TIDM93RV
RNS Number : 1341Y
Experian Finance Plc
12 May 2016
news release
Preliminary results for the year ended 31 March 2016
11 May 2016 -- Experian, the global information services
company, today issues its full year financial results for the
twelve months ended 31 March 2016.
General highlights
-- Delivering on our strategy:
o improved growth momentum;
o strength in Credit Services and Decision Analytics;
o successfully repositioning North America Consumer
Services;
o resilience in Brazil.
-- Delivering on our capital framework: investing in growth
whilst returning nearly US$1bn in dividends and share repurchases
during the year.
-- Definitive agreement post year-end to acquire CSIdentity Corporation.
-- Total revenue from continuing activities was US$4,477m, with
both total and organic revenue at constant exchange rates up 5%. At
actual exchange rates, total revenue from continuing activities
fell by 4% reflecting foreign exchange headwinds during the period.
Total revenue was US$4,550m as the Group exited a number of
non-core businesses in the year.
-- EBIT from continuing activities was US$1,195m, up 5% at
constant exchange rates. At actual exchange rates, EBIT from
continuing activities was down 6%. Total EBIT was US$1,210m.
-- EBIT margin from continuing activities was stable at constant
exchange rates. The impact of foreign exchange movements reduced
EBIT margin at actual exchange rates by 60 basis points to
26.7%.
-- Benchmark profit before tax was US$1,136m, up 3% at constant
exchange rates. Profit before tax was US$1,027m at actual exchange
rates (2015: US$1,006m).
-- Cash flow conversion of 105%. Net debt decreased by US$194m,
with net debt to EBITDA ratio remaining at 1.9 times.
-- Benchmark EPS was 89.1 US cents, up 5% at constant exchange
rates and down 6% at actual exchange rates. Basic EPS was 78.6 US
cents (2015: 79.0 US cents).
-- Second interim dividend of 27.5 US cents per ordinary share,
to bring the total for FY16 to 40.0 US cents per share, up 2%
reflecting underlying strength, notwithstanding the foreign
exchange headwinds.
-- We expect share repurchases of US$400m in FY17.
Brian Cassin, Chief Executive Officer, commented:
"We have made significant progress against our strategic
objectives over the past year. We have returned Experian to organic
revenue growth within our target range and driven greater
efficiencies in our business, whilst rigorously applying our robust
capital framework.
As we look forward, we're investing in a range of initiatives
which will help us deliver another year of good growth, within our
target range of mid single-digit organic revenue growth, with
stable margins and further progress in Benchmark earnings per
share."
Contacts
Experian
Brian Cassin Chief Executive Officer +44 (0)20 3042 4215
Lloyd Pitchford Chief Financial Officer
Nadia Ridout-Jamieson Director of Investor Relations
James Russell Director of Corporate Communications
Finsbury
Rollo Head +44 (0)20 7251 3801
Jenny Davey
There will be a presentation today at 9.30am (UK time) to
analysts and investors at the Bank of America Merrill Lynch
Financial Centre, 2 King Edward Street, London, EC1A 1HQ. The
presentation can be viewed live via the link from 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 be available on the website later in the
day.
Experian will update on first quarter trading on 14 July
2016.
See Appendix 1 and note 4 to the financial statements for
definitions of non-GAAP measures
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.
Forward looking statements
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. See page 13 and note 25 for further information on
risks and uncertainties facing Experian.
Company website
Neither the content of the Company's website, nor the content of
any website accessible from hyperlinks on the Company's website (or
any other website), is incorporated into, or forms part of, this
announcement.
About Experian
We are the leading global information services company,
providing data and analytical tools to our clients around the
world. We help businesses to manage credit risk, prevent fraud,
target marketing offers and automate decision making. We also help
people to check their credit report and credit score, and protect
against identity theft. In 2015, we were named by Forbes magazine
as one of the 'World's Most Innovative Companies'.
We employ approximately 17,000 people in 37 countries and our
corporate headquarters are in Dublin, Ireland, with operational
headquarters in Nottingham, UK; California, US; and São Paulo,
Brazil.
Experian plc is listed on the London Stock Exchange (EXPN) and
is a constituent of the FTSE 100 index. Total revenue for the year
ended 31 March 2016 was US$4.6 billion.
To find out more about our company, please visit
http://www.experianplc.com or watch our documentary, 'Inside
Experian'.
Chief Executive Officer's review
We have made significant progress against our strategic
objectives over the past year. We delivered organic revenue growth
within our mid single-digit target range and enhanced the
efficiency of our business, whilst rigorously applying our robust
capital framework. As we look forward, we're investing in a range
of initiatives to enable us to deliver good growth
consistently.
Highlights this year include:
-- We made significant progress on the five strategic priorities we outlined last year, having:
o backed a range of new organic investments in health, business
information, decisioning software, fraud prevention and in other
areas;
o made good progress in repositioning our North America Consumer
Services business and returning it to growth in the second
half;
o taken steps to enhance our operating model to fully leverage
synergies between businesses and drive greater efficiencies;
o sold six non-core activities; and
o returned US$972m in total to shareholders through dividends
and net share repurchases.
-- We delivered organic revenue growth of 5% for the year, with
sequential improvement throughout the year (4% in H1 and 6% in H2).
This reflected strong growth in Credit Services and Decision
Analytics and improved trends in North America Consumer Services.
Foreign exchange effects were a significant headwind and total
revenue from continuing activities declined by 4% as a result.
-- We maintained margins at constant currency. We benefited from positive operating leverage, counterbalanced by organic investment initiatives. Foreign exchange was a significant headwind, causing the EBIT margin to decline overall to 26.7% at actual rates.
-- After the year end we announced a definitive agreement to
acquire CSIdentity Corporation ('CSID'), a leading provider of
consumer identity management and fraud detection services, further
accelerating the execution of our Consumer Services strategy and
enabling us to address a broader spectrum of the consumer market.
(The acquisition is subject to Hart-Scott-Rodino regulatory
approval in the US and is expected to complete during H1).
Regional highlights
North America
We returned to growth in North America during the year, with
organic revenue up 3%.
Credit Services performed strongly. Lenders have continued to
engage actively in credit marketing and new underwriting as
consumer confidence has remained stable. This has supported strong
volume growth in our business. We have also secured a number of
sizeable wins from financial services clients by taking a 'One
Experian' approach, integrating data, analytics, software and
expertise from across multiple business activities.
Our strategy of diversifying and building out specialised
businesses in new vertical markets continues to produce strong
results. Our health business is developing very well. We're
building on our market-leading position in revenue-cycle
management, where we help healthcare providers to get paid. We see
potential to expand into adjacencies, for example we're introducing
services to prevent identity and payment fraud. We're also
positioning Experian Health to address emerging marketplace needs
such as the trend towards 'pay-for-performance', which will affect
all healthcare providers. We think this will place greater emphasis
on transparency in the payment process, heightening the need for
data and analytics and expanding our addressable market.
While Marketing Services has remained weak, we are pleased with
progress in cross-channel marketing having on-boarded a number of
new clients across a wide range of industries. While growth in
cross-channel is not yet sufficient to offset attrition in email
marketing, we are encouraged by a growing pipeline of opportunities
and a positive reaction for our products from industry analysts. We
are also executing on our strategy to more closely align our
Experian data quality operations with other parts of Experian, and
this is opening up new market opportunities across several vertical
markets.
Over the past two years we have taken many actions to reposition
Consumer Services. Organic revenue growth moved into positive
territory in the second half and the business is now poised to
address a larger and more dynamic market. Our goal is to enrich the
services we provide, making them more attractive to consumers and
helping to diversify our sources of revenue.
Our premium service, Experian.com, is growing strongly. We're
attracting members who want to interact and engage, and the take-up
rates for our mobile apps and educational services such as
ScoreTracker are encouraging. During the year we also launched a
new service enabling consumers to access their credit report for
free. This is proving to be a successful mechanism for drawing
traffic to our site, which can be commercialised in a variety of
ways. Since launch we have accumulated over 3m totally free
members.
The prospective acquisition of CSID is a further important step
in the execution of our strategy, enabling us to attract a broader
range of consumers by packaging identity protection as part of our
membership services, broaden our offer to third-party white-label
partners and expand consumer identity protection services
internationally.
Latin America
Helped by counter-cyclical revenues and our new growth
initiatives, our business in Latin America has held up well in a
worsening economic environment, with organic revenue growth of
7%.
While we continue to be cautious on the economic outlook in
Brazil, we are investing during the downturn to develop our
business for the longer term. We have restructured our sales
approach in order to capture a greater share of the small and
medium enterprise market. We are building relationships with
consumers to provide new services as well as to collect positive
data opt-ins. We have made significant progress in integrating our
software and fraud prevention services, which has led recently to
much stronger performance in Decision Analytics, and we are
repositioning our Marketing Services business to focus more on
cross-channel marketing and data quality. We have also taken steps
to make our cost base more efficient by setting up a new facility
in the city of São Carlos.
These factors have helped us this year and will continue to
support growth in the coming year.
UK and Ireland
We delivered a good performance in the UK and Ireland, with
organic revenue growth of 5%.
Our business-to-business ('B2B') business in the UK has
performed well as we benefit from investments made in product
innovation, customer service and ever-closer integration of our
product set. Over the year we saw strong market uptake of credit
pre-qualification, business information, as well as identity
verification services. We have delivered progress across a number
of client segments including small businesses, banks, government
departments and other areas. It was a good year for new business,
with a large proportion of our new wins coming about from the
combination of services from across our key business activities.
This approach has helped us to maximise opportunities as clients
have invested in systems upgrades and fraud prevention. We are also
creating new markets as we find new uses for our data, such as in
the UK energy sector where we are helping to track fraud.
While Consumer Services delivered growth for the year as a
whole, we are seeing evolutionary change in the market, similar to
the changes which have occurred in North America. This market shift
gave rise to some slowing in signing new member subscriptions and
some attrition towards the end of the year, and we expect these
trends to continue in the forthcoming year. We are responding in a
similar way as we have done in North America, by broadening our
product range and diversifying our sources of revenue. For example,
we recently secured wins from B2B clients who are providing
Experian scores on statements to their customers and other
membership services. This helps to re-enforce our leadership
position as the provider of scores and data used by the majority of
UK lenders in credit underwriting decisions. We plan to launch
further new services for consumers in the coming months.
EMEA/Asia Pacific
We have delivered good revenue growth in EMEA/Asia Pacific, with
organic revenue growth of 7%.
The actions we've taken to improve performance in EMEA/Asia
Pacific are paying off with better revenue growth and improving
margins. We have reorganised to drive scale and adopted a more
customer-centric approach. We're now focused on fewer markets. We
have reduced complexity, centralised functions, and got our largest
countries focused on our most successful products. Our growth is
being driven by combining credit data with credit decisioning
software and analytics, and by focusing on fraud prevention and
identity verification, and we're winning new deals in cross-channel
marketing. As a result, the average contract value on new wins is
increasing, particularly in Asia Pacific, and we have a strong
pipeline. We will continue with this focused approach and look to
further enhance profitability over the coming year.
EBIT margin
We maintained EBIT margin at constant currency. We faced
exceptional foreign exchange movements which reduced reported Group
revenue by US$412m and EBIT by US$137m compared to last year and
which gave rise to a 60 basis points reduction in the actual EBIT
margin to 26.7%. If recent rates prevail, we no longer expect
foreign exchange to be a headwind for the year ending 31 March
2017.
Cash generation and uses of cash
Cash flow conversion was strong, with EBIT conversion into
operating cash flow of 105%. Operating cash flow was US$1,270m, of
which US$325m was utilised in organic capital investment. Net
disposal proceeds amounted to US$163m, net share repurchases were
US$592m and equity dividends amounted to US$380m. After other small
outflows, net debt was reduced by US$194m to US$3,023m.
At 31 March 2016, net debt was 1.9 times EBITDA, compared to our
target leverage range of 2 to 2.5 times. After the year end, we
announced a definitive agreement to acquire CSID for US$360m. Pro
forma for this acquisition, net debt to EBITDA would be 2.1 times
for the year ending 31 March 2016.
Return on capital employed
Return on capital employed for the year was 15.4% (2015: 14.9%).
This represented organic improvement of 70 basis points, offset by
a 20 basis points headwind from disposals and foreign exchange
effects.
Dividend and share repurchases
We are announcing a second interim dividend of 27.5 US cents per
share, to bring the total for FY16 to 40.0 US cents per share, up
2% on the prior year. This dividend will be paid on 22 July 2016 to
shareholders on the register at the close of business on 24 June
2016. We also expect to execute share repurchases of US$400m in the
forthcoming year, which includes US$144m to complete the existing
US$800m programme.
Group financial results
Revenue by geography
Twelve months ended Growth %
31 March
------------------------------- -------- -------- -----------------------------------------
Total Total Organic
2016 2015(1) at actual at constant at constant
US$m US$m rates rates rates
------------------------------- -------- -------- ----------- ------------- -------------
North America
Credit Services 1,237 1,125 10 10
Decision Analytics 161 165 (2) (2)
Marketing Services 377 383 (2) (2)
Consumer Services 696 717 (3) (3)
-------- -------- ----------- ------------- -------------
Total continuing
activities 2,471 2,390 3 3 3
Discontinuing activities 43 78
-------- -------- ----------- ------------- -------------
Total North America 2,514 2,468
------------------------------- -------- -------- ----------- ------------- -------------
Latin America
Credit Services 579 782 7 7
Decision Analytics 36 46 10 10
Marketing Services 18 28 (4) (4)
-------- -------- ----------- ------------- -------------
Total continuing
activities 633 856 (26) 7 7
Discontinuing activities - 1
-------- -------- ----------- ------------- -------------
Total Latin America 633 857
------------------------------- -------- -------- ----------- ------------- -------------
UK and Ireland
Credit Services 275 277 6 6
Decision Analytics 234 224 12 12
Marketing Services 192 207 - (1)
Consumer Services 255 263 4 4
-------- -------- ----------- ------------- -------------
Total continuing
activities 956 971 (2) 5 5
Discontinuing activities 15 28
-------- -------- ----------- ------------- -------------
Total UK and Ireland 971 999
------------------------------- -------- -------- ----------- ------------- -------------
EMEA/Asia Pacific
Credit Services 149 176 (3) (3)
Decision Analytics 135 130 18 18
Marketing Services 133 135 10 10
-------- -------- ----------- ------------- -------------
Total continuing
activities 417 441 (6) 7 7
Discontinuing activities 15 45
-------- -------- ----------- ------------- -------------
Total EMEA/Asia Pacific 432 486
------------------------------- -------- -------- ----------- ------------- -------------
Total revenue - continuing
activities 4,477 4,658 (4) 5 5
Total revenue - discontinuing
activities 73 152
------------------------------- -------- -------- ----------- ------------- -------------
Total revenue 4,550 4,810
------------------------------- -------- -------- ----------- ------------- -------------
1. 2015 restated for the divestment of Baker Hill (North
America), FootFall (North America, UK & Ireland and EMEA/Asia
Pacific), Consumer Insights (all regions) and other small
businesses in EMEA/Asia Pacific.
See Appendix 2 (page 14) for analyses of revenue, EBIT and EBIT
margin by business segment.
Income statement, earnings and EBIT margin analysis
Twelve months ended 31 Growth %
March
------------------------------------- --------------------------
Total Total
2016 2015(1) at constant at actual
US$m US$m rates rates
------------------------------------- -------- ---------------- ------------- -----------
EBIT by geography
North America 755 741 2
Latin America 226 313 7
UK and Ireland 300 308 4
EMEA/Asia Pacific (4) (10) N/A
-------- ---------------- ------------- -----------
EBIT before Central Activities 1,277 1,352 5
Central Activities - central
corporate costs (82) (81)
-------- ---------------- ------------- -----------
EBIT from continuing activities 1,195 1,271 5 (6)
EBIT - discontinuing activities 15 35
-------- ---------------- ------------- -----------
Total EBIT 1,210 1,306 3 (7)
Net interest (74) (75)
-------- ---------------- ------------- -----------
Benchmark PBT 1,136 1,231 3 (8)
Exceptional items 37 (2)
Amortisation of acquisition
intangibles (119) (134)
Acquisition expenses (4) (1)
Adjustment to the fair
value of contingent consideration (2) (7)
Financing fair value remeasurements (21) (81)
Profit before tax 1,027 1,006
Group tax charge (263) (255)
Profit after tax from continuing
operations 764 751
------------------------------------- -------- ---------------- ------------- -----------
Benchmark earnings
Benchmark PBT 1,136 1,231 3 (8)
Benchmark tax charge (283) (300)
-------- ---------------- ------------- -----------
Overall Benchmark earnings 853 931
------------------------------------- -------- ---------------- ------------- -----------
For owners of Experian
plc 854 930 3 (8)
For non-controlling interests (1) 1
------------------------------------- -------- ---------------- ------------- -----------
Benchmark EPS US89.1c US95.2c 5 (6)
Basic EPS from continuing
operations US78.6c US79.0c
Weighted average number
of ordinary shares 958m 977m
------------------------------------- -------- ---------------- ------------- -----------
EBIT margin - continuing
activities
North America 30.6% 31.0%
Latin America 35.7% 36.6%
UK and Ireland 31.4% 31.7%
EMEA/Asia Pacific (1.0)% (2.3)%
------------------------------------- -------- ---------------- ------------- -----------
EBIT margin 26.7% 27.3%
------------------------------------- -------- ---------------- ------------- -----------
1. 2015 restated for the divestment of Baker Hill (North
America), FootFall (North America, UK & Ireland and EMEA/Asia
Pacific), Consumer Insights (all regions) and other small
businesses in EMEA/Asia Pacific.
See Appendix 1 (page 14) and note 4 to the financial statements
for definitions of non-GAAP measures.
See Appendix 2 (page 14) for analyses of revenue, EBIT and EBIT
margin by business segment.
Total growth % at constant exchange rates below Total EBIT are
estimated.
Business review
North America
Total revenue from continuing activities in North America was
US$2,471m, up 3% on both a total and organic basis.
Credit Services
Total and organic revenue growth was 10%, with strong
performances from all business activities. Across both our consumer
and business credit bureaux, credit prospecting, origination and
customer management volumes were strong, and we secured new
business wins in financial services and other segments, as we
execute on our strategy. Automotive performed well as strength in
vehicle unit sales drove demand for vehicle history reports and
strength in credit volumes. In health we continue to see rapid
growth, driving strength in client bookings and expansion of total
contract value amongst existing hospital and physician
customers.
Decision Analytics
Total and organic revenue declined 2%, as weakness in public
sector more than offset strength in fraud prevention.
Marketing Services
Both total revenue and organic revenue declined by 2%. We saw
further growth in cross-channel marketing, driven by new client
wins and by expansion within existing clients. Data quality also
delivered growth, as did our data targeting business, helped by
growth in digital advertising channels. These factors were offset
by further attrition in email marketing.
Consumer Services
Both total revenue and organic revenue declined by 3% for the
year. There was significant improvement as the year progressed, as
the business returned to growth delivering organic revenue growth
of 2% in the second half. This reflected continued strong growth in
our premium brand, Experian.com and on-boarding of a new affinity
partner. These factors offset contraction in the legacy
direct-to-consumer ('D2C') portfolio.
EBIT and EBIT margin
For continuing activities, North America EBIT was US$755m, up
2%. The EBIT margin was 30.6%, (2015: 31.0%), reflecting ongoing
investment in key strategic growth areas.
Latin America
Total revenue from continuing activities in Latin America was
US$633m, with both total and organic revenue growth of 7% at
constant exchange rates.
Credit Services
At constant exchange rates, total and organic revenue growth in
Credit Services was 7%, with good growth across both consumer and
business information. In Brazil, consumer information was helped by
strong volumes of counter-cyclical products, particularly
delinquency notifications and collections, while business
information was driven by higher volumes and good demand for new
scores and analytics from small and medium enterprise customers. In
our other Latin American markets growth was strong, with progress
in business information as we continue to build our product range
for small and medium enterprises.
Decision Analytics
Total and organic revenue growth was 10% at constant exchange
rates. After a weak start, we benefited from considerable momentum,
particularly in our Spanish Latin America markets. We have secured
several multi-year relationships with larger customers as we
integrate credit risk management software with credit data.
Marketing Services
Total and organic revenue at constant exchange rates declined
4%. While the year started weakly, there was a significant
improvement in the second half driven by cross-channel marketing
and data quality in Brazil.
EBIT and EBIT margin
For Latin America, EBIT increased by 7% at constant currency.
The depreciation of the Brazilian real relative to the US dollar
had a significant impact on reported EBIT, which decreased to
US$226m (2015: US$313m). Foreign exchange movements also had a
significant impact on the reported EBIT margin, which was 35.7%
compared to 36.6% in the prior year.
UK and Ireland
In the UK and Ireland, total revenue from continuing activities
was US$956m, with total and organic revenue growth of 5% at
constant exchange rates.
Credit Services
Total and organic revenue growth at constant exchange rates was
6%, with growth across consumer information, business information
and automotive. Consumer information growth was driven by new
business wins, strength in credit reference volumes, a strong
performance from credit pre-qualification services and momentum in
key verticals such as financial services. In business information,
we are making good progress on our key initiatives including the
expansion of the small and medium enterprise channel through
products such as BusinessExpress, as well as new business wins from
large clients.
Decision Analytics
At constant exchange rates, both total and organic revenue rose
12%. We saw strength across a variety of sectors and products in a
strong year for wins from banking clients and elsewhere. There was
a one-off boost in identity management from the successful roll-out
of a new verification service in the UK public sector, as well as
strong demand from banks for credit risk management and fraud
prevention software and analytics.
Marketing Services
At constant exchange rates, total revenue growth in Marketing
Services was flat and organic revenue declined by 1%. We delivered
growth in data, which has benefited from investments we've made in
targeted advertising in digital channels, and in cross-channel
marketing. This offset softness in email marketing. We also
continue to see good forward bookings for our data quality
business.
Consumer Services
At constant exchange rates total and organic revenue growth was
4%. Growth was driven by higher D2C memberships for Experian
CreditExpert in the first half of the year.
EBIT and EBIT margin
For the UK and Ireland, EBIT from continuing activities was
US$300m, up 4% at constant exchange rates. The EBIT margin was
31.4% (2015: 31.7%), reflecting organic investment in growth
initiatives, higher legal and regulatory costs and the impact of
foreign exchange.
EMEA/Asia Pacific
Total revenue from continuing activities in EMEA/Asia Pacific
was US$417m, with total and organic revenue both up 7% at constant
exchange rates.
Credit Services
Total and organic revenue at constant exchange rates decreased
by 3%. Growth in Asia Pacific was strong, particularly in Japan and
India, which partially offset a decline across our bureaux in EMEA.
The decline in EMEA was primarily due to weak conditions in some
markets such as the Nordics and South Africa.
Decision Analytics
Total and organic revenue growth at constant exchange rates were
both 18%. There was significant growth momentum, driven by a number
of new client wins for credit risk management software, other
credit decisioning tools and fraud prevention.
Marketing Services
Total and organic revenue growth at constant exchange rates were
both 10% as we benefited from new client wins for integrated data
and cross-channel marketing capabilities.
EBIT and EBIT margin
Losses in EMEA/Asia Pacific were significantly reduced to
US$(4)m (2015: US$(10)m). EBIT margin improved to (1.0)% from
(2.3)% at actual exchange rates, as operating efficiencies were
partially offset by foreign exchange headwinds.
Group financial review
Key financials
Year ended 31 March
2016 2015
---------------------------------- ---------- ----------
Revenue - continuing activities US$4,477m US$4,658m
Organic revenue growth 5% 1%
EBIT margin 26.7% 27.3%
Total EBIT US$1,210m US$1,306m
EBIT growth at constant currency 5% 4%
Benchmark PBT US$1,136m US$1,231m
Benchmark tax rate 24.9% 24.4%
Benchmark EPS 89.1 USc 95.2 USc
Benchmark EPS growth at constant
currency 5% 8%
Operating cash flow US$1,270m US$1,359m
Cash flow conversion 105% 104%
Net debt US$3,023m US$3,217m
Total investment (see Appendix US$347m US$443m
5)
Net share purchases US$592m US$192m
---------------------------------- ---------- ----------
The Group has identified and defined certain non-GAAP measures,
as they are the key measures used within the business to assess
performance. These measures are used within this Group financial
review and, unless otherwise indicated, all discussion of Revenue,
EBIT and EBIT margin relates to continuing activities only.
Summary
The Group made significant progress during the year, with
organic revenue growth improving to an average of 5% for the year
as a whole. At constant currency, EBIT margin was stable,
reflecting continued focus on efficiency and investment in our
strategic growth initiatives.
The Group reports its financial results in US dollars and
therefore the weakness of the Group's other trading currencies
(primarily the Brazilian real) against the US dollar during the
year decreased our total revenue by US$412m and Total EBIT by
US$137m, with an adverse impact on EBIT margin of 60 basis points.
Details of the principal exchange rates used are given on page
13.
The background to these results and Group profit performance by
geography is discussed within pages 3 to 10. A summary of
performance by business segment is given in Appendix 2 on page
14.
The Group reported Benchmark PBT of US$1,136m (2015: US$1,231m).
Benchmark EPS of 89.1 US cents (2015: 95.2 US cents) represents an
increase of 5% at constant currency and a reduction of 6% at actual
exchange rates. The net interest expense of US$74m (2015: US$75m)
reflects the continuing benefit of low US dollar interest rates,
together with the very strong cash flow performance. The Benchmark
tax rate was 24.9% (2015: 24.4%).
The Group continued to deliver strong cash generation, with a
105% conversion of Total EBIT to operating cash flow (2015: 104%).
Investment activity in the year has been undertaken within the
capital allocation framework outlined last year and has been
primarily organic. The Group has continued to focus its portfolio,
making six disposals for total cash receipts of US$214m.
Shareholder returns
The Group extended its previously announced US$600m share
purchase programme to US$800m. At 31 March 2016, US$656m of this
programme had been completed.
Taking the total dividend and share purchases together, during
the year the Group returned a total of US$972m to shareholders.
Growing the business
The Group delivered improving growth momentum during the year,
with organic revenue growth returning to its mid single-digit
target range.
Total revenue growth from continuing activities was 5% at
constant exchange rates in the year ended 31 March 2016, with a
reduction of 4% at actual rates.
This year, Total EBIT was US$1,210m, down 7% at actual exchange
rates but up 3% at constant currency. Expenditure through the
income statement in support of growth included initiatives in key
areas such as Brazil, Health, Consumer Services and Credit
Services. We also invested in regulatory and compliance
expenditure, and restructuring and productivity initiatives.
EBIT margin from continuing activities was stable at constant
currency. The impact of foreign exchange movements reduced EBIT
margin by 60 basis points overall for the year.
Generating value
The table at Appendix 3 on page 15 provides a reconciliation of
our underlying profitability, as measured by Total EBIT, to our
statutory profit before tax.
Our net interest expense and the related cash flows have
benefited from the strong cash generation and from low interest
rates globally. At 31 March 2016, the interest on 91% of our net
funding was at fixed rates (2015: 83%).
Our effective tax rate on Benchmark PBT was 24.9%, reflecting
the mix of profits and prevailing tax rates by territory. The
equivalent cash tax rate remains below our Benchmark tax rate and a
reconciliation is provided in the table at Appendix 7 on page 16.
It is currently anticipated that our cash tax rate will increase
and move closer to our Benchmark tax rate over the course of the
next six years, as tax amortisation of goodwill on earlier
acquisitions and prior tax losses are utilised.
Basic EPS was 78.6 US cents (2015: 79.0 US cents). Basic EPS for
the year ended 31 March 2016 included a loss of 1.3 (2015: earnings
of 2.1) US cents per share in respect of discontinued operations.
Benchmark EPS was 89.1 US cents (2015: 95.2 US cents), a decrease
of 6% at actual exchange rates but an increase of 5% at constant
currency. Further information is given in note 11 to the financial
statements. At 31 March 2016, Experian had 1,023 million shares in
issue of which some 77 million were held by employee trusts and as
treasury shares. Accordingly, the number of shares to be used for
the purposes of calculating basic EPS from 31 March 2016 is 946
million. Issues and purchases of shares after 31 March 2016 will
result in amendments to this figure.
The total dividend per share for the year is covered 2.2 times
by Benchmark EPS (2015: 2.4 times) in accordance with our
previously declared policy. Ordinary dividends paid in the year
amounted to US$380m (2015: US$374m).
Cash and liquidity management
As shown in the Cash flow and net debt summary table at Appendix
5 on page 16, we generated very strong operating and free cash
flows in the year. The continued strength of our operating cash
flow performance reflects the nature of our business and financial
model and our focus on working capital management.
Net debt at 31 March 2016 was US$3,023m (2015: US$3,217m), with
undrawn committed borrowing facilities of US$2,175m (2015:
US$2,085m). Our net debt at 31 March 2016 was 1.9 times EBITDA
(2015: 1.9 times), compared to the target range of 2.0 to 2.5 times
that we adopted last year.
Acquisition expenditure has been modest in both the current and
prior years and our capital expenditure of US$339m (2015: US$380m)
was 7.5% (2015: 7.9%) of total revenue. Net capital expenditure was
US$325m (2015: US$376m).
Foreign exchange rates
Foreign exchange - average rates
The principal exchange rates used to translate total revenue and
Total EBIT into the US dollar are shown in the table below.
2016 2015 Weakened against
the US dollar
----------------------- ------ ------ -----------------
US dollar : Brazilian
real 3.59 2.48 31%
Sterling : US dollar 1.51 1.61 6%
Euro : US dollar 1.10 1.26 13%
US dollar : Colombian
peso 2,942 2,118 28%
----------------------- ------ ------ -----------------
Foreign exchange - closing rates
The principal exchange rates used to translate assets and
liabilities into the US dollar at the year end dates are shown are
shown in the table below.
2016 2015
----------------------- ------ ------
US dollar : Brazilian
real 3.56 3.22
Sterling : US
dollar 1.44 1.48
Euro : US dollar 1.14 1.07
US dollar : Colombian
peso 2,997 2,596
-------------------------- ------ ------
Risks and uncertainties
The ten principal risks and uncertainties faced by the Group are
summarised in note 25 to the financial statements.
Appendices
1. Non-GAAP financial information
Experian has identified and defined certain measures that it
believes assist in understanding the performance of the Group.
These 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 these are considered to be key measures used
within the business for assessing performance. Information on
certain of our non-GAAP measures is set out below in the further
appendices. Definitions of all our non-GAAP measures are given in
note 4 to the financial statements.
2. Revenue, EBIT and EBIT margin by business segment
-----------------------------------------------------------------------------
Year ended 31 March Growth %
----------------------------- ------ -------- ------------------------------
2016 2015(1) Total Organic
at constant at constant
US$m US$m rates rates
----------------------------- ------ -------- ------------- -------------
Revenue
Credit Services 2,240 2,360 8 8
Decision Analytics 566 565 9 9
Marketing Services 720 753 1 -
Consumer Services 951 980 (1) (1)
----------------------------- ------ -------- ------------- -------------
Continuing activities 4,477 4,658 5 5
Discontinuing activities(2) 73 152 n/a
----------------------------- ------ -------- ------------- -------------
Total 4,550 4,810 3
----------------------------- ------ -------- ------------- -------------
Total EBIT
Credit Services 791 845 6
Decision Analytics 104 101 17
Marketing Services 141 129 16
Consumer Services 241 277 (11)
----------------------------- ------ -------- ------------- -------------
Total business segments 1,277 1,352 5
Central Activities -
central corporate costs (82) (81) (4)
-----------------------------
Continuing activities 1,195 1,271 5
Discontinuing activities(2) 15 35 n/a
----------------------------- ------ -------- ------------- -------------
Total EBIT 1,210 1,306 3
----------------------------- ------ -------- ------------- -------------
EBIT margin - continuing
activities(3)
Credit Services 35.3% 35.8% (0.4%)
Decision Analytics 18.4% 17.9% 1.3%
Marketing Services 19.6% 17.1% 2.6%
Consumer Services 25.3% 28.3% (2.8%)
----------------------------- ------ -------- ------------- -------------
EBIT margin 26.7% 27.3% -
----------------------------- ------ -------- ------------- -------------
1. 2015 restated for the divestment of Baker Hill, FootFall,
Consumer Insights and other small businesses and their movement to
discontinuing activities within the relevant business segments.
2. Discontinuing activities comprise discontinuing Credit
Services, Decision Analytics and Marketing Services businesses.
3. The growth percentages at constant rates for EBIT margin show
the margin change at constant exchange rates.
3. Reconciliation of Total EBIT to statutory profit before
tax
Year ended 31 March 2016 2015
----------------------------------
US$m US$m
---------------------------------- -------- --------
EBIT at constant currency 1,332 1,271
Currency impact (137) -
---------------------------------- -------- --------
EBIT 1,195 1,271
Discontinuing activities 15 35
---------------------------------- -------- --------
Total EBIT 1,210 1,306
Net interest expense (74) (75)
---------------------------------- -------- --------
Benchmark PBT 1,136 1,231
Exceptional items (Appendix 4) 37 (2)
Other adjustments made to derive
Benchmark PBT (Appendix 4) (146) (223)
---------------------------------- --------
Profit before tax 1,027 1,006
---------------------------------- -------- --------
4. Exceptional items and Other adjustments made to derive
Benchmark PBT
Year ended 31 March 2016 2015
US$m US$m
----------------------------------------- ------ ------
Exceptional items:
(Profit)/loss on disposal of businesses (57) 2
North America security incident 20 -
related costs
----------------------------------------- ------ ------
Exceptional items (37) 2
----------------------------------------- ------ ------
Other adjustments made to derive
Benchmark PBT:
Amortisation of acquisition intangibles 119 134
Acquisition expenses 4 1
Adjustment to the fair value of
contingent consideration 2 7
Financing fair value remeasurements 21 81
----------------------------------------- ------ ------
Other adjustments made to derive
Benchmark PBT 146 223
----------------------------------------- ------ ------
Net charge for Exceptional items
and Other adjustments made to derive
Benchmark PBT 109 225
----------------------------------------- ------ ------
5. Cash flow and net debt summary
Year ended 31 March 2016 2015
US$m US$m
----------------------------------------- -------- --------
Total EBIT 1,210 1,306
Amortisation and depreciation charged
to Benchmark PBT 353 384
Net capital expenditure (Appendix
6) (325) (376)
Increase in working capital (21) (1)
Profit retained in associates (1) (1)
Charge for share incentive plans 54 47
----------------------------------------- -------- --------
Operating cash flow 1,270 1,359
Net interest paid (66) (74)
Tax paid - continuing operations (136) (145)
Dividends paid to non-controlling
interests (3) (5)
----------------------------------------- -------- --------
Free cash flow 1,065 1,135
Acquisitions (22) (67)
Purchase of investments (2) -
Disposal of businesses and investments 163 16
Exceptional items other than disposal
of businesses (20) (12)
Ordinary dividends paid (380) (374)
----------------------------------------- -------- --------
Net cash inflow - continuing operations 804 698
X x
Net debt at 1 April (3,217) (3,809)
Net share purchases (592) (192)
Exchange, discontinued operations
and other movements (18) 86
----------------------------------------- -------- --------
Net debt at 31 March (3,023) (3,217)
----------------------------------------- -------- --------
Total investment of US$347m (2015: US$443m) comprises cash flows
for net capital expenditure and acquisitions.
6. Reconciliation of net capital expenditure
Year ended 31 March 2016 2015
US$m US$m
------------------------------------- ------ ------
Capital expenditure as reported
in the Group cash flow statement 339 380
Disposal of property, plant and
equipment (14) (4)
Net capital expenditure as reported
in the Cash flow and net debt
summary 325 376
------------------------------------- ------ ------
7. Cash tax reconciliation
Year ended 31 March 2016 2015
% %
--------------------------------------- ------ ------
Tax charge on Benchmark PBT 24.9 24.4
Tax relief on intangible assets (6.5) (7.9)
Benefit of brought forward tax
losses (4.6) (3.8)
Other (1.8) (0.9)
Tax paid as a percentage of Benchmark
PBT 12.0 11.8
--------------------------------------- ------ ------
Group income statement
for the year ended 31 March 2016
2016 2015
---------------------------------------- -----------------------------------------
Benchmark(1) Non-benchmark(2) Total Benchmark(1) Non-benchmark(2) Total
US$m US$m US$m US$m US$m US$m
Revenue (note
5(a)) 4,550 - 4,550 4,810 - 4,810
------------ ---------------- -------- ------------- ---------------- --------
Labour costs (1,712) - (1,712) (1,799) - (1,799)
Data and information
technology costs (502) - (502) (470) - (470)
Amortisation and
depreciation charges (353) (119) (472) (384) (134) (518)
Marketing and
customer acquisition
costs (349) - (349) (365) - (365)
Other operating
charges (428) (26) (454) (491) (10) (501)
------------ ---------------- -------- ------------- ---------------- --------
Total operating
expenses (3,344) (145) (3,489) (3,509) (144) (3,653)
Profit on disposal
of businesses
(note 7(b)) - 57 57 - - -
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Operating profit 1,206 (88) 1,118 1,301 (144) 1,157
Interest income 20 - 20 25 - 25
Finance expense (94) (21) (115) (100) (81) (181)
------------ ---------------- -------- ------------- ---------------- --------
Net finance costs
(note 8(a)) (74) (21) (95) (75) (81) (156)
Share of post-tax
profit of associates 4 - 4 5 - 5
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Profit before
tax (note 5(a)) 1,136 (109) 1,027 1,231 (225) 1,006
Group tax charge
(note 9(a)) (283) 20 (263) (300) 45 (255)
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Profit for the
financial year
from continuing
operations 853 (89) 764 931 (180) 751
(Loss)/profit
for the financial
year from discontinued
operations (note
10(a)) - (12) (12) - 21 21
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Profit for the
financial year 853 (101) 752 931 (159) 772
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Attributable to:
Owners of Experian
plc 854 (101) 753 930 (158) 772
Non-controlling
interests (1) - (1) 1 (1) -
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Profit for the
financial year 853 (101) 752 931 (159) 772
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Total EBIT(1) 1,210 - 1,210 1,306 - 1,306
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
US cents US cents US cents US cents US cents US cents
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
Earnings per share
(note 11(a))
Basic 89.1 (10.5) 78.6 95.2 (16.2) 79.0
Diluted 88.6 (10.5) 78.1 94.1 (16.0) 78.1
Earnings per share
from continuing
operations
(note 11(a))
Basic 89.1 (9.2) 79.9 95.2 (18.3) 76.9
Diluted 88.6 (9.2) 79.4 94.1 (18.1) 76.0
Benchmark PBT
per share(1) 118.6 126.0
Full year dividend
per share(1) 40.00 39.25
----------------------- ------------ ---------------- -------- ------------- ---------------- --------
1. Total EBIT, Benchmark items and full year dividend per share
are non-GAAP measures, defined where appropriate in note 4 to the
financial statements.
2. The loss before tax for non-benchmark items of US$109m (2015:
US$225m) comprises a credit for exceptional items of US$37m (2015:
charge of US$2m) and charges for other adjustments made to derive
Benchmark PBT of US$146m (2015: US$223m). Further information is
given in note 7 to the financial statements.
The segmental disclosures in notes 5 and 6 indicate the impact
of business disposals on the comparative revenue and Total EBIT
figures.
Group statement of comprehensive income
for the year ended 31 March 2016
2016 2015
US$m US$m
--------------------------------------- ------ ------
Profit for the financial year 752 772
----------------------------------------- ------ ------
Other comprehensive income
Items that will not be reclassified
to profit or loss:
Remeasurement of post-employment
benefit assets and obligations
(note (14(b)) (30) (15)
Deferred tax credit 6 3
----------------------------------------- ------ ------
Items that will not be reclassified
to profit or loss (24) (12)
----------------------------------------- ------ ------
Items that may be reclassified
subsequently to profit or loss:
Fair value gains/(losses) recognised
on available-for-sale financial
assets 1 (1)
Currency translation losses (151) (571)
----------------------------------------- ------ ------
Items that may be reclassified
subsequently to profit or loss (150) (572)
----------------------------------------- ------ ------
Items reclassified to profit or
loss:
Fair value gain on available-for-sale
financial assets - (2)
Cumulative currency translation
gain in respect of divestments 2 -
--------------------------------------- ------ ------
Items reclassified to profit or
loss 2 (2)
----------------------------------------- ------ ------
Other comprehensive income for
the financial year(1) (172) (586)
----------------------------------------- ------ ------
Total comprehensive income for
the financial year 580 186
Attributable to:
Continuing operations 593 166
Discontinued operations (12) 21
----------------------------------------- ------ ------
Owners of Experian plc 581 187
Non-controlling interests (1) (1)
----------------------------------------- ------ ------
Total comprehensive income for
the financial year 580 186
----------------------------------------- ------ ------
1. Amounts reported within other comprehensive income are in
respect of continuing operations and, except as reported for
post-employment benefit assets and obligations, there is no
associated tax. Currency translation items are taken directly to
the translation reserve within other reserves. Other items within
other comprehensive income are taken directly to retained
earnings.
Group balance sheet
at 31 March 2016
Notes 2016 2015
US$m US$m
--------------------------------------- ------ --------- ---------
Non-current assets
Goodwill 4,198 4,393
Other intangible assets 13 1,431 1,624
Property, plant and equipment 13 352 390
Investments in associates 8 8
Deferred tax assets 159 264
Post-employment benefit assets 14(a) 26 58
Trade and other receivables 8 10
Available-for-sale financial assets 43 40
Other financial assets 53 125
--------------------------------------- ------ --------- ---------
6,278 6,912
--------------------------------------- ------ --------- ---------
Current assets
Inventories 1 3
Trade and other receivables 902 878
Current tax assets 24 29
Other financial assets 46 8
Cash and cash equivalents 15(f) 156 147
--------------------------------------- ------ --------- ---------
1,129 1,065
--------------------------------------- ------ --------- ---------
Current liabilities
Trade and other payables (1,124) (1,122)
Borrowings 17(b) (52) (146)
Current tax liabilities (128) (91)
Provisions (27) (31)
Other financial liabilities (12) (14)
--------------------------------------- ------ --------- ---------
(1,343) (1,404)
--------------------------------------- ------ --------- ---------
Net current liabilities (214) (339)
--------------------------------------- ------ --------- ---------
Total assets less current liabilities 6,064 6,573
--------------------------------------- ------ --------- ---------
Non-current liabilities
Trade and other payables (24) (33)
Borrowings 17(b) (3,068) (3,146)
Deferred tax liabilities (352) (385)
Post-employment benefit obligations 14(a) (55) (60)
Other financial liabilities (127) (148)
--------------------------------------- ------ --------- ---------
(3,626) (3,772)
--------------------------------------- ------ --------- ---------
Net assets 2,438 2,801
--------------------------------------- ------ --------- ---------
Equity
Called up share capital 19 102 103
Share premium account 19 1,519 1,506
Retained earnings 18,633 18,523
Other reserves (17,830) (17,346)
--------------------------------------- ------ --------- ---------
Attributable to owners of Experian
plc 2,424 2,786
Non-controlling interests 14 15
--------------------------------------- ------ --------- ---------
Total equity 2,438 2,801
--------------------------------------- ------ --------- ---------
Group statement of changes in total equity
for the year ended 31 March 2016
Called Share Retained Other Total
up share premium earnings reserves Attributable equity
capital account to owners
(Note (Note of Experian Non-controlling
19) 19) plc interests
US$m US$m US$m US$m US$m US$m US$m
---- --------------- --------- ---------- ---------- ------------- ---------------- -------- ------
At 1 April 2015 103 1,506 18,523 (17,346) 2,786 15 2,801
-------------------- --------- ---------- ---------- ------------- ---------------- -------- ------
Profit for the
financial year - - 753 - 753 (1) 752
Other comprehensive
income for the
financial year - - (23) (149) (172) - (172)
-------------------- --------- ---------- ---------- ------------- ---------------- -------- ------
Total comprehensive
income for the
financial year - - 730 (149) 581 (1) 580
-------------------- --------- ---------- ---------- ------------- ---------------- -------- ------
Transactions
with owners:
Employee share
incentive plans:
- value of employee
services - - 54 - 54 - 54
- shares issued
on vesting - 13 - - 13 - 13
- other exercises
of share awards
and options - - (76) 80 4 - 4
- related tax
charge - - (12) - (12) - (12)
- purchase of
shares by employee
trusts - - - (71) (71) - (71)
- other payments - - (5) - (5) - (5)
Purchase of shares
held as treasury
shares - - - (344) (344) - (344)
Purchase and
cancellation
of own shares (1) - (189) - (190) - (190)
Transactions
in respect of
non-controlling
interests - - (10) - (10) 3 (7)
Fair value gain
on commitments
to purchase own
shares - - (2) - (2) - (2)
Dividends paid - - (380) (380) (3) (383)
-------------------- --------- ---------- ---------- ------------- ---------------- -------- ------
Transactions
with owners (1) 13 (620) (335) (943) - (943)
-------------------- --------- ---------- ---------- ------------- ---------------- -------- ------
At 31 March 2016 102 1,519 18,633 (17,830) 2,424 14 2,438
-------------------- --------- ---------- ---------- ------------- ---------------- -------- ------
for the year ended 31 March 2015
Called Share Retained Other Total
up share premium earnings reserves Attributable equity
capital account to owners
(Note (Note of Experian Non-controlling
19) 19) plc interests
US$m US$m US$m US$m US$m US$m US$m
---------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 1 April 2014 103 1,492 18,167 (16,680) 3,082 22 3,104
---------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Profit for the
financial year - - 772 - 772 - 772
Other comprehensive
income for the
financial year - - (15) (570) (585) (1) (586)
---------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Total comprehensive
income for the
financial year - - 757 (570) 187 (1) 186
---------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions
with owners:
Employee share
incentive plans:
- value of employee
services - - 47 - 47 - 47
- shares issued
on vesting - 14 - - 14 - 14
- other exercises
of share awards
and options - - (104) 112 8 - 8
- related tax
credit - - 30 - 30 - 30
- purchase of
shares by employee
trusts - - - (38) (38) - (38)
- other payments - - (6) - (6) - (6)
Purchase of shares
held as treasury
shares - - - (170) (170) - (170)
Transactions
in respect of
non-controlling
interests - - 6 - 6 (1) 5
Dividends paid - - (374) - (374) (5) (379)
Transactions
with owners - 14 (401) (96) (483) (6) (489)
---------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 31 March 2015 103 1,506 18,523 (17,346) 2,786 15 2,801
---------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Group cash flow statement
for the year ended 31 March 2016
Notes 2016 2015
US$m US$m
------------------------------------------- ------ -------- --------
Cash flows from operating activities
Cash generated from operations 15(a) 1,570 1,720
Interest paid (86) (96)
Interest received 20 22
Dividends received from associates 3 4
Tax paid 15(c) (136) (145)
------------------------------------------- ------ -------- --------
Net cash inflow from operating activities
- continuing operations 1,371 1,505
Net cash inflow from operating activities
- discontinued operations 10(a) - 32
------------------------------------------- ------ -------- --------
Net cash inflow from operating activities 1,371 1,537
------------------------------------------- ------ -------- --------
Cash flows from investing activities
Purchase of other intangible assets (271) (316)
Purchase of property, plant and equipment (68) (64)
Sale of property, plant and equipment 13 2
(Purchase)/sale of other financial
assets (2) 7
Acquisition of subsidiaries, net
of cash acquired 15(d) (13) (58)
Disposal of subsidiaries - continuing
operations 7(b) 150 18
Disposal of subsidiaries - discontinued
operations 10(b) 13 (9)
-------- --------
Net cash flows used in investing
activities (178) (420)
------------------------------------------- ------ -------- --------
Cash flows from financing activities
Cash inflow in respect of net share
purchases 15(e) 13 16
Cash outflow in respect of net share
purchases 15(e) (605) (208)
Other payments on vesting of share
awards (5) (6)
Payments to acquire non-controlling
interests 15(d) (6) (8)
New borrowings 204 -
Repayment of borrowings (361) (539)
Net payments for derivative financial
instruments held to manage currency
profile (29) (2)
Net receipts from equity swaps 1 2
Dividends paid (383) (379)
------------------------------------------- ------ -------- --------
Net cash flows used in financing
activities (1,171) (1,124)
------------------------------------------- ------ -------- --------
Net increase/(decrease) in cash and
cash equivalents 22 (7)
Cash and cash equivalents at 1 April 145 208
Exchange movements on cash and cash
equivalents (16) (56)
------------------------------------------- ------ -------- --------
Cash and cash equivalents at 31 March 15(f) 151 145
------------------------------------------- ------ -------- --------
Notes to the financial statements
for the year ended 31 March 2016
1. Corporate information
Experian plc (the 'Company') is the ultimate parent company of
the Experian group of companies ('Experian' or the 'Group'). The
Company is incorporated and registered in Jersey as a public
company limited by shares and is resident in Ireland. The Company's
ordinary shares are traded on the London Stock Exchange's Regulated
Market (Premium Listing).
2. Basis of preparation
The financial information set out in this preliminary
announcement does not constitute the Group's statutory financial
statements, which comprise the annual report and audited financial
statements, for the years ended 31 March 2016 or 31 March 2015 but
is derived from the statutory financial statements for the year
ended 31 March 2016. The Group's statutory financial statements for
the year ended 31 March 2016 will be made available to shareholders
in June 2016 and 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 2015 have been delivered to
the Jersey Registrar of Companies. The auditors reported on those
financial statements and gave an unqualified report which did 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 2016 have been:
-- prepared in accordance with the Companies (Jersey) Law 1991
and International Financial Reporting Standards ('IFRS' or 'IFRSs')
as adopted for use in the European Union ('EU') and IFRS
Interpretations Committee interpretations;
-- prepared on a going concern basis and under the historical
cost convention, as modified for the revaluation of
available-for-sale financial assets and certain other financial
assets and financial liabilities;
-- presented in US dollars, the most representative currency of
the Group's operations, and generally rounded to the nearest
million; and
-- prepared using the principal exchange rates set out on page 13.
Other than those disclosed in this preliminary announcement, no
significant events impacting the Group have occurred between 31
March 2016 and 10 May 2016 when this preliminary announcement was
approved for issue.
This preliminary announcement has been prepared in accordance
with the Listing Rules of the UK Financial Conduct Authority, using
the accounting policies applied in the preparation of the Group's
statutory financial statements for the year ended 31 March 2016.
Those policies were published in full in the Group's statutory
financial statements for the year ended 31 March 2015 and are
available on a corporate website, at
www.experianplc.com/annualreport.
3. Recent accounting developments
There have been no accounting standards, amendments and
interpretations effective for the first time in these financial
statements and which have had a material impact on the financial
statements.
There are a number of new standards and amendments to existing
standards currently in issue but not yet effective, including three
significant standards:
-- IFRS 9 'Financial instruments';
-- IFRS 15 'Revenue from contracts with customers'; and
-- IFRS 16 'Leases'.
IFRS 9 and IFRS 15 are now expected to be effective for Experian
for the year ending 31 March 2019 with IFRS 16 expected to be
effective for the year ending 31 March 2020 (all subject to EU
endorsement). It is not currently practicable to quantify their
effect. IFRS 15 introduces a single, principles-based five-step
revenue recognition model to be applied to all sales contracts. Our
assessment of the impact of IFRS 15 on the Group financial
statements has commenced; areas of potential change have been noted
and are undergoing further review.
There are no other new standards, amendments to existing
standards or interpretations that are not yet effective that would
be expected to have a material impact on the Group. Such
developments are routinely reviewed by the Group and its financial
reporting systems are adapted as appropriate.
Notes to the financial statements (continued)
for the year ended 31 March 2016
4. Use of non-GAAP measures in the financial statements
As detailed below, the Group has identified and defined certain
measures that it believes assist understanding of Experian's
performance. 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 key measures used within
the business to assess performance.
(a) Benchmark profit before tax ('Benchmark PBT')
Benchmark PBT is disclosed to indicate the Group's underlying
profitability. It is defined as profit before amortisation and
impairment of acquisition intangibles, impairment of goodwill,
acquisition expenses, adjustments to contingent consideration,
exceptional items, financing fair value remeasurements, tax and
discontinued operations. It includes the Group's share of
continuing associates' pre-tax results.
An explanation of the basis on which Experian reports
exceptional items is provided below. Other adjustments made to
derive Benchmark PBT are explained as follows:
-- Charges for the amortisation and impairment of acquisition
intangibles are excluded from the definition of Benchmark PBT
because these charges are based on judgments about their value and
economic life. Impairment of goodwill is similarly excluded.
-- Acquisition expenses relating to successful, active or
aborted acquisitions are excluded from the definition of Benchmark
PBT as they bear no relation to the Group's underlying performance
or to the performance of any acquired businesses. Adjustments to
contingent consideration are similarly excluded.
-- Charges and credits for financing fair value remeasurements
within finance expense in the Group income statement are excluded
from the definition of Benchmark PBT. These include that element of
the Group's derivatives that is ineligible for hedge accounting
together with gains and losses on put options in respect of
acquisitions. Amounts recognised generally arise from market
movements and accordingly bear no direct relation to the Group's
underlying performance.
(b) Earnings before interest and tax ('Total EBIT' and
'EBIT')
Total EBIT is defined as Benchmark PBT before the net interest
expense charged therein. Total EBIT excluding the results of
discontinuing activities is defined and reported as EBIT.
(c) Earnings before interest, tax, depreciation and amortisation
('EBITDA')
EBITDA is defined as Total EBIT before the depreciation and
amortisation charged therein.
(d) Continuing activities and Discontinuing activities
Businesses trading at 31 March 2016, which are not disclosed as
discontinuing activities, are treated as continuing activities.
Discontinuing activities are businesses sold, closed or identified
for closure during a financial year. These are treated as
discontinuing activities for both revenue and EBIT purposes. The
results of discontinuing activities are disclosed separately with
the results of the prior period re-presented as appropriate. This
measure differs from the definition of discontinued operations set
out in IFRS 5.
(e) Constant exchange rates
To highlight its organic performance, Experian discusses its
results in terms of growth at constant exchange rates, unless
otherwise stated. This represents growth calculated after
translating both years' performance at the prior year's average
exchange rates.
(f) Total growth
This is the year-on-year change in the performance of Experian's
activities. Total growth at constant exchange rates removes the
translational foreign exchange effects arising on the consolidation
of Experian's activities.
(g) Organic revenue growth
This is the year-on-year change in the revenue of continuing
activities, translated at constant exchange rates, excluding
acquisitions until the first anniversary of their
consolidation.
Notes to the financial statements (continued)
for the year ended 31 March 2016
4. Use of non-GAAP measures in the financial statements
(continued)
(h) Benchmark earnings and Total benchmark earnings
Benchmark earnings comprise Benchmark PBT less attributable tax
and non-controlling interests. The attributable tax for this
purpose excludes significant tax credits and charges arising in the
year which, in view of their size or nature, are not comparable
with previous years, together with tax arising on exceptional items
and on total adjustments made to derive Benchmark PBT.
Benchmark PBT less attributable tax is designated as Total
benchmark earnings.
(i) Benchmark earnings per share ('Benchmark EPS')
Benchmark EPS comprises Benchmark earnings divided by the
weighted average number of issued ordinary shares, as adjusted for
own shares held.
(j) Benchmark PBT per share
Benchmark PBT per share comprises Benchmark PBT divided by the
weighted average number of issued ordinary shares, as adjusted for
own shares held.
(k) Benchmark tax charge and rate
The Benchmark tax charge is the tax charge applicable to
Benchmark PBT. It differs from the Group tax charge by tax
attributable to exceptional items and other adjustments made to
derive Benchmark PBT, and exceptional tax charges. A reconciliation
is provided in note 9(b) to these financial statements. The related
effective rate of tax is calculated by dividing the Benchmark tax
charge by Benchmark PBT.
(l) Exceptional items
The separate reporting of non-recurring exceptional items gives
an indication of the Group's underlying performance. Exceptional
items include those arising from the profit or loss on disposal of
businesses, closure costs of major business units, costs of
significant restructuring programmes and other significant one-off
items. All other restructuring costs are charged against Total
EBIT, in the segments in which they are incurred.
(m) Full year dividend per share
Full year dividend per share comprises the total of dividends
per share announced in respect of the financial year.
(n) Operating and free cash flow
Operating cash flow is Total EBIT, plus amortisation,
depreciation and charges in respect of share-based incentive plans,
less capital expenditure net of disposal proceeds and adjusted for
changes in working capital and the profit or loss retained in
continuing associates. Free cash flow is derived from operating
cash flow by excluding net interest paid, tax paid in respect of
continuing operations and dividends paid to non-controlling
interests.
(o) Cash flow conversion
Cash flow conversion is operating cash flow expressed as a
percentage of Total EBIT.
(p) Net debt
Net debt is borrowings (and the fair value of derivatives
hedging borrowings) excluding accrued interest, less cash and cash
equivalents reported in the Group balance sheet and other highly
liquid bank deposits with original maturities greater than three
months.
Notes to the financial statements (continued)
for the year ended 31 March 2016
5. Segment information
(a) Income statement
EMEA/ Total Total
North Latin UK and Asia operating Central continuing
America America Ireland Pacific(1) segments Activities operations(2)
Year ended 31 March US$m US$m US$m US$m US$m US$m US$m
2016
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Revenue from
external
customers
Continuing
activities 2,471 633 956 417 4,477 - 4,477
Discontinuing
activities 43 - 15 15 73 - 73
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Total 2,514 633 971 432 4,550 - 4,550
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Reconciliation from
Total EBIT to
profit/(loss)
before tax
Total EBIT
Continuing
activities 755 226 300 (4) 1,277 (82) 1,195
Discontinuing
activities 11 - 3 1 15 - 15
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Total EBIT 766 226 303 (3) 1,292 (82) 1,210
Net interest (note
8(b)) - - - - - (74) (74)
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Benchmark PBT 766 226 303 (3) 1,292 (156) 1,136
Exceptional items
(note 7(a)) 53 - 2 (18) 37 - 37
Amortisation of
acquisition
intangibles (77) (23) (12) (7) (119) - (119)
Acquisition
expenses (4) - - - (4) - (4)
Adjustment to the
fair value of
contingent
consideration - - (2) - (2) - (2)
Financing fair
value
remeasurements - - - - - (21) (21)
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Profit/(loss)
before
tax 738 203 291 (28) 1,204 (177) 1,027
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
EMEA/ Total Total
North Latin UK and Asia operating Central continuing
America America Ireland Pacific(1) segments Activities operations
Year ended 31 March US$m US$m US$m US$m US$m US$m US$m
2015
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Revenue from
external
customers
Continuing
activities 2,390 856 971 441 4,658 - 4,658
Discontinuing
activities 78 1 28 45 152 - 152
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Total 2,468 857 999 486 4,810 - 4,810
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Reconciliation from
Total EBIT to
profit/(loss)
before tax
Total EBIT
Continuing
activities 741 313 308 (10) 1,352 (81) 1,271
Discontinuing
activities 20 - 6 9 35 - 35
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Total EBIT 761 313 314 (1) 1,387 (81) 1,306
Net interest (note
8(b)) - - - - - (75) (75)
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Benchmark PBT 761 313 314 (1) 1,387 (156) 1,231
Exceptional items
(note 7(a)) - (2) - - (2) - (2)
Amortisation of
acquisition
intangibles (74) (37) (14) (9) (134) - (134)
Acquisition
expenses - - (1) - (1) - (1)
Adjustment to the
fair value of
contingent
consideration - - (7) - (7) - (7)
Financing fair
value
remeasurements - - - - - (81) (81)
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
Profit/(loss)
before
tax 687 274 292 (10) 1,243 (237) 1,006
-------------------- --------- --------- --------- ------------- ----------- ------------ ---------------
1. EMEA/Asia Pacific represents all other operating segments.
2. A loss before tax of US$20m arose in the year ended
31 March 2016 in respect of discontinued operations.
Further information is given in note 10.
Additional information by operating segment, including
that on total and organic growth at constant exchange
rates, is provided within pages 3 to 11.
Notes to the financial statements (continued)
for the year ended 31 March 2016
5. Segment information (continued)
(b) Revenue by country
2016 2015
US$m US$m
------------------------ ------ ------
USA 2,503 2,453
Brazil 559 763
UK 964 992
Colombia 57 73
Other 467 529
------------------------ ------ ------
4,550 4,810
------------------------ ------ ------
Revenue is primarily attributable to countries other than
Ireland. No single client accounted for 10% or more of revenue in
the current or prior year. Revenue from the USA, Brazil and the UK
in aggregate comprises 88% (2015: 87%) of Group revenue.
(c) Revenue by business segment
The additional analysis of revenue from external customers
provided to the chief operating decision-maker and accordingly
reportable under IFRS 8 is given within note 6. This is
supplemented by voluntary disclosure of the profitability of groups
of service lines. For ease of reference, Experian continues to use
the term 'business segments' when discussing the results of groups
of service lines.
Notes to the financial statements (continued)
for the year ended 31 March 2016
6. Information on business segments (including non-GAAP
disclosures)
Total Total
Credit Decision Marketing Consumer business Central continuing
Services Analytics Services Services segments Activities operations(1)
Year ended 31 March US$m US$m US$m US$m US$m US$m US$m
2016
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Revenue from external
customers
Continuing activities 2,240 566 720 951 4,477 - 4,477
Discontinuing
activities 3 13 57 - 73 - 73
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Total 2,243 579 777 951 4,550 - 4,550
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Reconciliation from
Total EBIT to
profit/(loss)
before tax
Total EBIT
Continuing activities 791 104 141 241 1,277 (82) 1,195
Discontinuing
activities 1 6 8 - 15 - 15
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Total EBIT 792 110 149 241 1,292 (82) 1,210
Net interest (note
8(b)) - - - - - (74) (74)
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Benchmark PBT 792 110 149 241 1,292 (156) 1,136
Exceptional items
(note
7(a)) (5) 48 (6) - 37 - 37
Amortisation of
acquisition
intangibles (77) (25) (11) (6) (119) - (119)
Acquisition expenses (1) - - (3) (4) - (4)
Adjustment to the
fair
value of contingent
consideration (2) - - - (2) - (2)
Financing fair value
remeasurements - - - - - (21) (21)
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Profit/(loss) before
tax 707 133 132 232 1,204 (177) 1,027
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ ---------------
Total Total
Credit Decision Marketing Consumer business Central continuing
Services Analytics Services Services segments Activities operations
Year ended 31 March US$m US$m US$m US$m US$m US$m US$m
2015
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ -----------------
Revenue from external
customers
Continuing activities 2,360 565 753 980 4,658 - 4,658
Discontinuing
activities 6 29 117 - 152 - 152
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ -----------------
Total 2,366 594 870 980 4,810 - 4,810
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ -----------------
Reconciliation from
Total EBIT to
profit/(loss)
before tax
Total EBIT
Continuing activities 845 101 129 277 1,352 (81) 1,271
Discontinuing
activities 2 13 20 - 35 - 35
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ -----------------
Total EBIT 847 114 149 277 1,387 (81) 1,306
Net interest (note
8(b)) - - - - - (75) (75)
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ -----------------
Benchmark PBT 847 114 149 277 1,387 (156) 1,231
Exceptional items
(note
7(a)) - - (2) - (2) - (2)
Amortisation of
acquisition
intangibles (90) (15) (17) (12) (134) - (134)
Acquisition expenses (1) - - - (1) - (1)
Adjustment to the
fair
value of contingent
consideration (7) - - - (7) - (7)
Financing fair value
remeasurements - - - - - (81) (81)
Profit/(loss) before
tax 749 99 130 265 1,243 (237) 1,006
---------------------- ---------- ----------- ---------- ---------- ---------- ------------ -----------------
1. A loss before tax of US$20m arose in the year ended
31 March 2016 in respect of discontinued operations. Further
information is given in note 10.
Additional information by business segment, including
that on total and organic growth at constant exchange
rates, is provided within pages 3 to 11 and within Appendix
2 on page 15. Revenue and Total EBIT by business segment
for the year ended 31 March 2015 are now re-analysed in
the above table between continuing and discontinuing activities,
following the disposal of a number of businesses during
the current year.
Notes to the financial statements (continued)
for the year ended 31 March 2016
7. Exceptional items and Other adjustments made to derive
Benchmark PBT
(a) Net charge for Exceptional items and Other adjustments made
to derive Benchmark PBT
2016 2015
US$m US$m
----------------------------------------- ------ ------
Exceptional items:
(Profit)/loss on disposal of businesses
(note 7(b)) (57) 2
North America security incident 20 -
related costs (note 7(c))
----------------------------------------- ------ ------
(Credit)/charge for exceptional
items (37) 2
----------------------------------------- ------ ------
Other adjustments made to derive
Benchmark PBT:
Amortisation of acquisition intangibles 119 134
Acquisition expenses 4 1
Adjustment to the fair value of
contingent consideration 2 7
Financing fair value remeasurements 21 81
----------------------------------------- ------ ------
Charge for other adjustments made
to derive Benchmark PBT 146 223
----------------------------------------- ------ ------
Net charge for Exceptional items
and Other adjustments made to
derive Benchmark PBT 109 225
----------------------------------------- ------ ------
By income statement caption:
Amortisation and depreciation
charges 119 134
Other operating charges 26 10
Profit on disposal of businesses (57) -
----------------------------------------- ------ ------
Within operating profit 88 144
Finance expense 21 81
----------------------------------------- ------ ------
Net charge for Exceptional items
and Other adjustments made to
derive Benchmark PBT 109 225
----------------------------------------- ------ ------
(b) Profit/(loss) on disposal of businesses
The profit before tax on the disposal of businesses in the year
ended 31 March 2016 primarily related to the disposals of the
FootFall and Baker Hill businesses and the consumer insights
businesses, Hitwise and Simmons. The net profit of US$57m and the
related cash inflow in the year of US$150m are analysed in the
table below.
US$m
------------------------------------- -----
Goodwill 85
Other intangible assets 40
Property, plant and equipment 3
Deferred tax assets 5
Inventories 2
Trade and other receivables 31
Cash and cash equivalents 4
Trade and other payables (40)
-------------------------------------- -----
Net assets disposed 130
-------------------------------------- -----
Disposal proceeds and costs:
Proceeds 213
Transaction costs (24)
Recycled cumulative exchange loss (2)
-------------------------------------- -----
Disposal proceeds, net of costs 187
-------------------------------------- -----
Profit before tax on disposal 57
-------------------------------------- -----
Cash inflow from disposal:
Proceeds received in cash 214
Cash and cash equivalents sold with
businesses (4)
Tax paid on disposal (42)
Other transaction costs paid (18)
-------------------------------------- -----
Net cash inflow 150
-------------------------------------- -----
The loss on disposal of businesses of US$2m in the prior year
related to small disposals with a cash inflow of US$18m.
Notes to the financial statements (continued)
for the year ended 31 March 2016
7. Exceptional items and Other adjustments made to derive
Benchmark PBT (continued)
(c) North America security incident related costs
In September 2015, Experian North America suffered an
unauthorised intrusion to its Decision Analytics computing
environment that allowed unauthorised acquisition of certain data
belonging to a client, T-Mobile USA, Inc. Experian notified the
individuals who may have been affected and offered free credit
monitoring and identity theft resolution services. In addition,
government agencies were notified as required by law.
The one-off costs to Experian of directly responding to this
incident are reflected in a charge of US$20m in the year ended 31
March 2016.
8. Net finance costs
(a) Net finance costs included in
profit before tax
2016 2015
US$m US$m
---------------------------------------- ----- -----
Interest income:
Bank deposits, short-term investments
and loan notes (20) (24)
Interest on opening retirement benefit
assets - (1)
Interest income (20) (25)
---------------------------------------- ----- -----
Finance expense:
Interest expense 94 100
Charge in respect of financing fair
value remeasurements 21 81
Finance expense 115 181
---------------------------------------- ----- -----
Net finance costs included in profit
before tax 95 156
---------------------------------------- ----- -----
(b) Net interest expense included
in Benchmark PBT
2016 2015
US$m US$m
---------------------------------------- ----- -----
Interest income (20) (25)
Interest expense 94 100
---------------------------------------- ----- -----
Net interest expense included in
Benchmark PBT 74 75
---------------------------------------- ----- -----
Notes to the financial statements (continued)
for the year ended 31 March 2016
9. Tax - continuing operations
(a) Group tax charge and effective rate of tax
2016 2015
US$m US$m
--------------------------------------- ------ ------
Group tax charge 263 255
--------------------------------------- ------ ------
Profit before tax 1,027 1,006
--------------------------------------- ------ ------
Effective rate of tax based on profit
before tax 25.6% 25.3%
--------------------------------------- ------ ------
(b) Reconciliation of the Group tax charge to the Benchmark tax
charge
2016 2015
US$m US$m
-------------------------------------- ------ ------
Group tax charge 263 255
Tax charge on disposal of businesses (34) -
Tax relief on other exceptional
items 8 -
Tax relief on other adjustments
made to derive Benchmark PBT 46 45
-------------------------------------- ------ ------
Benchmark tax charge 283 300
-------------------------------------- ------ ------
Benchmark PBT 1,136 1,231
-------------------------------------- ------ ------
Benchmark tax rate 24.9% 24.4%
-------------------------------------- ------ ------
(c) Tax recognised in other comprehensive income and directly in
equity
In the year ended 31 March 2016, the charge of US$172m (2015:
US$586m) in respect of other comprehensive income is after a
deferred tax credit of US$6m (2015: US$3m), relating to
remeasurement losses on post-employment benefit assets and
obligations.
In the year ended 31 March 2016, a tax charge relating to
employee share incentive plans of US$12m (2015: credit of US$30m)
has been recognised in equity and reported as appropriate within
transactions with owners. This amount comprises a current tax
charge of US$9m (2015: credit of US$35m) and a deferred tax charge
of US$3m (2015: US$5m).
Notes to the financial statements (continued)
for the year ended 31 March 2016
10. Discontinued operations
(a) Comparison shopping and lead generation businesses
Experian completed a transaction to divest of these businesses
in October 2012 and their results and cash flows are classified as
discontinued.
The loss for the financial year from discontinued operations of
US$12m for the year ended 31 March 2016 comprised a charge of
US$20m, net of a US$8m tax credit, arising from the reduction in
the carrying value of the loan note receivable issued as part of
the disposal. The profit for the financial year from discontinued
operations of US$21m for the year ended 31 March 2015 comprised a
current tax credit for tax losses arising in respect of the
disposal.
The cash inflow from operating activities of US$32m for the year
ended 31 March 2015 comprised a tax recovery on the disposal
transaction
(b) Cash flow on disposal of discontinued operations
2016 2015
US$m US$m
------------------------------------------- ----- ----
Comparison shopping and lead generation
businesses:
Partial redemption of loan note
issued at disposal 13 -
Transaction costs paid - (1)
-------------------------------------------- ----- ----
Comparison shopping and lead generation
businesses 13 (1)
Cash flow for earlier disposal - (8)
-------------------------------------------- ----- ----
Net cash inflow/(outflow) 13 (9)
-------------------------------------------- ----- ----
The net cash inflow of US$13m on the disposal of the
discontinued businesses (2015: outflow of US$9m) is disclosed in
the Group cash flow statement within net cash flows used in
investing activities. Contingent consideration is available to
Experian, in respect of the comparison shopping and lead generation
businesses, if defined profit targets are achieved over time, and
in certain other circumstances, up to US$25m. This is in addition
to the amount of US$61m receivable, of which US$41m is recognised
in respect of the loan note.
Notes to the financial statements (continued)
for the year ended 31 March 2016
11. Earnings per share disclosures
(a) Earnings per share
Basic Diluted
-------------------- --------------------
2016 2015 2016 2015
US cents US cents US cents US cents
-------------------------------------- --------- --------- --------- ---------
Continuing and discontinued
operations 78.6 79.0 78.1 78.1
Add/(deduct): discontinued
operations 1.3 (2.1) 1.3 (2.1)
--------------------------------------- --------- --------- --------- ---------
Continuing operations 79.9 76.9 79.4 76.0
(Deduct)/add: exceptional
items, net of related tax (1.2) 0.2 (1.2) 0.2
Add: other adjustments made
to derive Benchmark PBT, net
of related tax 10.4 18.1 10.4 17.9
Benchmark earnings per share
from continuing operations
(non-GAAP measure) 89.1 95.2 88.6 94.1
--------------------------------------- --------- --------- --------- ---------
(b) Analysis of earnings (i)
Attributable to owners of
Experian plc
2016 2015
US$m US$m
-------------------------------------- --------- --------- --------- ---------
Continuing and discontinued
operations 753 772
Add/(deduct): discontinued
operations 12 (21)
--------------------------------------- --------- --------- --------- ---------
Continuing operations 765 751
(Deduct)/add: exceptional items,
net of related tax (11) 2
Add: other adjustments made to derive
Benchmark PBT, net of related tax 100 177
Benchmark earnings attributable to owners
of Experian plc (non-GAAP measure) 854 930
------------------------------------------------------------- --------- ---------
(ii) Attributable to non-controlling
interests
2016 2015
US$m US$m
Continuing and discontinued operations (1) -
Add: amortisation of acquisition
intangibles attributable to non-controlling
interests, net of related tax - 1
-------------------------------------------------- --------- --------- ---------
Benchmark earnings attributable to non-controlling
interests (non-GAAP measure) (1) 1
------------------------------------------------------------- --------- ---------
(c) Reconciliation of Total benchmark earnings
to profit for the financial year
2016 2015
US$m US$m
Total benchmark earnings (non-GAAP
measure) 853 931
(Loss)/profit from discontinued
operations (12) 21
Profit/(loss) from exceptional items, net
of related tax 11 (2)
Loss from other adjustments made to derive
Benchmark PBT, net of related tax (100) (178)
Profit for the financial year 753 772
--------------------------------------- --------- --------- --------- ---------
(d) Weighted average number
of ordinary shares used
2016 2015
million million
-------------------------------------- --------- --------- --------- ---------
Weighted average number of
ordinary shares 958 977
Add: dilutive effect of share incentive
awards, options and share purchases 6 11
-------------------------------------------------- --------- --------- ---------
Diluted weighted average number
of ordinary shares 964 988
--------------------------------------- --------- --------- --------- ---------
Notes to the financial statements (continued)
for the year ended 31 March 2016
12. Dividends
(a) Dividend information
2016 2015
------------------ ------------------
US cents US cents
per share US$m per share US$m
------------------------------ ----------- ----- ----------- -----
Amounts recognised and paid
during the financial year:
First interim - paid in
January 2016 (2015: January
2015) 12.50 120 12.25 120
Second interim - paid in
July 2015 (2015: July 2014) 27.00 260 26.00 254
Dividends paid on ordinary
shares 39.50 380 38.25 374
------------------------------ ----------- ----- ----------- -----
Full year dividend for the
financial year 40.00 380 39.25 383
------------------------------ ----------- ----- ----------- -----
A second interim dividend in respect of the year ended 31 March
2016 of 27.50 US cents per ordinary share will be paid on 22 July
2016 to shareholders on the register at the close of business on 24
June 2016. This dividend is not included as a liability in these
financial statements. This second interim dividend and the first
interim dividend paid in January 2016 comprise the full year
dividend for the financial year of 40.00 US cents per ordinary
share. Unless shareholders elect by 24 June 2016 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 1 July 2016.
(b) Income access share ('IAS') arrangements
As its ordinary shares are listed on the London Stock Exchange,
the Company has a large number of UK resident shareholders. In
order that shareholders may receive Experian dividends from a UK
source, should they wish, the IAS arrangements have been put in
place. The purpose of the IAS arrangements is to preserve the tax
treatment of dividends paid to Experian shareholders in the UK, in
respect of dividends paid by the Company. Shareholders who elect,
or are deemed to elect, to receive their dividends via the IAS
arrangements will receive their dividends from a UK source (rather
than directly from the Company) for UK tax purposes.
Shareholders who hold 50,000 or fewer Experian shares on the
first dividend record date after they become shareholders, 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 election to
receive dividends via the IAS arrangements. All elections remain in
force indefinitely unless revoked.
Unless shareholders have made an election to receive dividends
via the IAS arrangements, or are deemed to have made such an
election, dividends will be received from an Irish source and will
be taxed accordingly.
(c) Dividend waivers
In the year ended 31 March 2016 the employee trusts waived their
entitlements to dividends of US$5m (2015: US$5m). There is no
entitlement to dividend in respect of own shares held as treasury
shares.
13. Capital expenditure, disposals and capital commitments
During year ended 31 March 2016, the Group incurred capital
expenditure of US$339m (2015: US$380m) in continuing
operations.
Excluding any amounts in connection with the disposal of
businesses, the book value of other intangible fixed assets and
property, plant and equipment disposed of in the year ended 31
March 2016 was US$14m (2015: US$4m) and the amount realised was
US$13m (2015: US$2m).
At 31 March 2016, the Group had capital commitments in respect
of property, plant and equipment and intangible assets and for
which contracts had been placed of US$24m (2015: US$78m). These
include commitments of US$13m not expected to be incurred before 31
March 2017. Commitments as at 31 March 2015 included commitments of
US$45m not then expected to be incurred before 31 March 2016.
Notes to the financial statements (continued)
for the year ended 31 March 2016
14. Post-employment benefit assets and obligations - defined
benefit plans
(a) Balance sheet assets/(obligations)
2016 2015
US$m US$m
-------------------------------------------- ------ --------
Retirement benefit assets/(obligations)
- funded plans:
Fair value of funded plans' assets 1,023 1,094
Present value of funded plans' obligations (997) (1,036)
-------------------------------------------- ------ --------
Assets in the Group balance sheet
for funded defined pension benefits 26 58
-------------------------------------------- ------ --------
Obligations for unfunded post-employment
benefits:
Present value of defined pension
benefits - unfunded plans (49) (52)
Present value of post-employment
medical benefits (6) (8)
-------------------------------------------- ------ --------
Liabilities in the Group balance
sheet (55) (60)
-------------------------------------------- ------ --------
Net post-employment benefit obligations (29) (2)
-------------------------------------------- ------ --------
The post-employment benefit assets and obligations
are denominated primarily in sterling.
(b) Movements in net post-employment benefit
assets/(obligations) recognised in the Group
balance sheet
2016 2015
US$m US$m
-------------------------------------------- ------ --------
At 1 April (2) 13
Differences on exchange - (2)
Charge to Group income statement (8) (9)
Remeasurement losses recognised
within other comprehensive income (30) (15)
Contributions paid by the Group 11 11
-------------------------------------------- ------ --------
At 31 March (29) (2)
-------------------------------------------- ------ --------
(c) Group income statement charge
2016 2015
US$m US$m
-------------------------------------------- ------ --------
Current service cost 7 8
Curtailment gain on disposal of -
business (note 7(b)) (1)
Administration expenses 2 2
Charge within labour costs and operating
profit 8 10
Interest income - (1)
-------------------------------------------- ------ --------
Total charge to Group income statement 8 9
-------------------------------------------- ------ --------
(d) Actuarial assumptions
2016 2015
% %
-------------------------------------------- ------ --------
Discount rate 3.4 3.3
Inflation rate - based on the UK
Retail Prices Index (the 'RPI') 2.9 2.9
Inflation rate - based on the UK
Consumer Prices Index (the 'CPI') 1.9 1.9
Increase in salaries 3.4 3.4
Increase for pensions in payment
- element based on the RPI (where
cap is 5%) 2.7 2.8
Increase for pensions in payment
- element based on the CPI (where
cap is 2.5%) 1.5 1.5
Increase for pensions in payment
- element based on the CPI (where
cap is 3%) 1.7 1.7
Increase for pensions in deferment 1.9 1.9
Inflation in medical costs 5.9 5.9
The mortality and other demographic assumptions used
at 31 March 2016 remain broadly unchanged from those
used at 31 March 2015 and disclosed in the Group's
statutory financial statements for the year then ended.
Notes to the financial statements (continued)
for the year ended 31 March 2016
15. Notes to the Group cash flow statement
(a) Cash generated from operations
Notes 2016 2015
US$m US$m
--------------------------------------------------------------- ------ ----- -----
Profit before tax 1,027 1,006
Share of post-tax profit of associates (4) (5)
Net finance costs 95 156
Operating profit 1,118 1,157
Loss on disposals of fixed assets 1 2
(Profit)/loss on disposal of businesses 7(b) (57) 2
Depreciation and amortisation 472 518
Charge in respect of share incentive
plans 54 47
Increase in working capital 15(b) (21) (1)
Acquisition expenses - difference
between Group income statement
charge and amount paid 1 -
Adjustment to the fair value of
contingent consideration 2 7
Working capital movement in respect of restructuring programme - (12)
Cash generated from operations 1,570 1,720
--------------------------------------------------------------- ------
(b) Increase in working capital
2016 2015
US$m US$m
--------------------------------------------------------------- ------ ----- -----
Inventories - (1)
Trade and other receivables (61) (42)
Trade and other payables 40 42
Increase in working capital (21) (1)
--------------------------------------------------------------- ------
(c) Cash outflow from operating
activities in respect of tax
Note 2016 2015
US$m US$m
--------------------------------------------------------------- ------ ----- -----
Tax paid - continuing operations 136 145
Tax recovery on disposal transaction - discontinued operations 10(a) - (32)
Cash outflow from operating activities
in respect of tax 136 113
--------------------------------------------------------------- ------
Notes to the financial statements (continued)
for the year ended 31 March 2016
15. Notes to the Group cash flow statement (continued)
(d) Cash flows on acquisitions (non-GAAP measure)
Note 2016 2015
US$m US$m
----- -----
Purchase of subsidiaries 21 - 61
Net cash acquired with subsidiaries - (3)
Deferred consideration settled 13 -
As reported in the Group cash flow statement 13 58
Acquisition expenses paid 3 1
Payments to acquire non-controlling interests 6 8
Cash outflow for acquisitions (non-GAAP measure) 22 67
(e) Cash outflow in respect of net share purchases (non-GAAP
measure)
Note 2016 2015
US$m US$m
------------------------------------- ----- -----
Issue of ordinary shares 19 (13) (14)
Net cash inflow on vesting of
share awards
and exercise of share options - (2)
Purchase of shares held as treasury
shares 344 170
Purchase of shares by employee
trusts 71 38
Purchase and cancellation of own
shares 190 -
-------------------------------------- -----
Cash outflow in respect of net
share purchases (non-GAAP measure) 592 192
-------------------------------------- -----
As reported in the Group cash
flow statement:
Cash inflow in respect of net
share purchases (13) (16)
Cash outflow in respect of net
share purchases 605 208
-------------------------------------- -----
592 192
-----
(f) Analysis of cash and cash
equivalents
2016 2015
US$m US$m
------------------------------------- ----- -----
Cash and cash equivalents in the
Group balance sheet 156 147
Bank overdrafts (5) (2)
-------------------------------------- -----
Cash and cash equivalents in the
Group cash flow statement 151 145
-------------------------------------- -----
16. Reconciliation of Cash generated from operations to
Operating cash flow (non-GAAP measure)
Note 2016 2015
US$m US$m
------
Cash generated from operations 15(a) 1,570 1,720
Purchase of other intangible assets (271) (316)
Purchase of property, plant and equipment (68) (64)
Sale of property, plant and equipment 13 2
Acquisition expenses paid 3 1
Dividends received from associates 3 4
Cash outflow in respect of security incident 20 -
Cash outflow in respect of restructuring programme - 12
------
Operating cash flow (non-GAAP measure) 1,270 1,359
------
Free cash flow for the year ended 31 March 2016 was US$1,065m
(2015: US$1,135m). Cash flow conversion for the year ended 31 March
2016 was 105% (2015: 104%).
Notes to the financial statements (continued)
for the year ended 31 March 2016
17. Net debt (non-GAAP measure)
(a) Analysis by nature
2016 2015
US$m US$m
Cash and cash equivalents (net of overdrafts) 151 145
Debt due within one year - bank loans - (100)
Debt due within one year - commercial paper (44) (40)
Debt due within one year - finance lease obligations (3) (4)
Debt due after more than one year - bonds and notes (2,447) (2,456)
Debt due after more than one year - bank loans and finance lease obligations (601) (673)
Derivatives hedging loans and borrowings (79) (89)
(3,023) (3,217)
(b) Analysis by balance sheet caption
2016 2015
US$m US$m
Cash and cash equivalents 156 147
Current borrowings (52) (146)
Non-current borrowings (3,068) (3,146)
Total reported in the Group balance sheet (2,964) (3,145)
Accrued interest reported within borrowings above but excluded from Net debt 20 17
Derivatives reported within financial assets 20 16
Derivatives reported within financial liabilities (99) (105)
(3,023) (3,217)
(c) Analysis of movements in Net
debt
Net debt Movements in the year ended 31 March 2016 Net debt at
at1 April 2015 31 March 2016
Net Net Fair Exchange
cash share value and other
inflow purchases gains/(losses) movements
US$m US$m US$m US$m US$m US$m
----------- ----------------
Cash and cash
equivalents 147 617 (592) - (16) 156
Borrowings (3,292) 155 - 16 1 (3,120)
Total reported in
the Group balance
sheet (3,145) 772 (592) 16 (15) (2,964)
Accrued interest 17 3 - - - 20
Derivatives hedging
loans and
borrowings (89) 29 - (43) 24 (79)
(3,217) 804 (592) (27) 9 (3,023)
18. Undrawn committed bank borrowing facilities
2016 2015
US$m US$m
Facilities expiring in:
Less than one year - 60
Two to three years 150 -
Four to five years 2,025 2,025
2,175 2,085
Notes to the financial statements (continued)
for the year ended 31 March 2016
19. Called up share capital and share premium account
Number of shares Called up share Share
capital premium
account
million US$m US$m
At 1 April 2014 1,031.6 103 1,492
Shares issued under employee share incentive plans 1.2 - 14
At 31 March 2015 1,032.8 103 1,506
Shares issued under employee share incentive plans 1.0 - 13
Purchase and cancellation of own shares (10.8) (1) -
At 31 March 2016 1,023.0 102 1,519
20. Own shares held
Number of shares Cost
of shares
million US$m
At 1 April 2014 54 809
Purchase of shares held as treasury shares 10 170
Purchase of shares by employee trusts 2 38
Exercise of share options and awards (7) (112)
At 31 March 2015 59 905
Purchase of shares held as treasury shares 19 344
Purchase of shares by employee trusts 4 71
Exercise of share options and awards (5) (80)
At 31 March 2016 77 1,240
Own shares held at 31 March 2016 include 63 million shares held
as treasury shares and 14 million shares held by employee trusts.
Own shares held at 31 March 2015 include 46 million shares held as
treasury shares and 13 million shares held by employee trusts. The
total cost of own shares held at 31 March 2016 of US$1,240m (2015:
US$905m) is deducted from other reserves in the Group balance
sheet.
Notes to the financial statements (continued)
for the year ended 31 March 2016
21. Acquisitions
(a) Acquisitions in the year
The Group completed no acquisitions during the year ended 31 March 2016. The cash outflow
of US$13m reported in the Group cash flow statement in the year ended 31 March 2016 arose
in connection with earlier acquisitions.
(b) Prior year acquisitions
There was a cash outflow of US$58m reported in the Group cash
flow statement in the year ended 31 March 2015, after a deduction
of US$3m for net cash acquired with subsidiaries.
Other than an adjustment to the fair value of contingent
consideration of US$2m recognised in the income statement in the
year ended 31 March 2016, there have been no material gains,
losses, error corrections or other adjustments recognised that
relate to acquisitions in earlier years.
22. Contingencies
(a) North America security incident
In September 2015, Experian North America suffered an
unauthorised intrusion to its Decision Analytics computing
environment that allowed unauthorised acquisition of certain data
belonging to a client, T-Mobile USA, Inc.
Experian has notified the individuals who may have been affected
and is offering free credit monitoring and identity theft
resolution services. In addition, government agencies have been
notified as required by law.
The one-off costs to Experian of directly responding to this
incident are reflected in a US$20m income statement charge in the
year ended 31 March 2016.
Experian has received a number of class actions in respect of
the incident and is working with regulators and government bodies
as part of their investigations. It is currently not possible to
predict the scope and effect on the Group of these various
regulatory and government investigations and legal actions,
including their timing and scale. In the event of unfavourable
outcomes, the Group may benefit from applicable insurance
recoveries.
(b) Brazilian credit scores
As indicated in our 2014 annual report, the Group had received a
significant number of claims in Brazil, primarily in three states,
relating to the disclosure and use of credit scores. In November
2014, The Superior Tribunal of Justice, the highest court in Brazil
for such cases, determined the principal legal issues involved and
ruled that the cases had no merit under Brazilian law. Whilst
elements of the legal process have yet to be exhausted and
additional related claims could be filed, the directors do not
believe that the outcome of any such claims 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 that may
be unfavourable to the Group.
(c) Tax
As previously indicated, Serasa S.A. has been advised that the
Brazilian tax authorities are challenging the deduction for tax
purposes of goodwill amortisation arising from its acquisition by
Experian in 2007. The possibility of this resulting in a liability
to the Group is believed to be remote, on the basis of the advice
of external legal counsel and other factors in respect of the
claim.
(d) Other litigation and claims
There continue to be a number of pending and threatened
litigation and other claims involving the Group across all its
major geographies which are being vigorously defended. The
directors do not believe that the outcome of any such claims will
have a materially adverse effect on the Group's financial position.
However, as is inherent in legal, regulatory and administrative
proceedings, there is a risk of outcomes that may be unfavourable
to the Group. In the case of unfavourable outcomes the Group may
benefit from applicable insurance recoveries.
Notes to the financial statements (continued)
for the year ended 31 March 2016
23. Events occurring after the end of the reporting period
Details of the second interim dividend announced since the end
of the reporting period are given in note 12(a).
On 19 April 2016 the Group announced that it had signed a
definitive agreement to acquire CSIdentity Corporation, a leading
provider of consumer identity management and fraud detection
services, for a cash consideration of US$360m, payable in full at
closing. The transaction is subject to Hart-Scott-Rodino regulatory
approval in the USA and other customary closing conditions. The
fair value of goodwill, software development, customer
relationships and other assets and liabilities will be reported in
the Group's half-yearly financial statements for the six months
ending 30 September 2016 and in the 2017 annual report.
24. Company 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 UK
regulation governing the preparation and dissemination of financial
information may differ from requirements in other
jurisdictions.
Notes to the financial statements (continued)
for the year ended 31 March 2016
25. Risks and uncertainties
Risk management is an essential element of how we run Experian,
to help us deliver long-term shareholder value and to protect our
business, people, assets, capital and reputation.
Successful management of existing and emerging risks is critical
to the long-term success of our business and to achieving our
strategic objectives. To seize the opportunities in front of us, we
must accept risk to a reasonable degree and manage that risk
appropriately. Risk management is therefore an integral component
of our corporate governance.
The Board is responsible for maintaining and reviewing the
effectiveness of our risk management activities from a financial,
operational and strategic perspective. These activities are
designed to identify and manage, rather than eliminate, the risk of
failure to achieve business objectives or to successfully deliver
our business strategy. Our risk management framework supports the
successful running of the business, by identifying and where
possible managing risks to an acceptable level and delivering
assurance on these.
The risk management framework has been built to identify,
evaluate, analyse, mitigate and monitor those risks that threaten
the successful achievement of our business strategy and objectives,
within our risk appetite.
(a) Risk area - Loss or inappropriate use of data and systems
(increasing risk)
Description
We hold and manage sensitive consumer information that increases
our exposure and susceptibility to cyber-attacks, either directly
through our online systems or indirectly through our partners or
third-party contractors.
Potential impact
Losing or misusing sensitive consumer data could create adverse
effects for consumers and result in material loss of business,
substantial legal liability, regulatory enforcement actions and/or
significant harm to our reputation.
Examples of control mitigation
-- We deploy physical and technological security measures,
combined with monitoring and alerting for suspicious
activities.
-- We maintain an information security programme for
identifying, protecting against, detecting, and responding to cyber
security risks and recovering from cyber security incidents.
-- We impose contractual security requirements on our partners
and other third parties who use our data, complemented by periodic
reviews of third-party controls.
-- We maintain insurance cover, where feasible and appropriate.
(b) Risk area - Failure to comply with laws and regulations
(increasing risk)
Description
We hold and manage sensitive consumer information that exposes
us to a range of privacy and consumer protection laws, regulations
and contractual obligations with which we are required to
comply.
Potential impact
Non-compliance may result in material litigation and/or
regulatory actions, including class actions, which could result in
civil or criminal liability or penalties, as well as negative
publicity that harms our reputation.
Examples of control mitigation
-- We maintain a compliance management framework that includes
defined policies, procedures and controls for Experian employees,
business processes and third parties such as our data
resellers.
-- We assess the appropriateness of data usage for new and/or changing products and services.
-- We vigorously defend all pending and threatened claims,
employing internal and external counsel to effectively manage and
conclude such proceedings.
-- We analyse the causes of claims, to identify any potential
changes we need to make to our business processes and policies. We
maintain insurance coverage, where feasible and appropriate.
Notes to the financial statements (continued)
for the year ended 31 March 2016
25. Risks and uncertainties (continued)
(c) Risk area - Business conduct risk (increasing risk)
Description
Our business model strives to create long-term value for people,
businesses and society through our data assets and innovative
analytics and software solutions. Inappropriate execution of our
business strategies or activities could adversely affect our
clients, consumers or counterparties.
Potential impact
Consumers or clients could receive inappropriate products or not
have access to appropriate products, resulting in material loss of
business, substantial legal liability, regulatory enforcement
actions or significant harm to our reputation.
Examples of control mitigation
-- We maintain appropriate governance and oversight that include
policies, procedures and controls designed to safeguard personal
data, avoid detriment to consumers, provide consumer-centric
product design and delivery, and effectively respond to enquiries
and complaints. These activities also support a robust conduct risk
management framework.
-- We enforce our Global Code of Conduct, and our
Anti-Corruption and Gifts and Hospitality policies.
(d) Risk area - Non-resilient IT/business environment (stable
risk)
Description
Delivery of our products and services depends on a number of key
IT systems and processes that expose our clients, consumers and
businesses to serious disruptions from systems or operational
failures.
Potential impact
A significant failure or interruption could have a materially
adverse effect on our business, financial performance, financial
condition and/or reputation.
Examples of control mitigation
-- We maintain a significant level of redundant operations,
designed to avoid material and sustained disruptions to our
businesses, clients and consumers.
-- We design applications with a focus on resilience and a
balance between longevity, sustainability and speed.
-- We maintain a global integrated business continuity framework
that includes policies, procedures and controls for Experian's
systems and related processes.
-- We duplicate information in our databases and maintain back-up data centres.
(e) Risk area - Undesirable investment outcomes (stable
risk)
Description
We are investing in a number of high-quality growth
opportunities (for example in health, fraud prevention, software
and business credit) and executing performance improvement
programmes (for example in Brazil and North America Consumer
Services), any of which may not produce the desired financial or
operating results.
Potential impact
-- Failure to successfully implement our key business strategies
could have a materially adverse effect on our ability to achieve
our revenue or growth targets.
-- Poorly executed business acquisitions or partnerships could
result in material loss of business, increased costs, reduced
revenue, substantial legal liability, regulatory enforcement
actions and/or significant harm to our reputation.
Examples of control mitigation
-- We design our incentive programmes to optimise shareholder
value through delivery of balanced, sustainable returns and a sound
risk profile over the long term.
-- We carry out comprehensive business reviews.
-- We perform due diligence and post-investment reviews on acquisitions and partnerships.
-- We employ a rigorous capital allocation framework.
-- We analyse competitive threats to our business model and markets.
Notes to the financial statements (continued)
for the year ended 31 March 2016
25. Risks and uncertainties (continued)
(f) Risk area - Adverse and unpredictable financial markets or
fiscal developments (increasing risk)
Description
We operate globally and as such, results could be affected by
global or regional changes in fiscal or monetary policies:
-- A substantial change in the USA, UK or Brazil credit markets
could reduce our financial performance and growth potential in
those countries.
-- We present our financial statements in US dollars. However,
we transact business in a number of currencies. Changes in other
currencies relative to the US dollar could impact our financial
results.
-- A substantial rise in USA, EU or UK interest rates could
increase our future cost of borrowings.
-- We are subject to complex and evolving tax laws and
interpretations, which may be subject to significant change. These
changes may lead to increased effective tax rates in the future.
Uncertainty in the application of these laws may also result in
different outcomes from the amounts provided.
Potential impact
-- The USA, UK and Brazil in aggregate contribute 88% of
revenue. A reduction in one or more of these consumer and business
credit services markets could impact revenue and Total EBIT.
-- We benefit from the strengthening of currencies relative to
the US dollar and are adversely affected by the weakening of
currencies relative to it.
-- We have US$3,120m in outstanding debt denominated principally
in US dollars, sterling and euros. As this debt matures, we may
need to replace it with borrowings at higher rates.
-- Earnings could be reduced and tax payments increased as a
result of settlement of historical tax positions or increases in
our effective tax rates.
Examples of control mitigation
-- We have a diverse portfolio by geography, product, sector and client.
-- We provide counter-cyclical products and services.
-- We convert cash balances which accumulate in foreign currencies into US dollars.
-- We retain internal and external tax professionals, who
regularly monitor developments in international tax and assess the
impact of changes and differing outcomes.
(g) Risk area - New legislation or changes in regulatory
enforcement (increasing risk)
Description
We operate in an increasingly complex external environment, in
which many of our activities and services are subject to legal and
regulatory influences. New laws, new interpretations of existing
laws, changes to existing regulations and/or heightened regulatory
scrutiny could affect how we operate our business. For example,
future regulatory changes could impact how we collect and use
consumer information for marketing, risk management and fraud
detection. Regulatory changes could impact how we serve Experian
Consumer Services' clients or how we are able to market services to
clients or consumers.
Potential impact
We may suffer increased costs or reduced revenue resulting from
modified business practices, adopting new procedures,
self-regulation and/or litigation or regulatory actions resulting
in liability or fines.
Examples of control mitigation
-- We use internal and external resources to monitor planned and
realised changes in legislation.
-- We educate lawmakers, regulators, consumer and privacy
advocates, industry trade groups, our clients and other
stakeholders in the public policy debate.
-- Our global compliance team has region-specific regulatory
expertise and works with our businesses to identify and adopt
balanced compliance strategies.
-- We execute a Compliance Management Programme that directs the
structure, documentation, tools and training requirements to
support compliance on an ongoing basis.
Notes to the financial statements (continued)
for the year ended 31 March 2016
25. Risks and uncertainties (continued)
(h) Risk area - Increasing competition (increasing risk)
Description
Our competitive landscape continues to evolve, with traditional
players reinventing themselves, emerging players investing heavily
and new entrants making large commitments in new technologies or
new approaches to our markets, including marketing, consumer
services, and business and consumer credit information. There is a
risk that we will not respond adequately to such business
disruptions or our products and services will fail to meet changing
consumer demand and preferences.
Potential impact
Price reductions may reduce our margins, market share and
results of operations, or harm our ability to obtain new clients or
retain existing ones. We might also be unable to support changes in
the way our businesses and clients use and purchase information,
affecting our operating results.
Examples of control mitigation
-- We are committed to continued research and investment in new
data sources, people, technology and products to support our
strategic plan.
-- We carry out detailed competitive and market analyses.
-- We continue to develop new products that leverage our scale
and allow us to deploy capabilities into new and existing markets
and geographies.
-- We use rigorous processes to identify and select our
development investments, so we can effectively introduce new
products and services to the market.
(i) Risk area - Data ownership, access and integrity (stable risk)
Description
Our business model depends on our ability to collect, aggregate,
analyse and use consumer and client information. There is a risk
that we may not have access to data because of consumer privacy and
data accuracy concerns, or data providers being unable or unwilling
to provide their data to us or imposing a different fee structure
for using their data.
Potential impact
Our ability to provide products and services to our clients
could be affected, leading to a materially adverse impact on our
business, reputation and/or operating results.
Examples of control mitigation
-- We monitor legislative and regulatory initiatives, and
educate lawmakers, regulators, consumer and privacy advocates,
industry trade groups, clients and other stakeholders in the public
policy debate.
-- We use standardised selection, negotiation and contracting of
provider agreements, to address delivery assurance, reliability and
protections relating to critical service provider
relationships.
-- Our legal contracts define how we can use data and provide services.
-- We analyse data to make sure we receive the best value and highest quality.
(j) Risk area - Dependency on highly skilled personnel (stable risk)
Description
Our success depends on the ability to attract, motivate and
retain key talent and build future leadership.
Potential impact
Not having the right people could materially affect our ability
to service our clients and grow our business.
Examples of control mitigation
-- In every region, we have ongoing recruitment, personal and
career development, and talent identification and development
programmes.
-- We carry out our Global People Survey approximately every 12
to 18 months and act on the feedback.
-- We offer competitive compensation and benefits and review them regularly.
-- We actively monitor attrition rates, with a focus on
individuals designated as high talent or in strategically important
roles.
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 25.
The names and functions of the directors in office as at 11 May
2015 were listed in the Experian annual report 2015. In in the
period from 11 May 2015 to the date of this report:
-- Alan Jebson retired from the Board on 22 July 2015 in
accordance with his previously announced intention;
-- Luiz Fernando Vendramini Fleury was appointed to the Board as
a non-executive director on 8 September 2015;
-- Jan Babiak resigned from the Board on 13 January 2016; and
-- Fabiola Arredondo stepped down from the Board on 31 January 2016.
A list of current directors is maintained on the Company website
at www.experianplc.com.
By order of the Board
Charles Brown
Company Secretary
10 May 2016
This announcement has been issued through the Companies
Announcement Service of
the Irish Stock Exchange.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ISEATMFTMBTBBRF
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