the Group financial statements.
APPENDICES
1. Revenue and EBIT by principal activity
|
Year ended 31 March |
2009 US$m |
2008 US$m |
Total growth1 % |
Organic growth1 |
|
Revenue |
|
|
|
|
|
- Credit Services2,3 |
1,614 |
1,546 |
10 |
1 |
|
- Decision Analytics3 |
487 |
505 |
6 |
5 |
|
- Marketing Services3 |
770 |
781 |
5 |
- |
|
- Interactive3 |
950 |
880 |
10 |
10 |
|
Total - continuing activities |
3,821 |
3,712 |
8 |
3 |
|
Discontinuing activities4 |
52 |
77 |
n/a |
|
|
Total |
3,873 |
3,789 |
8 |
|
|
|
|
|
|
|
|
EBIT |
|
|
|
|
|
- Credit Services - direct business2,3 |
506 |
484 |
9 |
|
|
- FARES |
48 |
54 |
(11) |
|
|
- Total Credit Services |
554 |
538 |
7 |
|
|
- Decision Analytics3 |
142 |
160 |
- |
|
|
- Marketing Services3 |
88 |
69 |
34 |
|
|
- Interactive3 |
212 |
192 |
11 |
|
|
- Central Activities |
(57) |
(57) |
|
|
|
Total - continuing activities |
939 |
902 |
8 |
|
|
Discontinuing activities4 |
- |
6 |
n/a |
|
|
Total |
939 |
908 |
8 |
|
|
|
|
|
|
|
|
EBIT margin5 |
|
|
|
|
|
- Credit Services - direct business |
31.4% |
31.3% |
|
|
|
- Decision Analytics |
29.2% |
31.7% |
|
|
|
- Marketing Services |
11.4% |
8.8% |
|
|
|
- Interactive |
22.3% |
21.8% |
|
|
|
Total EBIT margin5 |
23.3% |
22.8% |
|
|
1 Growth at constant exchange rates
2 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
3 2008 restated for reclassification of certain businesses between segments, see notes 3 and 8 to the Group financial statements
4 Discontinuing activities include UK account processing, Loyalty Solutions and other smaller discontinuing activities
5 EBIT margin is for continuing business only, excluding FARES
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 tax. 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 tax. It includes the Group's share of associates' pre-tax profit.
Benchmark earnings per share ('Benchmark EPS'): Benchmark EPS represents Benchmark PBT less attributable tax 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 items gives an indication of Experian's underlying performance. Exceptional items are those arising from the profit or loss on disposal of businesses, closure costs of major business units or costs of significant restructuring programmes. 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 revenue and EBIT purposes. Prior periods, where shown, are restated to disclose separately the results of 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 a component of an entity that has either been disposed of, or is classified as held for sale, and 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 31 March 2009 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 revenue, 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 associates (including FARES).
Constant exchange rates: 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.
Operating cash flow and free cash flow: Operating cash flow is calculated as cash generated from operations adjusted for outflows in respect of the purchase of property, plant and equipment and other intangible assets and adding dividends from associates but excluding any cash inflows and outflows in respect of exceptional items. It is defined as EBIT less changes in working capital, add depreciation/amortisation, less capital expenditure, less profit retained in associates. Free cash flow is derived after further excluding net interest and tax paid together with dividends paid to minority shareholders.
Net debt: Net debt is calculated as total debt less cash and cash equivalents and other highly liquid bank deposits with maturities greater than three months. Total debt includes loans and borrowings (and the fair value of derivatives hedging loans and borrowings), overdrafts and obligations under finance leases. Accrued interest is excluded from net debt.
3. Reconciliation of revenue and EBIT by geography
|
Year ended 31 March |
2009 |
2008 |
||||
|
|
Continuing activities |
Discontinuing activities1 |
Total |
Continuing activities |
Discontinuing activities1 |
Total |
|
|
US$m |
US$m |
US$m |
US$m |
US$m |
US$m |
|
Revenue |
|
|
|
|
|
|
|
North America |
2,083 |
- |
2,083 |
2,061 |
- |
2,061 |
|
Latin America |
462 |
- |
462 |
324 |
- |
324 |
|
UK and Ireland |
850 |
52 |
902 |
959 |
65 |
1,024 |
|
EMEA/Asia Pacific2 |
426 |
- |
426 |
368 |
12 |
380 |
|
Total revenue |
3,821 |
52 |
3,873 |
3,712 |
77 |
3,789 |
|
|
|
|
|
|
|
|
|
EBIT |
|
|
|
|
|
|
|
North America - direct business |
568 |
- |
568 |
554 |
- |
554 |
|
FARES |
48 |
- |
48 |
54 |
- |
54 |
|
Total North America |
616 |
- |
616 |
608 |
- |
608 |
|
Latin America |
118 |
- |
118 |
75 |
- |
75 |
|
UK and Ireland |
213 |
- |
213 |
226 |
6 |
232 |
|
EMEA/Asia Pacific2 |
49 |
- |
49 |
50 |
- |
50 |
|
Central Activities |
(57) |
- |
(57) |
(57) |
- |
(57) |
|
Total EBIT |
939 |
- |
939 |
902 |
6 |
908 |
1 Discontinuing activities include UK account processing, Loyalty Solutions and other smaller discontinuing activities
2 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
4. Reconciliation of EBIT to operating profit for continuing operations
|
Year ended 31 March |
2009 |
|
2008 |
|
|
US$m |
|
US$m |
|
EBIT from continuing operations1 |
939 |
|
908 |
|
Net interest1 |
(96) |
|
(125) |
|
Benchmark PBT |
843 |
|
783 |
|
Exceptional items1 |
(117) |
|
(55) |
|
Amortisation of acquisition intangibles |
(132) |
|
(121) |
|
Goodwill adjustment |
(1) |
|
(2) |
|
Charges for demerger-related equity incentive plans |
(32) |
|
(49) |
|
Financing fair value remeasurements |
19 |
|
(29) |
|
Tax expense on share of profit of associates |
(2) |
|
(6) |
|
Profit before tax |
578 |
|
521 |
|
Share of post-tax profits of associates |
(42) |
|
(50) |
|
Net financing costs1 |
77 |
|
154 |
|
Operating profit |
613 |
|
625 |
1 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
5. Group cash flow summary
|
Year ended 31 March |
2009 |
|
2008 |
|
|
US$m |
|
US$m |
|
EBIT from continuing operations1 |
939 |
|
908 |
|
Depreciation and amortisation1 |
273 |
|
273 |
|
Loss on sale of fixed assets |
9 |
|
3 |
|
Capital expenditure1 |
(305) |
|
(321) |
|
Change in working capital1 |
7 |
|
18 |
|
Profit retained in associates |
(16) |
|
(17) |
|
Charge in respect of equity incentive plans within Benchmark PBT |
20 |
|
22 |
|
Operating cash flow2 |
927 |
|
886 |
|
Net interest paid1 |
(128) |
|
(131) |
|
Tax paid1 |
(39) |
|
(79) |
|
Dividends paid to minority shareholders |
(24) |
|
(11) |
|
Free cash flow |
736 |
|
665 |
|
Net cash outflow from exceptional items1 |
(102) |
|
(37) |
|
Acquisitions |
(179) |
|
(1,720) |
|
Purchase of investments in associates and available for sale financial assets Disposal of subsidiaries |
(29) 191 |
|
(9) 6 |
|
Equity dividends paid |
(189) |
|
(182) |
|
Net cash flow |
428 |
|
(1,277) |
|
Foreign exchange movements1 |
(37) |
|
17 |
|
Other financing related cash flows |
(394) |
|
776 |
|
Movement in cash and cash equivalents - continuing operations |
(3) |
|
(484) |
|
Movement in cash and cash equivalents - discontinued operations |
(17) |
|
(3) |
|
Movement in cash and cash equivalents |
(20) |
|
(487) |
1 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
2 A reconciliation of cash generated from operations as reported in the Group cash flow statement on page 23 to operating cash flow as reported above is given in note 18 to the Group financial statements
Cash conversion is defined as operating cash flow expressed as a percentage of EBIT from continuing operations
6. Reconciliation of depreciation and amortisation
|
Year ended 31 March |
2009 |
|
2008 |
|
|
US$m |
|
US$m |
|
As reported in the notes to the Group cash flow statement |
420 |
|
406 |
|
Less: amortisation of acquisition intangibles |
(132) |
|
(121) |
|
Less: exceptional asset write-off |
(15) |
|
(12) |
|
As reported above1 |
273 |
|
273 |
1 2008 restated to exclude French transaction processing activities, which are now classified as a discontinued operation
Group income statement
for the year ended 31 March 2009
|
|
|
2009 |
|
2008 |
||||||||||
|
|
|
|
|
(Restated) |
||||||||||
|
|
|
|
|
(Note 3) |
||||||||||
|
|
Notes |
US$m |
|
US$m |
||||||||||
|
Revenue |
7 |
3,873 |
|
3,789 |
||||||||||
|
Cost of sales |
|
(1,824) |
|
(1,776) |
||||||||||
|
Gross profit |
|
2,049 |
|
2,013 |
||||||||||
|
Distribution costs |
|
(387) |
|
|
(380) |
|||||||||
|
Administrative expenses |
|
(1,049) |
|
|
(1,008) |
|||||||||
|
Operating expenses |
|
(1,436) |
|
(1,388) |
||||||||||
|
Operating profit |
7 |
613 |
|
625 |
||||||||||
|
|
|
|
|
|
||||||||||
|
Finance income |
|
|
182 |
|
|
206 |
||||||||
|
Finance expense |
|
|
(259) |
|
|
(360) |
||||||||
|
Net financing costs |
10 |
(77) |
|
(154) |
||||||||||
|
|
|
|
|
|
||||||||||
|
Share of post-tax profits of associates |
|
42 |
|
50 |
||||||||||
|
Profit before tax |
7 |
578 |
|
521 |
||||||||||
|
Group tax expense |
11 |
(84) |
|
(91) |
||||||||||
|
Profit after tax for the financial year from continuing operations |
|
494 |
|
430 |
||||||||||
|
Profit for the financial year from discontinued operations |
12 |
12 |
|
22 |
||||||||||
|
Profit for the financial year |
|
506 |
|
452 |
||||||||||
|
|
|
|
|
|
||||||||||
|
Attributable to: |
|
|
|
|
||||||||||
|
Equity shareholders in the parent company |
|
486 |
|
437 |
||||||||||
|
Minority interests |
|
20 |
|
15 |
||||||||||
|
Profit for the financial year |
|
506 |
|
452 |
||||||||||
|
|
|
|
|
|
||||||||||
|
Earnings per share |
13 |
US cents |
|
US cents |
||||||||||
|
- Basic |
|
48.0 |
|
43.3 |
||||||||||
|
- Diluted |
|
47.5 |
|
42.7 |
||||||||||
|
|
|
|
|
|
||||||||||
|
Earnings per share from continuing operations |
13 |
US cents |
|
US cents |
||||||||||
|
- Basic |
|
46.8 |
|
41.1 |
||||||||||
|
- Diluted |
|
46.3 |
|
40.6 |
||||||||||
|
|
|
|
|
|
||||||||||
|
Non-GAAP measures |
||||||||||||||
|
|
|
2009 |
|
2008 |
||||||||||
|
|
|
|
|
(Restated) |
||||||||||
|
|
|
|
|
(Note 3) |
||||||||||
|
Reconciliation of profit before tax to Benchmark PBT |
Notes |
US$m |
|
US$m |
||||||||||
|
Profit before tax |
7 |
578 |
|
521 |
||||||||||
|
exclude: exceptional items |
9 |
117 |
|
55 |
||||||||||
|
exclude: amortisation of acquisition intangibles |
9 |
132 |
|
121 |
||||||||||
|
exclude: goodwill adjustment |
9 |
1 |
|
2 |
||||||||||
|
exclude: charges in respect of the demerger-related equity incentive plans |
9 |
32 |
|
49 |
||||||||||
|
exclude: financing fair value remeasurements |
9 |
(19) |
|
29 |
||||||||||
|
exclude: tax expense on share of profits of associates |
7 |
2 |
|
6 |
||||||||||
|
Benchmark PBT - continuing operations |
7 |
843 |
|
783 |
||||||||||
|
|
|
|
|
|
||||||||||
|
Benchmark earnings per share from continuing operations |
13 |
US cents |
|
US cents |
||||||||||
|
- Basic |
|
62.3 |
|
57.5 |
||||||||||
|
- Diluted |
|
61.6 |
|
56.8 |
||||||||||
|
|
|
US cents |
|
US cents |
||||||||||
|
Full year dividend per share |
14 |
20.00 |
|
18.50 |
||||||||||
Group balance sheet
at 31 March 2009
|
|
|
2009 |
|
2008 |
|
|
Notes |
US$m |
|
US$m |
|
Non-current assets |
|
|
|
|
|
Goodwill |
|
3,125 |
|
3,605 |
|
Other intangible assets |
|
1,189 |
|
1,473 |
|
Property, plant and equipment |
|
479 |
|
604 |
|
Investments in associates |
|
332 |
|
295 |
|
Deferred tax assets |
|
13 |
|
26 |
|
Retirement benefit assets |
16 |
- |
|
182 |
|
Trade and other receivables |
|
5 |
|
9 |
|
Available for sale financial assets |
|
26 |
|
42 |
|
Other financial assets |
|
61 |
|
24 |
|
|
|
5,230 |
|
6,260 |
|
Current assets |
|
|
|
|
|
Inventories |
|
4 |
|
4 |
|
Trade and other receivables |
|
738 |
|
1,031 |
|
Current tax assets |
|
17 |
|
16 |
|
Other financial assets |
|
21 |
|
6 |
|
Cash and cash equivalents |
|
129 |
|
151 |
|
|
|
909 |
|
1,208 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
(995) |
|
(1,279) |
|
Loans and borrowings |
|
(314) |
|
(39) |
|
Current tax liabilities |
|
(91) |
|
(110) |
|
Provisions |
|
(66) |
|
(84) |
|
Other financial liabilities |
|
(22) |
|
(50) |
|
|
|
(1,488) |
|
(1,562) |
|
Net current liabilities |
|
(579) |
|
(354) |
|
Total assets less current liabilities |
|
4,651 |
|
5,906 |
|
Non-current liabilities |
|
|
|
|
|
Trade and other payables |
|
(42) |
|
(57) |
|
Loans and borrowings |
|
(2,003) |
|
(2,811) |
|
Deferred tax liabilities |
|
(135) |
|
(170) |
|
Provisions |
|
(15) |
|
(27) |
|
Retirement benefit obligations |
16 |
(58) |
|
(50) |
|
Other financial liabilities |
|
(499) |
|
(674) |
|
|
|
(2,752) |
|
(3,789) |
|
Net assets |
|
1,899 |
|
2,117 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
20 |
102 |
|
102 |
|
Share premium |
20 |
1,449 |
|
1,442 |
|
Retained earnings |
|
16,251 |
|
16,065 |
|
Other reserves |
|
(16,017) |
|
(15,653) |
|
Total shareholders' equity |
|
1,785 |
|
1,956 |
|
Minority interests in equity |
|
114 |
|
161 |
|
Total equity |
21 |
1,899 |
|
2,117 |
Group statement of recognised income and expense
for the year ended 31 March 2009
|
|
|
2009 |
|
2008 |
|
|
Notes |
US$m |
|
US$m |
|
Net (expense)/income recognised directly in equity |
|
|
|
|
|
Reversal of net investment hedge |
|
- |
|
(7) |
|
Fair value losses on available for sale financial assets |
|
(8) |
|
(1) |
|
Actuarial (losses)/gains in respect of defined benefit pension plans |
16 |
(202) |
|
15 |
|
Currency translation differences |
|
(428) |
|
96 |
|
Recycled cumulative exchange gain in respect of divestments |
|
(3) |
|
- |
|
Tax credit/(charge) in respect of items taken directly to equity |
|
60 |
|
(16) |
|
Net (expense)/income recognised directly in equity |
21 |
(581) |
|
87 |
|
Profit for the financial year |
|
506 |
|
452 |
|
Total (expense)/income recognised for the year |
|
(75) |
|
539 |
|
|
|
|
|
|
|
Total (expense)/income recognised for the year attributable to: |
|
|
|
|
|
Equity shareholders in the parent company |
|
(51) |
|
524 |
|
Minority interests |
|
(24) |
|
15 |
|
Total (expense)/income recognised for the year |
|
(75) |
|
539 |
Group cash flow statement
for the year ended 31 March 2009
|
|
|
2009 |
|
2008 |
|
|
|
|
|
(Restated) |
|
|
|
|
|
(Note 3) |
|
|
Notes |
US$m |
|
US$m |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from operations |
|
1,102 |
|
1,134 |
|
Interest paid |
|
(157) |
|
(168) |
|
Interest received |
|
29 |
|
37 |
|
Dividends received from associates |
|
28 |
|
36 |
|
Tax paid |
|
(39) |
|
(79) |
|
Net cash inflow from operating activities |
|
963 |
|
960 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Purchase of property, plant and equipment |
|
(75) |
|
(99) |
|
Purchase of other intangible assets |
|
(230) |
|
(222) |
|
Purchase of investments in associates and available for sale financial assets |
|
(29) |
|
(9) |
|
Acquisition of subsidiaries, net of cash acquired |
|
(179) |
|
(1,720) |
|
Disposal of subsidiaries |
12 |
191 |
|
6 |
|
Net cash flows used in investing activities |
|
(322) |
|
(2,044) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Purchase of own shares by employee trusts |
|
- |
|
(6) |
|
Issue of ordinary shares |
|
7 |
|
7 |
|
Receipt of share option proceeds and sale of own shares by employee trusts |
|
9 |
|
34 |
|
New borrowings |
|
71 |
|
1,438 |
|
Repayment of borrowings |
|
(278) |
|
(746) |
|
Capital element of finance lease rental payments |
|
(3) |
|
(5) |
|
Net (payments)/receipts from derivative financial instruments held to manage currency profile |
|
(160) |
|
54 |
|
Equity swap settlement |
|
(11) |
|
- |
|
Payment into bank deposit |
|
(29) |
|
- |
|
Dividends paid |
|
(213) |
|
(193) |
|
Net cash flows (used in)/generated from financing activities |
|
(607) |
|
583 |
|
|
|
|
|
|
|
Exchange and other movements |
|
(37) |
|
17 |
|
Net decrease in cash and cash equivalents - continuing operations |
|
(3) |
|
(484) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents - discontinued operations |
12 |
(17) |
|
(3) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(20) |
|
(487) |
|
|
|
|
|
|
|
Movement in cash and cash equivalents |
|
|
|
|
|
Cash and cash equivalents at 1 April |
|
147 |
|
634 |
|
Net decrease in cash and cash equivalents |
|
(20) |
|
(487) |
|
Cash and cash equivalents at the end of the financial year |
|
127 |
|
147 |
|
|
|
|
|
|
Notes to the Group financial statements
for the year ended 31 March 2009
1. General information
Experian plc (the 'Company') 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.
The financial information for the year ended 31 March 2009 was approved for issue on 19 May 2009. No significant events, other than those disclosed in this document, have occurred between 31 March 2009 and that date. The financial information set out in this announcement does not constitute the Group's statutory financial statements for the years ended 31 March 2009 or 31 March 2008 but is derived from the 31 March 2009 statutory financial statements.
The Group's statutory financial statements, which comprise the annual report and audited financial statements for the year ended 31 March 2009, will be delivered to the Jersey Registrar of Companies in due course. 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. The Group's statutory financial statements for the year ended 31 March 2008 have been delivered to the Jersey Registrar of Companies. The auditors reported on those financial statements and gave 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
The Group financial statements of Experian plc and its subsidiary undertakings ('Experian' or the 'Group') are prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted for use in the European Union ('EU') and as issued by the International Accounting Standards Board ('IASB'). These are those standards, subsequent amendments and related interpretations issued and adopted by the IASB that have been endorsed by the EU.
This preliminary announcement has been prepared in accordance with the Listing Rules of the United Kingdom Financial Services Authority, and with IFRS-compliant accounting policies that have been followed in preparing the Group's statutory financial statements for the year ended 31 March 2009. The accounting policies were published in full in the Group's statutory financial statements for the year ended 31 March 2008 and are available on the Company's website, at www.experianplc.com/corporate/financial/reports.
The Group financial statements are presented in US dollars, as this is the most representative currency of the Group's operations, and they are rounded to the nearest million. They are prepared on the historical cost basis modified for the revaluation of certain financial instruments. The principal exchange rates used in preparing the Group financial statements are set out in note 6. Except as indicated in note 3, the financial statements have been prepared on a basis consistent with the year ended 31 March 2008.
3. Comparative information
There have been two developments during the year which change the presentation of the comparative financial information and these are summarised as follows:
a) Experian disposed of its transaction processing activities in France on 31 October 2008. As a consequence, in accordance with the requirements of IFRS 5 'Non-current assets held for sale and discontinued operations', the results and cash flows of that business have been classified as discontinued and comparative figures restated accordingly. The results of the EMEA/Asia Pacific geographical segment (shown within note 7) and the Credit Services business segment (shown within note 8) have been restated accordingly.
b) Following a review of the Group's assessment of risks and rewards, there have been a number of changes in the reporting of revenues and profits across the Group's four business segments so that these more appropriately reflect the nature of the underlying businesses and align the risks and rewards of certain smaller businesses with those of the business segments in which they are now reported. The nature and effect of these changes is detailed in note 8. The Group has not adopted IFRS 8 'Operating segments' during the current financial year but has reviewed its requirements and is adopting it with effect from 1 April 2009. The Group's first reported results under IFRS 8 will be those for the six months ending 30 September 2009 and no significant changes are anticipated in the structure of the Group's segmental information.
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
4. Recent accounting developments
The following accounting standards, amendments and interpretations issued by the IASB and the International Financial Reporting Interpretations Committee ('the IFRIC') are effective for the Group's accounting periods beginning on or after 1 April 2008 but have had no material effect on the results or financial position of the Group:
-
IFRIC 12 'Service Concession Arrangements' *
-
IFRIC 14 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction'
Once adopted by the EU, the following accounting standards, amendments and interpretations issued by the IASB and the IFRIC will be effective for the Group's accounting periods beginning on or after 1 April 2009:
-
Amendments to the following standards as a result of the May 2008 annual improvements process:
IFRS 5 'Non-current assets held for sale and discontinued operations' *
IAS 16 'Property, plant and equipment' *
IAS 19 'Employee benefits' *
IAS 20 'Accounting for government grants and disclosure of government assistance' *
IAS 29 'Financial reporting in hyperinflationary economies' *
IAS 31 'Financial reporting of interests in joint ventures' *
IAS 36 'Impairment of assets' *
IAS 38 'Intangible assets' *
IAS 40 'Investment property' *
IAS 41 'Agriculture' *
-
IFRS 1 'Amendment - First time adoption of IFRS'
-
IFRS 2 'Amendment - Share-Based Payments'
-
IFRS 3 (Revised) 'Business Combinations' *
-
IFRS 8 'Operating segments'
-
IAS 1 'Amendment - Presentation of Financial Statements'
-
IAS 23 'Amendment - Borrowing Costs'
-
IAS 27 (Revised) 'Consolidated and Separate Financial Statements'
-
IAS 28 'Amendment - Investment in Associates' *
-
IAS 32 'Amendment - Financial Instruments: Presentation'
-
IAS 39 'Amendment - Financial Instruments: Recognition and Measurement' *
-
IAS 39 (Revised) 'Financial Instruments: Recognition and Measurement'*
-
IFRIC 13 'Customer Loyalty Programmes' *
-
IFRIC 15 'Agreements for the Construction of Real Estate' *
-
IFRIC 16 'Hedges of a Net Investment in a Foreign Operation' *
-
IFRIC 18 'Transfer of Assets from Customers'*
* These standards are still subject to adoption by the EU.
IFRS 3 (Revised) 'Business Combinations' requires amendments to accounting for business combinations and the treatment of associated transaction costs and accordingly will impact the accounting treatment of future acquisitions in the financial statements. With that exception, these accounting standards, amendments and interpretations are not expected to have a material effect on the results and net assets of the Group. A number of the developments will lead to additional disclosures.
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
5. 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 tax. 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 tax. It includes the Group's share of associates' pre-tax profit.
Benchmark earnings
Benchmark earnings represents Benchmark PBT less attributable tax and minority interests. Benchmark earnings attributable to minority interests represents that portion of Benchmark earnings that relate to the minority interests.
Benchmark earnings per share ('Benchmark EPS')
Benchmark EPS represents Benchmark PBT less attributable tax 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, closure costs of major business units or costs of significant restructuring programmes. All other restructuring costs are charged against EBIT in the segments in which they are incurred.
Operating cash flow
Operating cash flow is calculated as cash generated from operations adjusted for outflows in respect of the purchase of property, plant and equipment and other intangible assets and adding dividends from associates but excluding any cash inflows and outflows in respect of exceptional items. It is defined as EBIT less changes in working capital, plus depreciation/amortisation, less capital expenditure, less profit retained in associates.
Net debt
Net debt is calculated as total debt less cash and cash equivalents and other highly liquid bank deposits with original maturities of greater than three months. Total debt includes loans and borrowings (and the fair value of derivatives hedging loans and borrowings), overdrafts and obligations under finance leases. Accrued interest is excluded from net debt.
6. Foreign currency
The principal exchange rates used in these financial statements are as follows:
|
|
Average |
|
Closing |
|||
|
|
2009 |
2008 |
|
2009 |
2008 |
2007 |
|
|
|
|
|
|
|
|
|
Sterling : US dollar |
1.69 |
2.01 |
|
1.43 |
1.99 |
1.96 |
|
US dollar : Brazilian real |
1.96 |
1.86 |
|
2.30 |
1.75 |
2.08 |
|
Euro : US dollar |
1.41 |
1.42 |
|
1.33 |
1.58 |
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 rate on the dates of the transactions).
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
7. Segmental information - geographical segments
|
Year ended 31 March 2009 |
||||||||||||||
|
|
Continuing operations |
|
|
|||||||||||
|
|
North America US$m |
Latin America US$m |
UK and Ireland US$m |
EMEA/ Asia Pacific US$m |
Central Activities US$m |
Total continuing US$m |
Discontinued operations1 US$m |
Total Group US$m |
||||||
|
Revenue from external customers2 |
2,083 |
462 |
902 |
426 |
- |
3,873 |
201 |
4,074 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Profit |
|
|
|
|
|
|
|
|
||||||
|
Operating profit/(loss) |
456 |
80 |
140 |
16 |
(79) |
613 |
26 |
639 |
||||||
|
Net financing costs |
- |
- |
- |
- |
(77) |
(77) |
- |
(77) |
||||||
|
Share of post-tax profits/(losses)of associates |
46 |
- |
- |
(4) |
- |
42 |
- |
42 |
||||||
|
Profit/(loss) before tax |
502 |
80 |
140 |
12 |
(156) |
578 |
26 |
604 |
||||||
|
Group tax expense |
|
|
|
|
|
(84) |
(14) |
(98) |
||||||
|
Profit for the financial year |
|
|
|
|
|
494 |
12 |
506 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Reconciliation from EBIT to profit/(loss) before tax - continuing operations |
|
|
|
|
|
|
|
|
||||||
|
EBIT |
616 |
118 |
213 |
49 |
(57) |
939 |
|
|
||||||
|
Net interest |
- |
- |
- |
- |
(96) |
(96) |
|
|
||||||
|
Benchmark PBT |
616 |
118 |
213 |
49 |
(153) |
843 |
|
|
||||||
|
Exceptional items (note 9) |
(49) |
- |
(30) |
(22) |
(16) |
(117) |
|
|
||||||
|
Amortisation of acquisition intangibles |
(48) |
(38) |
(34) |
(12) |
- |
(132) |
|
|
||||||
|
Goodwill adjustment |
(1) |
- |
- |
- |
- |
(1) |
|
|
||||||
|
Charges in respect of the demerger-related equity incentive plans |
(14) |
- |
(9) |
(3) |
(6) |
(32) |
|
|
||||||
|
Financing fair value remeasurements |
- |
- |
- |
- |
19 |
19 |
|
|
||||||
|
Tax expense on share of profit of associates |
(2) |
- |
- |
- |
- |
(2) |
|
|
||||||
|
Profit/(loss) before tax |
502 |
80 |
140 |
12 |
(156) |
578 |
|
|
||||||
|
1 As indicated in note 3, discontinued operations comprise the Group's transaction processing activities in France. Additional information on discontinued operations, the results of which were formerly reported within the EMEA/Asia Pacific geographical segment, is shown in note 12. 2 Revenue from external customers arose principally from the provision of services. |
||||||||||||||
|
|
||||||||||||||
|
Year ended 31 March 2008 |
||||||||||||||
|
|
Continuing operations |
|
|
|||||||||||
|
|
North America US$m |
Latin America US$m |
UK and Ireland US$m |
EMEA/ Asia Pacific US$m |
Central Activities US$m |
Total continuing US$m |
Discontinued operations1 US$m |
Total Group US$m |
||||||
|
Revenue from external customers2 |
2,061 |
324 |
1,024 |
380 |
- |
3,789 |
341 |
4,130 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Profit |
|
|
|
|
|
|
|
|
||||||
|
Operating profit/(loss) |
473 |
44 |
155 |
29 |
(76) |
625 |
29 |
654 |
||||||
|
Net financing costs |
- |
- |
- |
- |
(154) |
(154) |
(1) |
(155) |
||||||
|
Share of post-tax profits of associates |
49 |
- |
- |
1 |
- |
50 |
- |
50 |
||||||
|
Profit/(loss) before tax |
522 |
44 |
155 |
30 |
(230) |
521 |
28 |
549 |
||||||
|
Group tax expense |
|
|
|
|
|
(91) |
(6) |
(97) |
||||||
|
Profit for the financial year |
|
|
|
|
|
430 |
22 |
452 |
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
Reconciliation from EBIT to profit/(loss) before tax - continuing operations |
|
|
|
|
|
|
|
|
||||||
|
EBIT |
608 |
75 |
232 |
50 |
(57) |
908 |
|
|
||||||
|
Net interest |
- |
- |
- |
- |
(125) |
(125) |
|
|
||||||
|
Benchmark PBT |
608 |
75 |
232 |
50 |
(182) |
783 |
|
|
||||||
|
Exceptional items (note 9) |
(12) |
- |
(28) |
(9) |
(6) |
(55) |
|
|
||||||
|
Amortisation of acquisition intangibles |
(48) |
(31) |
(35) |
(7) |
- |
(121) |
|
|
||||||
|
Goodwill adjustment |
(2) |
- |
- |
- |
- |
(2) |
|
|
||||||
|
Charges in respect of the demerger-related equity incentive plans |
(18) |
- |
(14) |
(4) |
(13) |
(49) |
|
|
||||||
|
Financing fair value remeasurements |
- |
- |
- |
- |
(29) |
(29) |
|
|
||||||
|
Tax expense on share of profit of associates |
(6) |
- |
- |
- |
- |
(6) |
|
|
||||||
|
Profit/(loss) before tax |
522 |
44 |
155 |
30 |
(230) |
521 |
|
|
||||||
|
1 As indicated in note 3, the segmental information for the year ended 31 March 2008 has been restated to reflect the reclassification of the Group's transaction processing activities in France as a discontinued operation. Additional information on discontinued operations, the results of which were formerly reported within the EMEA/Asia Pacific geographical segment, is shown in note 12. 2 Revenue from external customers arose principally from the provision of services. |
||||||||||||||
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
8. Segmental information - business segments
|
Year ended 31 March 2009 |
|
|
|
|
|||||||
|
|
Continuing operations1 |
|
|
||||||||
|
|
Credit Services US$m |
Decision Analytics US$m |
Marketing Services US$m |
Interactive US$m |
Central Activities US$m |
Total continuing US$m |
Discontinued operations2 US$m |
Total Group US$m |
|||
|
Revenue from external customers3 |
1,666 |
487 |
770 |
950 |
- |
3,873 |
201 |
4,074 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Profit |
|
|
|
|
|
|
|
|
|||
|
Operating profit/(loss) |
415 |
120 |
24 |
171 |
(117) |
613 |
26 |
639 |
|||
|
Net financing costs |
- |
- |
- |
- |
(77) |
(77) |
- |
(77) |
|||
|
Share of post-tax profits of associates |
42 |
- |
- |
- |
- |
42 |
- |
42 |
|||
|
Profit/(loss) before tax |
457 |
120 |
24 |
171 |
(194) |
578 |
26 |
604 |
|||
|
Group tax expense |
|
|
|
|
|
(84) |
(14) |
(98) |
|||
|
Profit for the financial year |
|
|
|
|
|
494 |
12 |
506 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Reconciliation from EBIT to profit/(loss) before tax - continuing operations |
|
|
|
|
|
|
|
|
|||
|
EBIT |
554 |
142 |
88 |
212 |
(57) |
939 |
|
|
|||
|
Net interest |
- |
- |
- |
- |
(96) |
(96) |
|
|
|||
|
Benchmark PBT |
554 |
142 |
88 |
212 |
(153) |
843 |
|
|
|||
|
Exceptional items (note 9) |
(41) |
(16) |
(23) |
(9) |
(28) |
(117) |
|
|
|||
|
Amortisation of acquisition intangibles |
(54) |
(6) |
(40) |
(32) |
- |
(132) |
|
|
|||
|
Goodwill adjustment |
- |
- |
(1) |
- |
- |
(1) |
|
|
|||
|
Charges in respect of the demerger-related equity incentive plans4 |
- |
- |
- |
- |
(32) |
(32) |
|
|
|||
|
Financing fair value remeasurements |
- |
- |
- |
- |
19 |
19 |
|
|
|||
|
Tax expense on share of profit of associates |
(2) |
- |
- |
- |
- |
(2) |
|
|
|||
|
Profit/(loss) before tax |
457 |
120 |
24 |
171 |
(194) |
578 |
|
|
|||
|
1 As indicated in note 3, there have been some reclassifications in respect of three of the Group's smaller businesses within the reporting of results for continuing operations by business segment and the above results reflect the new reporting structure. These reclassifications relate to the Vente, Baker Hill and Experian Payments businesses. The effect of these reclassifications on the reported results has been to increase the revenue reported for Decision Analytics and Interactive by US$39m and US$14m respectively and to reduce that for Credit Services and Marketing Services by US$15m and US$38m respectively. The associated effect has been to increase operating profit and profit before tax for Credit Services and Decision Analytics by US$1m and US$7m respectively and to reduce operating profit and profit before tax for Marketing Services by US$8m. 2 As indicated in note 3, discontinued operations comprise the Group's transaction processing activities in France. Additional information on discontinued operations, the results of which were formerly reported within the Credit Services business segment, is shown in note 12. 3 Revenue from external customers arose principally from the provision of services. 4 No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by geographical segment. |
|||||||||||
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
8. Segmental information - business segments (continued)
Results by business segment (continued)
|
Year ended 31 March 2008 |
|
|
|
|
|||||||
|
|
Continuing operations1 |
|
|
||||||||
|
|
Credit Services US$m |
Decision Analytics US$m |
Marketing Services US$ |
Interactive US$m |
Central Activities US$m |
Total continuing US$m |
Discontinued operations2 US$m |
Total Group US$m |
|||
|
Revenue from external customers3 |
1,619 |
505 |
785 |
880 |
- |
3,789 |
341 |
4,130 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Profit |
|
|
|
|
|
|
|
|
|||
|
Operating profit/(loss) |
430 |
143 |
8 |
156 |
(112) |
625 |
29 |
654 |
|||
|
Net financing costs |
- |
- |
- |
- |
(154) |
(154) |
(1) |
(155) |
|||
|
Share of post-tax profit of associates |
50 |
- |
- |
- |
- |
50 |
- |
50 |
|||
|
Profit/(loss) before tax |
480 |
143 |
8 |
156 |
(266) |
521 |
28 |
549 |
|||
|
Group tax expense |
|
|
|
|
|
(91) |
(6) |
(97) |
|||
|
Profit for the financial year |
|
|
|
|
|
430 |
22 |
452 |
|||
|
|
|
|
|
|
|
|
|
|
|||
|
Reconciliation from EBIT to profit/(loss) before tax - continuing operations |
|
|
|
|
|
|
|
|
|||
|
EBIT |
544 |
160 |
69 |
192 |
(57) |
908 |
|
|
|||
|
Net interest |
- |
- |
- |
- |
(125) |
(125) |
|
|
|||
|
Benchmark PBT |
544 |
160 |
69 |
192 |
(182) |
783 |
|
|
|||
|
Exceptional items (note 9) |
(13) |
(10) |
(22) |
(4) |
(6) |
(55) |
|
|
|||
|
Amortisation of acquisition intangibles |
(45) |
(7) |
(37) |
(32) |
- |
(121) |
|
|
|||
|
Goodwill adjustment |
- |
- |
(2) |
- |
- |
(2) |
|
|
|||
|
Charges in respect of the demerger-related equity incentive plans4 |
- |
- |
- |
- |
(49) |
(49) |
|
|
|||
|
Financing fair value remeasurements |
- |
- |
- |
- |
(29) |
(29) |
|
|
|||
|
Tax expense on share of profit of associates |
(6) |
- |
- |
- |
- |
(6) |
|
|
|||
|
Profit/(loss) before tax |
480 |
143 |
8 |
156 |
(266) |
521 |
|
|
|||
|
1 As indicated in note 3, the segmental information for the year ended 31 March 2008 has been restated and the results of three of the Group's smaller businesses reclassified within the reporting of results for continuing operations. Whilst the reported results for Central Activities remain unchanged, there are minor reclassifications of revenue and profit measures within the other four segments. These reclassifications relate to the Vente, Baker Hill and Experian Payments businesses. The effect of these reclassifications has been to increase the revenue reported for Decision Analytics and Interactive by US$36m and US$21m respectively and to reduce that for Credit Services and Marketing Services by US$12m and US$45m respectively. The associated effect has been to increase operating profit and profit before tax for Decision Analytics and Interactive by US$6m and US$3m respectively and to reduce operating profit and profit before tax for Marketing Services by US$9m. 2 As indicated in note 3, the segmental information for the year ended 31 March 2008 has been restated to reflect the reclassification of the Group's transaction processing activities in France as a discontinued operation. Additional information on discontinued operations, the results of which were formerly reported within the Credit Services business segment, is shown in note 12. 3 Revenue from external customers arose principally from the provision of services. 4 No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by geographical segment. |
|||||||||||
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
9. Exceptional and other non-GAAP measures
|
|
2009 |
2008 |
|
|
|
(Restated) |
|
|
|
(Note 3) |
|
|
US$m |
US$m |
|
Exceptional items |
|
|
|
Restructuring costs |
92 |
52 |
|
Cessation of bureau activities |
15 |
- |
|
Demerger and related restructuring costs |
7 |
6 |
|
Closure of UK Account Processing |
- |
(2) |
|
Loss on disposal of businesses |
3 |
2 |
|
Gain arising in associate on the partial disposal of its subsidiary |
- |
(3) |
|
Total exceptional items |
117 |
55 |
|
Other non-GAAP measures |
|
|
|
Amortisation of acquisition intangibles |
132 |
121 |
|
Goodwill adjustment |
1 |
2 |
|
Charges in respect of the demerger-related equity incentive plans |
32 |
49 |
|
Financing fair value remeasurements |
(19) |
29 |
|
Total other non-GAAP measures |
146 |
201 |
Exceptional items and other non-GAAP measures are in respect of continuing operations. Exceptional items are charged to administrative expenses.
Exceptional items
Expenditure of US$92m (2008: US$52m) arose in the year in connection with the Group's strategic programme of cost efficiency measures. Of this US$51m (2008: US$34m) related to redundancy, US$34m (2008: US$6m) related to offshoring activities, infrastructure consolidations and other restructuring activities and US$7m (2008: US$12m) related to asset write-offs.
During the year Experian initiated the closure of its Canadian credit bureau and is in discussions to terminate the joint venture bureau in Japan. Charges associated with the closure of the bureaux include US$13m of fixed asset write-offs, including the related investment in associate, and a further US$2m of closure costs.
Demerger and related restructuring costs comprise legal and professional fees, together with costs in connection with the cessation of a number of subsidiaries of the former GUS plc.
In April 2006, Experian announced the phased withdrawal from large scale credit card and loan account processing in the UK. The anticipated cost of withdrawal of US$26m was charged in the year ended 31 March 2007, and during the year ended 31 March 2008 an amount of US$2m was released from the provision.
In the year ended 31 March 2008, First American Real Estate Solutions LLC ('FARES') recognised gains in respect of a number of disposals and the Group recognised US$3m, its 20% share of such gains.
Cash outflows in respect of exceptional items are analysed in note 17(d).
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 judgements about their value and economic life.
A goodwill adjustment of US$1m (2008: US$2m) 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 the year by US$1m (2008: US$2m).
Charges in respect of demerger-related equity incentive plans relate to one-off grants made to senior management and at all staff levels at the time of the demerger, under a number of equity incentive plans. The cost of these one-off grants is being charged to the Group income statement over the five years following flotation in October 2006, but excluded from the definition of Benchmark PBT. The cost of all other grants is being charged to the Group income statement and included in the definition of Benchmark PBT.
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
9. Exceptional and other non-GAAP measures (continued)
Other non-GAAP measures (continued)
An element of the Group's derivatives is ineligible for hedge accounting under IFRS. Gains or losses on these derivatives arising from market movements, together with gains and losses on put options in respect of acquisitions, are credited or charged to financing fair value remeasurements within finance income and finance expense in the Group income statement.
10. Net financing costs
|
|
2009 |
2008 |
|
|
|
(Restated) |
|
|
|
(Note 3) |
|
|
US$m |
US$m |
|
Interest income: |
|
|
|
Expected return on pension plan assets |
69 |
76 |
|
Other interest income |
28 |
20 |
|
Interest income |
97 |
96 |
|
Financing fair value gains: |
|
|
|
Movement in fair value of Serasa put option |
21 |
69 |
|
Other financing fair value gains |
64 |
41 |
|
Financing fair value gains |
85 |
110 |
|
Finance income |
182 |
206 |
|
|
|
|
|
Interest expense: |
|
|
|
Interest expense on pension plan liabilities |
52 |
53 |
|
Other interest expense |
141 |
168 |
|
Interest expense |
193 |
221 |
|
Financing fair value losses |
66 |
139 |
|
Finance expense |
259 |
360 |
|
|
|
|
|
Net financing costs |
77 |
154 |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
11. Group tax expense
The effective rate of tax is 14.5% (2008: 17.5% as restated (see note 3)) based on the profit before tax for the year ended 31 March 2009 of US$578m (2008: US$521m) and the Group tax expense of US$84m (2008: US$91m). The Group tax expense comprises a UK tax credit of US$43m (2008: US$67m) and non-UK tax charge of US$127m (2008: US$158m).
The effective rate of tax based on Benchmark PBT of US$843m (2008: US$783m) and the associated tax charge of US$184m (2008: US$183m), excluding the effect of a one-off corporation tax credit of US$20m (2008: US$nil) in respect of prior years, is 21.8% (2008: 23.4% as restated (see note 3)). The one-off corporation tax credit in the year ended 31 March 2009 has been excluded from the calculation of the effective rate of tax based on Benchmark PBT as it relates to arrangements involving entities no longer part of the Group.
The reconciliation of the tax expense reported in the Group income statement to the Benchmark tax charge is as follows:
|
|
2009 |
2008 |
|
|
|
(Restated) |
|
|
|
(Note 3) |
|
|
US$m |
US$m |
|
Group tax expense |
84 |
91 |
|
Add: one-off corporation tax credit in respect of prior years |
20 |
- |
|
Add: tax relief on exceptional items |
25 |
10 |
|
Add: tax relief on other non-GAAP measures |
53 |
76 |
|
Tax expense on share of profit of associates |
2 |
6 |
|
Tax on Benchmark PBT |
184 |
183 |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
12. Discontinued operations
As indicated in note 3, the Group disposed of its transaction processing activities in France on 31 October 2008. As a consequence, the results and cash flows of that business are classified as discontinued operations with comparative figures restated.
Results for discontinued operations
|
|
2009 |
2008 |
||
|
|
US$m |
US$m |
||
|
Revenue |
201 |
341 |
||
|
Cost of sales |
(147) |
(240) |
||
|
Gross profit |
54 |
101 |
||
|
Distribution costs |
|
(6) |
|
(14) |
|
Administrative expenses |
|
(49) |
|
(58) |
|
Operating expenses |
(55) |
(72) |
||
|
Operating (loss)/profit on transaction processing activities |
(1) |
29 |
||
|
Net financing costs |
- |
(1) |
||
|
(Loss)/profit before tax of discontinued operations |
(1) |
28 |
||
|
Tax charge in respect of pre-tax profit |
- |
(6) |
||
|
(Loss)/profit after tax of discontinued operations |
(1) |
22 |
||
|
|
|
|
||
|
Profit on disposal of discontinued operations: |
|
|
||
|
Profit on disposal of transaction processing activities in France |
27 |
- |
||
|
Tax charge in respect of profit on disposal |
(14) |
- |
||
|
Profit after tax on disposal of discontinued operations |
13 |
- |
||
|
Profit for the financial year from discontinued operations |
12 |
22 |
||
The operating profit of US$26m reported for discontinued operations within notes 7 and 8 in respect of the year ended 31 March 2009 comprises the operating loss of US$1m on transaction processing activities together with the profit on its disposal of US$27m. The profit on disposal includes a recycled cumulative exchange gain of US$3m and is stated after costs of US$52m, of which US$12m were paid in the year. The proceeds received were US$203m and the net assets disposed of were US$127m.
Cash flows attributable to discontinued operations
|
|
2009 |
2008 |
|
|
US$m |
US$m |
|
From operating activities |
(10) |
18 |
|
From investing activities |
(10) |
(23) |
|
Exchange and other movements |
3 |
2 |
|
Net decrease in cash and cash equivalents in discontinued operations |
(17) |
(3) |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
13. Basic and diluted earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders of the Company by a weighted average number of ordinary shares in issue during the year (excluding own shares held in employee trusts, which are treated as cancelled).
The calculation of diluted earnings per share reflects the potential dilutive effect of employee share incentive plans. The earnings figures used in the calculations are unchanged for diluted earnings per share.
|
|
2009 |
2008 |
|
|
|
(Restated) |
|
|
|
(Note 3) |
|
Basic earnings per share: |
US cents |
US cents |
|
Continuing and discontinued operations |
48.0 |
43.3 |
|
Exclude: discontinued operations |
(1.2) |
(2.2) |
|
Continuing operations |
46.8 |
41.1 |
|
Add back of exceptional and other non-GAAP measures, net of tax |
15.5 |
16.4 |
|
Benchmark earnings per share from continuing operations (non-GAAP measure) |
62.3 |
57.5 |
|
|
|
|
|
|
2009 |
2008 |
|
|
|
(Restated) |
|
|
|
(Note 3) |
|
Diluted earnings per share: |
US cents |
US cents |
|
Continuing and discontinued operations |
47.5 |
42.7 |
|
Exclude: discontinued operations |
(1.2) |
(2.1) |
|
Continuing operations |
46.3 |
40.6 |
|
Add back of exceptional and other non-GAAP measures, net of tax |
15.3 |
16.2 |
|
Benchmark diluted earnings per share from continuing operations (non-GAAP measure) |
61.6 |
56.8 |
|
|
|
|
|
|
2009 |
2008 |
|
|
|
(Restated) |
|
|
|
(Note 3) |
|
Earnings: |
US$m |
US$m |
|
Continuing and discontinued operations |
486 |
437 |
|
Exclude: discontinued operations |
(12) |
(22) |
|
Continuing operations |
474 |
415 |
|
Add back of exceptional and other non-GAAP measures, net of tax |
157 |
166 |
|
Benchmark earnings (non-GAAP measure) |
631 |
581 |
|
|
|
|
|
|
2009 |
2008 |
|
Earnings attributable to minority interests: |
US$m |
US$m |
|
Continuing and discontinued operations |
20 |
15 |
|
Add back of amortisation of acquisition intangibles attributable to the minority, net of tax |
8 |
6 |
|
Benchmark earnings attributable to minority interests (non-GAAP measure) |
28 |
21 |
|
|
|
|
|
|
2009 |
2008 |
|
Weighted average number of ordinary shares in issue: |
m |
m |
|
Weighted average number of ordinary shares in issue during the year |
1,012.6 |
1,008.9 |
|
Dilutive effect of share incentive awards |
12.3 |
13.4 |
|
Diluted weighted average number of ordinary shares in issue during the year |
1,024.9 |
1,022.3 |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
14. Dividends
|
|
2009 |
2008 |
||
|
|
US cents per share |
US$m |
US cents per share |
US$m |
|
Amounts recognised and paid as distributions to equity shareholders during the year: |
|
|
|
|
|
First interim - paid in January 2009 (2008: February 2008) |
6.75 |
68 |
6.50 |
66 |
|
Second interim - paid in July 2008 (2008: July 2007) |
12.00 |
121 |
11.50 |
116 |
|
Ordinary dividends paid on equity shares |
18.75 |
189 |
18.00 |
182 |
|
|
|
|
|
|
|
Full year dividend for the year ended 31 March |
20.00 |
|
18.50 |
187 |
A dividend of 13.25 US cents per ordinary share will be paid on 24 July 2009 to shareholders on the register at the close of business on 26 June 2009 and is not included as a liability in these financial statements. This dividend, together with the first interim dividend of 6.75 US cents per ordinary share paid in January 2009, comprises the full year dividend for the year ended 31 March 2009 of 20.00 US cents.
Unless shareholders elect by 26 June 2009 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 3 July 2009.
Pursuant to the Income Access Share arrangements put in place as part of the demerger, shareholders in the Company can 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 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. Unless shareholders have made an IAS election, or are deemed to have made an IAS election, dividends will be received from an Irish source and will be taxed accordingly.
The Company offers a Dividend Reinvestment Plan ('DRIP') which enables those shareholders who receive their dividends under the Income Access Share arrangements to use their cash dividends to purchase Experian shares. Such shareholders who wish to participate in the DRIP for the first time, in respect of the second interim dividend for the year ended 31 March 2009 to be paid on 24 July 2009, should return a completed and signed DRIP mandate form to be received by the Registrars, by no later than 26 June 2009. For further details please contact the Company's Registrars.
The employee trusts waived their entitlements to dividends of US$2m (2008: US$2m).
15. Capital expenditure and capital commitments
During the year ended 31 March 2009 the Group incurred capital expenditure of US$315m (2008: US$344m) including US$10m (2008: US$23m) in respect of discontinued operations.
At 31 March 2009, the Group had capital commitments in respect of property, plant and equipment and intangible assets and for which contracts had been placed of US$22m (2008: US$15m).
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
16. Retirement benefit assets and obligations - defined benefit plans
|
Amounts recognised in the Group balance sheet |
|
|
|
|
2009 |
2008 |
|
Retirement benefit (obligations)/assets - funded plans |
US$m |
US$m |
|
Market value of funded plans' assets |
595 |
1,045 |
|
Present value of funded plans' liabilities |
(614) |
(863) |
|
Deficit in the funded plans |
(19) |
|
|
Surplus in the funded plans |
|
182 |
|
|
|
|
|
Retirement benefit obligations - unfunded plans |
|
|
|
Present value of unfunded pension arrangements |
(26) |
(35) |
|
Liability for post-retirement healthcare |
(13) |
(15) |
|
Retirement benefit obligations |
(39) |
(50) |
|
|
|
|
|
Net retirement benefit (obligations)/assets |
(58) |
132 |
|
The Group's retirement benefit assets and obligations are denominated primarily in sterling. |
||
|
|
|
|
|
Movements during the year in the net retirement benefit (obligations)/assets |
|
|
|
|
2009 |
2008 |
|
|
US$m |
US$m |
|
At 1 April |
132 |
85 |
|
Differences on exchange |
(9) |
- |
|
Amounts recognised in Group income statement |
7 |
11 |
|
Actuarial (losses)/gains recognised in Group statement of recognised income and expense |
(202) |
15 |
|
Contributions paid by the Group |
14 |
21 |
|
At 31 March |
(58) |
132 |
|
|
|
|
|
Amounts recognised in Group income statement |
|
|
|
|
2009 |
2008 |
|
|
US$m |
US$m |
|
Administrative costs (after exceptional income of US$3m (2008: US$5m)) |
10 |
12 |
|
Net financing income |
(17) |
(23) |
|
Total credit to Group income statement |
(7) |
(11) |
|
Actuarial assumptions |
|
|
|
|
2009 |
2008 |
|
|
% |
% |
|
Rate of inflation |
3.4 |
3.6 |
|
Rate of increase for salaries |
5.2 |
5.4 |
|
Rate of increase of pensions in payment and deferred pensions |
3.4 |
3.6 |
|
Rate of increase in medical costs |
6.5 |
6.5 |
|
Discount rate |
6.9 |
6.9 |
The mortality assumptions used at 31 March 2009 remain broadly unchanged from those used at 31 March 2008.
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
17. Notes to the Group cash flow statement
|
|
|
2009 |
2008 |
|
|
|
|
(Restated) |
|
|
|
|
(Note 3) |
|
|
Notes |
US$m |
US$m |
|
a) Cash generated from operations |
|
|
|
|
Operating profit |
|
613 |
625 |
|
Loss on sale of property, plant and equipment |
|
6 |
3 |
|
Loss on sale of other intangible assets |
|
3 |
- |
|
Loss on disposal of subsidiaries |
|
3 |
- |
|
Depreciation and amortisation |
|
420 |
406 |
|
Goodwill adjustment |
|
1 |
2 |
|
Write down of investment in associate |
|
5 |
- |
|
Charge in respect of equity incentive plans |
|
52 |
66 |
|
Change in working capital |
17(b) |
7 |
23 |
|
Exceptional items included in working capital |
|
(8) |
9 |
|
Cash generated from operations |
|
1,102 |
1,134 |
|
|
|
|
|
|
b) Change in working capital |
|
|
|
|
Increase in inventories |
|
(2) |
- |
|
Decrease/(increase) in receivables |
|
24 |
(51) |
|
(Decrease)/increase in payables |
|
(11) |
79 |
|
Difference between pension contributions paid and amounts recognised in Group income statement |
|
(4) |
(5) |
|
Change in working capital |
|
7 |
23 |
|
|
|
|
|
|
c) Purchase of other intangible assets |
|
|
|
|
Databases |
|
153 |
148 |
|
Internally generated software |
|
38 |
42 |
|
Internal use software |
|
39 |
32 |
|
Purchase of other intangible assets |
|
230 |
222 |
|
|
|
|
|
|
d) Cash outflow in respect of exceptional items |
|
|
|
|
Total exceptional items |
9 |
117 |
55 |
|
Working capital movements |
|
8 |
(9) |
|
Asset write-offs |
|
(15) |
(12) |
|
(Losses)/gains in respect of associates |
|
(5) |
3 |
|
Loss on disposal of subsidiaries |
|
(3) |
- |
|
Cash outflow in respect of exceptional items |
|
102 |
37 |
18. Reconciliation of cash generated from operations to operating cash flow (non-GAAP measure)
|
|
|
2009 |
2008 |
|
|
|
|
(Restated) |
|
|
|
|
(Note 3) |
|
|
Notes |
US$m |
US$m |
|
Cash generated from operations |
17(a) |
1,102 |
1,134 |
|
Purchase of property, plant and equipment |
|
(75) |
(99) |
|
Purchase of other intangible assets |
17(c) |
(230) |
(222) |
|
Dividends received from associates |
|
28 |
36 |
|
Net cash outflow from exceptional items |
17(d) |
102 |
37 |
|
Operating cash flow |
|
927 |
886 |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
19. Analysis of net debt (non-GAAP measure)
|
|
2009 US$m |
2008 US$m |
|
a) Analysis of net debt (non-GAAP measure) |
|
|
|
Cash and cash equivalents (net of overdrafts) |
127 |
147 |
|
Bank deposits with maturity greater than three months |
29 |
- |
|
Derivatives hedging loans and borrowings |
28 |
(43) |
|
Debt due within one year |
(295) |
(29) |
|
Finance leases |
(9) |
(16) |
|
Debt due after more than one year |
(1,990) |
(2,758) |
|
Net debt at the end of the financial year |
(2,110) |
(2,699) |
|
|
|
|
|
Net debt held by: |
|
|
|
Continuing operations |
(2,110) |
(2,701) |
|
Discontinued operations |
- |
2 |
|
Net debt at the end of the financial year |
(2,110) |
(2,699) |
|
|
|
|
|
b) Net debt by balance sheet caption |
|
|
|
Cash and cash equivalents |
129 |
151 |
|
Loans and borrowings (current) |
(314) |
(39) |
|
Loans and borrowings (non-current) |
(2,003) |
(2,811) |
|
Net debt by balance sheet caption |
(2,188) |
(2,699) |
|
Bank deposits within financial assets |
29 |
- |
|
Interest payable on borrowings |
21 |
43 |
|
Derivatives hedging loans and borrowings |
28 |
(43) |
|
Net debt at the end of the financial year |
(2,110) |
(2,699) |
At 31 March 2009, the Group had committed borrowing facilities of US$2,530m (2008: US$2,530m) which expire more than two years after the balance sheet date, of which US$1,050m (2008: US$1,121m) was undrawn.
During the year ended 31 March 2009, 6.375% Eurobonds 2009 with a par value of £147m were redeemed. The balance of these Eurobonds, which was £203m (US$308m) at 31 March 2009, falls due for repayment in July 2009.
20. Share capital and share premium
|
|
Number of shares m |
Share capital US$m |
Share premium US$m |
|
At 1 April 2007 |
1,022.3 |
102 |
1,435 |
|
Employee share option plans - proceeds from shares issued |
1.1 |
- |
7 |
|
At 31 March 2008 |
1,023.4 |
102 |
1,442 |
|
Employee share option plans - proceeds from shares issued |
1.9 |
- |
7 |
|
At 31 March 2009 |
1,025.3 |
102 |
1,449 |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
21. Group reconciliation of movements in total equity
|
|
|
2009 |
2008 |
||||
|
|
Notes |
US$m |
US$m |
||||
|
Total equity at 1 April |
|
2,117 |
2,107 |
||||
|
Profit for the financial year |
|
506 |
452 |
||||
|
Net (expense)/income recognised directly in equity for the year |
|
(581) |
87 |
||||
|
Employee share incentive plans: |
|
|
|
||||
|
-- value of employee services |
|
53 |
65 |
||||
|
-- proceeds from shares issued |
|
7 |
7 |
||||
|
Exercise of share options |
|
9 |
34 |
||||
|
Liability on put option over minority interests |
|
- |
(591) |
||||
|
Minority interest arising on business combinations |
|
2 |
155 |
||||
|
Disposal of minority interest |
|
(1) |
- |
||||
|
Purchase of own shares by employee trusts |
|
- |
(6) |
||||
|
Equity dividends paid during the year |
14 |
(189) |
(182) |
||||
|
Dividends paid to minority shareholders |
|
(24) |
(11) |
||||
|
Total equity at 31 March |
|
1,899 |
2,117 |
||||
|
|
|
|
|
||||
|
Attributable to: |
|
|
|
||||
|
Equity shareholders in the parent company |
|
1,785 |
1,956 |
||||
|
Minority interests |
|
114 |
161 |
||||
|
Total equity at 31 March |
|
1,899 |
2,117 |
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
22. Acquisitions
On 10 December 2008, the Group acquired the whole of the issued share capital of SearchAmerica, Inc., a leading provider of payment prediction data and analytics to the healthcare industry in the USA, for US$90m. On 1 December 2008, a company in which the Group has a 75% interest acquired the whole of the issued share capital of KreditInform (Pty) Ltd, a leading provider of commercial credit information and analytics in South Africa. There were no other individually material acquisitions.
In aggregate, the acquired businesses contributed revenues of US$14m to the Group from the date of their acquisition to 31 March 2009. The acquired businesses contributed aggregate profit after tax of US$4m to the Group for the periods from their respective acquisition dates to 31 March 2009. If these acquisitions had been completed on 1 April 2008, further revenues of US$22m would have been reported. It has been impracticable to estimate the impact on Group profit after tax had the acquired entities been owned from 1 April 2008, due to the acquired entities having different accounting policies prior to acquisition and previously reporting to different period ends.
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. Further goodwill of US$11m was recognised in the year in connection with adjustments to deferred consideration in respect of acquisitions made in previous years. The deferred consideration settled during the year on acquisitions made in previous years was US$59m.
There have been no material gains, losses, error corrections or other adjustments recognised in the year ended 31 March 2009 that relate to acquisitions that were effected in the current or previous years.
23. Contingencies
In North America and Latin America, there are a number of pending and threatened litigation claims involving Experian which are being vigorously defended. The directors do not believe that the outcome of any such pending or threatened litigation will have a materially 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.
24. Related parties
During the year the Group made net sales and recharges, under normal commercial terms and conditions that would be available to third parties, to FARES and its associate First Advantage Corporation of US$25m (2008: US$28m). There were no other material related party transactions.
25. 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 preliminary announcement 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.
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
26. Risks and uncertainties
Risks to Experian are anticipated and regularly assessed and internal controls are enhanced where necessary to ensure that such risks are appropriately mitigated. Risks to the business are either specific to Experian's business model (such as information security) or more general (such as the impact of competition).
Experian has identified the following major risks:
Data
The data that Experian holds may be inappropriately used
Experian has established rigorous information security policies, standards, procedures, and recruitment and training schemes, which are embedded throughout its business operations. Experian also screens new third party partners carefully and conducts targeted audits on their operations. The loss and/or potential misuse of consumer data is addressed through continued investment in IT security infrastructure, including the significant use of data and communications encryption technology.
Legislation or government regulations may alter what data Experian can collect and how it is collected
To the best of Experian's knowledge, the Group is in compliance with data protection requirements in the jurisdictions in which it operates. Experian actively monitors its collection and use of personal data, while the Group's legal, regulatory and government affairs departments work closely with senior management to adopt strategies to educate lawmakers and influence the public policy debate, where appropriate.
Technology
There could be security breaches of Experian's systems or facilities
Experian's data centres are protected against computer viruses or other purposeful attacks, such as physical break-ins or hacking. To mitigate the risk from insecure systems, Experian has strict standards, procedures and training schemes for technology services, physical security and information security.
Business processes or systems could fail
Failures to plan, resource, test or adequately respond to major incidents could put Experian at risk of breaching client contracts and services levels, loss of revenue and reputation damage. Experian's data centres are protected against damage from fire, power loss, telecommunications failure, natural disaster, and hardware or software malfunction. Experian maintains full duplication of all information contained in databases and runs backup data centres. The Group also has established support arrangements with third party vendors and strict standards, procedures and training schemes for business continuity.
Whilst the probability of disaster events occurring is generally low, the geographic diversity of the business means that Experian is in a position to respond effectively to both larger and smaller scale incidents.
People
Experian is dependent upon highly skilled personnel, especially its senior management and other
experienced staff
Loss of these people could have an adverse effect on the company's ability to deliver its corporate objectives. Experian aims to provide compensation and benefits that are competitive with other leading companies, as well as fulfilling future career opportunities.
Notes to the Group financial statements (continued)
for the year ended 31 March 2009
26. Risks and uncertainties (continued)
General economy
Macro economic factors impact the demand for customer credit in particular
Experian could be adversely affected by worsening economic conditions globally or in certain individual markets such as the United Kingdom or United States. However, prudent expense management along with the breadth of Experian's portfolio by geography, by product, by sector and by client partly reduces the impact of this risk.
Consolidation among Experian's clients may cause price compression and a reduction in its revenue and profits
No single client accounts for more than 2% of Experian's revenue, which reduces the probability of this potential risk having a significant impact on the business. However, in light of the global economic downturn, Experian continues to respond with a wide range of countercyclical products and solutions, across all relevant business lines.
Experian could fail to protect adequately against its exposure to financial risks
Experian's financial risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
Counterparties could fail
Counterparty risk is a new principal risk. Experian's ability to engage in routine transactions to fund its operations and manage its risks could be adversely affected by the commercial soundness of our counterparties. We continue to monitor counterparty positions regularly. Treasury and insurance activities are conducted only with financial and insurance institutions with strong credit ratings, within limits set for each organisation.
Other risks
Experian could face increased competition, especially in the credit reporting industry
Experian mitigates this risk through continued research and investment in people, technology and products as prioritised by its strategic plan.
Acquisitions may not meet expectations
Experian assesses all acquisitions rigorously, using both in-house experts and professional advisers. In addition, the Group conducts extensive post-acquisition reviews to ensure performance remains consistent with the acquisition buy-plan.
The outcome of litigation could be unfavourable to Experian
Experian carries insurance and employs expert legal personnel inhouse, as well as retaining the services of several leading legal practices, to assist in the effective management and disposal of legal proceedings.
Experian could fail to protect adequately its valuable intellectual property rights or face claims for intellectual property right infringement
Experian seeks patent protection and appropriate agreements regarding its intellectual property rights, where appropriate and feasible, and continues to monitor this situation.
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the financial statements are prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group taken as a whole; and the management report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, and a description of the principal risks and uncertainties that they face is included in note 26.
By order of the board
Charles Brown
Company Secretary
19 May 2009
This information is provided by RNS
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