TIDMEXPN
RNS Number : 0385T
Experian plc
12 November 2019
news release
Half-yearly financial report
7am, 12 November 2019 -- Experian plc, the global information
services company, today issues its half-yearly financial report for
the six months ended 30 September 2019.
Brian Cassin, Chief Executive Officer, commented:
"We have started the year well. First-half organic revenue
growth was 7%, with acceleration in Q2. This reflects successful
execution on big new addressable market opportunities, the global
roll out of our innovative platforms and considerable momentum in
Consumer Services as we invest in Experian Boost.
"We now expect full-year organic revenue growth in the 7-8%
range, at the upper end of our previous guidance. We continue to
expect EBIT growth at or above revenue growth and strong progress
in Benchmark earnings per share, all at constant currency, and for
the full year we expect operating cash conversion of around
90%."
Benchmark and Statutory financial highlights
-------------------------------------------------------------------------------------------------
2019 2018(2) Actual Constant Organic(3)
US$m US$m rates growth rates growth growth
% % %
--------- --------- -------------- -------------- -----------
Benchmark(1)
Revenue - ongoing activities 2,495 2,361 6 8 7
Revenue 2,495 2,364 6 8 n/a
Benchmark EBIT - ongoing
activities(4) 670 647 4 6 n/a
Total Benchmark EBIT 670 649 3 5 n/a
Benchmark EPS USc 49.1 USc 48.7 1 3 n/a
Statutory
Revenue 2,495 2,364 6 8 n/a
Operating profit 556 580 (4) n/a n/a
Profit before tax 480 470 2 n/a n/a
Basic EPS USc 39.0 USc 35.3 10 n/a n/a
Total dividend USc 14.5 USc 14.0 4 n/a n/a
--------- --------- -------------- -------------- -----------
1 See Appendix 1 (page 13) and note 6 to the financial
statements (pages 25-26) for definitions of non-GAAP measures.
2 Benchmark measures are restated for exited business activities
which comprise certain B2B businesses. 3 Organic revenue growth at
constant exchange rates.
4 See page 13 for reconciliation of Benchmark EBIT from ongoing
activities to Profit before tax.
-- Strong first half performance.
o Q2 organic revenue growth of 7% and H1 organic revenue growth
of 7%.
o B2B organic revenue growth of 6%.
o Consumer Services organic revenue growth of 11% with rapidly
growing new product portfolio.
o Benchmark EBIT (ongoing activities) growth at constant rates
of 6%.
o Benchmark EBIT margin of 26.9%, down 50 basis points at both
constant rates and actual rates, including one-off launch costs for
Experian Boost.
o Benchmark EPS growth of 3% at constant rates.
-- Operational highlights.
o Strong momentum as we accelerate our global B2B innovation
plays; Ascend, Experian One, open banking (Trusso and Verdus) and
CrossCore all progressed strongly in the half, and considerable
momentum in Experian Boost with quadrupling of revenues in
CreditMatch.
o Good momentum in North America, as B2B innovations take-hold
and with double-digit Consumer Services growth.
o Double-digit organic revenue growth in Latin America;
preparing for positive data.
o Generating audiences at scale as global free consumer
memberships reach 70m across our three major markets, up from c.
45m last year.
o Significant progress in Experian Boost, unique account
connections of 2m US consumers.
o Further strategic progress with US$437m investments in
acquisitions, including Compuscan, and additional acquisitions and
minority investments.
-- Continuing commitment to shareholder returns and disciplined capital allocation.
o First interim dividend up 4% to 14.5 US cents per ordinary
share.
o Completed US$181m of the share repurchase programme to 8
November 2019, of which US$137m was in the first half.
Contacts
Experian
Nadia Ridout-Jamieson Investor queries +44 (0)20 3042 4215
Gerry Tschopp Media queries
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
telephone dial-in facility: 0800 783 0906 (UK primary) or 01296 480
100 (UK direct) or +44 1296 480 100 (International direct), using
access code 559 971 33. The supporting slides and an indexed replay
will be available on the website later in the day.
Experian will update on third quarter trading for FY20 on 17
January 2020.
Roundings
Certain financial data has 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.
Definitions
B2B - Business-to-Business.
B2B2C - business-to-business-to-consumer.
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 12 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
Experian is the world's leading global information services
company. During life's big moments - from buying a home or a car,
to sending a child to college, to growing a business by connecting
with new customers - we empower consumers and our clients to manage
their data with confidence. We help individuals to take financial
control and access financial services, businesses to make smarter
decisions and thrive, lenders to lend more responsibly, and
organisations to prevent identity fraud and crime.
We have 17,200 people operating across 44 countries and every
day we're investing in new technologies, talented people and
innovation to help all our clients maximise every opportunity. We
are listed on the London Stock Exchange (EXPN) and are a
constituent of the FTSE 100 Index.
Learn more at www.experianplc.com or visit our global content
hub at our global news blog for the latest news and insights from
the Group.
Chief Executive Officer's review
This was another half of good progress with strong momentum in
North America, Latin America back to strong levels of growth, and
pleasing progress in Consumer Services. All of which has its roots
in our technology investments, new product innovation, new data
sets and strong sales execution. We are experiencing expansion on
many fronts as we address new opportunities to grow with existing
clients and as we win new customers all around the world. We are
also engaging with consumers in new ways and now reach tens of
millions of people across our three major markets through our free
offers. This gives us great confidence as we look out to H2 and
beyond and we have therefore raised our full year organic revenue
guidance to 7-8 %, the top half of our previous guidance range.
Financial highlights:
-- Total revenue growth of 8% at constant currency and organic
revenue growth of 7%. At actual exchange rates total revenue growth
was 6%. Organic revenue growth was 6% in Q1 accelerating to 7% in
Q2.
-- Double-digit organic revenue growth in North America and
Latin America, while UK and Ireland was flat and EMEA/Asia Pacific
saw modest decline.
-- Continued momentum in B2B, with organic revenue growth of 6%
at constant exchange rates with good demand for new sources of data
and as we scale our global platforms.
-- Strong growth in Consumer Services, with organic revenue up
11% at constant exchange rates as we empower consumers to take
control of their data and as we build relationships with millions
of consumers.
-- Growth in Benchmark EBIT of 6% at constant exchange rates, 4% at actual exchange rates.
-- Benchmark EBIT margin at constant currency and actual rates
was 26.9%, down 50 basis points, as we invested behind the launch
of Experian Boost (80 basis points one-off launch costs) and saw
higher depreciation on technology investments.
-- Growth in Benchmark earnings per share of 3% at constant
exchange rates and 1% at actual exchange rates.
-- Conversion of Benchmark EBIT into Benchmark operating cash
flow was 51%, in the seasonally weaker half of the year for cash
flow.
We delivered further progress in B2B:
-- Our Data segment delivered organic revenue growth of 8% at
constant exchange rates, with all regions contributing positively.
This reflects investment in a wide range of unique sources of data,
strength in consumer information across all territories, strong
recovery in Brazil and a growing contribution from our bureaux in
EMEA/Asia Pacific.
-- The total contract value for Ascend has now reached US$270m,
as we secure new engagements for existing modules and introduce new
modules to the platform. Ascend is currently live in the USA, UK,
Brazil, and Italy and we expect to launch in more countries during
this financial year.
-- While Decisioning revenue was flat in the half against strong
prior-year comparables, pipelines are growing. We secured new
contracts for PowerCurve; we have made excellent progress in fraud
and identity, including with CrossCore; and Experian One, our new
cloud-based decisioning platform, secured new wins during the
half.
-- Experian Health delivered further good progress as we expand
our position with healthcare providers and successfully extend our
suite of services.
We made significant progress in Consumer Services as we:
-- Secured direct relationships with 70m consumers for free
Experian offers (up from over 45m in FY19). We now have 24m free
members in the USA, 39m in Brazil and 6.6m the UK.
-- Delivered strong growth in credit marketplace (lead
generation) revenues in both the US and the UK and our consumer
activities in Brazil have made significant progress towards
meaningful revenue-generation.
-- Expanded our Experian Boost membership, with unique account
connections of 2m US consumers since launch.
With regards to capital allocation and uses of cash:
-- We have made further strategic progress having completed the
acquisition of Compuscan in the half plus other smaller
investments, such as MyHealthDirect. We also purchased the
remaining 45% of our subsidiary Experian MicroAnalytics and, after
the end of the half-year took a controlling interest in RAMCI, a
credit bureau in Malaysia, and we acquired Auto I.D., Inc., a
leading provider of automotive solutions and services in the
USA.
-- We made equity investments in Grab and CompareAsiaGroup. We
also agreed new commercial agreements to help power their consumer
financial marketplaces.
-- We are announcing a first interim dividend of 14.5 US cents
per share, up 4% year-on-year. This will be paid on 31 January 2020
to shareholders on the register at the close of business on 3
January 2020.
-- We completed US$137m in net share repurchases in the first
half, as part of our US$400m share repurchase programme this year,
and as at 8 November 2019 that has increased to US$181m.
-- Net debt at the end of the first half was US$4,060m, which
places us at 2.4 times Benchmark EBITDA, within our target leverage
range of 2.0 to 2.5 times net debt to Benchmark EBITDA.
Regional highlights
We delivered strong organic revenue growth in North America and
Latin America, whilst UK and Ireland was flat and EMEA/Asia Pacific
was slightly lower.
Year-on-year % change in organic revenue (1) EBIT
margin
Data Decisioning B2B(2) Consumer Total Total
Services
----- ------------ ------- ---------- ------ --------
North America 9 6 8 13 10 34.6%
----- ------------ ------- ---------- ------ --------
Latin America 10 7 10 n/a 10 27.6%
----- ------------ ------- ---------- ------ --------
UK and Ireland 4 (8) (1) 3 - 20.2%
----- ------------ ------- ---------- ------ --------
EMEA/Asia
Pacific 7 (12) (3) n/a (3) (2.5)%
----- ------------ ------- ---------- ------ --------
Total Global 8 - 6 11 7 26.9%
----- ------------ ------- ---------- ------ --------
1 Ongoing activities only, at constant exchange rates.
2 B2B = Business-to-Business segment consists of Data and
Decisioning business sub-divisions.
See note 6 to the financial statements on pages 25-26 for
definition of organic revenue growth.
North America
Revenue in North America was US$1,573m, with total and organic
revenue growth of 10%.
North America B2B delivered organic revenue growth of 8% at
constant exchange rates. Data saw strength in core profiles, as
well as in mortgage, and a very strong contribution from Clarity
Services. We are excited about our prospects as we launch new
suites of credit score products which combine traditional credit,
alternative credit and trended data assets covering a wider
proportion of the US population and helping more people gain access
to fair and affordable credit. Revenues for Ascend have also grown
significantly as we secure new customers for existing modules and
introduce new versions. In total five modules of Ascend have been
successfully launched in the USA with further modules pending.
Automotive also performed well in the half, reflecting good demand
for our superior data assets, integrated cross-Experian
propositions and new client wins for the automotive version of the
Ascend sandbox.
Decisioning performed well, revenue was up 6% at constant
exchange rates, as we delivered on significant new client
engagements for fraud and identity management services. We have
also secured a healthy pipeline for software including for Experian
One, our cloud-based decisioning platform. Experian health
performed well as we extend our position with healthcare providers.
Our clients want to deliver better engagement with their patients
and to provide greater transparency on payments. This is driving
demand across our product suite, including for patient engagement,
coverage discovery and identity management offers. The acquisition
of MyHealthDirect further strengthens our proposition as it will
help to simplify and automate the appointment, scheduling and
payment processes for both healthcare providers and for
patients.
In Consumer Services, we have had a tremendous response to the
introduction of Experian Boost, the new unique service we
introduced in March 2019. Experian Boost gives consumers the
ability to make positive choices about using their data to build
out their credit files using non-traditional sources like utility
or mobile phone bills. In the USA 2m unique consumers have now
connected their accounts, and "Experian Boost" is now one of the
top 10 most searched keyword terms in the credit monitoring
category. In total we have now signed 24m consumers to free
membership offers, up from 16m at H1 FY19 and we stepped up
marketing investment in the half to promote the service and drive
traffic to our sites and mobile application.
Revenue performance in Consumer Services was strong, up 13% at
constant exchange rates. This was in part driven by a quadrupling
in lead generation revenue in the half through CreditMatch as
consumers engage with Experian and are matched to suitable credit
offers. Growth also reflected ongoing strength in identity
management offers and a considerably-reduced drag in paid-for
credit monitoring services. Partner Solutions also performed well,
to some extent benefitting from a one-off data breach resolution
contract win. During the second half, we expect the Consumer
Services business to continue to grow well, with growth rates
reflecting the material breach contract recorded in the second half
of the previous year.
We have recently completed the acquisition of Auto I.D., Inc. a
leading provider of solutions and services to automotive lenders in
the US. We already have a successful, fast-growing automotive
business in North America and adding Auto I.D.'s capabilities in
recovering loss, mitigating risk, improving compliance and
identifying fraud will allow us to offer an even more extensive
range of products to our automotive clients.
North America Benchmark EBIT increased by 11% to US$544m. The
Benchmark EBIT margin increased by 20 basis points year-on-year to
34.6%. This reflected strong operating leverage in B2B, offset by
investments in customer acquisition to support the roll out of
Experian Boost.
Latin America
Revenue in Latin America was US$352m, with total and organic
revenue growth of 10% at constant exchange rates.
In Brazil, we have seen further improvements to economic and
business confidence. Our business grew double-digit in H1 as this
greater confidence combined with our innovation-led strategy which
helped drive strong revenue performance. We have seen good growth
across both consumer and business information, as well as a growing
revenue contribution from our consumer-activities as we engage with
millions of consumer members. Our base continues to grow quickly,
and we now have 39m free members or over 18% of the population,
giving us material scale.
In October, we received formal accreditation from the Central
Bank in Brazil to incorporate positive credit payment data as part
of our operations. This is a big and welcome change which will mean
consumers and companies in Brazil will be automatically included in
a positive credit registry. We believe it will help drive greater
access to credit in Brazil at more affordable rates, reduce levels
of credit distress and, in time, create the conditions for more
customised credit offers. We estimate that over 150m people will be
included in the positive data bureau with the advent of positive
data.
We have now started to receive the positive data and expect to
launch new products during FY20 and FY21. We believe we will have
new opportunities to develop better scores, to increase adoption of
advanced analytical and cloud-based decisioning tools, and that
positive data will give rise to enhanced services for consumers.
Our plans are well advanced as we have pre-invested in our
technology platform and have a detailed roadmap for the roll out of
positive data propositions.
Growth in Spanish Latin America was driven by a strong
performance in Colombia, as we extend the range of services we
offer to our B2B clients and we signed a number of significant new
contracts. We see good prospects as we introduce more of our global
Experian platforms into the region, including Ascend, CrossCore and
Experian One and direct-to-consumer.
Benchmark EBIT in Latin America was US$97m, up 6% at constant
exchange rates. Benchmark EBIT margin was 27.6% (2018: 28.9%)
reflecting revenue mix effects and investments in consumer,
positive data preparation and our technology platforms.
UK and Ireland
Revenue in the UK and Ireland was US$371m. Total and organic
revenue growth was flat at constant exchange rates. B2B declined
(1)% while Consumer Services delivered organic revenue growth of
3%.
Within B2B, Data delivered revenue growth of 4% at constant
exchange rates, with a strong performance across the consumer
credit bureau operations. This reflects the investments we have
made in unique propositions, such as trended data and open banking
(Trusso and Verdus), and in our B2B platform strategy. We are
delivering services to digitise the process of applying for a
mortgage, with several new client engagements, take-up rates for
our open-data aggregation platform have been strong and we have
established significant scale in personalised eligibility services
for B2B marketplaces. Other parts of our Data operations were
somewhat weaker however, particularly on the more cyclical
marketing side of our business. Decisioning also experienced
weakness, with organic revenue down (8%). This was as we lapped
strong prior-year comparables and saw a subdued macroeconomic
backdrop impact the pace of client investments in new software
installations. We expect this to continue to be a headwind in the
near-term given ongoing political and economic uncertainty in the
UK.
In Consumer Services, we have made steady progress with the
business back to growth in H1, driven by significant expansion of
our CreditMatcher comparison service. This more than offset modest
declines in paid memberships. Our free membership base has reached
6.6m consumers and we will continue to add exciting new features to
help consumers better manage their money.
Benchmark EBIT was US$75m, down (20)% at constant exchange
rates. This reflected the reduction in Decisioning revenue, as well
as increased depreciation and further investment related to
technology infrastructure to support the roll out of our global
platforms. The Benchmark EBIT margin was 20.2% (2018: 25.7%).
EMEA/Asia Pacific
In EMEA/Asia Pacific, revenue was US$199m, with total revenue
growth of 5% and organic growth of (3)% at constant rates. The
difference relates to the contribution from the Compuscan
acquisition.
We delivered good growth in Data, where organic revenue was up
7% at constant exchange rates. This reflected good progress in our
bureaux in EMEA and significant growth across our consumer credit
bureaux in India and Australia. We also benefitted from first time
revenue contributions for Ascend, as we secure new client
engagements, and for affordability solutions, for example through
Trusso, our open data platform. In its first few months under
Experian ownership Compuscan, our new credit bureau in South Africa
performed well and we are excited about the opportunities for the
combined business.
Decisioning revenue declined by (12%) at constant exchange
rates, reflecting solid progress in EMEA offset by weakness in Asia
Pacific as we lapped a small number of large decisioning contracts
in the prior year. Notwithstanding this, pipelines are very strong,
and we have secured several contracts across our PowerCurve suite.
We therefore have good line of sight to improving revenue growth
momentum as we exit this financial year.
We made several strategic investments in both EMEA and Asia
Pacific during the half. We are delighted to welcome RAMCI to
Experian. RAMCI is a credit bureau in Malaysia in which we
previously held a minority stake and which now moves to control. We
have also taken minority equity stakes in Grab and
CompareAsiaGroup. We also agreed commercial agreements to supply
scores and decisioning software to power their consumer credit
portals.
Benchmark EBIT was US$(5)m (2018: US$(9)m). At actual exchange
rates Benchmark EBIT growth was 36% and at constant exchange rates
it was 46%. Benchmark EBIT margin from ongoing activities at actual
rates increased 200 basis points to (2.5)% as our operations grow
in scale.
Other financial developments
Our Benchmark PBT was US$604m, up 4% at constant currency and 2%
at actual rates, after higher Benchmark net interest expense of
US$66m (2018: US$56m), reflecting higher Net debt largely due to
the acquisitions made in the half and a US$5m IFRS16 related
interest charge (see note 3 to the financial statements for further
information). We now expect net interest of c.US$130m for the full
year including the effects of IFRS16. While IFRS16 will have no
material impact on our overall financial results, it will reduce
total operating expense by around $10m and increase interest
expense by a similar amount in FY20.
The Benchmark tax rate was 26.2% (2018: 25.3%). The increase
reflected the mix of profit in the half. We expect the Benchmark
tax rate to be c. 26% in FY20 reflecting the mix of profits and
prevailing tax rates by territory.
Our Benchmark EPS was 49.1 US cents, an increase of 3% at
constant currency and 1% at actual rates, as the weighted average
number of ordinary shares (WANOS) reduced to 903m (2018: 907m) as a
result of our share repurchase programme.
Benchmark operating cash flow declined 29% at actual rates and
our Benchmark operating cash flow conversion was 51% (2018: 74%),
as we saw our investment programme phased more to the first half of
the year which is also our traditionally weaker half of the year
for cash generation. We continue to expect a conversion of
Benchmark EBIT to operating cash flow of around 90% for the year
ending 31 March 2020.
Consistent with our capital allocation framework, uses of cash
were balanced between growth investment and returns to
shareholders. Net capital expenditure was US$223m, which
represented 9% of total revenue in the half. We continue to expect
net capital expenditure to be in the range of 9-10% of revenue in
FY20 as we invest in new products and innovation. After acquisition
and investment expenditure of US$499m, ordinary dividends paid of
US$294m, and net share purchases of US$137m, we ended the half year
with Net debt of US$4,060m, placing us at 2.4 times EBITDA, within
our target range of 2.0 to 2.5 times net debt to EBITDA.
Foreign exchange translation was a 2% headwind to EPS in the
half year. This was predominantly due to the Brazilian real, which
weakened by 4% relative to the US dollar versus the prior year, and
weakness in GBP sterling. Assuming recent rates stay the same for
the rest of the year, we now expect a full-year EBIT headwind of
c.1-2%.
Group financial results
Revenue by region
Six months ended 30 September Growth %
------
Total Total at Organic
2019 2018(1) at actual constant at constant
US$m US$m rates rates rates
------ ----------- ---------- -------------
North America
Data 791 726 9 9
Decisioning 322 301 7 6
------ -------- ----------- ---------- -------------
B2B 1,113 1,027 8 8
Consumer Services 460 403 14 13
------ -------- ----------- ---------- -------------
Total ongoing activities 1,573 1,430 10 10 10
Exited business activities(1) - -
------ -------- ----------- ---------- -------------
Total North America 1,573 1,430
------ -------- ----------- ---------- -------------
Latin America
Data 300 287 10 10
Decisioning 52 52 7 7
Total ongoing activities 352 339 4 10 10
Exited business activities - -
------ -------- ----------- ---------- -------------
Total Latin America 352 339
------ -------- ----------- ---------- -------------
UK and Ireland
Data 182 184 4 4
Decisioning 109 126 (8) (8)
------ -------- ----------- ---------- -------------
B2B 291 310 (1) (1)
Consumer Services 80 83 3 3
------ -------- ----------- ---------- -------------
Total ongoing activities 371 393 (6) - -
Exited business activities - 3
------ -------- ----------- ---------- -------------
Total UK and Ireland 371 396
------ -------- ----------- ---------- -------------
EMEA/Asia Pacific
Data 104 86 26 7
Decisioning 95 113 (11) (12)
Total ongoing activities 199 199 - 5 (3)
Exited business activities - -
------ -------- ----------- ---------- -------------
Total EMEA/Asia Pacific 199 199
------ -------- ----------- ---------- -------------
Total revenue - ongoing
activities 2,495 2,361 6 8 7
Total revenue - exited
business activities - 3
------ -------- ----------- ---------- -------------
Revenue 2,495 2,364 6 8
------ -------- ----------- ---------- -------------
1 Results for 2018 are restated for the reclassification to
exited business activities of certain B2B businesses.
See Appendix 1 (page 13) and note 6 to the financial statements
(pages 25-26) for definitions of non-GAAP measures.
See Appendix 2 (page 13) for analyses of revenue, Benchmark EBIT
and Benchmark EBIT margin from ongoing activities by business
segment.
Income statement, earnings and Benchmark EBIT margin
analysis
Six months ended 30 September Growth %
--------
Total at Total at
2019 2018(1) actual constant
US$m US$m rates rates
-------- --------- ----------
Benchmark EBIT by geography
North America 544 492 11
Latin America 97 98 6
UK and Ireland 75 101 (20)
EMEA/Asia Pacific (5) (9) 46
-------- -------- --------- ----------
Benchmark EBIT before Central Activities 711 682 5
Central Activities - central corporate
costs (41) (35)
-------- -------- --------- ----------
Benchmark EBIT from ongoing activities 670 647 4 6
Exited business activities(1) - 2
-------- -------- --------- ----------
Benchmark EBIT 670 649 3 5
Net interest (66) (56)
-------- -------- --------- ----------
Benchmark PBT 604 593 2 4
Exceptional items (35) -
Amortisation of acquisition intangibles (59) (56)
Acquisition expenses (16) (6)
Adjustment to the fair value of
contingent consideration 1 (3)
Non-benchmark share of post-tax 36 -
profit of associates
Interest on uncertain tax provisions (7) (7)
Financing fair value remeasurements (44) (51)
Profit before tax 480 470
Group tax charge (125) (149)
Profit after tax 355 321
-------- -------- ---------
Benchmark earnings
Benchmark PBT 604 593 2 4
Benchmark tax charge (158) (150)
-------- -------- --------- ----------
Total Benchmark earnings 446 443
-------- -------- --------- ----------
Owners of Experian plc 443 442 - 2
Non-controlling interests 3 1
-------- -------- --------- ----------
Benchmark EPS US49.1c US48.7c 1 3
Basic EPS US39.0c US35.3c
Weighted average number of ordinary
shares 903m 907m
-------- -------- --------- ----------
Benchmark EBIT margin - ongoing
activities
North America 34.6% 34.4%
Latin America 27.6% 28.9%
UK and Ireland 20.2% 25.7%
EMEA/Asia Pacific (2.5)% (4.5)%
-------- -------- --------- ----------
Benchmark EBIT margin 26.9% 27.4%
-------- -------- --------- ----------
1 Results for 2018 are restated for the reclassification to
exited business activities of certain B2B businesses.
See Appendix 1 (page 13) and note 6 to the financial statements
(pages 25-26) for definitions of non-GAAP measures.
See Appendix 2 (page 13) for analyses of revenue, Benchmark EBIT
and Benchmark EBIT margin from ongoing activities by business
segment.
Group financial review
Key statutory measures
Statutory revenue
We continued to make good progress during the period, revenue
increased by 6% to US$2,495m (2018: US$2,364m), reflecting an
improved underlying performance by both business segments.
Statutory operating profit and profit before tax
Operating profit for the six months ended 30 September 2019
decreased to US$556m from US$580m in the prior period, largely due
to the charge for Exceptional items. Profit before tax increased to
US$480m (2018: US$470m). We benefitted from a gain on an
associate's business disposal which increased our share of the
post-tax profit of associates by US$37m in the period.
Statutory Basic EPS
Basic EPS was up 10% to 39.0 US cents (2018: 35.3 US cents). The
increase reflects a mix of factors including a higher profit before
tax, a lower tax charge and a lower number of shares in issue as a
consequence of our continuing share repurchase programme.
Statutory cash flow
Cash generated from operations was US$552m (2018: US$638m)
reflecting movements in working capital. New borrowings totalled
US$839m, reflecting the funding required for the increased
acquisition activity (US$353m), cash outflows in respect of net
share purchases (US$137m) and payment of the second interim
dividend (US$295m) during the half year. Undrawn committed
borrowing facilities were US$2,175m at 30 September 2019, a
reduction of US$450m from 31 March 2019, as committed facilities
were drawn down.
Tax
The effective rate of tax based on profit before tax is 26.0%, a
reduction from the comparative period which was 31.7%, and
unusually high as a result of a non-recurring tax charge in North
America.
Balance sheet commentary
Net assets
At 30 September 2019, net assets amounted to US$2,317m (2018:
US$2,282m). Capital employed, as defined in note 6(q) to the
condensed half-yearly financial statements, was US$6,657m (2018:
US$6,092m). Following the implementation of IFRS 16, right-of-use
assets and lease liabilities have been recognised on the Group
balance sheet. Further detail on the transition to IFRS 16 is
included in note 3.
Equity
There was a decrease in equity of US$177m from US$2,494m at 31
March 2019 with movements detailed in the Group statement of
changes in total equity on page 18.
Key movements in equity during the half include:
-- Profit for the period of US$355m.
-- Currency translation losses of US$112m.
-- Remeasurement gains of US$44m in respect of defined benefit pension plans.
-- Dividends of US$295m and a movement of US$137m in connection with net share purchases.
Seasonality
In recent years, our Benchmark EBIT performance has tended to be
weighted towards the second half of the year reflecting revenue
seasonality. This pattern is expected to continue during the year
ending 31 March 2020.
Foreign currency
Foreign exchange - average rates
The principal exchange rates used to translate revenue and
Benchmark EBIT into the US dollar are shown in the table below.
Period ended Period ended Year ended
30 September 30 September 31 March 2019
2019 2018
US dollar : Brazilian
real 3.95 3.78 3.79
Pound sterling : US dollar 1.26 1.33 1.31
Euro : US dollar 1.12 1.18 1.16
US dollar : Colombian
peso 3,292 2,902 3,025
US dollar : South African
rand 14.54 13.38 13.76
-------------- -------------- ---------------
The impact of currency movements on revenue from ongoing
activities is set out in note 7(c).
Foreign exchange - closing rates
The principal exchange rates used to translate assets and
liabilities into the US dollar at the period end dates are shown in
the table below.
30 September 30 September 31 March 2019
2019 2018
US dollar : Brazilian
real 4.16 4.01 3.89
Pound sterling : US dollar 1.23 1.30 1.31
Euro : US dollar 1.09 1.16 1.12
US dollar : Colombian
peso 3,464 2,981 3,163
US dollar : South African
rand 15.17 14.16 14.47
------------- ------------- --------------
Risks
We continue to see heightened legislative and regulatory
activity, particularly as it relates to privacy and information
security matters. Except for these matters, the principal risks and
uncertainties we face in the remaining six months of the year
remain largely unchanged from those explained in detail on pages 52
to 59 of our Annual Report for the year ended 31 March 2019:
-- Loss or inappropriate use of data and systems;
-- Failure to comply with laws and regulations;
-- Non-resilient IT/business environment;
-- Business conduct risk;
-- Dependence on highly skilled personnel;
-- Adverse and unpredictable financial markets or fiscal developments;
-- New legislation or changes in regulatory enforcement;
-- Increasing competition; and
-- Undesirable investment outcomes.
'Data ownership, access and integrity' reported as a principal
risk in our Annual Report for the year ended 31 March 2019 overlaps
with other risks such as legislative, regulatory and compliance.
Consequently, we no longer identify 'data ownership, access and
integrity' as a standalone principal risk. None of the risk
information in this category has been eliminated but is covered
within the other principal risks noted above.
In the first half of the financial year, we note that new laws,
new interpretations of existing laws, changes to existing
regulations and regulatory scrutiny continue to increase. Recent
examples include the California Consumer Privacy Act and the
Brazilian General Data Protection Law.
We continue to experience an increasing number of consumer and
class actions in the USA.
We note continued uncertainty in the development of tax
legislation in our key regions.
We are also still closely monitoring trends in geopolitical
risks given the uncertainty related to Brexit and populist agendas
across a number of regions.
Further information on financial risk management is given in
note 24 to the condensed half-yearly financial statements.
The Chief Executive Officer's, Business and Group financial
reviews on pages 3 to 11 include consideration of key uncertainties
affecting us for the remainder of the current financial year. There
may however be additional risks unknown to us and other risks,
currently believed to be immaterial, which could turn out to be
material. These risks, whether they materialise individually or
simultaneously, could significantly affect our business and
financial results.
Going concern
Having reassessed the principal risks at the time of approving
these condensed half-yearly financial statements, the directors
considered it appropriate to adopt the going concern basis of
accounting.
Appendices
1. Non-GAAP financial information
We have identified and defined certain measures that we believe
assist understanding of our performance. These measures are not
defined under IFRS and they may not be directly comparable with
other companies' adjusted measures. These non-GAAP measures are not
intended to be a substitute for any IFRS measures of performance
but we have included them as these are considered to be key
measures used within the business for assessing the underlying
performance of our ongoing businesses. 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 6 to the
condensed half-yearly financial statements.
The reconciliation of revenue from ongoing activities is set out
in note 7(c) on page 28, Benchmark EBIT and Benchmark PBT in
Appendix 3 below and Benchmark EPS in note 13 on page 32.
2. Revenue, Benchmark EBIT and Benchmark EBIT margin by business
segment
Six months ended 30 September Growth
Total Organic
at constant at constant
2019 2018(1) rates rates
US$m US$m % %
------- ---------- ------------- -------------
Revenue
Data 1,377 1,283 10 8
Decisioning 578 592 - -
------- ---------- ------------- -------------
B2B 1,955 1,875 7 6
Consumer Services 540 486 12 11
------- ---------- ------------- -------------
Total - ongoing activities 2,495 2,361 8 7
Exited business activities(1) - 3 n/a
------- ---------- ------------- -------------
Total revenue 2,495 2,364 8
------- ---------- ------------- -------------
Benchmark EBIT
B2B 586 561 7
Consumer Services 125 121 4
------- ---------- ------------- -------------
Total business segments 711 682 6
Central Activities - central
corporate costs (41) (35) n/a
------- ---------- ------------- -------------
Total - ongoing activities 670 647 6
Exited business activities(1) - 2 n/a
------- ---------- ------------- -------------
Total Benchmark EBIT 670 649 5
------- ---------- ------------- -------------
Benchmark EBIT margin - ongoing
activities
B2B(1) 30.0% 29.9%
Consumer Services 23.1% 24.9%
------- ---------- ------------- -------------
Total Benchmark EBIT margin 26.9% 27.4%
------- ---------- ------------- -------------
1. Comparative information is restated following the
reclassification to exited business activities of certain B2B
businesses.
3. Summary reconciliation of Benchmark EBIT to statutory profit
before tax
Six months ended 30 September 2019 2018
US$m US$m
------ ------
Benchmark EBIT 670 649
Net interest expense (66) (56)
---------------------------------------------- ------ ------
Benchmark PBT 604 593
Exceptional items and other adjustments made
to derive Benchmark PBT(2) (124) (123)
---------------------------------------------- ------
Profit before tax 480 470
---------------------------------------------- ------ ------
2. See note 9.
Appendices (continued)
4. Cash flow and Net debt summary
Six months ended 30 September 2019 2018
US$m US$m
-------- --------
Benchmark EBIT 670 649
Amortisation and depreciation charged to Benchmark
EBIT 204 159
---------------------------------------------------- -------- --------
Benchmark EBITDA 874 808
Net capital expenditure (223) (181)
Increase in working capital (317) (188)
Principal lease payments (26) -
Profit retained in associates (1) (2)
Charge for share incentive plans 33 41
---------------------------------------------------- -------- --------
Benchmark operating cash flow 340 478
Net interest paid (69) (55)
Tax paid (146) (84)
Dividends paid to non-controlling interests (1) -
---------------------------------------------------- -------- --------
Benchmark free cash flow 124 339
Acquisitions (437) (13)
Purchase of investments (62) (17)
Movement in Exceptional and other non-benchmark
items (17) (8)
Ordinary dividends paid (294) (284)
---------------------------------------------------- -------- --------
Net cash (outflow)/inflow - continuing operations (686) 17
Net cash outflow - discontinued operations (7) (32)
Net debt at 1 April (3,262) (3,408)
Net share purchases (137) (107)
Foreign exchange and other movements 32 27
---------------------------------------------------- -------- --------
Net debt at 30 September (4,060) (3,503)
---------------------------------------------------- -------- --------
5. Total investment
Six months ended 30 September 2019 2018
US$m US$m
----- -----
Capital expenditure 226 183
Disposal of property, plant and equipment (3) (2)
------------------------------------------- ----- -----
Net capital expenditure 223 181
Acquisitions 437 13
Purchase of investments 62 17
------------------------------------------- ----- -----
Total investment 722 211
------------------------------------------- ----- -----
Condensed half-yearly financial statements
Group income statement
for the six months ended 30 September 2019
Six months ended 30 September Six months ended 30 September
2019 2018
Benchmark(1) Non-benchmark(2) Statutory Benchmark(1) Non-benchmark(2) Statutory
Total Total
US$m US$m US$m US$m US$m US$m
Revenue (note 7(a)) 2,495 - 2,495 2,364 - 2,364
Total operating expenses
(note 9(a)) (1,830) (109) (1,939) (1,719) (65) (1,784)
Operating profit/(loss) 665 (109) 556 645 (65) 580
Interest income 6 - 6 5 - 5
Finance expense (72) (51) (123) (61) (58) (119)
------------ ---------------- --------- ------------ ---------------- ---------
Net finance costs
(note 10(a)) (66) (51) (117) (56) (58) (114)
Share of post-tax
profit of associates(3) 5 36 41 4 - 4
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) before
tax (note 7(a)) 604 (124) 480 593 (123) 470
Group tax (charge)/credit
(note 11(a)) (158) 33 (125) (150) 1 (149)
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) for
the period 446 (91) 355 443 (122) 321
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Attributable to:
Owners of Experian
plc 443 (91) 352 442 (122) 320
Non-controlling interests 3 - 3 1 - 1
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) for
the period 446 (91) 355 443 (122) 321
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Total Benchmark EBIT(1) 670 - 670 649 - 649
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
US cents US cents US cents US cents US cents US cents
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Earnings/(loss) per
share (note 13(a))
Basic 49.1 (10.1) 39.0 48.7 (13.4) 35.3
Diluted 48.7 (10.0) 38.7 48.3 (13.4) 34.9
-------------------------- ------------ ---------------- --------- ------------ ---------------- ---------
1. Total Benchmark EBIT and other Benchmark items are non-GAAP
measures, defined in note 6 to the condensed half-yearly financial
statements.
2. The loss before tax for non-benchmark items of US$124m (2018:
US$123m) is analysed in note 9 to the condensed half-yearly
financial statements.
3. The non-benchmark share of post-tax profit of associates of
US$36m (2018: US$nil) includes a gain of US$38m relating to a
business disposal by an associate.
Condensed half-yearly financial statements
Group statement of comprehensive income
for the six months ended 30 September 2019
Six months ended 30
September
------------------------
2019 2018
US$m US$m
---------------------------------------------- ----------- -----------
Profit for the period 355 321
----------------------------------------------- ----------- -----------
Other comprehensive income
Items that will not be reclassified to
profit or loss:
Remeasurement of post-employment benefit
assets and obligations (note 16(b)) 44 8
Changes in the fair value of financial
assets revalued through OCI - (2)
Items that will not be reclassified to
profit or loss 44 6
----------------------------------------------- ----------- -----------
Items that may be reclassified subsequently
to profit or loss:
Currency translation losses (112) (188)
----------------------------------------------- ----------- -----------
Items that may be reclassified subsequently
to profit or loss (112) (188)
----------------------------------------------- ----------- -----------
Other comprehensive income for the period(1) (68) (182)
Total comprehensive income for the period 287 139
Attributable to:
Owners of Experian plc 284 138
Non-controlling interests 3 1
----------------------------------------------- ----------- -----------
Total comprehensive income for the period 287 139
----------------------------------------------- ----------- -----------
1. Amounts reported within Other comprehensive income (OCI) are
in respect of continuing operations and, except as reported for
post-employment benefit assets and obligations, there is no
associated tax. Currency translation items are recognised in the
translation reserve within other reserves. Other items within Other
comprehensive income are recognised in retained earnings.
Condensed half-yearly financial statements
Group balance sheet
at 30 September 2019
30 September 31 March
--------------------
2019 2018 2019
Notes US$m US$m US$m
--------------------------------------- ------ --------- --------- ---------
Non-current assets
Goodwill 4,507 4,276 4,324
Other intangible assets 1,545 1,436 1,474
Property, plant and equipment 519 315 333
Investments in associates 155 126 122
Deferred tax assets 115 142 147
Post-employment benefit assets 16(a) 105 56 61
Trade and other receivables 145 88 129
Financial assets revalued through
OCI 164 94 103
Other financial assets 168 172 154
--------------------------------------- ------ --------- --------- ---------
7,423 6,705 6,847
--------------------------------------- ------ --------- --------- ---------
Current assets
Trade and other receivables 1,018 989 1,055
Current tax assets 30 30 27
Other financial assets 10 7 9
Cash and cash equivalents 19(b) 146 175 149
--------------------------------------- ------ --------- --------- ---------
1,204 1,201 1,240
--------------------------------------- ------ --------- --------- ---------
Current liabilities
Trade and other payables (1,139) (1,183) (1,464)
Borrowings 19(b) (1,140) (550) (869)
Current tax liabilities (272) (333) (313)
Provisions (54) (67) (41)
Other financial liabilities (163) (126) (152)
--------------------------------------- ------ --------- --------- ---------
(2,768) (2,259) (2,839)
--------------------------------------- ------ --------- --------- ---------
Net current liabilities (1,564) (1,058) (1,599)
--------------------------------------- ------ --------- --------- ---------
Total assets less current liabilities 5,859 5,647 5,248
--------------------------------------- ------ --------- --------- ---------
Non-current liabilities
Trade and other payables (102) (91) (99)
Borrowings 19(b) (3,166) (2,965) (2,455)
Deferred tax liabilities (160) (157) (132)
Post-employment benefit obligations 16(a) (52) (55) (55)
Other financial liabilities (62) (97) (13)
--------------------------------------- ------ --------- --------- ---------
(3,542) (3,365) (2,754)
--------------------------------------- ------ --------- --------- ---------
Net assets 2,317 2,282 2,494
--------------------------------------- ------ --------- --------- ---------
Equity
Called-up share capital Share
capital 21 96 97 96
Share premium account 21 1,572 1,558 1,559
Retained earnings 18,669 18,524 18,718
Other reserves (18,027) (17,907) (17,893)
--------------------------------------- ------ --------- --------- ---------
Attributable to owners of Experian
plc 2,310 2,272 2,480
Non-controlling interests 7 10 14
--------------------------------------- ------ --------- --------- ---------
Total equity 2,317 2,282 2,494
--------------------------------------- ------ --------- --------- ---------
Condensed half-yearly financial statements
Group statement of changes in total equity
for the six months ended 30 September 2019
Called-up Share Retained Other Attributable Total
share premium earnings reserves to owners equity
capital account of Experian Non-controlling
plc interests
US$m US$m US$m US$m US$m US$m US$m
--------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 1 April 2019 96 1,559 18,718 (17,893) 2,480 14 2,494
Comprehensive income:
Total profit for the
period - - 352 - 352 3 355
Other comprehensive
income - - 44 (112) (68) - (68)
--------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Total comprehensive
income - - 396 (112) 284 3 287
--------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions with owners:
Employee share incentive
plans:
- value of employee
services - - 33 - 33 - 33
- shares issued on
vesting - 13 - - 13 - 13
- other vesting of
awards and exercises
of share options - - (57) 70 13 - 13
- purchase of shares
by employee trusts - - - (92) (92) - (92)
- other payments - - (5) - (5) - (5)
Purchase and cancellation
of own shares - - (58) - (58) - (58)
Transactions in respect
of non-controlling
interests - - (64) - (64) (9) (73)
Dividends paid - - (294) - (294) (1) (295)
--------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions with owners - 13 (445) (22) (454) (10) (464)
--------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 30 September 2019 96 1,572 18,669 (18,027) 2,310 7 2,317
--------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Group statement of changes in total equity
for the six months ended 30 September 2018
Called-up Share Retained Other Attributable Total
share premium earnings reserves to owners equity
capital account of Experian Non-controlling
plc interests
US$m US$m US$m US$m US$m US$m US$m
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 1 April 2018 97 1,546 18,609 (17,775) 2,477 7 2,484
Comprehensive income:
Total profit for the
period - - 320 - 320 1 321
Other comprehensive
income - - 6 (188) (182) - (182)
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Total comprehensive
income - - 326 (188) 138 1 139
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions with owners:
Employee share incentive
plans:
- value of employee
services - - 41 - 41 - 41
- shares issued on vesting - 12 - - 12 - 12
- other vesting of awards
and exercises of share
options - - (50) 56 6 - 6
- related tax charge - - 4 - 4 - 4
- other payments - - (4) - (4) - (4)
Purchase and cancellation
of own shares - - (118) - (118) - (118)
Transactions in respect
of non-controlling
interests - - - - - 2 2
Dividends paid - - (284) - (284) - (284)
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions with owners - 12 (411) 56 (343) 2 (341)
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 30 September 2018 97 1,558 18,524 (17,907) 2,272 10 2,282
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Condensed half-yearly financial statements
Group cash flow statement
for the six months ended 30 September 2019
Notes Six months ended 30
September
----------------------
2019 2018
US$m US$m
--------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Cash generated from operations 17(a) 552 638
Interest paid (72) (57)
Interest received 3 2
Dividends received from associates 4 2
Tax paid (146) (84)
--------------------------------------------- ------ ---------- ----------
Net cash inflow from operating activities
- continuing operations 341 501
Net cash outflow from operating activities
- discontinued operations 12 (7) (32)
--------------------------------------------- ------ ---------- ----------
Net cash inflow from operating activities 334 469
--------------------------------------------- ------ ---------- ----------
Cash flows from investing activities
Purchase of other intangible assets 17(c) (191) (151)
Purchase of property, plant and equipment (35) (32)
Sale of property, plant and equipment 3 1
Purchase of other financial assets (62) (12)
Purchase of investment in associates - (5)
Acquisition of subsidiaries, net of
cash acquired 17(d) (353) (3)
Net cash flows used in investing activities (638) (202)
--------------------------------------------- ------ ---------- ----------
Cash flows from financing activities
Cash inflow in respect of shares issued 17(e) 13 12
Cash outflow in respect of share purchases 17(e) (150) (119)
Other payments on vesting of share
awards (5) (4)
Transactions in respect of non-controlling
interests (68) 2
New borrowings 839 529
Repayment of borrowings - (356)
Payment of lease liabilities (26) -
Net payments for cross-currency swaps (14) -
and foreign exchange contracts
Net receipts from equity swaps 5 3
Dividends paid (295) (284)
--------------------------------------------- ------ ---------- ----------
Net cash flows from/(used in) financing
activities 299 (217)
--------------------------------------------- ------ ---------- ----------
Net (decrease)/increase in cash and
cash equivalents (5) 50
Cash and cash equivalents at 1 April 146 137
Exchange movements on cash and cash
equivalents 2 (15)
------
Cash and cash equivalents at 30 September 17(f) 143 172
--------------------------------------------- ------ ---------- ----------
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
1. Corporate information
Experian plc (the Company) is the ultimate parent company of the
Experian group of companies (Experian or the Group). Experian is a
leading global information services group.
The Company is incorporated and registered in Jersey as a public
company limited by shares and is resident in Ireland. The Company's
registered office is at 22 Grenville Street, St Helier, Jersey JE4
8PX, Channel Islands.
The Company's ordinary shares are traded on the London Stock
Exchange's Regulated Market and have a Premium Listing.
There has been no change in this information since the Annual
Report for the year ended 31 March 2019.
2. Basis of preparation
The condensed half-yearly financial statements are prepared on
the going concern basis and in accordance with International
Accounting Standard (IAS) 34 'Interim Financial Reporting' (IAS 34)
as adopted by the European Union (the EU).
The condensed half-yearly financial statements:
-- comprise the consolidated results of the Group for the six
months ended 30 September 2019 and 30 September 2018;
-- were approved for issue on 11 November 2019;
-- have not been audited but have been reviewed by the Company's
auditor with their report set out on page 45; and
-- do not constitute the Group's statutory financial statements
but should be read in conjunction with the Group's statutory
financial statements for the year ended 31 March 2019.
No significant events impacting the Group, other than those
disclosed in this document, have occurred between 30 September 2019
and 11 November 2019.
The Group's statutory financial statements comprise the Annual
Report and audited financial statements which are prepared in
accordance with International Financial Reporting Standards (IFRS
or IFRSs) as adopted by the EU (EU-IFRS). The most recent such
financial statements, for the year ended 31 March 2019, were
approved by the directors on 14 May 2019 and subsequently delivered
to the Jersey Registrar of Companies. The auditor's report was
unqualified and did not contain a statement under Article 111(2) or
Article 111(5) of the Companies (Jersey) Law 1991. Copies of these
financial statements are available on the Company's website, at
www.experianplc.com, and from the Company Secretary at Newenham
House, Northern Cross, Malahide Road, Dublin 17, D17 AY61,
Ireland.
The financial information for the year ended 31 March 2019
included in the condensed half-yearly financial statements is not
the Company's statutory accounts for that financial year, but has
been extracted from the Group's statutory financial statements.
As required by the UK Financial Conduct Authority Disclosure
Guidance and Transparency Rules Sourcebook, these condensed
half-yearly financial statements have been prepared applying the
accounting policies and presentation that were applied in the
preparation of the Group's statutory financial statements for the
year ended 31 March 2019, except for the changes to accounting
standards set out in note 3.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
3. Changes in accounting standards
IFRS 16 'Leases'
With effect from 1 April 2019, the Group has adopted IFRS 16
'Leases' which replaces IAS 17 'Leases'.
IFRS 16 removes the distinction between finance and operating
leases, bringing the majority of leases onto the balance sheet for
the first time. As a lessee, we have recognised both right-of-use
assets and lease liabilities on our balance sheet, increasing both
assets and financial liabilities.
In accordance with the IFRS 16 transition guidance, we have
adopted the new rules using the modified retrospective approach
which allows the matching of the opening right-of-use assets with
the opening lease liabilities on 1 April 2019. Under this approach,
no restatement of comparative information is required.
We have used the following practical expedients when adopting
IFRS 16:
-- Applied a single discount rate to a portfolio of leases with similar characteristics.
-- Relied on our previous assessment as to whether leases are
onerous under IAS 37 'Provisions, Contingent Liabilities and
Contingent Assets', at 31 March 2019, rather than performing
impairment tests on transition.
-- Excluded initial direct costs from the measurement of the
right-of-use assets at 1 April 2019.
The weighted average incremental borrowing rate applied to lease
liabilities on initial recognition at 1 April 2019 was 4.5%.
There was no material difference between the operating lease
commitments disclosed at 31 March 2019 under IAS 17, discounted
using the incremental borrowing rate on initial recognition, and
the lease liabilities recognised in the Group balance sheet at 1
April 2019.
The impact of adoption on the Group's financial results is set
out below. In addition, we have updated our definition of Net debt
and Net funding to exclude lease liabilities.
Six months ended 30 September 2019
As reported under IFRS 16 adjustment As reported under
IAS 17 IFRS 16
Group income statement US$m US$m US$m
Revenue 2,495 - 2,495
----------------- ------------------ -----------------
IAS 17 Operating lease charge (29) 29 -
IFRS 16 Depreciation - (24) (24)
Other operating expenses (1,915) - (1,915)
----------------- ------------------ -----------------
Total operating expenses (1,944) 5 (1,939)
Operating profit 551 5 556
Interest income 6 - 6
Finance expense (118) (5) (123)
----------------- ------------------ -----------------
Net finance costs (112) (5) (117)
Share of post-tax profit of
associates 41 - 41
------------------------------ ----------------- ------------------ -----------------
Profit before tax 480 - 480
Group tax charge (125) - (125)
------------------------------ ----------------- ------------------ -----------------
Profit for the period 355 - 355
------------------------------ ----------------- ------------------ -----------------
Attributable to:
Owners of Experian plc 352 - 352
Non-controlling interests 3 - 3
------------------------------ ----------------- ------------------ -----------------
Profit for the period 355 - 355
------------------------------ ----------------- ------------------ -----------------
Total Benchmark EBIT(1) 665 5 670
------------------------------ ----------------- ------------------ -----------------
1. Total Benchmark EBIT is a non-GAAP measure, defined in note 6
to the condensed half-yearly financial statements.
The operating lease expense previously reported under IAS 17 on
a straight-line basis has been replaced by depreciation of the
right-of-use assets and interest on the lease liabilities.
We also made lease payments of US$6m in respect of low-value
assets which continue to be recognised as an expense, on a
straight-line basis, in the Group income statement. This treatment
utilises the exemption available in IFRS 16 for such assets. We
have chosen not to apply the exemption for short-term leases. We
have no material sub-lease income.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
3. Changes in accounting standards (continued)
IFRS 16 'Leases' (continued)
At 31 March 2019 IFRS 16 adjustment At 1 April 2019
Group balance sheet (extract) US$m US$m US$m
Non-current assets
Property, plant and equipment 333 192 525
Current assets
Trade and other receivables 1,055 (1) 1,054
Current liabilities
Trade and other payables (1,464) 5 (1,459)
Borrowings (869) (41) (910)
Non-current liabilities
Trade and other payables (99) 8 (91)
Borrowings (2,455) (163) (2,618)
Other 5,993 - 5,993
Net assets 2,494 - 2,494
------------------------------ ---------------- ------------------ ---------------
Total equity 2,494 - 2,494
------------------------------ ---------------- ------------------ ---------------
The Group's lease portfolio consists of 33 significant property
leases across the countries in which we operate. In addition, we
lease approximately 170 smaller properties, 800 motor vehicles, and
a small number of hardware assets. At 30 September 2019 we hold
right-of-use assets with a net book value of US$206m comprising
property assets of US$174m and US$32m for plant and equipment. The
corresponding lease liabilities at 30 September 2019 are valued at
US$222m split between current (US$50m) and non-current (US$172m)
borrowings in the Group balance sheet.
The Group's future commitments for leases committed to but not
yet commenced total US$7m and do not form part of the lease
liabilities or right-of-use assets.
Lease liability analysis by maturity
Six months ended 30 September 2019 US$m
-------------------------------------- -----
Less than one year 50
One to two years 45
Two to three years 37
Three to four years 31
Four to five years 15
Over five years 44
222
-------------------------------------- -----
In the Group cash flow statement, principal lease payments are
now presented within cash flows used in financing with the
associated interest recorded as a cash outflow from operating
activities. Previously lease payments were recognised as cash
outflows from operating activities. During the six months ended 30
September 2019, we recognised total payments for leases of US$30m
which comprised US$26m for repayments of principal and US$4m for
payments of interest.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
4. Accounting policies, estimates and judgments
(a) Introduction
The preparation of the condensed half-yearly financial
statements requires management to make estimates and assumptions
that affect the reported amount of revenues, expenses, assets,
liabilities and the disclosure of contingent liabilities. If in the
future such estimates and assumptions, which are based on
management's best judgment at the date of these condensed
half-yearly financial statements, deviate from actual
circumstances, the original estimates and assumptions will be
modified as appropriate in the period in which the circumstances
change. There have been no significant changes in the bases upon
which estimates have been determined, compared to those applied at
31 March 2019, and no change in estimate has had a material effect
on the current period.
Except as described in note 3, the accounting policies applied
in the condensed half-yearly financial statements are the same as
those applied in the Annual Report and Group financial statements
for the year ended 31 March 2019.
(b) Goodwill
Goodwill held in the Group's balance sheet is tested annually
for impairment and details of the methodology used are set out in
the Group's statutory financial statements for the year ended 31
March 2019.
During the six months ended 30 September 2019 the annual tests
were performed with no impairment identified.
(c) Post-employment benefits (note 16)
We have updated the accounting valuation of our principal
defined benefit pension plan in light of changes in the key
actuarial assumptions, and this is recognised in the condensed
half-yearly financial statements. The actuarial assumption with the
most significant impact at 30 September 2019 is the discount rate
of 1.8% (2018: 2.7%). The discount rate used in the year ended 31
March 2019 was 2.3%.
(d) Revenue recognition (note 7)
Revenue is stated net of any sales taxes, rebates and
discounts.
Revenue is recognised to represent the transfer of promised
services to customers in a way that reflects the consideration
expected to be received in return. Total consideration from
contracts with customers is allocated to the performance
obligations identified based on their standalone selling price, and
is recognised when those performance obligations are satisfied and
the control of goods or services is transferred to the customer,
either over time or at a point in time.
-- Revenue in respect of the provision and processing of
transactional data is recognised in the period in which the service
is provided.
-- Revenue from batch data arrangements which include an ongoing
update service are apportioned across each delivery to the
customer.
-- Subscription and membership fees are recognised on a
straight-line basis over the period to which they relate.
-- Software licence and delivery services are primarily
accounted for as a single performance obligation, with revenue
recognised when the combined offering is delivered to the customer.
These services are distinguished between Experian-hosted solutions,
where revenue is spread over the period that the service is
available to the customer, and on-premise software licence
arrangements, where revenue is recognised on delivery
completion.
-- The delivery of support and maintenance agreements is
generally considered to be a separate performance obligation and
revenue is recognised on a straight-line basis over the term of the
maintenance period.
-- Professional services revenues which form a separate
performance obligation are recognised as the services are
delivered.
Sales are typically invoiced in the geographic area in which the
customer is located. As a result, the geographic location of the
invoicing undertaking is used to attribute revenue to individual
countries.
Accrued income balances, which represent the right to
consideration in exchange for goods or services that we have
transferred to a customer, are assessed as to whether they meet the
definition of a contract asset:
-- When the right to consideration is conditional on something
other than the passage of time, a balance is classified as a
contract asset. This arises where there are further performance
obligations to be satisfied as part of the contract with the
customer and typically includes balances relating to software
licensing contracts;
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
4. Accounting policies, estimates and judgments (continued)
(d) Revenue recognition (note 7) (continued)
-- When the right to consideration is conditional only on the
passage of time, the balance does not meet the definition of a
contract asset and is classified as an unbilled receivable. This
typically arises where the timing of the related billing cycle
occurs in a period after the performance obligation is
satisfied.
Certain costs incurred prior to the satisfaction or
partial-satisfaction of a performance obligation are also deferred
as contract costs and these are amortised on a systematic basis
consistent with the pattern of transfer of the related goods or
services.
-- Costs to obtain a contract predominantly comprise sales commissions costs.
-- Costs to fulfil a contract predominantly comprise of labour costs directly relating to the implementation services provided.
Contract liabilities arise when we have an obligation to
transfer future goods or services to a customer for which we have
received consideration, or the amount is due, from the customer and
include both deferred income balances and specific reserves.
(e) Tax (note 11)
The tax charge recognised in the period is derived from the
estimated tax rate for the full year, taking account of one-off tax
charges and credits arising in the period and expected to arise in
the full year and the tax effect of Exceptional items and other
adjustments made to derive Benchmark PBT.
(f) Leases
The Group undertakes an assessment of whether a contract is or
contains a lease at its inception. The assessment establishes
whether the Group obtains substantially all the economic benefits
from the use of an asset and whether we have the right to direct
its use.
Low-value lease payments are recognised as an expense, on a
straight-line basis over the lease term. For other leases we
recognise both a right-of-use asset and a lease liability at the
commencement date of a lease contract.
The right-of-use asset is initially measured at cost, comprising
the initial amount of the lease liability adjusted for payments
made at or before the commencement date, plus initial direct costs
and an estimate of the cost of any obligation to refurbish the
asset or site, less lease incentives.
Subsequently, right-of-use assets are measured at cost less
accumulated depreciation and impairment losses and are adjusted for
any remeasurement of the lease liability. Depreciation is
calculated on a straight-line basis over the lower of the useful
life of the right-of-use asset and the period of the lease.
The lease term comprises the non-cancellable period of a lease,
plus periods covered by an extension option, if it is reasonably
certain to be exercised, and periods covered by a termination
option if it is reasonably certain not to be exercised.
The lease liability is initially measured at the present value
of lease payments that are not paid at the commencement date,
discounted at the interest rate implicit in the lease or if that
rate cannot be easily determined the Group's incremental borrowing
rate.
Lease payments comprise payments of fixed principal, less any
lease incentives, variable elements linked to an index, guaranteed
residuals or buy-out options that are reasonably certain to be
exercised. It includes payments in respect of optional renewal
periods where these are reasonably certain to be exercised or early
termination payments where the lease term reflects such an
option.
The lease liability is remeasured when there is a change in
future lease payments arising from a change in an index or rate, if
there is a change in the Group's estimate of the amount expected to
be payable under a residual value guarantee or if the Group changes
its assessment of whether it will exercise a purchase, extension or
termination option.
When a lease liability is remeasured, a corresponding adjustment
is made to the carrying amount of the right-of-use asset or is
recognised in the Group income statement if the asset is fully
depreciated.
The Group presents right-of-use assets within property, plant
and equipment and lease liabilities within borrowings in the Group
balance sheet.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
5. Accounting developments
There are no 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.
6. Use of non-GAAP measures in the condensed half-yearly
financial statements
As detailed below, the Group has identified and defined certain
measures that it uses to understand and manage its performance. The
measures are not defined under IFRS and they may not be directly
comparable with other companies' adjusted measures. These non-GAAP
measures are not intended to be a substitute for any IFRS measures
of performance but management has included them as they consider
them to be key measures used within the business for assessing the
underlying performance of the Group's ongoing businesses.
(a) Benchmark profit before tax (Benchmark PBT) (note 7(a) and
note 8)
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
interest thereon) and discontinued operations. It includes the
Group's share of continuing associates' Benchmark post-tax
results.
An explanation of the basis on which we report 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 calculation of Benchmark PBT
because these charges are based on judgments about their value and
economic life and bear no relation to the Group's underlying
ongoing performance. Impairment of goodwill is similarly excluded
from the calculation of Benchmark PBT.
-- Acquisition and disposal expenses (representing the
incidental costs of acquisitions and disposals, one-time
integration costs and other corporate transaction expenses)
relating to successful, active or aborted acquisitions and
disposals are excluded from the definition of Benchmark PBT as they
bear no relation to the Group's underlying ongoing performance or
to the performance of any acquired businesses. Adjustments to
contingent consideration are similarly excluded from the definition
of Benchmark PBT.
-- 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 retranslation
of intra-Group funding, and 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) Benchmark earnings before interest and tax (Benchmark EBIT)
and margin (Benchmark EBIT margin) (note 7(a))
Benchmark EBIT is defined as Benchmark PBT before the net
interest expense charged therein and accordingly excludes
Exceptional items as defined below. Benchmark EBIT margin is
Benchmark EBIT from ongoing activities expressed as a percentage of
revenue from ongoing activities.
(c) Benchmark earnings before interest, tax, depreciation and
amortisation (Benchmark EBITDA)
Benchmark EBITDA is defined as Benchmark EBIT before the
depreciation and amortisation charged therein.
(d) Exited business activities
Exited business activities are businesses sold, closed or
identified for closure during a financial year. These are treated
as exited business activities for both revenue and Benchmark EBIT
purposes. The results of exited business activities are disclosed
separately with the results of the prior period re-presented in the
segmental analyses as appropriate. This measure differs from the
definition of discontinued operations in IFRS 5.
(e) Ongoing activities
The results of businesses trading at 30 September 2019, which
are not disclosed as exited business activities, are reported as
ongoing activities.
(f) Constant exchange rates
To highlight our organic performance, we discuss our 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.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
6. Use of non-GAAP measures in the condensed half-yearly
financial statements (continued)
(g) Total growth (note 7(c))
This is the year-on-year change in the performance of our
activities at actual exchange rates. Total growth at constant
exchange rates removes the translational foreign exchange effects
arising on the consolidation of our activities and comprises one of
our measures of performance at constant exchange rates.
(h) Organic revenue growth (note 7(c))
This is the year-on-year change in the revenue of ongoing
activities, translated at constant exchange rates, excluding
acquisitions until the first anniversary of their
consolidation.
(i) Benchmark earnings and Total Benchmark earnings (note
13)
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 other adjustments made to derive Benchmark PBT. Benchmark
PBT less attributable tax is designated as Total Benchmark
earnings.
(j) Benchmark earnings per share (Benchmark EPS) (note
13(a))
Benchmark EPS comprises Benchmark earnings divided by the
weighted average number of issued ordinary shares, as adjusted for
own shares held.
(k) 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.
(l) Benchmark tax charge and rate (note 11(b))
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 11(b) to these condensed half-yearly financial
statements. The Benchmark effective rate of tax is calculated by
dividing the Benchmark tax charge by Benchmark PBT.
(m) Exceptional items
The separate reporting of 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 financially significant one-off
items. All other restructuring costs are charged against Benchmark
EBIT, in the segments in which they are incurred.
(n) Benchmark operating and Benchmark free cash flow
Benchmark operating cash flow is Benchmark 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, principal lease
payments and the Benchmark profit or loss retained in continuing
associates. Benchmark free cash flow is derived from Benchmark
operating cash flow by excluding net interest, tax paid in respect
of continuing operations and dividends paid to non-controlling
interests.
(o) Cash flow conversion
Cash flow conversion is Benchmark operating cash flow expressed
as a percentage of Benchmark EBIT.
(p) Net debt and Net funding (note 19)
Net debt is borrowings (and the fair value of derivatives
hedging borrowings) excluding lease liabilities and accrued
interest, less cash and cash equivalents and other highly liquid
bank deposits with original maturities greater than three months.
Net funding is borrowings (and the fair value of the effective
portion of derivatives hedging borrowings) excluding lease
liabilities and accrued interest, less cash held in Group
Treasury.
(q) Return on capital employed (ROCE)
ROCE is defined as Benchmark EBIT less tax at the Benchmark rate
divided by a three-point average of capital employed, in continuing
operations, over the year. Capital employed is net assets less
non-controlling interests, further adjusted to add or deduct the
net tax liability or asset and to add Net debt.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
7. Segment information
(a) Income statement
North Latin UK and EMEA/ Total Central Total
America America Ireland Asia operating Activities continuing
Pacific segments operations
Six months ended 30 US$m US$m US$m US$m US$m US$m US$m
September
2019
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Revenue from external
customers 1,573 352 371 199 2,495 - 2,495
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Reconciliation from
Benchmark
EBIT to
profit/(loss) before tax
Benchmark EBIT 544 97 75 (5) 711 (41) 670
Net interest expense
included
in Benchmark PBT
(note 10(b)) (2) (1) (1) (1) (5) (61) (66)
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Benchmark PBT 542 96 74 (6) 706 (102) 604
Exceptional items (note
9(a)) (35) - - - (35) - (35)
Amortisation of acquisition
intangibles (42) (8) (4) (5) (59) - (59)
Acquisition expenses (4) - (4) (8) (16) - (16)
Adjustment to the fair
value of contingent
consideration - - 1 - 1 - 1
Non-benchmark share of
post-tax profit of
associates - - - - - 36 36
Interest on uncertain
tax provisions (note 10(a)) - - - - - (7) (7)
Financing fair value
remeasurements
(note 10(c)) - - - - - (44) (44)
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Profit/(loss) before tax 461 88 67 (19) 597 (117) 480
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
North Latin UK and EMEA/ Total Central Total
America America Ireland Asia operating Activities continuing
Pacific segments operations
Six months ended 30 US$m US$m US$m US$m US$m US$m US$m
September
2018
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Revenue from external
customers
Ongoing activities 1,430 339 393 199 2,361 - 2,361
Exited business activities - - 3 - 3 - 3
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Total 1,430 339 396 199 2,364 - 2,364
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Reconciliation from
Benchmark
EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities 492 98 101 (9) 682 (35) 647
Exited business activities - - 2 - 2 - 2
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Total 492 98 103 (9) 684 (35) 649
Net interest expense
included
in Benchmark PBT
(note 10(b)) - - - - - (56) (56)
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Benchmark PBT 492 98 103 (9) 684 (91) 593
Amortisation of acquisition
intangibles (40) (9) (5) (2) (56) - (56)
Acquisition expenses (3) - (3) - (6) - (6)
Adjustment to the fair
value of contingent
consideration (3) - - - (3) - (3)
Interest on uncertain
tax provisions (note 10(a)) - - - - - (7) (7)
Financing fair value
remeasurements
(note 10(c)) - - - - - (51) (51)
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
Profit/(loss) before tax 446 89 95 (11) 619 (149) 470
----------------------------- --------- --------- --------- --------- ----------- ------------ ------------
The results for the six months ended 30 September 2018 have been
restated following the reclassification to exited business
activities of certain B2B businesses.
Additional information by operating segment, including that on
total and organic growth at constant exchange rates, and the
disaggregation of revenue from contracts with customers, is
provided within pages 3 to 9.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
7. Segment information (continued)
(b) 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 'Operating segments' is given within note
8. This is supplemented by voluntary disclosure of the
profitability of groups of service lines. For ease of reference, we
continue to use the term 'business segments' when discussing the
results of groups of service lines.
(c) Reconciliation of revenue from ongoing activities
North Latin UK and EMEA/ Total
America America Ireland Asia ongoing
Pacific activities
US$m US$m US$m US$m US$m
--------------------------------------------- --------- --------- --------- --------- ------------
Revenue for the six months ended 30
September 2018(1) 1,430 339 393 199 2,361
Adjustment to constant exchange rates (1) (3) (4) (3) (11)
---------------------------------------------- --------- --------- --------- --------- ------------
Revenue at constant rates for the six
months ended 30 September 2018 1,429 336 389 196 2,350
Organic revenue growth 137 32 (1) (6) 162
Revenue from acquisitions 7 - 1 16 24
Revenue at constant rates for the six
months ended 30 September 2019 1,573 368 389 206 2,536
Adjustment to actual exchange rates - (16) (18) (7) (41)
Revenue for the six months ended 30
September 2019 1,573 352 371 199 2,495
---------------------------------------------- --------- --------- --------- --------- ------------
Organic revenue growth at constant exchange
rates 10% 10% - (3%) 7%
Revenue growth at constant exchange
rates 10% 10% - 5% 8%
---------------------------------------------- --------- --------- --------- --------- ------------
1. The results for the six months ended 30 September 2018 have
been restated following the reclassification to exited business
activities of certain B2B businesses.
The above table demonstrates the application of the methodology
set out in note 6 in determining organic and total revenue growth
at constant exchange rates.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
8. Information on business segments (including non-GAAP
disclosures)
Business-to- Consumer Total Central Total
Business Services business Activities continuing
segments operations
Six months ended 30 September US$m US$m US$m US$m US$m
2019
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Revenue from external customers 1,955 540 2,495 - 2,495
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Reconciliation from Benchmark
EBIT to
profit/(loss) before tax
Benchmark EBIT 586 125 711 (41) 670
Net interest expense included
in Benchmark PBT (note 10(b)) (4) (1) (5) (61) (66)
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Benchmark PBT 582 124 706 (102) 604
Exceptional items (note 9(a)) (35) - (35) - (35)
Amortisation of acquisition
intangibles (49) (10) (59) - (59)
Acquisition expenses (14) (2) (16) - (16)
Adjustment to the fair value
of contingent consideration 1 - 1 - 1
Non-benchmark share of post-tax
profit of associates - - - 36 36
Interest on uncertain tax provisions
(note 10(a)) - - - (7) (7)
Financing fair value remeasurements
(note 10(c)) - - - (44) (44)
Profit/(loss) before tax 485 112 597 (117) 480
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Consumer Total Central Total
Business-to- Services business Activities continuing
Business segments operations
Six months ended 30 September US$m US$m US$m US$m US$m
2018
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Revenue from external customers
Ongoing activities 1,875 486 2,361 - 2,361
Exited business activities 3 - 3 - 3
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Total 1,878 486 2,364 - 2,364
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Reconciliation from Benchmark
EBIT to
profit/(loss) before tax
Benchmark EBIT
Ongoing activities 561 121 682 (35) 647
Exited business activities 2 - 2 - 2
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Total 563 121 684 (35) 649
Net interest expense included
in Benchmark PBT (note 10(b)) - - - (56) (56)
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Benchmark PBT 563 121 684 (91) 593
Amortisation of acquisition
intangibles (47) (9) (56) - (56)
Acquisition expenses (5) (1) (6) - (6)
Adjustment to the fair value
of contingent consideration (3) - (3) - (3)
Interest on uncertain tax provisions
(note 10 (a)) - - - (7) (7)
Financing fair value remeasurements
(note 10(c)) - - - (51) (51)
-------------------------------------- ------------- ---------- ---------- ------------ ------------
Profit/(loss) before tax 508 111 619 (149) 470
-------------------------------------- ------------- ---------- ---------- ------------ ------------
The results for the six months ended 30 September 2018 have been
restated following the reclassification to exited business
activities of certain B2B businesses.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
9. Exceptional items and other adjustments made to derive
Benchmark PBT
(a) Charge for Exceptional items and other adjustments made to
derive Benchmark PBT
Six months ended 30
September
----------------------
2019 2018
US$m US$m
---------------------------------------------------- ---------- ----------
Exceptional items:
Legal provisions movements (note 9(b)) 35 -
---------------------------------------------------- ---------- ----------
Charge for Exceptional items 35 -
---------------------------------------------------- ---------- ----------
Other adjustments made to derive Benchmark
PBT:
Amortisation of acquisition intangibles 59 56
Acquisition expenses 16 6
Adjustment to the fair value of contingent
consideration (1) 3
Non-benchmark share of post-tax profit of (36) -
associates
Interest on uncertain tax provisions 7 7
Financing fair value remeasurements (note
10(c)) 44 51
----------------------------------------------------- ---------- ----------
Charge for other adjustments made to derive
Benchmark PBT 89 123
----------------------------------------------------- ---------- ----------
Charge for Exceptional items and other adjustments
made to derive Benchmark PBT 124 123
----------------------------------------------------- ---------- ----------
By income statement caption:
Within total operating expenses 109 65
Within operating profit 109 65
Within share of post-tax profit of associates (36) -
Within finance expense 51 58
----------------------------------------------------- ---------- ----------
Charge for Exceptional items and other adjustments
made to derive Benchmark PBT 124 123
----------------------------------------------------- ---------- ----------
(b) Legal provisions movements
During the six months ended 30 September 2019, there has been a
movement in provisions in respect of a number of historic legal
claims.
10. Net finance costs
(a) Net finance costs included in profit
before tax
Six months ended 30 September
--------------------------------
2019 2018
US$m US$m
------------------------------------------------ -------- ----------------------
Interest income:
Bank deposits, short-term investments and
loan notes (6) (5)
Finance expense:
Interest expense 67 61
Charge in respect of financing fair value
remeasurements (note 10(c)) 44 51
Interest on uncertain tax provisions 7 7
Interest on leases 5 -
------------------------------------------------- -------- ----------------------
Finance expense 123 119
------------------------------------------------- -------- ----------------------
Net finance costs included in profit before
tax 117 114
------------------------------------------------- -------- ----------------------
(b) Net interest expense included in Benchmark
PBT
Six months ended 30 September
--------------------------------
2019 2018
US$m US$m
------------------------------------------------ -------- ----------------------
Interest income (6) (5)
Interest expense 72 61
------------------------------------------------- -------- ----------------------
Net interest expense included in Benchmark
PBT 66 56
------------------------------------------------- -------- ----------------------
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
10. Net finance costs (continued)
(c) Analysis of charge in respect of financing fair value
remeasurements
Six months ended 30 September
--------------------------------
2019 2018
US$m US$m
------------------------------------------- --------------- ---------------
Foreign exchange losses on Brazilian real
intra-Group funding 15 44
Increase in the fair value of put options - 3
Other financing fair value losses 29 4
--------------------------------------------- --------------- ---------------
Charge in respect of financing fair value
remeasurements 44 51
--------------------------------------------- --------------- ---------------
Brazilian real intra-Group funding provided to Serasa S.A., from
a Group company whose functional currency is not the Brazilian
real, is not considered permanent and foreign exchange gains or
losses on this funding are recognised in the Group income
statement.
11. Tax - ongoing activities
(a) Group tax charge and effective rate of tax
Six months ended 30 September
--------------------------------
2019 2018
US$m US$m
---------------------------------------------- --------------- ---------------
Group tax charge 125 149
Profit before tax 480 470
---------------------------------------------- --------------- ---------------
Effective rate of tax based on Profit before
tax 26.0% 31.7%
---------------------------------------------- --------------- ---------------
(b) Reconciliation of the Group tax charge to the Benchmark tax
charge
Six months ended 30 September
---------------------------------
2019 2018
US$m US$m
------------------------------------------------ ---------------- ---------------
Group tax charge 125 149
Tax relief on other adjustments made to derive
Benchmark PBT 33 1
Benchmark tax charge 158 150
------------------------------------------------ ---------------- ---------------
Benchmark PBT 604 593
------------------------------------------------ ---------------- ---------------
Benchmark tax rate 26.2% 25.3%
------------------------------------------------ ---------------- ---------------
12. Discontinued operations
There have been no material divestments during the six months
ended 30 September 2019. On 31 May 2017 we completed the divestment
of our email/cross-channel marketing business (CCM), and the
results and cash flows of that business were accordingly classified
as discontinued.
The cash outflow from operating activities of US$7m
(2018:US$32m) relates to CCM and is stated after tax paid of US$nil
(2018: US$21m).
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
13. Earnings per share disclosures
(a) Earnings per share (EPS)
Six months ended 30 September
Basic Diluted
---------------------- ---------------------
2019 2018 2019 2018
US cents US cents US cents US cents
-------------------------------------------- ----------- --------- ---------- ---------
Continuing operations 39.0 35.3 38.7 34.9
Add: Exceptional items and other
adjustments made to derive Benchmark
PBT, net of related tax 10.1 13.4 10.0 13.4
-------------------------------------------- ----------- --------- ---------- ---------
Benchmark EPS (non-GAAP measure) 49.1 48.7 48.7 48.3
-------------------------------------------- ----------- --------- ---------- ---------
(b) Analysis of earnings
Six months ended
30 September
---------------------
2019 2018
US$m US$m
----------
Continuing operations attributable to owners of
Experian plc 352 320
Add: Exceptional items and other adjustments
made to derive Benchmark PBT, net of related
tax 91 122
--------- ---------- ---------
Benchmark earnings attributable to owners of Experian
plc (non-GAAP measure) 443 442
Benchmark earnings attributable to non-controlling
interests (non-GAAP measure) 3 1
Total Benchmark earnings (non-GAAP
measure) 446 443
(c) Reconciliation of Total Benchmark earnings
to profit for the period
Six months ended
30 September
---------------------
2019 2018
US$m US$m
-------------------------------------------- ----------- --------- ---------- ---------
Total Benchmark earnings (non-GAAP
measure) 446 443
Loss from Exceptional items and other adjustments
made to derive
Benchmark PBT, net of related tax (91) (122)
---------- ---------
Profit for the period 355 321
(d) Weighted average number of ordinary
shares
Six months
ended
30 September
2019 2018
million million
Weighted average number of ordinary shares 903 907
Add: dilutive effect of share incentive
awards, options and share purchases 7 9
Diluted weighted average number of ordinary
shares 910 916
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
14. Dividends
Six months ended 30 September
2019 2019 2018 2018
US cents US cents
per share US$m per share US$m
Amounts recognised and paid:
Second interim - paid in
July 2019 (2018: July) 32.50 294 31.25 284
First interim - announced 14.50 131 14.00 126
--------
A first interim dividend of 14.5 US cents per ordinary share
will be paid on 31 January 2020 to shareholders on the register at
the close of business on 3 January 2020 and is not included as a
liability in these condensed half-yearly financial statements. The
announced dividend payment of 14.5 US cents per ordinary share is a
gross amount. The first interim dividend for the six months ended
30 September 2018 was 14.0 US cents per ordinary share and the
total dividend per ordinary share for the year ended 31 March 2019
was 46.5 US cents with a total full year cost of US$420m.
15. Capital expenditure, disposals and capital commitments
(a) Additions
During the six months ended 30 September 2019, the Group
recognised capital additions of US$259m (2018: US$183m), comprising
capital expenditure of US$226m (2018: US$183m) and right-of-use
asset additions of US$33m (2018: US$nil).
(b) Disposals
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 six months ended
30 September 2019 was US$3m (2018: US$2m), there was no profit or
loss on disposal (2018: loss on disposal US$1m).
(c) Capital commitments
At 30 September 2019, the Group had capital commitments in
respect of intangible assets and property, plant and equipment for
which contracts had been placed of US$39m (2018: US$21m). Capital
commitments at 30 September 2019 include commitments of US$1m not
expected to be incurred before 30 September 2020. Capital
commitments at 30 September 2018 included commitments of US$5m not
then expected to be incurred before 30 September 2019.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
16. Post-employment benefit assets and obligations - defined
benefit plans
(a) Amounts recognised in the Group balance sheet
30 September
2019 2018
US$m US$m
Retirement benefit assets/(obligations) - funded
plans:
Fair value of funded plans' assets 1,160 1,088
Present value of funded plans' obligations (1,055) (1,032)
Assets in the Group balance sheet for funded
defined benefit pensions 105 56
Obligations for unfunded post-employment benefits:
Present value of defined benefit pensions -
unfunded plans (48) (50)
Present value of post-employment medical benefits (4) (5)
Liabilities in the Group balance sheet (52) (55)
Net post-employment benefit assets 53 1
The net retirement benefit assets of US$6m at 1 April 2019 comprised
assets of US$61m in respect of funded plans and obligations of US$55m
in respect of unfunded plans. The retirement benefit assets and
obligations are denominated primarily in pounds sterling.
(b) Movements in net post-employment benefit assets/(obligations)
recognised in the Group balance sheet
Six months ended
30 September
2019 2018
US$m US$m
At 1 April 6 (11)
Charge to the Group income statement within
total operating expenses (4) (5)
Remeasurements recognised within Other comprehensive
income 44 8
Differences on exchange (2) -
Contributions paid by the Group 9 9
At 30 September 53 1
There was a small funding deficit at the date of the 2016 full actuarial
valuation of the Experian Pension Scheme in the UK. To correct the
shortfall the employer has agreed to pay deficit contributions of
US$4m per annum over five years from 1 April 2017. Deficit contributions
of US$4m were paid in the six months ended 30 September 2019 (2018:
US$4m).
It is anticipated that agreement will be reached on the 2019 actuarial
valuation prior to 31 March 2020, the results of which will then
be reflected in the Group's statutory financial statements for that
year.
(c) Actuarial assumptions
30 September
2019 2018
% %
Discount rate 1.8 2.7
Inflation rate - based on the UK Retail Prices
Index (the RPI) 3.1 3.3
Inflation rate - based on the UK Consumer Prices
Index (the CPI) 2.1 2.3
Increase in salaries 2.6 3.8
Increase for pensions in payment - element
based on the RPI (where cap is 5%) 2.9 3.0
Increase for pensions in payment - element
based on the CPI (where cap is 2.5%) 1.6 1.7
Increase for pensions in payment - element
based on the CPI (where cap is 3%) 1.8 1.9
Increase for pensions in deferment 2.1 2.3
Inflation in medical costs 6.1 6.3
The mortality and other demographic assumptions used at 30
September 2019 remain unchanged from those used at 31 March 2019
and disclosed in the Group's statutory financial statements for the
year then ended.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
17. Notes to the Group cash flow statement
(a) Cash generated from operations
Six months ended 30 September
2019 2018
US$m US$m
Profit before tax 480 470
Share of post-tax profit of associates (41) (4)
Net finance costs 117 114
Operating profit 556 580
Loss on disposal of fixed assets - 1
Amortisation and depreciation(1) 263 215
Charge in respect of share incentive
plans 33 41
Increase in working capital (note
17(b)) (317) (188)
Acquisition expenses - difference between
income statement charge and amount paid - (6)
Adjustment to the fair value of contingent
consideration (1) 3
Movement in other non-benchmark items
included in working capital 18 (8)
Cash generated from operations 552 638
1. Amortisation and depreciation includes amortisation of acquisition
intangibles of US$59m (2018: US$56m) which is excluded from Benchmark
PBT.
(b) Increase in working capital
Six months ended 30 September
2019 2018
US$m US$m
Trade and other receivables (13) 46
Trade and other payables (304) (234)
Increase in working capital (317) (188)
(c) Purchase of other intangible
assets
Six months ended 30 September
2019 2018
US$m US$m
Databases 87 85
Internally generated software 86 58
Internal use software 18 8
Purchase of other intangible assets 191 151
(d) Cash flows on acquisitions (non-GAAP measure)
Six months ended 30 September
2019 2018
US$m US$m
Purchase of subsidiaries (note 23(a)) 350 -
Less: net cash acquired with subsidiaries (12) -
Settlement of deferred and contingent
consideration 15 3
As reported in the Group cash flow
statement 353 3
Acquisition expenses paid 16 12
Transactions in respect of non-controlling
interests 68 (2)
Cash outflow for acquisitions (non-GAAP
measure) (Appendix 4) 437 13
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
17. Notes to the Group cash flow statement (continued)
(e) Cash outflow in respect of net share purchases (non-GAAP measure)
Notes Six months ended 30
September
2019 2018
US$m US$m
----------------------------------------------------- ------- --------
Issue of ordinary shares 21 (13) (12)
Purchase of shares by employee trusts 22 92 -
Purchase and cancellation of own shares 58 119
-------
Cash outflow in respect of net share purchases
(non-GAAP measure) 137 107
--------
As reported in the Group cash flow statement:
Cash inflow in respect of shares issued (13) (12)
Cash outflow in respect of share purchases 150 119
-------
Cash outflow in respect of net share
purchases (non-GAAP measure) 137 107
----------------------------------------------------- ------- --------
In the prior period cash outflow in respect of net share
purchases included US$1m in respect of the settlement of shares
purchased in the year ended 31 March 2018.
(f) Analysis of cash and cash equivalents
30 September
2019 2018
US$m US$m
Cash and cash equivalents in the Group
balance sheet 146 175
Bank overdrafts (3) (3)
Cash and cash equivalents in the Group cash flow
statement 143 172
Cash and cash equivalents at 31 March 2019 of US$146m in the
Group cash flow statement were reported net of overdrafts of
US$3m.
18. Reconciliation of Cash generated from operations
to Benchmark operating cash flow (non-GAAP measure)
Notes Six months ended 30
September
2019 2018
US$m US$m
Cash generated from operations 17(a) 552 638
Purchase of other intangible assets 17(c) (191) (151)
Purchase of property, plant and equipment (35) (32)
Sale of property, plant and equipment 3 1
Acquisition expenses paid 17(d) 16 12
Payment of lease liabilities (26) -
Cash flows in respect of Exceptional
and other non-benchmark items 17 8
Dividends received from associates 4 2
Benchmark operating cash flow (non-GAAP
measure) 340 478
Benchmark free cash flow for the six months ended 30 September
2019 was US$124m (2018: US$339m). Cash flow conversion for the six
months ended 30 September 2019 was 51% (2018: 74%).
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
19. Net debt (non-GAAP measure)
(a) Analysis by nature
30 September
2019 2018
US$m US$m
Cash and cash equivalents (net of overdrafts) 143 172
Debt due within one year - commercial paper (518) -
Debt due within one year - bonds and notes (552) (523)
Debt due within one year - bank loans(1) - (3)
Debt due after more than one year - bonds and
notes (2,082) (2,227)
Debt due after more than one year - bank loans(1) (900) (705)
Derivatives hedging loans and borrowings (151) (217)
(4,060) (3,503)
--------
1. Includes finance lease obligations in the prior period.
(b) Analysis by balance sheet caption
30 September
2019 2018
US$m US$m
--------
Cash and cash equivalents 146 175
Current borrowings (1,140) (550)
Non-current borrowings (3,166) (2,965)
Borrowings (4,306) (3,515)
Total of Group balance sheet line items (4,160) (3,340)
Lease obligations reported within borrowings
excluded from Net debt from 1 April 2019 222 -
Accrued interest reported within borrowings above
but excluded from Net debt 29 54
Derivatives reported within other financial assets 20 14
Derivatives reported within other financial liabilities (171) (231)
(4,060) (3,503)
--------
At 30 September 2019 the fair value of borrowings is US$4,358m
(2018: US$3,494m) and includes lease liabilities of US$222m
recognised in respect of right-of-use assets.
(c) Movements in Net debt
31 March Movements in the period ended 30 September 30
2019 September
2019 Lease Non-cash Cash Net share Fair Exchange 2019
obligations lease flow purchases value and other
on obligation gains/ movements
transition additions (losses)
US$m US$ US$ US$m US$m US$m US$m US$m
---------- ------- --------- ---------
Derivatives
hedging loans
and borrowings (119) - - 14 - 11 (57) (151)
Borrowings(1) (3,324) (204) (33) (809) - (18) 82 (4,306)
Total financing
liabilities (3,443) (204) (33) (795) - (7) 25 (4,457)
Lease obligations(2) 13 204 33 (30) - - 2 222
Accrued interest 19 - - - - - 10 29
Cash and cash
equivalents 149 - - 132 (137) - 2 146
Net debt (3,262) - - (693) (137) (7) 39 (4,060)
--------
1. Cash flows include principal (US$26m) and interest (US$4m)
payments in respect of lease obligations.
2. Following the implementation of IFRS 16, leases are excluded
from our definition of Net debt and the opening position has been
restated to exclude US$13m of finance lease liabilities previously
reported at 31 March 2019.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
20. Undrawn committed bank borrowing facilities
30 September
---------------
2019 2018
US$m US$m
------ -------
Facilities expiring in:
Less than one year 225 -
One to two years - 635
Two to three years - 1,800
Three to four years - -
Four to five years 1,950 -
2,175 2,435
-------
At 31 March 2019, there were undrawn committed borrowing
facilities of US$2,625m.
There is one financial covenant in connection with the borrowing
facilities. Benchmark EBIT must exceed three times net interest
expense before financing fair value remeasurements. The calculation
of the financial covenant excludes the effects of IFRS 16. The
Group monitors this, and the Net debt to EBITDA leverage ratio, and
has complied with this covenant throughout the period.
21. Called-up share capital and share premium account
Number of Called-up Share premium
shares share account
capital
million US$m US$m
At 1 April 2018 980.1 97 1,546
Shares issued under employee share
incentive plans 0.8 - 12
Purchase and cancellation of own
shares (4.9) - -
------------
At 30 September 2018 976.0 97 1,558
Shares issued under employee share
incentive plans 0.1 - 1
Purchase and cancellation of own
shares (4.6) (1) -
------------
At 31 March 2019 971.5 96 1,559
Shares issued under employee share
incentive plans 0.8 - 13
Purchase and cancellation of own
shares (2.0) - -
------------
At 30 September 2019 970.3 96 1,572
------------
22. Own shares held
Number of Cost of
shares shares
million US$m
At 1 April 2018 74 1,227
Other vesting of awards and exercises of share
options (4) (56)
At 30 September 2018 70 1,171
Other vesting of awards and exercises of share
options - (4)
At 31 March 2019 70 1,167
Purchase of shares by employee trusts 3 92
Other vesting of awards and exercises of share
options (5) (70)
At 30 September 2019 68 1,189
Own shares held at 30 September 2019 include 60 million (2018:
61 million) shares held as treasury shares and 8 million (2018: 9
million) shares held in employee trusts. Own shares held at 31
March 2019 included 61 million shares held as treasury shares (1
April 2018: 62 million shares) and 9 million shares (1 April 2018:
12 million shares) held in employee trusts.
The total cost of own shares held at each balance sheet date is
deducted from other reserves in the Group balance sheet.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
23. Acquisitions
(a) Acquisitions in the period
The Group made four acquisitions in the period to 30 September
2019, including the acquisition of the whole of the issued share
capital of Compuscan (CSH Group (Pty) Limited) which completed on
30 April 2019. Compuscan is a leading provider of credit
information and decision analytics in South Africa, with operations
across seven key geographies in sub-Saharan Africa. Provisional
goodwill of US$283m was recognised based on the fair value of net
assets acquired of US$96m.
Compuscan Other Total
US$m US$m US$m
Intangible assets:
Customer and other relationships 53 29 82
Software development 22 13 35
Marketing-related acquisition intangibles - 1 1
Other non-acquisition intangibles - 1 1
Intangible assets 75 44 119
Property, plant and equipment 5 - 5
Trade and other receivables 9 1 10
Cash and cash equivalents (note 17(d)) 10 2 12
Trade and other payables (11) (6) (17)
Current tax liabilities (3) - (3)
Deferred tax liabilities (20) (10) (30)
Total identifiable net assets 65 31 96
Goodwill 203 80 283
Total 268 111 379
Satisfied by:
Cash (note 17(d)) 268 82 350
Contingent consideration - 29 29
Total 268 111 379
These provisional fair values contain amounts which will be
finalised no later than one year after the date of acquisition.
Provisional amounts have been included at 30 September 2019, as a
consequence of the timing and complexity of the acquisitions.
Goodwill represents the synergies, assembled workforces and future
growth potential of the acquired businesses. None of the goodwill
arising in the period of US$283m is currently deductible for tax
purposes.
There have been no other material gains, losses, error
corrections or other adjustments recognised in the period that
relate to acquisitions in the current or prior periods.
(b) Additional information in respect of acquisitions in the
period
Compuscan Other Total
US$m US$m US$m
Increase in book value from fair value adjustments:
Intangible assets 75 43 118
Trade and other payables (3) - (3)
Deferred tax liabilities (20) (10) (30)
Increase in book value from fair value adjustments 52 33 85
Gross contractual amounts receivable in respect
of trade and other receivables 7 1 8
Pro forma revenue from 1 April 2019 to date
of acquisition 3 5 8
Revenue from date of acquisition to 30 September
2019 16 2 18
Profit/(loss) before tax from date of acquisition
to 30 September 2019 2 (1) 1
At the dates of acquisition, the gross contractual amounts
receivable in respect of trade and other receivables of US$8m were
expected to be collected in full. If the transactions had occurred
on the first day of the financial year there would have been no
impact on profit before tax.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
24. Financial risk management
(a) Financial risk factors
The Group's activities expose it to a variety of financial
risks. These are market risk, including foreign exchange risk and
interest rate risk, credit risk and liquidity risk. The nature of
these risks and the policies adopted by way of mitigation are
unchanged from those reported in the Annual Report and Group
financial statements for the year ended 31 March 2019. Full
information and disclosures were contained in that document.
(b) Analysis by valuation method for items measured at fair
value
(i) As at 30 September 2019
Level Level 2 Level 3 Total
1
US$m US$m US$m US$m
Financial assets:
Derivatives used for hedging - 24 - 24
Financial assets at fair value
through profit and loss - 57 - 57
Amounts reported within other
financial assets - 81 - 81
Financial assets revalued through
OCI 37 - 127 164
37 81 127 245
Financial liabilities:
Derivatives used for hedging - (158) - (158)
Financial liabilities at fair
value through profit and loss - (50) (60) (110)
- (208) (60) (268)
Net financial assets/(liabilities) 37 (127) 67 (23)
(ii) As at 30 September 2018
Level Level 2 Level 3 Total
1
US$m US$m US$m US$m
Financial assets:
Derivatives used for hedging - 19 - 19
Financial assets at fair value
through profit and loss - 76 - 76
Amounts reported within other
financial assets - 95 - 95
Financial assets revalued through
OCI 37 - 57 94
37 95 57 189
Financial liabilities:
Derivatives used for hedging - (195) - (195)
Financial liabilities at fair
value through profit and loss - (11) (43) (54)
- (206) (43) (249)
Net financial assets/(liabilities) 37 (111) 14 (60)
In accounting for items measured at fair value, we follow
EU-IFRS including IFRS 13 'Fair value measurement'. The fair values
of derivative financial instruments and other financial assets and
liabilities are determined by using market data and established
estimation techniques such as discounted cash flow and option
valuation models. The fair value of foreign exchange contracts is
based on a comparison of the contractual and period end exchange
rates. The fair values of other derivative financial instruments
are estimated by discounting the future cash flows to net present
values using appropriate market rates prevailing at the period end.
There have been no changes in valuation techniques during the
period under review.
The levels used in the above tables are defined in IFRS 13 and
are summarised here for completeness:
-- assets and liabilities whose valuations are based on
unadjusted quoted prices in active markets for identical assets and
liabilities are classified as Level 1;
-- assets and liabilities which are not traded in an active
market, and whose valuations are derived from available market data
that is observable for the asset or liability, are classified as
Level 2; and
-- assets and liabilities whose valuations are derived from
inputs not based on observable market data are classified as Level
3.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
24. Financial risk management (continued)
(b) Analysis by valuation method for items measured at fair
value (continued)
Level 3 items principally comprise minority shareholdings in
unlisted businesses, trade investments, contingent consideration
and put and call options associated with corporate transactions.
The inputs used in determining valuations are a mix of earnings and
asset valuations, reflecting different contractual arrangements.
There would be no material effect on the amounts stated from any
reasonably possible change in such inputs at 30 September 2019.
There have been no transfers between levels during the current
or prior period.
(c) Analysis of movements in Level 3 net financial
assets/(liabilities)
(i) Six months ended 30 September 2019
Financial Contingent Other Total
assets consideration
revalued
through
OCI
US$m US$m US$m US$m
At 1 April 2019 67 (27) (17) 23
Additions(1) 62 (34) - 28
Adjustment to the fair value of
contingent consideration - 1 - 1
Settlement of contingent consideration - 15 - 15
Other (2) 1 1 -
At 30 September 2019 127 (44) (16) 67
1. Additions to contingent consideration comprise US$29m in
respect of acquisitions and US$5m for transactions in respect of
non-controlling interests.
(ii) Six months ended 30 September 2018
Financial Contingent Other Total
assets revalued consideration
through
OCI
US$m US$m US$m US$m
At 1 April 2018 46 (24) (15) 7
Additions 13 - - 13
Fair value losses recognised in
Group income statement (note 10(c)) - - (3) (3)
Adjustment to the fair value of
contingent consideration - (3) - (3)
Other (2) 1 1 -
At 30 September 2018 57 (26) (17) 14
(d) Other financial assets and liabilities
Information in respect of the carrying amounts and the fair
value of borrowings is included in note 19(b). There are no
material differences between the carrying value of the Group's
other financial assets and liabilities not measured at fair value
and their estimated fair values. The following assumptions and
methods are used to estimate the fair values of financial assets
and liabilities not measured at fair value:
-- the fair values of receivables, payables and cash and cash
equivalents are considered to approximate to the carrying
amounts;
-- the fair values of short-term borrowings, other than bonds,
are considered to approximate to the carrying amounts due to the
short maturity terms of such instruments;
-- the fair value of that portion of bonds carried at amortised
cost is based on quoted market prices, employing a valuation
methodology falling within Level 1 of the IFRS 13 fair value
hierarchy;
-- the fair values of long-term variable rate bank loans and
lease obligations are considered to approximate to the carrying
amount; and
-- the fair values of other financial assets and liabilities are
calculated based on a discounted cash flow analysis, using a
valuation methodology falling within Level 2 of the IFRS 13 fair
value hierarchy.
(e) Carrying value of financial assets and liabilities
There have been no unusual changes in economic or business
circumstances that have affected the carrying value of the Group's
financial assets and liabilities at 30 September 2019.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
25. Related party transactions
The Group's related parties were disclosed in the Group's
statutory financial statements for the year ended 31 March 2019 and
there have been no material changes during the six months ended 30
September 2019. Following the divestment of CCM in the year ended
31 March 2018, the Group owns 24.47% of the issued share capital of
Vector CM Holdings (Cayman), L.P. (Vector), a partnership
incorporated in Cayman Islands.
In the six months ended 30 September 2019 the Group recorded the
following transactions and balances with Vector and its
subsidiaries:
Transaction amount Balance owed to
Experian
Six months ended 30 30 September
September
2019 2018 2019 2018
US$m US$m US$m US$m
Promissory note and accrued
interest 3 2 90 82
Transitional Services Arrangement
(TSA) fees - 2 - -
Net amounts collected/(settled)
and (payable)/ receivable
under the TSA (1) 12 1 -
The promissory note is due and payable to Experian on 31 May
2024 with interest also payable on this date. A 12-month TSA
between the Group and Vector to provide services to the partnership
has been extended. During the six months ended 30 September 2019,
we continued to process transactions on behalf of Vector. We
receive a pre-agreed fee for the execution of the TSA and do not
receive any margin on individual transactions. Details of amounts
arising from the TSA are shown in the table below.
Transaction amount Balance owed to
Vector
Six months ended 30 30 September
September
2019 2018 2019 2018
US$m US$m US$m US$m
---------
Cash received on behalf
of Vector 1 27 1 -
---------
Transaction amount Balance owed to
Experian
Six months ended 30 30 September
September
2019 2018 2019 2018
US$m US$m US$m US$m
Cash paid on behalf of Vector 2 15 2 -
Transactions with associates are made on normal market terms and
in the period ended 30 September 2019 comprised the provision and
receipt of services to other associates of US$1m (2018: US$4m) and
US$3m (2018: US$2m) respectively. At 30 September 2019, amounts
owed by associates, other than Vector, were US$nil (2018: US$1m)
and amounts due to associates, other than Vector, totalled US$1m
(2018: US$nil).
26. 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. We 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 costs of
directly responding to this incident were reflected in a US$20m
income statement charge in the year ended 31 March 2016.
We have received a number of class actions and other related
claims in respect of the incident and are 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.
Notes to the condensed half-yearly financial statements
for the six months ended 30 September 2019
26. Contingencies (continued)
(b) Brazil 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. To date the Brazilian courts have ultimately
upheld Experian's position in respect of the tax years from 2007 to
2011, with no further right of appeal. The Brazilian tax
authorities have raised similar assessments in respect of the 2012,
2013 and 2014 tax years, in which approximately US$95m of tax was
claimed, and may raise similar claims in respect of other years.
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, success in cases to date and other factors in respect of
the claim.
(c) UK marketing services regulation
Experian is in a process with the UK Information Commissioner's
Office (ICO) with respect to a 2018 audit of several companies on
the use of data for marketing purposes under the new EU General
Data Protection Regulation (GDPR), which relates to our marketing
services activities in the UK. We expect the outcome of this review
to be released in the second half of the year ending 31 March 2020.
At this stage we do not know what the final outcome will be, but it
may require some changes to business processes in our UK marketing
services business. This business represents approximately 1.6% of
Experian's global revenues and we do not expect this to result in a
materially adverse financial outcome for the Group.
(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.
27. Events occurring after the end of the reporting period
(a) First interim dividend
Details of the first interim dividend approved by the Board on
11 November 2019 are given in note 14.
(b) Acquisitions
On the 21 October 2019 the Group acquired a controlling interest
in RAM Credit Information Sdn. Bhd. (RAMCI), a leading credit
bureau in Malaysia.
On 8 November 2019 the Group announced that it had signed a
definitive agreement to acquire 100% of the outstanding shares of
Auto I.D., Inc. a leading provider of solutions and services to
automotive lenders, for a cash consideration of US$180m, payable in
full on closing. The provisional fair values of acquired assets and
liabilities are currently being determined and will be disclosed in
the Group's statutory financial statements for the year ending 31
March 2020.
28. 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
auditor does not involve consideration of these matters. Jersey
legislation and UK regulation governing the preparation and
dissemination of financial information may differ from requirements
in other jurisdictions.
Statement of directors' responsibilities
The directors are responsible for preparing the half-yearly
financial report for the six months ended 30 September 2019 in
accordance with applicable law, regulations and accounting
standards.
The directors confirm that these condensed half-yearly financial
statements have been prepared in accordance with IAS 34 'Interim
financial reporting' as adopted by the EU, and that, to the best of
their knowledge, the interim management report herein includes a
fair review of the information required by:
(a) DTR 4.2.7R of the UK Financial Conduct Authority Disclosure
Guidance and Transparency Rules Sourcebook, being an indication of
important events that have occurred during the first six months of
the financial year and the impact on these condensed half-yearly
financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
(b) DTR 4.2.8R of the UK Financial Conduct Authority Disclosure
Guidance and Transparency Rules Sourcebook, being related party
transactions that have taken place in the first six months of the
financial year and that have materially affected the financial
position or performance of the enterprise during that period; and
any changes in the related party transactions described in the last
annual report that could do so.
The names and biographical details of the directors of Experian
plc as at 14 May 2019 were listed in the Group's statutory
financial statements for the year ended 31 March 2019. Don Robert
retired as Chairman and as a director of Experian plc on 24 July
2019 in accordance with his previously announced intention, and
Mike Rogers took up the role of Chairman on that date. Paul Walker
retired from the Board on 24 July 2019 in accordance with his
previously announced intention. A list of current directors is
maintained on the Company website at www.experianplc.com.
By order of the Board
Charles Brown
Company Secretary
11 November 2019
Independent review report to Experian plc
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2019 of the Company and its
subsidiaries (together the 'Group') which comprises the Group
income statement, the Group statement of comprehensive income, the
Group balance sheet, the Group statement of changes in total
equity, the Group cash flow statement and the related explanatory
notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2019 is not prepared, in all material respects, in
accordance with IAS 34 'Interim financial reporting' as adopted by
the EU and the Disclosure Guidance and Transparency Rules
Sourcebook (the DTR) of the UK's Financial Conduct Authority (the
UK FCA).
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
Andrew Bradshaw
for and on behalf of KPMG LLP
Chartered Accountants
15 Canada Square
London
E14 5GL
United Kingdom
11 November 2019
Shareholder information
Company website
A full range of investor information is available at
www.experianplc.com.
Electronic shareholder communication
Shareholders may register for Share Portal, an electronic
communication service provided by Link Market Services (Jersey)
Limited, via the Company website at shares.experianplc.com. The
service is free and it facilitates the use of a comprehensive range
of shareholder services online.
When registering for Share Portal, shareholders can select their
preferred communication method - email or post. Shareholders will
receive a written notification of the availability on the Company's
website of shareholder documents unless they have elected to either
(i) receive such notification via email or (ii) receive paper
copies of shareholder documents where such documents are available
in that format.
Dividend information
Dividends for the year ending 31 March 2020
A first interim dividend in respect of the year ending 31 March
2020 of 14.50 US cents per ordinary share will be paid on 31
January 2020 to shareholders on the register at the close of
business on 3 January 2020. Unless shareholders elect by 3 January
2020 to receive US dollars, their dividends will be paid in pounds
sterling at a rate per share calculated on the basis of the
exchange rate from US dollars to pounds sterling on 10 January
2020.
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.
Dividend Reinvestment Plan (DRIP)
The DRIP enables those shareholders who receive their dividends
under the IAS arrangements to use their cash dividends to buy more
shares in the Company. Eligible shareholders, who wish to
participate in the DRIP in respect of the first interim dividend
for the year ending 31 March 2020 to be paid on 31 January 2020,
should return a completed and signed DRIP application form, to be
received by the registrars by no later than 3 January 2020.
Shareholders should contact the registrars for further details.
American Depositary Receipts (ADR)
Experian has a sponsored Level 1 ADR programme, for which Bank
of New York Mellon acts as depositary. This programme is not listed
on a stock exchange in the US and trades in the over-the-counter
market on the OTCQX platform under the symbol EXPGY. Each ADR
represents one Experian plc ordinary share. Further information can
be obtained by contacting:
BNY Mellon Shareowner Services
PO Box 505000
Louisville, KY 40233-5000
USA
T +1 201 680 6825 (from the US: 1-888-BNY-ADRS)
E shrrelations@cpushareownerservices.com
W www.mybnymdr.com
Shareholder information (continued)
Financial calendar
First interim ex-dividend date 2 January 2020
First interim dividend record 3 January 2020
date
First interim dividend exchange 10 January 2020
rate determined
Trading update, third quarter 17 January 2020
First interim dividend payment 31 January 2020
date
Preliminary announcement of full 20 May 2020
year results
Trading update, first quarter 16 July 2020
Annual General Meeting 22 July 2020
Contact information
Corporate headquarters
Experian plc
Newenham House
Northern Cross
Malahide Road
Dublin 17
D17 AY61
Ireland
T +353 (0) 1 846 9100
F +353 (0) 1 846 9150
Investor relations
E investors@experian.com
Registered office
Experian plc
22 Grenville Street
St Helier
Jersey
JE4 8PX
Channel Islands
Registered number - 93905
Registrars
Experian Shareholder Services
Link Market Services (Jersey) Limited
PO Box 532
St Helier
Jersey
JE4 5UW
Channel Islands
Shareholder helpline 0371 664 9245 (+44 800 141 2952 for calls
from outside the UK)
E experian@linkregistrars.com
Calls are charged at the standard geographic rate and will vary
by provider. Calls from outside the United Kingdom will be charged
at the applicable international rate. Lines are open between 8.30am
and 5.30pm (UK time), Monday to Friday excluding public holidays
in England and Wales.
Stock exchange listing information
Exchange: London Stock Exchange, Premium Main Market
Index: FTSE 100
Symbol: EXPN
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GMMMMLMFGLZM
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