TIDMEXPN
RNS Number : 4105N
Experian plc
20 May 2020
news release
Full-year financial report
7am, 20 May 2020 -- Experian plc, the global information
services company, today issues its financial report for the year
ended 31 March 2020 .
Brian Cassin, Chief Executive Officer, commented:
"The past year was a strong one for Experian. We delivered
organic revenue growth at the top end of our revenue guidance range
and finished the year strongly in Q4. The COVID-19 crisis began to
escalate late into our financial year with limited financial impact
in FY20. We took swift action across our business in response to
the unfolding crisis. We have operations in 45 countries and
numerous industry segments, including in many of the societies
hardest hit by the pandemic. Our priorities have been to protect
our people, to secure our business financially and operationally,
to focus on how we can help the millions of consumers who are
financially affected, as well as to assist governments and our
clients as they respond to the crisis.
"The vast majority of our employees are working from home and
our operations continue to function smoothly. Our business is
strongly cash generative and we have a robust balance sheet and
funding liquidity. While we continue to assess the impact of the
crisis on our markets, and we expect near-term revenue to be
affected, the nature of our business means we have a degree of
resilience. We are taking mitigating cost actions in the short
term, but we are also positioning ourselves to emerge strongly by
continuing to invest in our people and growth initiatives.
"The COVID-19 pandemic has highlighted the fundamental
importance of data as we tackle this unprecedented challenge. We
are proud of the way our people and business have stepped up to
provide broader help in this time of crisis. We have a role to play
in helping societies recover, and we are leading the way in
providing education, advice and free tools to consumers as well as
significant and valuable help to governments across the world. We
are confident that, once the crisis abates, we will be well placed
to continue to deliver on our growth agenda. Accordingly, we have
held our second interim dividend level at 32.5 cents per
share."
Benchmark and Statutory financial highlights
-----------------------------------------------------------------------------------------------
2020 2019 Actual Constant Organic
US$m US$m rates growth rates growth growth
% % %(2)
---------- --------- -------------- -------------- --------
Benchmark(1)
Revenue - ongoing activities 5,179 4,855 7 9 8
Revenue 5,179 4,861 7 9 n/a
Benchmark EBIT - ongoing
activities(3) 1,387 1,306 6 9 n/a
Total Benchmark EBIT 1,387 1,311 6 9 n/a
Benchmark EPS USc 103.0 USc 98.0 5 8 n/a
Statutory
Revenue 5,179 4,861 7 9 n/a
Operating profit 1,185 1,162 2 5 n/a
Profit before tax 942 957 (2) 5 n/a
Basic EPS USc 74.8 USc 76.9 (3) 6 n/a
Total dividend USc 47.0 USc 46.5 1 n/a n/a
---------- --------- -------------- -------------- --------
1 See Appendix 1 (page 13) and note 5 to the financial
statements (pages 23-25) for definitions of non-GAAP measures.
2 Organic revenue growth at constant currency.
3 See page 14 for reconciliation of Benchmark EBIT from ongoing
activities to Profit before tax.
-- Strong FY20 financial performance.
o Full year organic revenue growth of 8%, with Q4 organic
revenue growth of 10%.
o Full year organic revenue growth in B2B and Consumer Services
of 7% and 10% respectively.
o Full year regional organic growth rates of 11% in North
America, 13% in Latin America, (2%) in UK and Ireland and (3%) in
EMEA/Asia Pacific.
o Q4 regional organic growth rates of 13% in North America, 12%
in Latin America, (5%) in UK and Ireland and 7% in EMEA/Asia
Pacific.
o Q4 organic revenue growth in Business-to-Business (B2B) and
Consumer Services of 9% and 11% respectively.
o Benchmark EBIT (ongoing activities) growth at constant
exchange rates of 9%.
o Benchmark EBIT margin of 26.8%.
o Benchmark EPS growth of 8% at constant rates and basic EPS
growth of (3%) at actual exchange rates.
-- Strategic highlights.
o A strong year for new product innovation with a focus on
scaling new B2B platforms: Ascend, Experian One, Open Data and
CrossCore all progressed in the year.
o Brazil grew strongly. Positive data now launched.
o Consumer Services' diversification and expansion gathered
momentum with millions of new free memberships taking the total to
82m. Significant progress in Experian Boost - unique account
connections of 3m US consumers. Latin America Consumer Services
revenue now material with momentum.
o Further strategic progress with US$700m investment in
acquisitions, including Compuscan. After the year end we agreed to
acquire a majority stake in Germany's second largest credit
bureau.
-- Continuing commitment to shareholder returns and disciplined capital allocation.
o Second interim dividend of 32.5 US cents per ordinary share,
unchanged year-on-year, to bring the total for FY20 to 47.0 US
cents per share.
o Completed US$189m of the net share repurchase programme.
Programme suspended since March 2020.
Contacts
Experian
Nadia Ridout-Jamieson Investor queries +44 (0)20 3042 4278
Gerry Tschopp Media queries
Finsbury
Rollo Head +44 (0)77 6899 4987
Jenny Davey +44 (0)79 0151 3610
There will be a presentation today at 9.30am (UK time) to
analysts and investors via conference call. To view the slides and
listen in online please go to www.experianplc.com for the link.
Experian will update on first quarter trading for FY21 on 16
July 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.
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 pages 42-46 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 17,800 people operating across 45 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.
Part 1 - Chief Executive Officer's review
Our results today are shared in the shadow of the tragic
COVID-19 pandemic, which is an event like none other in our
history. Our thoughts are with the individuals and families whose
lives have been affected by the spread of the virus. We also wish
to express our support and appreciation to the tireless efforts of
healthcare professionals everywhere who are dealing with this
crisis, as well as to everyone helping the vulnerable.
COVID-19 - our operating principles
At Experian, we have adopted some key principles to help us
navigate this crisis, first among which is to protect the wellbeing
of our people. We are placing a very high priority on this, helping
our people to meet the challenges of remote working. As a business,
we also have an important role to play to help not only clients and
consumers, but also governments, communities and society more
broadly. Many people and businesses are struggling financially, and
many may become susceptible to fraudsters and criminal
organisations. Governments and other organisations need help to
tackle the effects of this crisis and to target assistance to the
most vulnerable in our society.
We have rallied our organisation to support wherever we can. The
many examples from across Experian include how:
-- We are helping local authorities and charities to direct donations to the most vulnerable;
-- We are supporting people with financial education recovery
programmes, as well as working with governments and society on many
fronts;
-- We have worked to limit the effect of the pandemic on consumer credit scores;
-- We are helping small businesses in the USA and the UK with free Experian credit reports;
-- We are helping to facilitate the qualification of COVID-19
symptoms online in our Health business;
-- We have been working with the Nottingham University Hospitals
NHS Trust, providing analytics and data to create models that help
the efficient allocation of key staff and resources, in preparation
for patient influx;
-- We have also been providing sector and market-level data to
help ministers assess the effectiveness of the Government's lending
schemes to support UK businesses throughout the pandemic; and
-- In Brazil, we are leading a consortium of private and public
partners to help health authorities and university researchers
better understand the spread of the virus and how it can be
managed.
We are also placing a high priority on ensuring our business
remains strong throughout this period and we intend to emerge from
the crisis strongly. In the early phases of the crisis we quickly
activated our business continuity plans and are pleased with how
well our systems have performed. The vast majority of our people
are working remotely, and we continue to serve clients and
consumers across the world. We are fortunate that our operations
are supported by a resilient core infrastructure, and we are
confident that our data centres and network are operating
securely.
In recognition of the extraordinary times, I and my fellow
Executive Directors, have decided to waive 25% of our annual salary
for six months. The Company intends to allocate the savings it
makes to the Experian employee support fund and other
charities.
Year ended 31 March 2020
The year ended 31 March 2020 was a strong one for Experian. We
delivered organic revenue growth of 8%, which was at the top end of
our guidance range, with Q4 organic revenue growth of 10%. We made
considerable progress strategically and financially and ended the
year with a robust balance sheet and liquidity position.
Full year financial highlights include:
-- Revenue growth of 9% at constant currency and organic revenue
growth of 8%. At actual exchange rates revenue growth was 7%.
-- Double-digit organic revenue growth in North America.
Double-digit growth in Latin America with strength across all
segments in Brazil. EMEA/Asia Pacific faced some headwinds and
declined overall, as did the UK and Ireland which had a challenging
year and where we have taken action to improve performance.
-- Continued momentum in B2B, with organic revenue growth of 7%
as we invest in new sources of data and scale our innovative new
platforms.
-- Strong growth in Consumer Services, with organic revenue up
10% as we build relationships with millions of consumers and
empower consumers to take control of their data.
-- Growth in Benchmark EBIT of 9% at constant exchange rates,
and 6% at actual exchange rates after significant currency
translation headwinds.
-- Our Benchmark EBIT margin was 26.8%; flat at constant
currency or down 10bps at actual exchange rates.
-- We delivered growth in Benchmark earnings per share of 8% at
constant exchange rates and 5% at actual exchange rates.
-- We continued to convert EBIT strongly into cash, with a
conversion rate of Benchmark EBIT into Benchmark operating cash
flow of 88%.
-- We ended the year in the lower half of our leverage range at
2.2x, compared to our target of 2.0-2.5x Net debt to Benchmark
EBITDA.
We delivered further progress in B2B:
-- Data delivered organic revenue growth of 10%, with all
regions contributing positively. This reflected investment in a
wide range of unique sources of data, strength in consumer
information across all territories, a strong performance in Brazil
and a growing contribution from our bureaux in EMEA/Asia Pacific.
We were also delighted after the year end to enter the bureau
market in the 4th largest economy in the world, with an agreement
to acquire a majority stake in Germany's second largest credit
bureau.
-- We continued to sign new Ascend clients around the world and
are now seeing clients using our sandbox module in multiple
countries. Ascend is currently live in six countries around the
world with further launches targeted for FY21. The cumulative total
contract value for Ascend has now reached US$313m.
-- Decisioning delivered organic revenue growth of 1%. We
secured 24 new contracts for PowerCurve and we have made excellent
progress in fraud and identity, including with CrossCore. Experian
One, our new cloud-based decisioning platform, has been introduced
across nine countries. Performance in Decisioning was partially
offset by strong prior year comparables in Asia Pacific and
weakness in the UK and Ireland.
-- Experian Health delivered further good progress as we
expanded our revenue-cycle management product suite and secured new
wins with healthcare providers.
We made significant progress in Consumer Services:
-- We have secured direct relationships with 82m consumers for
free Experian offers (up from over 55m in FY19). We now have 29.5m
free members in the USA, 45m in Brazil and 7.5m in the UK.
-- We delivered strong growth in credit marketplace (lead
generation) revenues in both the USA and the UK.
-- Our consumer activities in Latin America made significant
progress, generating revenue of US$40m in the year, an increase of
129% organically. With our success in developing a material Latin
America Consumer Services business we will be disclosing this
separately going forward.
-- We increased Experian Boost membership in the US, with unique
account connections of 3m US consumers since launch.
Capital allocation
-- We continued to invest in technology and innovation through
capital expenditure. Capital expenditure was US$487m, which
represented 9% of total revenue.
-- During the year we completed a number of acquisitions,
including of a number of credit bureaux; Compuscan in South Africa,
a controlling interest in RAMCI in Malaysia and Sentinel in Peru.
We also added capabilities in key verticals including Auto I.D.,
Inc., as well as MyHealthDirect, plus the remaining 45% of our
subsidiary Experian MicroAnalytics. Total acquisition expenditure
was US$700m.
-- After the year end, Experian agreed to acquire a majority
stake in the Risk Management division of Arvato Financial Solutions
(AFS). The AFS Risk Management division is being carved out of the
Bertelsmann Group and is one of the leading credit bureaux in
Germany, operating also in Austria. On completion, the
consideration will be satisfied by the issue of 7.2m Experian plc
shares. The acquisition is subject to regulatory approval.
-- Recognising our strong financial position and our diversified
and cash generative business model, we are announcing a second
interim dividend of 32.5 US cents per share, unchanged year-on-year
to bring the total for FY20 to 47.0 US cents per ordinary share.
This will be paid on 24 July 2020 to shareholders on the register
at the close of business on 26 June 2020.
-- In May 2019 we announced a US$400m share repurchase programme
for FY20, of which we had completed US$189m by 31 March 2020.
Recognising our capital priorities at this time, we have suspended
this programme.
Funding and liquidity
-- Our balance sheet is robust. We have a policy of spacing out
debt maturities and our next bond maturity is in October 2021.
Also, in April 2020 we issued GBP400 million of 3.25% bonds due in
2032, which have further extended the maturity of our debt
portfolio.
-- As at 31 March 2020 Net debt to Benchmark EBITDA was 2.2x (on
a pre IFRS 16 basis), which compares to our target leverage range
of 2-2.5x. Following our April Bond issue, at 30 April 2020 we held
US$2.4bn of undrawn bank facilities which have an average remaining
tenor of four years. These include our core US$1.95bn club facility
which is undrawn and committed until December 2024. Our bonds and
drawn bank loans, totalling US $4.0bn, have an average remaining
tenor of six years and no maturities until July 2021, with no bond
maturities before October 2021. The covenant on our bank facilities
is that Benchmark EBIT should cover net interest expense (excluding
financing fair value remeasurements) by 3x. As at 31 March 2020
this coverage ratio was 11x.
Other financial developments
Benchmark PBT was US$1,255m, up 8% at constant currency and 5%
at actual rates, after higher Benchmark net interest expense of
US$132m (2019: US$113m). This reflected higher average net debt
largely due to the acquisitions made in the second half and a
US$10m IFRS16 related interest charge (see note 3 to the financial
statements for further information).
The Benchmark tax rate was 25.8% compared to 25.5% in 2019. The
increase reflected the change of profit mix in the year.
Our Benchmark EPS was 103.0 US cents, an increase of 8% at
constant currency and 5% at actual exchange rates, as the weighted
average number of ordinary shares (WANOS) reduced to 902m (2019:
904m) as a result of our share repurchase programme.
Benchmark operating cash flow decreased 4% at actual rates and
our Benchmark operating cash flow conversion was 88% (2019: 97%).
The reduction is due to the changing mix of our business, greater
infrastructure investment and working capital movements. Trade and
unbilled receivables have increased by US$57m during the year,
partly due to the impact of COVID-19 on collections.
Foreign exchange translation was a 3% headwind to Benchmark EPS
in the year. This was predominantly due to the Brazilian real,
which weakened by 9% relative to the US dollar versus the prior
year.
Current trends and outlook
The COVID-19 crisis has led to significant shutdowns in economic
activity across all our main markets and has impacted revenue
performance across many of our industry segments. The situation is
currently volatile, with key revenue drivers varying significantly
from week-to-week. There are three main factors to consider which
will have a bearing on our FY21 performance, namely the extent of
the impact of stay-at-home policies on economic activity, the
positive effects of government stimulus measures on consumer
spending, and our own efforts to serve the shifting needs and
demands of clients and consumers at this time. Experian's portfolio
and geographic diversity also means that not all products and
industry segments react in the same way, with some more affected
than others.
It is not currently possible to predict how long government
lockdown policies will be in place for. We therefore do not intend
to provide guidance for the year ending 31 March 2021. For the
month of April, the Group experienced a decline in organic revenue
of (5)%. Should current trading trends continue throughout the
first quarter, we estimate that Q1 organic revenue will decline in
a range of (5)% to (10)%. We have also seen significant volatility
in foreign exchange rates during the current crisis and in
particular a weakening of the Brazilian real. Based on recent
average exchange rates persisting, the headwind to Q1 FY21 revenue
and Benchmark EBIT would be around 5%.
We are managing costs thoughtfully. We have instigated a range
of short-term cost mitigation actions, while remaining committed to
maintaining organisational capacity and positioning ourselves to
emerge strongly when conditions improve. Accordingly, we have not
furloughed any employees and our focus remains on active cost
measures on all discretionary costs. We will continue to review all
costs as the situation demands.
In order to provide additional transparency, we provide below
regional and segmental organic revenue performance over the period
1 to 30 April 2020.
Year-on-year % change in organic revenue - for
the month ended 30 April 2020
% of Group Data Decisioning B2B(2) Consumer Total
revenue Services
(1)
----------- ------ --------------- -------- ----------- -------
North America 63 (5) 0 (3) 7 0
----------- ------ --------------- -------- ----------- -------
Latin America 14 (8) (10) (9) 112 (5)
----------- ------ --------------- -------- ----------- -------
UK and Ireland 15 (18) (9) (15) (17) (15)
----------- ------ --------------- -------- ----------- -------
EMEA/Asia
Pacific 8 (7) (38) (22) n/a (22)
----------- ------ --------------- -------- ----------- -------
Total Global 100 (7) (8) (8) 6 (5)
----------- ------ --------------- -------- ----------- -------
1 For the year ended 31 March 2020.
2 B2B = Business-to-Business segment consists of Data and
Decisioning business sub-divisions.
See note 5 to the financial statements on pages 23-25 for
definition of organic revenue growth.
Part 2 - Regional highlights for the year ended 31 March
2020
We delivered strong organic revenue growth in North America and
Latin America, while UK and Ireland and EMEA/Asia Pacific made
small declines.
Year-on-year % change in organic revenue - for the year EBIT
ended 31 March 2020 margin
Data Decisioning B2B(1) Consumer Total Total
Services
----- ------------ ------- ---------- ------ --------
North America 11 8 10 11 11 33.7%
----- ------------ ------- ---------- ------ --------
Latin America 13 10 13 n/a 13 30.1%
----- ------------ ------- ---------- ------ --------
UK and Ireland 1 (10) (3) 2 (2) 22.2%
----- ------------ ------- ---------- ------ --------
EMEA/Asia
Pacific 7 (10) (3) n/a (3) 3.5%
----- ------------ ------- ---------- ------ --------
Total Global 10 1 7 10 8 26.8%
----- ------------ ------- ---------- ------ --------
1 B2B = Business-to-Business segment consists of Data and
Decisioning business sub-divisions.
See note 5 of the extracts from the financial statements on
pages 23-25 for definition of organic revenue growth.
North America
Revenue in North America was US$3,247m, with both total revenue
and organic revenue growth of 11%.
North America B2B delivered organic revenue growth of 10%. Data
grew 11%, with positive contributions across all core areas of
activity, reflecting strength in credit data volumes, mortgage and
contributions from new products and data assets such as additional
Ascend modules and trended data assets. With the launch of Ascend
Data Services, we have now introduced six Ascend modules in total
and we secured significant synergies from non-traditional credit
data assets (Clarity Services).
Decisioning performed well, revenue was up 8% organically,
including a very strong performance in fraud and identity
management services, including new client wins and new deployments
for CrossCore, as well as strong progress in analytics. FY20 closed
strongly with new PowerCurve wins, many of which will migrate to
our modern cloud platform in the coming financial year. Experian
Health performed well as we added new client logos. Growth was also
driven by the expansion of our suite of revenue cycle offers,
including the integration of MyHealthDirect which helps automate
appointments, scheduling and payment processes.
In Consumer Services, we have seen a phenomenal consumer
response to Experian Boost since it was first 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 such as utility or mobile phone
bills. In the USA, 3m unique consumers have now connected their
accounts, and this has contributed to the growth in our free
membership base to 29.5m, up from 19m free members at the end of
FY19. Increased consumer engagement contributed to growth in
organic revenue of 11% as consumers take up a variety of services
across the Experian.com ecosystem. Lead generation revenue through
CreditMatch more than trebled in size as more consumers were
matched to suitable credit offers, there was further very strong
growth in identity management paid memberships, and while down for
the year as a whole paid-for credit monitoring services crossed
into positive territory in H2.
North America Benchmark EBIT increased by 16% to US$1,093m. The
Benchmark EBIT margin increased by 140 basis points year-on-year to
33.7%. This reflected strong operating leverage in B2B, even as we
invested in customer acquisition in support of the Experian Boost
roll out.
Latin America
Revenue in Latin America was US$732m, with both total and
organic revenue growth of 13% at constant exchange rates.
In Brazil, our business grew strongly, with strength across
consumer information, business information and Decisioning. In B2B,
we introduced new products, such as Ascend, and we also made
progress entering new industry segments, with particular strength
in automotive in the year. We also benefitted from a significant
revenue contribution from our consumer-facing activities, with
strong demand for Limpa Nome Online, a consumer debt-resolution
service, and eCred, which is a credit-matching marketplace, and as
we engage with millions of new consumer members. Our consumer
membership base continues to grow quickly, and we now have 45m free
members, giving us material scale. Revenue across Latin America
consumer services was US$40m for the year ended 31 March 2020, an
increase of 129% organically over FY19. Given this strong progress
and our outlook for creating a significant consumer services
business in Latin America, currently live in Brazil, Colombia and
Peru, we will be reporting Consumer Services revenue separately
from Data going forward in Latin America.
We made significant investments in Brazil during the year, as we
prepared for the introduction of positive data. Towards the end of
the financial year we launched the first of our B2B positive data
propositions, including scores which encompass both positive and
negative data, and over the coming year we plan to introduce a wide
range of advanced analytical and cloud-based decisioning tools
which will incorporate and utilise positive data. We continue to
believe that positive data is an important step towards making
credit products in Brazil more affordable, and when coupled with
advanced analytical solutions like Ascend, will lead to a
step-change in digital banking experiences for consumers in
Brazil.
We made further progress in Spanish Latin America and were
pleased to extend our position in Peru with the acquisition of
Sentinel Peru. Sentinel's strong presence in the small and medium
enterprise segment and its relationships with more than one million
consumers will help further develop our presence in the Spanish
Latin America area.
Benchmark EBIT in Latin America was US$220m, up 6% at constant
exchange rates. Benchmark EBIT margin was 30.1% (2019: 32.7%)
reflecting revenue mix effects and investments in consumer,
positive data preparation and in our technology platforms.
UK and Ireland
The UK and Ireland had a challenging year and underperformed our
expectations, with weakness in both revenue performance in B2B and
in profitability overall. We have launched a transformation
programme to enhance the performance of the business.
Revenue in the UK and Ireland was US$769m. Total and organic
revenue growth was (2)%. B2B declined (3)% while Consumer Services
delivered organic revenue growth of 2%.
Within B2B, Data delivered organic revenue growth of 1%,
including a good contribution from the consumer credit bureau, led
by growth in new digital capabilities such as eligibility services
for B2B marketplaces, trended data and mortgage digitisation
services. Other parts of our Data operations were weaker, while
Decisioning contracted, with organic revenue down (10)%. In part,
this was as we lapped strong prior-year comparatives but there was
also weakness in software sales and installations.
Consumer Services made good progress driven by significant
expansion of the credit comparison marketplace and helped by a
moderation in the rate of decline in paid memberships. Our free
membership base reached 7.5m consumers.
Benchmark EBIT performance was weak in the UK and Ireland, down
(22)% at constant exchange rates to US$171m. This reflected the
reduction in Decisioning revenue, increased depreciation and
amortisation, and further investment related to technology
infrastructure to support the rollout of our global platforms. The
Benchmark EBIT margin was 22.2% (2019: 28.3%).
EMEA/Asia Pacific
In EMEA/Asia Pacific, revenue was US$431m, with total revenue
growth at constant rates of 7% and organic decline of (3)%. The
difference relates to the contribution from the Compuscan
acquisition and other smaller acquisitions.
We delivered good growth in Data, where organic revenue was up
7%. This reflected good progress in our bureaux in the Nordics,
South Africa, India and Australia. We also benefitted from first
time revenue contributions for Ascend, as we secure new client
engagements, and for our open data platform. Compuscan, our
recently acquired credit bureau in South Africa, has performed well
and we are excited about the opportunities for the combined
business.
Decisioning organic revenue declined by (10)%, 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.
In April we agreed to acquire a majority stake in the Risk
Management division of Arvato Financial Solutions (AFS), the
second-largest credit bureau in Germany, operating also in Austria.
Combining this bureau with our existing decision and analytics
business in Germany will allow us to build a strong, scale presence
in this key European market.
Benchmark EBIT was US$15m (2019: US$3m). At actual exchange
rates Benchmark EBIT growth was 394% and at constant exchange rates
it was 336%. Benchmark EBIT margin from ongoing activities at
actual rates increased 280 basis points to 3.5% as our operations
grow in scale.
Group financial results
Revenue by region
Year ended 31 March 2020 2019 Growth %
US$m US$m
------
Total Total at Organic
at actual constant at constant
rates rates rates
------ ----------- ---------- -------------
North America
Data 1,642 1,468 12 11
Decisioning 679 623 9 8
------ ------ ----------- ---------- -------------
B2B 2,321 2,091 11 10
Consumer Services 926 822 13 11
------ ------ ----------- ---------- -------------
Total ongoing activities 3,247 2,913 11 11 11
Exited business activities - -
------ ------ ----------- ---------- -------------
Total North America 3,247 2,913
------ ------ ----------- ---------- -------------
Latin America
Data 618 594 14 13
Decisioning 114 113 10 10
Total ongoing activities 732 707 3 13 13
Exited business activities - -
------ ------ ----------- ---------- -------------
Total Latin America 732 707
------ ------ ----------- ---------- -------------
UK and Ireland
Data 381 388 1 1
Decisioning 227 262 (10) (10)
------ ------ ----------- ---------- -------------
B2B 608 650 (3) (3)
Consumer Services 161 163 2 2
------ ------ ----------- ---------- -------------
Total ongoing activities 769 813 (5) (2) (2)
Exited business activities - 6
------ ------ ----------- ---------- -------------
Total UK and Ireland 769 819
------ ------ ----------- ---------- -------------
EMEA/Asia Pacific
Data 213 175 28 7
Decisioning 218 247 (8) (10)
Total ongoing activities 431 422 2 7 (3)
Exited business activities - -
------ ------ ----------- ---------- -------------
Total EMEA/Asia Pacific 431 422
------ ------ ----------- ---------- -------------
Total revenue - ongoing
activities 5,179 4,855 7 9 8
Total revenue - exited
business activities - 6
------ ------ ----------- ---------- -------------
Revenue 5,179 4,861 7 9
------ ------ ----------- ---------- -------------
See Appendix 1 (page 13) and note 5 to the financial statements
(pages 23-25) 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
Year ended 31 March 2020 2019 Growth %
US$m US$m
----------
Total Total
at actual at constant
rates rates
---------- ----------- -------------
Benchmark EBIT by geography
North America 1,093 940 16
Latin America 220 231 6
UK and Ireland 171 230 (22)
EMEA/Asia Pacific 15 3 336
---------- --------- ----------- -------------
Benchmark EBIT before Central Activities 1,499 1,404 9
Central Activities - central corporate
costs (112) (98)
---------- --------- ----------- -------------
Benchmark EBIT from ongoing activities 1,387 1,306 6 9
Exited business activities - 5
---------- --------- ----------- -------------
Benchmark EBIT 1,387 1,311 6 9
Net interest (132) (113)
---------- --------- ----------- -------------
Benchmark PBT 1,255 1,198 5 8
Exceptional items (35) 5
Amortisation of acquisition intangibles (124) (111)
Acquisition and disposal expenses (39) (24)
Adjustment to the fair value of
contingent consideration 4 (16)
Non-benchmark share of post-tax 6 -
profit of associates
Interest on uncertain tax provisions (14) (14)
Financing fair value remeasurements (111) (81)
Profit before tax 942 957 (2) 5
Group tax charge (263) (256)
Profit after tax 679 701
---------- --------- -----------
Benchmark earnings
Benchmark PBT 1,255 1,198 5 8
Benchmark tax charge (324) (306)
---------- --------- ----------- -------------
Total Benchmark earnings 931 892
---------- --------- ----------- -------------
Owners of Experian plc 929 886 5 8
Non-controlling interests 2 6
---------- --------- ----------- -------------
Benchmark EPS USc 103.0 USc 98.0 5 8
Basic EPS USc 74.8 USc 76.9 (3) 6
Weighted average number of ordinary
shares 902m 904m
---------- --------- ----------- -------------
Benchmark EBIT margin - ongoing
activities
North America 33.7% 32.3%
Latin America 30.1% 32.7%
UK and Ireland 22.2% 28.3%
EMEA/Asia Pacific 3.5% 0.7%
---------- --------- ----------- -------------
Benchmark EBIT margin 26.8% 26.9%
---------- --------- ----------- -------------
See Appendix 1 (page 13) and note 5 to the financial statements
(pages 23-25) 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
We continued to make good financial progress during the year and
revenue increased by 7% to US$5,179m (2019: US$4,861m) reflecting
the improved underlying performance of ongoing activities.
Operating profit for the year ended 31 March 2020 increased to
US$1,185m (2019: US$1,162m). Profit before tax decreased to US$942m
(2019: US$957m) due to an increase in net finance costs of
US$49m.
The increase in net finance costs of US$49m reflects unrealised
foreign exchange losses on Brazilian real intra-Group funding and
other fair value remeasurements, and increases in debt and leverage
levels as a result of acquisition activity. In addition, interest
of US$10m was recognised on leases following the adoption of IFRS
16 .
Cash inflow from operating activities from continuing operations
was US$1,262m (2019: US$1,283m) reflecting improved operating
performance and movements in working capital. Undrawn committed
borrowing facilities were US$2,175m at 31 March 2020 (2019:
US$2,625m).
Basic EPS was 74.8 US cents (2019: 76.9 US cents). The decrease
in this statutory measure reflects a mix of factors with a higher
tax charge, higher finance costs but a lower number of shares in
issue as a consequence of our share repurchase programme.
The effective rate of tax based on profit before tax increased
from 26.8% in the year ended 31 March 2019 to 27.9% in the current
financial year.
At 31 March 2020, net assets amounted to US$2,281m (2019:
US$2,494m). Capital employed, as defined in note 5(r) to the
financial statements, was US$6,465m (2019: US$6,026m). 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.
Return on capital employed for the year ended 31 March 2020
increased to 16.1% (2019: 15.9%) reflecting our continued focus on
operational efficiency.
There was a decrease in equity of US$213m from US$2,494m at 31
March 2019 with movements detailed in the Group statement of
changes in total equity on page 19.
Key movements in equity during the year included:
-- Profit for the financial year of US$677m.
-- Currency translation losses of US$313m.
-- Remeasurement gains of US$26m in respect of defined benefit
pension plans.
-- Ordinary dividends of US$424m (2019:US$410m) of which US$402m
(2019:US$391m) was paid by a UK subsidiary undertaking which has
distributable reserves of US$13,552m (2019: US$7,536m).
-- A movement of US$189m in connection with net share
purchases.
Foreign exchange rates
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.
2020 2019 Movement against
the US dollar
------ ------
US dollar : Brazilian
real 4.12 3.79 (9)%
Pound sterling : US dollar 1.27 1.31 (3)%
Euro : US dollar 1.11 1.16 (4)%
US dollar : Colombian
peso 3,382 3,025 (12)%
US dollar : South African
rand 14.79 13.76 (7)%
---------------------------- ------ ------ -----------------
Foreign exchange - closing rates
The principal exchange rates used to translate assets and
liabilities into the US dollar at the year-end dates are shown in
the table below.
2020 2019
------ ------
US dollar : Brazilian
real 5.20 3.89
Pound sterling : US
dollar 1.24 1.31
Euro : US dollar 1.09 1.12
US dollar : Colombian
peso 4,052 3,163
US dollar : South African
rand 17.81 14.47
------------------------------ ------ ------
Risks and uncertainties
The nine principal risks and uncertainties faced by the Group
are summarised in note 27 to the financial statements.
Appendices
1. N on-GAAP financial information
We have identified and defined certain measures that we believe
assist in understanding the performance of the Group. These
measures are not defined under IFRS and they may not be directly
comparable with other companies' adjusted measures. These non-GAAP
measures are not intended to be a substitute for any IFRS measures
of performance but management have included them as these are
considered to be key measures used within the business for
assessing the underlying performance of our ongoing business.
We have updated our definition of Benchmark PBT to include the
Group's share of continuing associates' Benchmark post-tax results
to provide a more consistent measure, removing the effects of
Exceptional items, acquisition and disposal expenses etc. from
associates' post-tax results and aligning to our assessment of
subsidiary performance. Previously our measure of Benchmark PBT
included the Group's share of continuing associates' total post-tax
results. Following the adoption of IFRS 16 we have updated our
definition of Net debt and Net funding to exclude lease
liabilities. The definitions of Benchmark operating and Benchmark
free cash flow have also been updated to adjust for principal lease
payments and the Benchmark profit or loss retained in continuing
associates.
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 5 to the financial statements.
2. Revenue, Benchmark EBIT and Benchmark EBIT margin by business
segment
-------------------------------------------------------------------------------
Growth %
------ ------ ------------------------------
2020 2019 Total Organic
at constant at constant
Year ended 31 March US$m US$m rates rates
--------------------------------- ------ ------ ------------- -------------
Revenue
Data 2,854 2,625 12 10
Decisioning 1,238 1,245 2 1
------ ------ ------------- -------------
Business-to-Business 4,092 3,870 9 7
Consumer Services 1,087 985 11 10
------ ------ ------------- -------------
Total - Ongoing activities 5,179 4,855 9 8
Exited business activities - 6 n/a
------ ------ ------------- -------------
Total revenue 5,179 4,861 9
--------------------------------- ------ ------ ------------- -------------
Benchmark EBIT
Business-to-Business 1,242 1,186 8
Consumer Services 257 218 19
------ ------ ------------- -------------
Total - Business segments 1,499 1,404 9
Central Activities - central
corporate costs (112) (98) n/a
Total - Ongoing activities 1,387 1,306 9
Exited business activities - 5 n/a
------ ------ ------------- -------------
Total Benchmark EBIT 1,387 1,311 9
--------------------------------- ------ ------ ------------- -------------
Benchmark EBIT margin - ongoing
activities
Business-to-Business 30.4% 30.6%
Consumer Services 23.6% 22.1%
------ ------ ------------- -------------
Total Benchmark EBIT margin 26.8% 26.9%
--------------------------------- ------ ------ ------------- -------------
3. Reconciliation of Benchmark EBIT to statutory profit before
tax
2020 2019
--------------------------------------------
Year ended 31 March US$m US$m
-------------------------------------------- ------ ------
Benchmark EBIT from ongoing activities 1,387 1,306
Exited business activities - 5
-------------------------------------------- ------ ------
Benchmark EBIT 1,387 1,311
Net interest expense (132) (113)
-------------------------------------------- ------ ------
Benchmark PBT 1,255 1,198
Exceptional items (Appendix 4) (35) 5
Other adjustments made to derive Benchmark
PBT (Appendix 4) (278) (246)
-------------------------------------------- ------ ------
Profit before tax 942 957
-------------------------------------------- ------ ------
4. Exceptional items and other adjustments made to derive
Benchmark PBT
2020 2019
Year ended 31 March US$m US$m
--------------------------------------------- ------ ------
Exceptional items:
Profit on disposal of businesses - (5)
Legal provisions movements 35 -
--------------------------------------------- ------ ------
Charge/(credit) for Exceptional items 35 (5)
--------------------------------------------- ------ ------
Other adjustments made to derive Benchmark
PBT:
Amortisation of acquisition intangibles 124 111
Interest on uncertain tax provisions 14 14
Acquisition and disposal expenses 39 24
Adjustment to the fair value of contingent
consideration (4) 16
Non-benchmark share of post-tax profit of (6) -
associates
Financing fair value remeasurements 111 81
--------------------------------------------- ------ ------
Charge for other adjustments made to derive
Benchmark PBT 278 246
--------------------------------------------- ------ ------
Net charge for Exceptional items and other
adjustments made to derive Benchmark PBT 313 241
--------------------------------------------- ------ ------
An explanation of the reasons for the exclusion of such items
from our definition of Benchmark PBT is given in note 5(a) to the
financial statements.
5. Cash flow and Net debt summary
2020 2019
Year ended 31 March US$m US$m
----------------------------------------------------- -------- --------
Benchmark EBIT 1,387 1,311
Amortisation and depreciation charged to Benchmark
EBIT 413 326
----------------------------------------------------- -------- --------
Benchmark EBITDA 1,800 1,637
Net capital expenditure (Appendix 6) (483) (431)
Increase in working capital (112) (26)
Principal lease payments (55) -
(Profit)/loss retained in associates (2) 3
Fair value gain on revaluation of step acquisition (17) -
Charge for share incentive plans 83 87
----------------------------------------------------- -------- --------
Benchmark operating cash flow 1,214 1,270
Net interest paid (152) (129)
Tax paid (286) (233)
Dividends paid to non-controlling interests (2) (1)
----------------------------------------------------- -------- --------
Benchmark free cash flow 774 907
Acquisitions (700) (95)
Purchase of investments (95) (30)
Disposal of businesses and investments - continuing
operations - 12
Movement in Exceptional and other non-benchmark
items (18) (25)
Ordinary dividends paid (424) (410)
----------------------------------------------------- -------- --------
Net cash (outflow)/inflow - continuing operations (463) 359
Net debt previously reported at 31 March (3,275) (3,408)
Finance leases previously reported under IAS 13 -
17(1)
----------------------------------------------------- -------- --------
Net debt at 1 April (3,262) (3,408)
Net share purchases (188) (215)
Discontinued operations (6) (42)
Foreign exchange and other movements 21 31
----------------------------------------------------- -------- --------
Net debt at 31 March (3,898) (3,275)
----------------------------------------------------- -------- --------
1. Following the implementation of IFRS 16, leases are excluded
from our definition of Net debt, given in note 5(q) to the
financial statements. The FY20 opening position has been restated
to exclude finance lease liabilities previously reported at 31
March 2019.
6. Reconciliation of total investment
2020 2019
Year ended 31 March US$m US$m
---------------------------------------------- ------ -----
Capital expenditure as reported in the Group
cash flow statement 487 439
Disposal of property, plant and equipment (5) (13)
Profit on disposal of fixed assets 1 5
---------------------------------------------- ------ -----
Net capital expenditure 483 431
Acquisitions 700 95
Purchase of investments 95 30
---------------------------------------------- ------ -----
Total investment 1,278 556
---------------------------------------------- ------ -----
7. Cash tax reconciliation
2020 2019
Year ended 31 March % %
------------------------------------------- ------ ------
Tax charge on Benchmark PBT 25.8 25.5
Tax relief on intangible assets (3.1) (4.1)
Benefit of brought forward tax losses (1.3) (1.3)
Other differences(1) 1.4 (0.7)
Tax paid as a percentage of Benchmark PBT 22.8 19.4
------------------------------------------- ------ ------
1. Other differences include items for which the tax charge and
payment fall in different financial years.
Group income statement
for the year ended 31 March 2020
2020 2019
Benchmark(1) Non-benchmark(2) Statutory Benchmark(1) Non-benchmark(2) Statutory
Total Total
US$m US$m US$m US$m US$m US$m
Revenue (note
6(a)) 5,179 - 5,179 4,861 - 4,861
------------ ---------------- --------- ------------ ---------------- ---------
Labour costs (1,864) (8) (1,872) (1,795) (3) (1,798)
Data and
information
technology costs (753) - (753) (645) - (645)
Amortisation and
depreciation
charges (413) (124) (537) (326) (111) (437)
Marketing and
customer
acquisition costs (378) - (378) (342) - (342)
Other operating
charges (392) (62) (454) (445) (37) (482)
------------ ---------------- --------- ------------ ---------------- ---------
Total operating
expenses (3,800) (194) (3,994) (3,553) (151) (3,704)
Profit on disposal
of
businesses - - - - 5 5
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Operating
profit/(loss) 1,379 (194) 1,185 1,308 (146) 1,162
Interest income 13 - 13 12 - 12
Finance expense (145) (125) (270) (125) (95) (220)
------------ ---------------- --------- ------------ ---------------- ---------
Net finance costs
(note
9(a)) (132) (125) (257) (113) (95) (208)
Share of post-tax
profit
of associates 8 6 14 3 - 3
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss)
before
tax (note 6(a)) 1,255 (313) 942 1,198 (241) 957
Group tax
(charge)/credit
(note 10(a)) (324) 61 (263) (306) 50 (256)
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) for
the
financial year
from continuing
operations 931 (252) 679 892 (191) 701
Loss for the
financial
year from
discontinued
operations (note
11) - (2) (2) - - -
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) for
the
financial year 931 (254) 677 892 (191) 701
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Attributable to:
Owners of Experian
plc 929 (254) 675 886 (191) 695
Non-controlling
interests 2 - 2 6 - 6
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Profit/(loss) for
the
financial year 931 (254) 677 892 (191) 701
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Total Benchmark
EBIT
(1) 1,387 - 1,387 1,311 - 1,311
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
US cents US cents US cents US cents US cents US cents
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
Earnings/(loss) per
share (note 12(a))
Basic 103.0 (28.2) 74.8 98.0 (21.1) 76.9
Diluted 102.1 (27.9) 74.2 96.9 (20.9) 76.0
Earnings/(loss) per
share from
continuing
operations (note
12(a))
Basic 103.0 (28.0) 75.0 98.0 (21.1) 76.9
Diluted 102.1 (27.7) 74.4 96.9 (20.9) 76.0
Benchmark PBT per
share(1,3) 139.1 132.5
Full-year dividend
per
share(1) 47.0 46.5
-------------------- ------------ ---------------- --------- ------------ ---------------- ---------
1. Total Benchmark EBIT, Benchmark PBT per share and Full-year
dividend per share are non-GAAP measures, defined in note 5 to the
financial statements.
2. The loss before tax for non-benchmark items of US$313m (2019:
US$241m) comprises a charge for Exceptional items of US$35m (2019:
credit of US$5m) and charges for other adjustments made to derive
Benchmark PBT of US$278m (2019: US$246m). Further information is
given in note 8 to the financial statements.
3. Benchmark PBT per share is calculated by dividing Benchmark
PBT of US$1,255m (2019: US$1,198m) by the weighted average number
of ordinary shares of 902 million (2019: 904 million). The amount
is stated in US cents per share.
The segmental disclosures in notes 6 and 7 indicate the impact
of business disposals on the comparative revenue and Total
Benchmark EBIT figures.
Group statement of comprehensive income
for the year ended 31 March 2020
2020 2019
US$m US$m
------------------------------------------------- ------ ------
Profit for the financial year 677 701
--------------------------------------------------- ------ ------
Other comprehensive income
Items that will not be reclassified to profit
or loss:
Remeasurement of post-employment benefit
assets and obligations (note 15(b)) 26 16
Changes in the fair value of financial assets
revalued through OCI (6) (2)
Deferred tax charge (5) (1)
--------------------------------------------------- ------ ------
Items that will not be reclassified to profit
or loss 15 13
--------------------------------------------------- ------ ------
Items that may be reclassified subsequently
to profit or loss:
Currency translation losses (313) (179)
--------------------------------------------------- ------ ------
Items that may be reclassified subsequently
to profit or loss (313) (179)
--------------------------------------------------- ------ ------
Items reclassified to profit or loss:
Cumulative currency translation gain in respect
of divestments - 3
--------------------------------------------------- ------ ------
Other comprehensive income for the financial
year(1) (298) (163)
--------------------------------------------------- ------ ------
Total comprehensive income for the financial
year 379 538
Attributable to:
Owners of Experian plc 378 533
Non-controlling interests 1 5
--------------------------------------------------- ------ ------
Total comprehensive income for the financial
year 379 538
--------------------------------------------------- ------ ------
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, not reclassified to
profit or loss, are recognised in the translation reserve within
other reserves. Other items within Other comprehensive income are
recognised in retained earnings.
Group balance sheet
at 31 March 2020
2020 2019
Notes US$m US$m
---------------------------------------- ------ --------- ---------
Non-current assets
Goodwill 4,543 4,324
Other intangible assets 14 1,583 1,474
Property, plant and equipment 14 502 333
Investments in associates 123 122
Deferred tax assets 107 147
Post-employment benefit assets 15(a) 83 61
Trade and other receivables 164 129
Financial assets revalued through OCI 171 103
Other financial assets 223 154
---------------------------------------- ------ --------- ---------
7,499 6,847
---------------------------------------- ------ --------- ---------
Current assets
Trade and other receivables 1,078 1,055
Current tax assets 28 27
Other financial assets 17 9
Cash and cash equivalents 16(f) 277 149
---------------------------------------- ------ --------- ---------
1,400 1,240
---------------------------------------- ------ --------- ---------
Current liabilities
Trade and other payables (1,430) (1,464)
Borrowings (498) (869)
Current tax liabilities (225) (313)
Provisions (48) (41)
Other financial liabilities (23) (152)
---------------------------------------- ------ --------- ---------
(2,224) (2,839)
---------------------------------------- ------ --------- ---------
Net current liabilities (824) (1,599)
---------------------------------------- ------ --------- ---------
Total assets less current liabilities 6,675 5,248
---------------------------------------- ------ --------- ---------
Non-current liabilities
Trade and other payables (121) (99)
Borrowings (3,916) (2,455)
Deferred tax liabilities (202) (132)
Post-employment benefit obligations 15(a) (48) (55)
Other financial liabilities (107) (13)
---------------------------------------- ------ --------- ---------
(4,394) (2,754)
---------------------------------------- ------ --------- ---------
Net assets 2,281 2,494
---------------------------------------- ------ --------- ---------
Equity
Called-up share capital 19 96 96
Share premium account 19 1,574 1,559
Retained earnings 18,826 18,718
Other reserves (18,221) (17,893)
---------------------------------------- ------ --------- ---------
Attributable to owners of Experian plc 2,275 2,480
Non-controlling interests 6 14
---------------------------------------- ------ --------- ---------
Total equity 2,281 2,494
---------------------------------------- ------ --------- ---------
Group statement of changes in total equity
for the year ended 31 March 2020
Called-up Share Retained Other Attributable Non-controlling Total
share premium earnings reserves to owners interests equity
capital account of Experian
(Note (Note plc
19) 19)
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:
Profit for the financial year - - 675 - 675 2 677
Other comprehensive income
for the financial year - - 15 (312) (297) (1) (298)
------------------------------------------------------ ---------- -------- --------- --------- ------------- ---------------- -------
Total comprehensive income
for the financial year - - 690 (312) 378 1 379
------------------------------------------------------ ---------- -------- --------- --------- ------------- ---------------- -------
Transactions with owners:
Employee share incentive plans:
- value of employee services - - 83 - 83 - 83
- shares issued on vesting - 15 - - 15 - 15
* purchase of shares by employee trusts - - - (92) (92) - (92)
* other vesting of awards and exercises of share
options - - (64) 76 12 - 12
- related tax credit - - 5 - 5 - 5
- other payments - - (5) - (5) - (5)
Purchase and cancellation
of own shares - - (112) - (112) - (112)
Transactions in respect of
non-controlling interests - - (65) - (65) (7) (72)
Dividends paid - - (424) - (424) (2) (426)
------------------------------------------------------ ---------- -------- --------- --------- ------------- ---------------- -------
Transactions with owners - 15 (582) (16) (583) (9) (592)
------------------------------------------------------ ---------- -------- --------- --------- ------------- ---------------- -------
At 31 March 2020 96 1,574 18,826 (18,221) 2,275 6 2,281
------------------------------------------------------ ---------- -------- --------- --------- ------------- ---------------- -------
Called-up Share Retained Other Attributable Non-controlling Total
share premium earnings reserves to owners interests equity
capital account of Experian
(Note (Note plc
19) 19)
US$m US$m US$m US$m US$m US$m US$m
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 1 April 2018 97 1,546 18,609 (17,775) 2,477 7 2,484
Comprehensive income:
Profit for the financial
year - - 695 - 695 6 701
Other comprehensive income
for the financial year - - 16 (178) (162) (1) (163)
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Total comprehensive income
for the financial year - - 711 (178) 533 5 538
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions with owners:
Employee share incentive
plans:
- value of employee
services - - 87 - 87 - 87
- shares issued on vesting - 13 - - 13 - 13
- other vesting of awards
and exercises of share
options - - (53) 60 7 - 7
- related tax credits - - 8 - 8 - 8
- other payments - - (4) - (4) - (4)
Purchase and cancellation
of own shares (1) - (230) - (231) - (231)
Transactions in respect of
non-controlling interests - - - - - 3 3
Dividends paid - - (410) - (410) (1) (411)
---------- --------- ---------- ---------- ------------- ---------------- --------
Transactions with owners (1) 13 (602) 60 (530) 2 (528)
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
At 31 March 2019 96 1,559 18,718 (17,893) 2,480 14 2,494
---------------------------- ---------- --------- ---------- ---------- ------------- ---------------- --------
Group cash flow statement
for the year ended 31 March 2020
2020 2019
Notes US$m US$m
------------------------------------------------------ ------ -------- --------
Cash flows from operating activities
Cash generated from operations 16(a) 1,694 1,639
Interest paid (157) (134)
Interest received 5 5
Dividends received from associates 6 6
Tax paid (286) (233)
------------------------------------------------------ ------ -------- --------
Net cash inflow from operating activities -
continuing operations 1,262 1,283
Net cash outflow from operating activities -
discontinued operations 11 (6) (42)
------------------------------------------------------ ------ -------- --------
Net cash inflow from operating activities 1,256 1,241
------------------------------------------------------ ------ -------- --------
Cash flows from investing activities
Purchase of other intangible assets 16(d) (403) (348)
Purchase of property, plant and equipment (84) (91)
Sale of property, plant and equipment 5 13
Purchase of other financial assets (95) (25)
Acquisition of subsidiaries, net of cash acquired 16(c) (600) (72)
Purchase of investments in associates - (5)
Disposal of subsidiaries - continuing operations - 12
------------------------------------------------------ ------ -------- --------
Net cash flows used in investing activities (1,177) (516)
------------------------------------------------------ ------ -------- --------
Cash flows from financing activities
Cash inflow in respect of shares issued 16(e) 15 13
Cash outflow in respect of share purchases 16(e) (203) (228)
Other payments on vesting of share awards (5) (4)
Transactions in respect of non-controlling interests 16(c) (67) 3
New borrowings 1,519 1,035
Repayment of borrowings (553) (1,118)
Payment of lease liabilities (55) -
Net (payments)/receipts for cross-currency swaps
and foreign exchange contracts (169) 5
Net receipts from equity swaps 5 3
Dividends paid (426) (411)
------------------------------------------------------ ------ -------- --------
Net cash flows from/(used in) financing activities 61 (702)
------------------------------------------------------ ------ -------- --------
Net increase in cash and cash equivalents 140 23
Cash and cash equivalents at 1 April 146 137
Exchange movements on cash and cash equivalents (14) (14)
------------------------------------------------------ ------ -------- --------
Cash and cash equivalents at 31 March 16(f) 272 146
------------------------------------------------------ ------ -------- --------
Notes to the financial statements
for the year ended 31 March 2020
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.
2. Basis of preparation
The financial information set out in this preliminary
announcement does not constitute the Group's statutory financial
statements, which comprise the Annual Report and audited financial
statements, for the years ended 31 March 2020 and 31 March 2019 but
is derived from the statutory financial statements for the year
ended 31 March 2020. The Group's statutory financial statements for
the year ended 31 March 2020 will be made available to shareholders
in June 2020 and delivered to the Jersey Registrar of Companies in
due course. The auditor has reported on those financial statements
and has given an unqualified report which does not contain a
statement under Article 111(2) or Article 111(5) of the Companies
(Jersey) Law 1991. The Group's statutory financial statements for
the year ended 31 March 2019 have been delivered to the Jersey
Registrar of Companies. The auditor reported on those financial
statements and gave an unqualified report which did not contain a
statement under Article 111(2) or Article 111(5) of the Companies
(Jersey) Law 1991.
The Group's statutory financial statements for the year ended 31
March 2020 have been:
-- prepared in accordance with the Companies (Jersey) Law 1991
and International Financial Reporting Standards (IFRS or IFRSs) as
adopted for use in the European Union (the EU) and IFRS
Interpretations Committee interpretations (together EU-IFRS). The
financial statements also comply with IFRS as issued by the
International Accounting Standards Board (IASB). EU-IFRS differs in
certain respects from IFRS as issued by the IASB, however, the
differences have no material impact for the periods presented;
-- prepared on the going concern basis and under the historical
cost convention, as modified for the revaluation of certain
financial assets and financial liabilities;
-- presented in US dollars, the most representative currency of
the Group's operations, and generally rounded to the nearest
million;
-- prepared using the principal exchange rates set out on page 12; and
-- designed to voluntarily include disclosures in line with
those parts of the UK Companies Act 2006 applicable to companies
reporting under IFRS.
Other than those disclosed in this preliminary announcement, no
significant events impacting the Group have occurred between 31
March 2020 and 19 May 2020 when this preliminary announcement was
approved for issue.
This preliminary announcement has been prepared in accordance
with the Listing Rules of the UK Financial Conduct Authority, using
the accounting policies applied in the preparation of the Group's
statutory financial statements for the year ended 31 March 2020.
Those policies were published in full in the Group's statutory
financial statements for the year ended 31 March 2019 and are
available on the corporate website, at www.experianplc.com .
Going concern
In adopting the going concern basis for preparing these
financial statements, the directors have considered the business
activities, the principal risks and uncertainties and the other
matters that could threaten the long-term financial stability of
the Group. This includes the modelling of our most significant
'plausible but severe' test of a significant data breach, in
addition to a cautious scenario for the impact of COVID-19. At 31
March 2020 the Group had undrawn committed bank borrowing
facilities of US$2.2bn and under the modelled scenarios we would
comfortably maintain sufficient undrawn capacity and satisfy all
borrowing facility covenants.
The directors believe that the Group is well placed to manage
its financing and other business risks satisfactorily, and have a
reasonable expectation that the Group will have adequate resources
to continue in operational existence. The directors therefore
consider it appropriate to adopt the going concern basis of
accounting in preparing the financial statements.
Notes to the financial statements (continued)
for the year ended 31 March 2020
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.
Year ended 31 March 2020
Proforma IFRS 16 adjustment As reported
IAS 17
Group income statement (extract) US$m US$m US$m
---------- -------------------- ----------------
Total Benchmark EBIT (1) 1,377 10 1,387
Benchmark net finance costs (122) (10) (132)
Group tax charge (263) - (263)
Exceptional items and other adjustments
made to derive Benchmark PBT (313) - (313)
Loss for the financial year from discontinued
operations (2) - (2)
-------------------------------------------------- ---------- -------------------- ----------------
Profit for the financial year 677 - 677
-------------------------------------------------- ---------- -------------------- ----------------
1. Total Benchmark EBIT is a non-GAAP measure, defined in note
5(b).
The operating lease expense previously reported under IAS 17 on
a straight-line basis has been replaced by depreciation of
right-of-use assets and interest on lease liabilities with no
material impact on our operating results.
We also made lease payments of US$9m, in the year ended 31 March
2020, in respect of low-value assets which continue to be
recognised as an expense, on a straight-line basis, in the Group
income statement. This treatment utilises the exemption available
in IFRS 16 for such assets. We have chosen not to apply the
exemption for short-term leases and have no material sub-lease
income. In addition, we have updated our definition of Net debt and
Net funding to exclude lease liabilities (see note 5(q)).
Notes to the financial statements (continued)
for the year ended 31 March 2020
3. Changes in accounting standards (continued)
IFRS 16 'Leases' (continued)
At 31 March 2019 IFRS 16 adjustment At 1 April 2019
Group balance sheet US$m US$m US$m
(extract)
------------------------- ------------------ ---------------
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 190 smaller properties, 800 motor vehicles, and
a small number of hardware assets. At 31 March 2020 we held
right-of-use assets with a net book value of US$189m (2019: US$12m)
comprising property assets of US$161m (2019: US$nil) and motor
vehicles, plant and equipment of US$28m (2019: US$12m). The
corresponding lease obligations at 31 March 2020 were valued at
US$201m (2019: US$13m) split between current US$46m (2019: US$5m)
and non-current US$155m (2019: US$8m) borrowings in the Group
balance sheet.
In the year ended 31 March 2019, the Group only recognised
leased assets and liabilities in respect of agreements that were
classified as 'finance leases' under IAS 17. There is no material
difference between the valuation of these assets and liabilities
under IAS 17 and the right-of-use assets and lease obligations
recognised in accordance with IFRS 16.
The Group's future commitments for leases committed to but not
yet commenced total US$7m and do not form part of the lease
liabilities or right-of-use assets.
Maturity of lease liabilities - contractual
undiscounted cash flows
2020 2019
US$m US$m
Less than one year 54 4
One to two years 49 4
Two to three years 39 3
Three to four years 28 1
Four to five years 17 1
Over five years 46 -
Total undiscounted lease liabilities at
31 March 233 13
--------------------------------------------- ----- -----
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.
4. Recent accounting developments
There are no new standards, amendments to existing standards or
interpretations that are not yet effective that are 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.
5. Use of non-GAAP measures in the 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 performance 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.
Notes to the financial statements (continued)
for the year ended 31 March 2020
5. Use of non-GAAP measures in the financial statements
(continued)
(a) Benchmark profit before tax (Benchmark PBT) (note 6(a))
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 6(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 31 March 2020, 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.
(g) Total growth (note 6(d))
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.
Notes to the financial statements (continued)
for the year ended 31 March 2020
5. Use of non-GAAP measures in the financial statements
(continued)
(h) Organic revenue growth (note 6(d))
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
12)
Benchmark earnings comprises 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
12(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 10(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 10(b) to these financial statements. The
Benchmark effective rate of tax is calculated by dividing the
Benchmark tax charge by Benchmark PBT.
(m) Exceptional items (note 8(a))
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) Full-year dividend per share (note 13)
Full-year dividend per share comprises the total of dividends
per share announced in respect of the financial year.
(o) 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 Group's share of 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.
(p) Cash flow conversion
Cash flow conversion is Benchmark operating cash flow expressed
as a percentage of Benchmark EBIT.
(q) Net debt and Net funding (note 17)
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.
(r) 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 financial statements (continued)
for the year ended 31 March 2020
6. Segment information
IFRS 8 disclosures
(a) Income statement
North Latin UK and EMEA/ Total Central Total
America America Ireland Asia operating Activities continuing
Pacific segments operations
(1)
Year ended 31 US$m US$m US$m US$m US$m US$m US$m
March 2020
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Revenue from
external
customers 3,247 732 769 431 5,179 - 5,179
Reconciliation
from Benchmark
EBIT to
profit/(loss)
before
tax
Benchmark EBIT 1,093 220 171 15 1,499 (112) 1,387
Net interest
expense
included
in Benchmark
PBT
(note 9(b)) (5) (2) (1) (2) (10) (122) (132)
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Benchmark PBT 1,088 218 170 13 1,489 (234) 1,255
Exceptional
items (note
8(a)) (35) - - - (35) - (35)
Amortisation of
acquisition
intangibles (85) (17) (8) (14) (124) - (124)
Acquisition and
disposal
expenses (9) (2) (8) (20) (39) - (39)
Adjustment to
the fair
value of
contingent
consideration (1) - 5 - 4 - 4
Non-benchmark
share of
post-tax
profit of
associates - - - - - 6 6
Interest on
uncertain tax
provisions - - - - - (14) (14)
Financing fair
value
remeasurements - - - - - (111) (111)
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Profit/(loss)
before tax 958 199 159 (21) 1,295 (353) 942
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
North Latin UK and EMEA/ Total Central Total
America America Ireland Asia operating Activities continuing
Pacific(1) segments operations
Year ended 31 US$m US$m US$m US$m US$m US$m US$m
March 2019
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Revenue from
external
customers
Ongoing
activities 2,913 707 813 422 4,855 - 4,855
Exited business
activities - - 6 - 6 - 6
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Total 2,913 707 819 422 4,861 - 4,861
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Reconciliation
from Benchmark
EBIT to
profit/(loss)
before
tax
Benchmark EBIT
Ongoing
activities 940 231 230 3 1,404 (98) 1,306
Exited business
activities - - 5 - 5 - 5
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Total 940 231 235 3 1,409 (98) 1,311
Net interest
expense
included
in Benchmark
PBT
(note 9(b)) - - - - - (113) (113)
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Benchmark PBT 940 231 235 3 1,409 (211) 1,198
Exceptional
items (note
8(a)) - (4) 9 - 5 - 5
Amortisation of
acquisition
intangibles (80) (18) (9) (4) (111) - (111)
Acquisition and
disposal
expenses (8) - (9) (7) (24) - (24)
Adjustment to
the fair
value of
contingent
consideration (14) - (2) - (16) - (16)
Interest on
uncertain tax
provisions - - - - - (14) (14)
Financing fair
value
remeasurements - - - - - (81) (81)
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
Profit/(loss)
before tax 838 209 224 (8) 1,263 (306) 957
---------------- -------- -------- -------- ------------ ---------- ----------- -----------
1. EMEA/Asia Pacific represents all other operating segments.
Additional information by operating segment, including that on
total and organic growth at constant exchange rates, is provided
within pages 3 to 10.
Notes to the financial statements (continued)
for the year ended 31 March 2020
6. Segment information (continued)
(b) Revenue by country- continuing operations
2020 2019
(Re-presented)
US$m US$m
-------------- ------ ---------------
USA 3,245 2,910
UK 762 810
Brazil 647 618
South Africa 62 38
Colombia 66 71
Other 397 414
-------------- ------ ---------------
5,179 4,861
-------------- ------ ---------------
Revenue is primarily attributable to countries other than
Ireland. No single client accounted for 10% or more of revenue in
the current or prior year. Revenue from the USA, the UK and Brazil
in aggregate comprises 90% (2019: 89%) of Group revenue.
Revenue attributable to South Africa was previously reported
within Other, following the acquisition of Compuscan in the year
(see note 21) this is now analysed separately, and consequently
comparative information has been re-presented.
(c) Revenue by business segment
The additional analysis of revenue from external customers
provided to the chief operating decision-maker and accordingly
reportable under IFRS 8 is given within note 7. This is
supplemented by voluntary disclosure of the profitability of groups
of service lines. For ease of reference, we continue to use the
term 'business segments' when discussing the results of groups of
service lines.
(d) Reconciliation of revenue from ongoing activities
North Latin UK and EMEA/ Total
America America Ireland Asia ongoing
Pacific activities
US$m US$m US$m US$m US$m
--------------------------------------------- --------- --------- --------- --------- ------------
Revenue for the year ended 31 March 2019 2,913 707 813 422 4,855
Adjustment to constant exchange rates - (1) 3 1 3
--------------------------------------------- --------- --------- --------- --------- ------------
Revenue at constant exchange rates for
the year ended 31 March 2019 2,913 706 816 423 4,858
Organic revenue growth 309 89 (20) (12) 366
Revenue from acquisitions 25 3 1 42 71
--------------------------------------------- --------- --------- --------- --------- ------------
Revenue at constant exchange rates for
the year ended 31 March 2020 3,247 798 797 453 5,295
Adjustment to actual exchange rates - (66) (28) (22) (116)
--------------------------------------------- --------- --------- --------- --------- ------------
Revenue for the year ended 31 March 2020 3,247 732 769 431 5,179
--------------------------------------------- --------- --------- --------- --------- ------------
Organic revenue growth at constant exchange
rates 11% 13% (2)% (3)% 8%
Total revenue growth at constant exchange
rates 11% 13% (2)% 7% 9%
--------------------------------------------- --------- --------- --------- --------- ------------
The above table demonstrates the application of the methodology
set out in note 5 in determining organic and total revenue growth
at constant exchange rates. Revenue at constant exchange rates for
both years is reported using the average exchange rates applicable
for the year ended 31 March 2019.
Notes to the financial statements (continued)
for the year ended 31 March 2020
7. Information on business segments (including non-GAAP
disclosures)
Business-to-Business Consumer Total Central Total
Services business Activities continuing
segments operations
Year ended 31 March 2020 US$m US$m US$m US$m US$m
------------------------------- ------------------------- ---------- ---------- ------------ ------------
Revenue from external
customers 4,092 1,087 5,179 - 5,179
------------------------------- ------------------------- ---------- ---------- ------------ ------------
Reconciliation from Benchmark
EBIT
to profit/(loss) before tax
Benchmark EBIT 1,242 257 1,499 (112) 1,387
Net interest expense included
in Benchmark PBT (note 9(b)) (8) (2) (10) (122) (132)
-------------------------------- ------------------------- ---------- ---------- ------------ ------------
Benchmark PBT 1,234 255 1,489 (234) 1,255
Exceptional items (note 8(a)) (35) - (35) - (35)
Amortisation of acquisition
intangibles (103) (21) (124) - (124)
Acquisition and disposal
expenses (37) (2) (39) - (39)
Adjustment to the fair value
of contingent consideration 4 - 4 - 4
Non-benchmark share of
post-tax
profit of associates - - - 6 6
Interest on uncertain tax
provisions - - - (14) (14)
Financing fair value
remeasurements - - - (111) (111)
------------------------------- ------------------------- ---------- ---------- ------------ ------------
Profit/(loss) before tax 1,063 232 1,295 (353) 942
------------------------------- ------------------------- ---------- ---------- ------------ ------------
Business-to-Business Consumer Total Central Total
Services business Activities continuing
segments operations
Year ended 31 March 2019 US$m US$m US$m US$m US$m
------------------------------- --- --------------------- ---------- ---------- ------------ --------------
Revenue from external
customers
Ongoing activities 3,870 985 4,855 - 4,855
Exited business activities 6 - 6 - 6
------------------------------- --- --------------------- ---------- ---------- ------------ --------------
Total 3,876 985 4,861 - 4,861
-------------------------------
Reconciliation from Benchmark
EBIT to profit/(loss) before
tax
Benchmark EBIT
Ongoing activities 1,186 218 1,404 (98) 1,306
Exited business activities 5 - 5 - 5
------------------------------- --- --------------------- ---------- ---------- ------------ --------------
Total 1,191 218 1,409 (98) 1,311
Net interest expense included in
Benchmark PBT (note 9(b)) - - - (113) (113)
------------------------------------- --------------------- ---------- ---------- ------------ --------------
Benchmark PBT 1,191 218 1,409 (211) 1,198
Exceptional items (note 8(a)) 5 - 5 - 5
Amortisation of acquisition
intangibles (92) (19) (111) - (111)
Acquisition and disposal
expenses (13) (11) (24) - (24)
Adjustment to the fair value
of contingent consideration (16) - (16) - (16)
Interest on uncertain tax
provisions - - - (14) (14)
Financing fair value
remeasurements - - - (81) (81)
------------------------------- --------------------- ---------- ---------- ------------ --------------
Profit/(loss) before tax 1,075 188 1,263 (306) 957
1. Additional information by business segment, including that on
total and organic growth at constant exchange rates, is provided
within pages 3 to 10 and within Appendix 2 on page 13.
Notes to the financial statements (continued)
for the year ended 31 March 2020
8. Exceptional items and other adjustments made to derive
Benchmark PBT - continuing operations
(a) Net charge for Exceptional items and other adjustments made
to derive Benchmark PBT
2020 2019
US$m US$m
Exceptional items:
Profit on disposal of businesses (note 8(b)) - (5)
Legal provisions movements (note 8(c)) 35 -
Charge/(credit) for Exceptional items 35 (5)
Other adjustments made to derive Benchmark
PBT:
Amortisation of acquisition intangibles 124 111
Acquisition and disposal expenses 39 24
Adjustment to the fair value of contingent
consideration (4) 16
Non-benchmark share of post-tax profit of
associates (6) -
Interest on uncertain tax provisions 14 14
Financing fair value remeasurements 111 81
Charge for other adjustments made to derive
Benchmark PBT 278 246
Net charge for Exceptional items and other
adjustments made to derive Benchmark PBT 313 241
By income statement caption:
Labour costs 8 3
Amortisation and depreciation charges 124 111
Other operating charges 62 37
Profit on disposal of businesses - (5)
Within operating profit 194 146
Within share of post-tax profit of associates (6) -
Finance expense 125 95
Net charge for Exceptional items and other
adjustments made to derive Benchmark PBT 313 241
Acquisition and disposal expenses represent professional fees
and expenses associated with completed, ongoing and terminated
acquisition and disposal processes, as well as the integration and
separation costs associated with completed deals.
(b) Profit on disposal of businesses
The profit before tax on the disposal of businesses in the year
ended 31 March 2019 related to the disposal of two small
businesses, one based in the UK and Ireland region and one in Latin
America.
(c) Legal provisions movements
During the year ended 31 March 2020, there has been a movement
in provisions and related receivables in respect of a number of
historic legal claims.
9. Net finance costs
(a) Net finance costs included in profit before
tax
2020 2019
US$m US$m
Interest income:
Bank deposits, short-term investments and loan
notes (13) (12)
Interest income (13) (12)
Finance expense:
Interest expense 145 125
Charge in respect of financing fair value remeasurements 111 81
Interest on uncertain tax provisions 14 14
Finance expense 270 220
Net finance costs included in profit before
tax 257 208
Notes to the financial statements (continued)
for the year ended 31 March 2020
9. Net finance costs (continued)
(b) Net interest expense included in Benchmark
PBT
2020 2019
US$m US$m
Interest income (13) (12)
Interest expense 145 125
Net interest expense included in Benchmark
PBT 132 113
10. Tax - ongoing activities
(a) Group tax charge and effective rate of tax
2020 2019
US$m US$m
Group tax charge 263 256
Profit before tax 942 957
Effective rate of tax based on profit before
tax 27.9% 26.8%
In the normal course of business, the Group has a number of open
tax returns with various tax authorities with whom it is in active
dialogue. At 31 March 2020 the Group held current provisions of
US$327m (2019: US$336m) in respect of uncertain tax positions.
Liabilities relating to these open and judgmental matters are based
on an assessment as to whether additional taxes will be due, after
taking into account external advice where appropriate. The
resolution of these tax matters may take many years. While the
timing of developments in resolving these matters is inherently
uncertain, the Group does not expect to materially increase its
uncertain tax provisions in the next 12 months, however if an
opportunity arose to resolve the matters for less than the amounts
provided, a settlement may be made with a corresponding reduction
in the provision.
(b) Reconciliation of the Group tax charge to the Benchmark tax
charge
2020 2019
US$m US$m
Group tax charge 263 256
Tax relief on Exceptional items and other adjustments
made to derive Benchmark PBT 61 46
Exceptional tax items - 4
Benchmark tax charge 324 306
Benchmark PBT 1,255 1,198
Benchmark tax rate 25.8% 25.5%
(c) Tax recognised in other comprehensive income and directly in
equity
In the year ended 31 March 2020, the loss of US$298m (2019:
US$163m) in respect of other comprehensive income is after a
deferred tax charge of US$5m (2019: US$1m), relating to
remeasurement gains on post-employment benefit assets and
obligations.
A tax credit relating to employee share incentive plans of US$5m
(2019: US$8m) is recognised in equity and reported as appropriate
within transactions with owners. This amount comprises a current
tax credit of US$9m (2019: US$3m) and a deferred tax charge of
US$4m (2019: credit of US$5m).
Notes to the financial statements (continued)
for the year ended 31 March 2020
11. Discontinued operations
There have been no material divestments during the year ended 31
March 2020. On 31 May 2017, the Group completed the divestment of
the Group's email/cross-channel marketing business (CCM), and the
results and cash flows of that business were accordingly classified
as discontinued. Residual disposal costs of US$2m (2019: US$nil)
were incurred during the year.
The cash outflow from operating activities of US$6m (2019:
US$42m) relates to CCM and is stated after tax paid on the disposal
of the business of US$nil (2019: US$18m).
12. Earnings per share disclosures
(a) Earnings per share (EPS)
Basic Diluted
2020 2019 2020 2019
US cents US cents US cents US cents
Continuing and discontinued operations 74.8 76.9 74.2 76.0
Add: loss from discontinued operations 0.2 - 0.2 -
Continuing operations 75.0 76.9 74.4 76.0
Add: Exceptional items and other adjustments
made to derive Benchmark PBT, net of
related tax 28.0 21.1 27.7 20.9
Benchmark EPS (non-GAAP measure) 103.0 98.0 102.1 96.9
(b) Analysis of earnings (i) Attributable
to owners of Experian plc
2020 2019
US$m US$m
Continuing and discontinued operations 675 695
Add: loss from discontinued operations 2 -
Continuing operations 677 695
Add: Exceptional items and other adjustments made to
derive Benchmark PBT, net of related tax 252 191
Benchmark earnings attributable to owners of Experian
plc (non-GAAP measure) 929 886
(ii) Attributable to non-controlling
interests
2020 2019
US$m US$m
Profit for the financial year attributable
to non-controlling interests 2 6
Add: amortisation of acquisition intangibles attributable - -
to non-controlling interests, net of related tax
Benchmark earnings attributable to non-controlling interests
(non-GAAP measure) 2 6
(c) Reconciliation of Total Benchmark earnings to profit
for the financial year
2020 2019
US$m US$m
Total Benchmark earnings (non-GAAP
measure) 931 892
Loss from discontinued operations (2) -
Loss from Exceptional items and other adjustments made
to derive Benchmark PBT, net of related tax (252) (191)
Profit for the financial year 677 701
(d) Weighted average number of ordinary
shares
2020 2019
million million
Weighted average number of ordinary
shares 902 904
Add: dilutive effect of share incentive awards,
options and share purchases 8 10
Diluted weighted average number of
ordinary shares 910 914
Notes to the financial statements (continued)
for the year ended 31 March 2020
13. Dividends
(a) Dividend information
2020 2019
US cents US$m US cents US$m
per share per share
Amounts recognised and paid during
the financial year:
First interim - paid in January
2020 (2019: February 2019) 14.50 130 14.00 126
Second interim - paid in July 2019
(2019: July 2018) 32.50 294 31.25 284
Dividends paid on ordinary shares 47.00 424 45.25 410
Full-year dividend for the financial
year 47.00 423 46.50 419
A second interim dividend in respect of the year ended 31 March
2020 of 32.5 US cents per ordinary share will be paid on 24 July
2020, to shareholders on the register at the close of business on
26 June 2020. This dividend is not included as a liability in these
financial statements. This second interim dividend and the first
interim dividend paid in January 2020 comprise the full-year
dividend for the financial year of 47.0 US cents per ordinary
share. Further administrative information on dividends is given in
the Shareholder and corporate information section. Dividend amounts
are quoted gross.
In the year ended 31 March 2020, the employee trusts waived
their entitlements to dividends of US$4m (2019: US$4m). There is no
entitlement to dividend in respect of own shares held as treasury
shares.
(b) Income Access Share (IAS) arrangements
As its ordinary shares are listed on the London Stock Exchange,
the Company has a large number of UK resident shareholders. In
order that shareholders may receive Experian dividends from a UK
source, should they wish, the IAS arrangements have been put in
place. The purpose of the IAS arrangements is to preserve the tax
treatment of dividends paid to Experian shareholders in the UK, in
respect of dividends paid by the Company. Shareholders who elect,
or are deemed to elect, to receive their dividends via the IAS
arrangements will receive their dividends from a UK source (rather
than directly from the Company) for UK tax purposes.
Shareholders who hold 50,000 or fewer Experian plc 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.
14. Capital expenditure, disposals and capital commitments
During year ended 31 March 2020, the Group recognised capital
additions of US$537m (2019: US$439m) comprising capital expenditure
of US$487m (2019: US$439m) and right-of-use asset additions of
US$50m (2019: US$nil).
The book value of other intangible fixed assets and purchased
property, plant and equipment disposed of in the year ended 31
March 2020 was US$4m (2019: US$8m) and the amount realised was
US$5m (2019: US$13m).
At 31 March 2020, the Group had capital commitments in respect
of property, plant and equipment and intangible assets and for
which contracts had been placed of US$25m (2019: US$19m). Capital
commitments at 31 March 2020 include US$7m in respect of
right-of-use assets, and all amounts are all expected to be
incurred before 31 March 2021. Commitments as at 31 March 2019
included US$3m not then expected to be incurred before 31 March
2020.
Notes to the financial statements (continued)
for the year ended 31 March 2020
15. Post-employment benefits - IAS 19 information
(a) Balance sheet assets/(obligations)
2020 2019
US$m US$m
Retirement benefit assets/(obligations) - funded
defined benefit plans:
Fair value of funded plans' assets 1,023 1,122
Present value of funded plans' obligations (940) (1,061)
Assets in the Group balance sheet for funded
defined benefit pensions 83 61
Obligations for unfunded post-employment benefits:
Present value of defined benefit pensions -
unfunded plans (44) (50)
Present value of post-employment medical benefits (4) (5)
Liabilities in the Group balance sheet (48) (55)
Net post-employment benefit assets 35 6
Pension assets are deemed to be recoverable and there are no adjustments
in respect of minimum funding requirements as, under the Experian Pension
Scheme rules, future economic benefits are available to the Group in
the form of reductions in future contributions or refunds of surplus.
(b) Movements in net post-employment benefit assets/(obligations)
recognised in the Group balance sheet
2020 2019
US$m US$m
At 1 April 6 (11)
Differences on exchange (1) -
Charge to the Group income statement (8) (11)
Remeasurement gains recognised within Other
comprehensive income 26 16
Contributions paid by the Group and employees 12 12
At 31 March 35 6
(c) Income statement charge
2020 2019
US$m US$m
By nature of expense:
Current service cost 6 5
Past service cost - 4
Administration expenses 2 2
Charge within labour costs and operating profit 8 11
The income statement charge and the remeasurement recognised in the
Statement of comprehensive income relate to defined benefit plans. The
past service cost incurred in the year ended 31 March 2019 was in respect
of Guaranteed Minimum Pension equalisation.
(d) Financial actuarial assumptions
2020 2019
% %
Discount rate 2.2 2.3
Inflation rate - based on the UK Retail Prices
Index (the RPI) 2.6 3.2
Inflation rate - based on the UK Consumer Prices
Index (the CPI) 1.8 2.2
Increase in salaries 2.1 3.7
Increase for pensions in payment - element based
on the RPI (where cap is 5%) 2.5 3.0
Increase for pensions in payment - element based
on the CPI (where cap is 2.5%) 1.5 1.7
Increase for pensions in payment - element based
on the CPI (where cap is 3%) 1.7 1.9
Increase for pensions in deferment 1.8 2.2
Inflation in medical costs 5.6 6.2
The mortality and other demographic assumptions used at 31 March 2020
have been updated from those used at 31 March 2019 following additional
analysis carried out in connection with the triennial funding valuation
of the principal defined benefit scheme as at 31 March 2019.
Notes to the financial statements (continued)
for the year ended 31 March 2020
16. Notes to the Group cash flow statement
(a) Cash generated from operations
2020 2019
US$m US$m
Profit before tax 942 957
Share of post-tax profit of associates (14) (3)
Net finance costs 257 208
Operating profit 1,185 1,162
Profit on disposal of fixed assets (1) (5)
Profit on disposal of businesses - (5)
Amortisation and depreciation(1) 537 437
Charge in respect of share incentive plans 83 87
Increase in working capital (note 16(b)) (112) (26)
Acquisition expenses - difference between income
statement charge and amount paid 6 (2)
Fair value gain on revaluation of step acquisition (17) -
Adjustment to the fair value of contingent
consideration (4) 16
Movement in Exceptional items included in
working capital 17 (25)
Cash generated from operations 1,694 1,639
1. Depreciation and amortisation includes amortisation of acquisition
intangibles of US$124m (2019: US$111m) which is excluded from Benchmark
PBT.
(b) Increase in working capital
2020 2019
US$m US$m
Trade and other receivables (145) (65)
Trade and other payables 33 39
Increase in working capital (112) (26)
(c) Cash flows on acquisitions (non-GAAP measure)
2020 2019
US$m US$m
Purchase of subsidiaries (note 21(a)) 601 56
Less: net cash acquired with subsidiaries (26) -
Settlement of deferred and contingent consideration 25 16
As reported in the Group cash flow statement 600 72
Acquisition expenses paid 33 26
Transactions in respect of non-controlling
interests 67 (3)
Cash outflow for acquisitions (non-GAAP measure) 700 95
(d) Purchase of other intangible assets
2020 2019
US$m US$m
Databases 175 171
Internally generated software 189 156
Internal use software 39 21
Purchase of other intangible assets 403 348
Notes to the financial statements (continued)
for the year ended 31 March 2020
16. Notes to the Group cash flow statement (continued)
(e) Cash outflow in respect of net share purchases (non-GAAP
measure)
2020 2019
US$m US$m
Issue of ordinary shares (15) (13)
Purchase of shares by employee trusts 92 -
Purchase and cancellation of own shares 111 228
Cash outflow in respect of net share purchases
(non-GAAP measure) 188 215
As reported in the Group cash flow statement:
Cash inflow in respect of shares issued (15) (13)
Cash outflow in respect of share purchases 203 228
Cash outflow in respect of net share purchases
(non-GAAP measure) 188 215
(f) Analysis of cash and cash equivalents
2020 2019
US$m US$m
Cash and cash equivalents in the Group balance
sheet 277 149
Bank overdrafts (5) (3)
Cash and cash equivalents in the Group cash
flow statement 272 146
(g) Reconciliation of Cash generated from operations to
Benchmark operating cash flow (non-GAAP measure)
2020 2019
US$m US$m
Cash generated from operations (note
16(a)) 1,694 1,639
Purchase of other intangible assets
(note 16(d)) (403) (348)
Purchase of property, plant and equipment (84) (91)
Sale of property, plant and equipment 5 13
Payment of lease liabilities (55) -
Acquisition expenses paid 33 26
Dividends received from associates 6 6
Cash flows in respect of Exceptional and
other non-benchmark items 18 25
Benchmark operating cash flow (non-GAAP
measure) 1,214 1,270
Benchmark free cash flow for the year ended 31 March 2020 was
US$774m (2019: US$907m). Cash flow conversion for the year ended 31
March 2020 was 88% (2019: 97%).
Notes to the financial statements (continued)
for the year ended 31 March 2020
17. Net debt (non-GAAP measure)
(a) Analysis by nature
2020 2019
US$m US$m
Cash and cash equivalents (net of overdrafts) 272 146
Debt due within one year - commercial paper (447) (179)
Debt due within one year - bonds and notes - (578)
Debt due within one year - bank loans(1) - (105)
Debt due after more than one year - bonds and notes (2,858) (2,132)
Debt due after more than one year - bank loans(1) (900) (308)
Derivatives hedging loans and borrowings 35 (119)
(3,898) (3,275)
1. Includes finance lease obligations in the year
ended 31 March 2019.
(b) Analysis by balance sheet caption
2020 2019
US$m US$m
Cash and cash equivalents 277 149
Current borrowings (498) (869)
Non-current borrowings (3,916) (2,455)
Borrowings (4,414) (3,324)
Total of Group balance sheet line items (4,137) (3,175)
Lease obligations reported within borrowings excluded
from Net debt from 1 April 2019 201 -
Accrued interest reported within borrowings excluded
from Net debt 3 19
Derivatives reported within Other financial assets 52 14
Derivatives reported within Other financial liabilities (17) (133)
(3,898) (3,275)
At 31 March 2020 the fair value of borrowings was US$4,408m
(2019: US$3,351m) and includes lease obligations of US$201m
recognised in respect of right-of-use assets.
(c) Analysis of movements in Net debt
31 March Movements in the year ended 31 March 2020 31 March
2019 Lease Non-cash Cash Net share Fair value Exchange 2020
obligations lease flow purchases gains/ and other
on transition obligation (2) (losses) movements
to IFRS additions
16 (1)
US$m US$m US$m US$m US$m US$m US$m US$m
---------- ----------
Borrowings (3,324) (204) (46) (886) - (13) 59 (4,414)
Derivatives
hedging
loans
and
borrowings (119) - - 169 - 14 (29) 35
Liabilities
from
financing
activities (3,443) (204) (46) (717) - 1 30 (4,379)
Lease
obligations - 217 46 (63) - - 1 201
Accrued
interest 19 - - (17) - - 1 3
Cash and cash
equivalents 149 - - 328 (188) - (12) 277
Net debt (3,275) 13 - (469) (188) 1 20 (3,898)
1. Following the implementation of IFRS 16, leases are excluded
from our definition of Net debt, and therefore US$13m of finance
lease liabilities previously reported in Net debt at 31 March 2019
have been excluded from 1 April 2019.
2. Lease obligation cash flows include principal and interest
payments of US$55m and US$8m respectively.
Notes to the financial statements (continued)
for the year ended 31 March 2020
18. Undrawn committed bank borrowing facilities
2020 2019
US$m US$m
Facilities expiring in:
Less than one year 75 -
One to two years - 375
Two to three years 150 300
Three to four years - -
Four to five years 1,950 1,950
2,175 2,625
These facilities are at variable interest rates and are in place
for general corporate purposes, including the financing of
acquisitions and the refinancing of other borrowings.
19. Called-up share capital and share premium account
Number of Called-up Share
shares share premium
capital account
million US$m US$m
At 1 April 2018 980.1 97 1,546
Shares issued under employee share incentive
plans 0.9 - 13
Purchase and cancellation of own shares (9.5) (1) -
At 31 March 2019 971.5 96 1,559
Shares issued under employee share incentive
plans 0.8 - 15
Purchase and cancellation of own shares (3.6) - -
At 31 March 2020 968.7 96 1,574
20. Own shares held
Number of Cost
shares of shares
million US$m
-----------
At 1 April 2018 74 1,227
Other vesting of awards and exercises of share options (4) (60)
-----------
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) (76)
-----------
At 31 March 2020 68 1,183
-----------
Own shares held at 31 March 2020 include 60 million shares held
as treasury shares and 8 million shares held by employee trusts.
Own shares held at 31 March 2019 include 61 million shares held as
treasury shares and 9 million shares held by employee trusts. The
total cost of own shares held at 31 March 2020 of US$1,183m (2019:
US$1,167m) is deducted from Other reserves in the Group balance
sheet.
Notes to the financial statements (continued)
for the year ended 31 March 2020
21. Acquisitions
(a) Acquisitions in the year
The Group made eight acquisitions during the year ended 31 March
2020, 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. In addition, on
8 November 2019 the Group acquired the whole of the issued share
capital of Auto I.D., Inc. (Auto ID) a leading provider of
solutions and services to automotive lenders in the USA.
Provisional goodwill of US$471m was recognised based on the fair
value of the net assets acquired of US$178m.
Net assets acquired, goodwill and acquisition consideration are
analysed below.
Compuscan Auto ID Other Total
US$m US$m US$m US$m
Intangible assets:
Customer and other relationships 53 49 42 144
Software development 22 14 26 62
Marketing-related acquisition intangibles - 1 3 4
Other non-acquisition intangibles - - 5 5
Intangible assets 75 64 76 215
Property, plant and equipment 3 - 1 4
Trade and other receivables 8 - 5 13
Current tax assets - 2 - 2
Deferred tax assets - - 3 3
Cash and cash equivalents (note
16(c)) 7 13 6 26
Trade and other payables (8) (5) (14) (27)
Current tax liabilities (3) - - (3)
Deferred tax liabilities (20) (17) (18) (55)
Total identifiable net assets 62 57 59 178
Goodwill 206 131 134 471
Total 268 188 193 649
Satisfied by:
Cash (note 16(c)) 268 188 145 601
Fair value of existing interest
in associate - - 19 19
Contingent consideration - - 29 29
Total 268 188 193 649
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 31 March 2020 as a
consequence of the timing and complexity of the acquisitions.
Goodwill represents the synergies, assembled workforces and future
growth potential of the businesses. None of the goodwill arising in
the year of US$471m is currently deductible for tax purposes.
There have been no other material gains, losses, error
corrections or other adjustments recognised in the year ended 31
March 2020 that relate to acquisitions in the current or earlier
years.
Notes to the financial statements (continued)
for the year ended 31 March 2020
21. Acquisitions (continued)
(b) Additional information
(i) Current year acquisitions
Compuscan Auto ID Other Total
US$m US$m US$m US$m
Increase in book value from fair
value adjustments:
Intangible assets 75 64 71 210
Trade and other payables (3) (1) - (4)
Deferred tax assets - - 3 3
Deferred tax liabilities (20) (17) (18) (55)
Increase in book value from fair
value adjustments 52 46 56 154
Gross contractual amounts receivable
in respect of trade and other receivables 7 - 3 10
Pro forma revenue from 1 April 2019
to date of acquisition 3 9 14 26
Revenue from date of acquisition
to 31 March 2020 33 6 17 56
Profit before tax from date of acquisition
to 31 March 2020 12 3 1 16
At the date of acquisition, the gross contractual amounts
receivable in respect of trade and other receivables of US$10m were
expected to be collected in full.
If the transactions had occurred on the first day of the
financial year, the estimated additional contribution to Group
revenues would have been US$26m and the profit before tax would
have been US$7m.
(ii) Prior year acquisitions
Deferred consideration of US$25m (2019: US$16m) was settled in
the year in respect of acquisitions made in earlier years. These
cash flows principally relate to the acquisitions of Clarity
Services, Inc. and Runpath Group Limited acquired in the year ended
31 March 2018.
The Group made one acquisition in the year ended 31 March 2019
and a cash outflow of US$72m was reported in the Group cash flow
statement for that year.
(iii) Post balance sheet acquisition
On 8 April 2020, the Group agreed to acquire a majority stake in
the Risk Management division of Arvato Financial Solutions (AFS).
On completion, the consideration will be satisfied by the issue of
7.2m Experian plc shares, c. EUR185m (c.US$200m) at the date of
signing. The AFS Risk Management division is being carved out of
the Bertelsmann Group and is one of the leading credit bureaux in
Germany, operating also in Austria.
The AFS Risk Management division's business is closely allied
with our activities in consumer information services. The
transaction is expected to complete during the year ending 31 March
2021, subject to regulatory approval.
22. Disposals
There were no disposals during the year ended 31 March 2020.
In the year ended 31 March 2019 two small businesses were
divested, one based in the UK and Ireland region and one in Latin
America. In total, proceeds of US$12m were received in cash which
resulted in a profit on disposal of US$5m recognised in that
year.
Notes to the financial statements (continued)
for the year ended 31 March 2020
23. Related party transactions
The Group's related parties were disclosed in the Group's
statutory financial statements for the year ended 31 March 2019.
Following the divestment of CCM in the year ended 31 March 2018 the
Group owns 24.47% of the issued share capital of Vector CM Holdings
(Cayman), L.P. (Vector), a partnership incorporated in Cayman
Islands.
The Group recorded the following transactions and balances with
Vector and its subsidiaries:
Transaction amount Balance owed to
Experian
Year ended 31 March At 31 March
2020 2019 2020 2019
US$m US$m US$m US$m
Promissory note and accrued interest 7 7 94 87
Transaction processing fees - 2 - -
Net amounts collected/(settled)
and receivable/(payable) - (6) 2 (1)
The promissory note is due and payable to Experian on 31 May
2024 with interest also payable on this date. During the years
ended 31 March 2020 and 31 March 2019, we continued to process
transactions on behalf of Vector. We do not receive any margin on
individual transactions. Details of amounts arising in respect of
these transactions are shown in the table below.
Transaction amount Balance owed to
Vector
Year ended 31 At 31 March
March
2020 2019 2020 2019
US$m US$m US$m US$m
Cash received on behalf
of Vector 2 28 - 1
Transaction amount Balance owed to
Experian
Year ended 31 At 31 March
March
2020 2019 2020 2019
US$m US$m US$m US$m
Cash paid on behalf
of Vector 2 22 2 -
Transactions with associates are made on normal market terms and
in the year ended 31 March 2020 comprised the provision and receipt
of services to other associates of US$1m (2019: US$6m) and US$9m
(2019: US$8m) respectively. At 31 March 2020, amounts owed by
associates, other than Vector, were US$nil (2019: US$nil) and
amounts due to associates, other than Vector, totalled US$1m (2019:
US$nil).
Notes to the financial statements (continued)
for the year ended 31 March 2020
24. 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.
(b) Latin America tax
As previously indicated, Serasa S.A. has been advised that the
Brazilian tax authorities are challenging the deduction for tax
purposes of goodwill amortisation arising from its acquisition by
Experian in 2007. The 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 to 2014 tax
years, in which approximately US$77m was claimed, and may raise
similar claims in respect of other years. The possibility of this
resulting in a liability to the Group is considered 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.
We note that a similar challenge has been raised in Colombia in
respect of the 2014 and 2016 tax years, in which approximately
US$5m was claimed, and similar claims in respect of other years may
be raised. We are contesting these on the basis of external legal
advice.
(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 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 early FY21. At this stage we do not know what the
final outcome will be, but it may include an enforcement notice
which, if unchallenged, could require significant changes to
business processes in our UK marketing services business. Experian
will have the right to appeal any such enforcement notice, during
which time all requirements would be stayed.
The UK marketing services business represents approximately 1.4%
of Experian's global revenues and we do not expect this to result
in a materially adverse financial outcome for the Experian
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.
25. Events occurring after the end of the reporting period
Details of the second interim dividend announced since the end
of the reporting period are given in note 13(a). Details of the
post balance sheet acquisition are provided in note 21(b)(iii).
On 7 April 2020, Experian Finance plc, a subsidiary undertaking,
issued GBP400m 3.25% bonds due 2032, under the terms of its Euro
Medium Term Note Programme, which is guaranteed by Experian plc.
The bond issue extends the maturity of the Group's debt portfolio
and diversifies its funding sources.
26. Company website
A full range of investor information is available at
www.experianplc.com. Details of the 2020 Annual General Meeting
(AGM), to be held in Dublin, Ireland on Wednesday, 22 July 2020,
will be given on the website and in the notice of meeting.
Information on the Company's share price is available on the
website.
Notes to the financial statements (continued)
for the year ended 31 March 2020
27. Risks and uncertainties
Identifying and managing risk is key to our business. Doing so
helps us deliver long-term shareholder value and protect our
business, people, assets, capital and reputation.
The Board is responsible for maintaining and reviewing the
effectiveness of our risk management activities from a strategic,
financial, and operational perspective. These activities are
designed to identify and manage, rather than eliminate, the risk of
failure to achieve business objectives or to successfully deliver
our business strategy. Our risk landscape continues to change as
both business and regulatory environments evolve. The emergence of
COVID-19 has impacted several of our principal risks. We have
implemented multiple senior management steering groups to
understand, analyse and seek to mitigate the impact of
COVID-19.
The risk management process is designed to identify, assess,
respond to, report on and monitor the risks that threaten our
ability to achieve our business strategy and objectives, within our
risk appetite.
(a) Risk area - Loss or inappropriate use of data and
systems
Description
We hold and manage sensitive consumer information that increases
our exposure and susceptibility to cyber-attacks, either directly
through our online systems or indirectly through our partners or
third-party contractors.
Potential impact
Losing or misusing sensitive consumer data could cause problems
for consumers and result in material loss of business, substantial
legal liability, regulatory enforcement actions and/or significant
harm to our reputation. The impact of this risk, if it
materialises, will typically be felt in the near term.
Examples of control mitigation
-- We deploy physical and technological security measures,
combined with monitoring and alerting for suspicious
activities.
-- We maintain an information security programme with strong
governance for identifying, protecting against, detecting and
responding to cyber security risks and recovering from cyber
security incidents.
-- We impose contractual security requirements on our partners
and other third parties that use our data, complemented by periodic
reviews of third-party controls.
-- We maintain insurance coverage, where feasible and appropriate.
(b) Risk area - Failure to comply with laws and regulations
Description
We hold and manage sensitive consumer information and we must
comply with many privacy and consumer protection laws, regulations
and contractual obligations.
Potential impact
Non-compliance may result in material litigation, including
class actions, as well as regulatory actions. These could result in
civil or criminal liability or penalties, damage to our reputation
or significant changes to parts of our business. The impact of this
risk, if it materialises, will typically be felt in the near
term.
Examples of control mitigation
-- We maintain a compliance management framework that includes
defined policies, procedures and controls for Experian employees,
business processes, and third parties such as our data
resellers.
-- We assess the appropriateness of using data in new and changing products and services.
-- We vigorously defend all pending and threatened claims,
employing internal and external counsel to effectively manage and
conclude such proceedings.
-- We analyse the causes of claims, to identify any potential
changes we need to make to our business processes and policies. We
maintain insurance coverage, where feasible and appropriate.
Notes to the financial statements (continued)
for the year ended 31 March 2020
27. Risks and uncertainties (continued)
(c) Risk area - Non-resilient IT/ business environment
Description
Delivery of our products and services depends on a number of key
IT systems and processes that expose our clients, consumers and
businesses to serious disruption in the event of systems or
operational failures.
Potential impact
A significant failure or interruption could have a materially
adverse effect on our business, financial performance, financial
condition and reputation. The impact of this risk, if it
materialises, will typically be felt in the near term.
Examples of control mitigation
-- We maintain a significant level of resilience in our
operations, designed to avoid material and sustained disruption to
our businesses, clients and consumers.
-- We design applications to be resilient and with a balance
between longevity, sustainability and speed.
-- We maintain a global integrated business continuity framework
that includes industry-appropriate policies, procedures and
controls for all our systems and related processes, as well as
ongoing review, monitoring and escalation activities.
-- We duplicate information in our databases and maintain back-up data centres.
(d) Risk area - Business conduct risk
Description
Our business model is designed to create long-term value for
people, businesses and society, through our data assets and
innovative analytics and software solutions. Inappropriate
execution of our business strategies or activities could adversely
affect our clients, consumers or counterparties.
Potential impact
Consumers or clients could receive inappropriate products or not
have access to appropriate products, resulting in material loss of
business, substantial legal liability, regulatory enforcement
actions or significant harm to our reputation. The impact of this
risk, if it materialises, will typically be felt in the short
term.
Examples of control mitigation
-- We maintain appropriate governance and oversight through
policies, procedures and controls designed to safeguard personal
data, avoid detriment to consumers, provide consumer-centric
product design and delivery, and effectively respond to enquiries
and complaints.
-- The above activities also support a robust conduct risk management framework.
-- We enforce our Global Code of Conduct, Anti-Corruption Policy
and Gifts and Hospitality Policy. If we believe employees or
suppliers are not following our conduct standards, we will
investigate thoroughly and take disciplinary action where
appropriate.
(e) Risk area - Dependence on highly skilled personnel
Description
Our success depends on our ability to attract, motivate and
retain key talent while also building future leadership.
Potential impact
Not having the right people could materially affect our ability
to service our clients and grow our business. The impact of this
risk, if it materialises, will typically be felt in the long
term.
Examples of control mitigation
-- In every region, we have ongoing programmes for recruitment,
personal and career development, and talent identification and
development
-- As part of our employee engagement strategy, we conduct an
annual People Survey and periodic employee pulse surveys. We track
progress against our action plans.
-- We offer competitive compensation and benefits and review them regularly.
-- We actively monitor attrition rates, with a focus on
individuals designated as high talent or in strategically important
roles.
Notes to the financial statements (continued)
for the year ended 31 March 2020
27. Risks and uncertainties (continued)
(f) Risk area - Adverse and unpredictable financial markets or fiscal developments
Description
We operate globally and our results could be affected by global,
regional or national changes in fiscal or monetary policies.
A substantial change in credit markets in the USA, Brazil or the
UK could reduce our financial performance and growth potential in
those countries.
We present our Group financial statements in US dollars.
However, we transact business in a number of currencies. Changes in
other currencies relative to the US dollar affect our financial
results. A substantial rise in US, EU or UK interest rates could
increase our future cost of borrowings.
We are subject to complex and evolving tax laws and
interpretations, which may change significantly. These changes may
increase our effective tax rates in the future. Uncertainty about
the application of these laws may also result in different outcomes
from the amounts we provide for.
We have a number of outstanding tax matters and resolving them
could have a substantial impact on our financial statements, cash
and reputation.
Potential impact
The US, Brazilian and UK markets are significant contributors to
our revenue. A reduction in one or more of these consumer and
business credit services markets could reduce our revenue and
profit.
We benefit from the strengthening of currencies relative to the
US dollar and are adversely affected by currencies weakening
relative to it.
We have outstanding debt denominated principally in euros, pound
sterling and US dollars. As this debt matures, we may need to
replace it with borrowings at higher interest rates.
Our earnings could be reduced and tax payments increased as a
result of settling historical tax positions or increases in tax
rates.
Adverse publicity around tax could damage our reputation.
The impact of this risk, if it materialises, will typically be
felt in the short to long term .
Examples of control mitigation
-- We have a diverse portfolio by geography, product, sector and
client. We provide counter-cyclical products and services.
-- We convert cash balances in foreign currencies into US dollars.
-- We fix the interest rates on a proportion of our borrowings.
-- We retain internal and external tax professionals, who
regularly monitor developments in international tax and assess the
impact of changes and differing outcomes.
-- We review contingency plans in our key markets as to specific
potential responses to evolving financial conditions.
Notes to the financial statements (continued)
for the year ended 31 March 2020
27. Risks and uncertainties (continued)
(g) Risk area - New legislation or changes in regulatory
enforcement
Description
We operate in an increasingly complex environment and many of
our activities and services are subject to legal and regulatory
influences. New laws, new interpretations of existing laws, changes
to existing regulations and heightened regulatory scrutiny could
affect how we operate. For example, future regulatory changes could
affect how we collect and use consumer information for marketing,
risk management and fraud detection. Regulatory changes could
impact how we serve Consumer Services clients or how we market
services to clients or consumers.
Potential impact
We may suffer increased costs or reduced revenue resulting from
modified business practices, adopting new procedures,
self-regulation and litigation or regulatory actions resulting in
liability, fines and/or changes in our business practices. The
impact of this risk, if it materialises, will typically be felt in
the short term.
Examples of control mitigation
-- We use internal and external resources to monitor planned and
realised changes in legislation.
-- We educate lawmakers, regulators, consumer and privacy
advocates, industry trade groups, our clients and other
stakeholders in the public policy debate.
-- Our global Compliance team has region-specific regulatory
expertise and works with our businesses to identify and adopt
balanced compliance strategies.
-- We execute our Compliance Management Programme, which directs
the structure, documentation, tools and training requirements to
support compliance on an ongoing basis.
(h) Risk area - Increasing competition
Description
We operate in dynamic markets such as business and consumer
credit information, decisioning software, fraud, marketing, and
consumer services. Our competitive landscape is still evolving,
with traditional players reinventing themselves, emerging players
investing heavily and new entrants making commitments in new
technologies or approaches to our markets. There is a risk that we
will not respond adequately to such disruptions or that our
products and services will fail to meet changing client and
consumer preferences.
Potential impact
Price reductions may reduce our margins and financial results.
Increased competition may reduce our market share, harm our ability
to obtain new clients or retain existing ones, affect our ability
to recruit talent and influence our investment decisions. We might
also be unable to support changes in the way our businesses and
clients use and purchase information, affecting our operating
results. The impact of this risk, if it materialises, will
typically be felt in the long term.
Examples of control mitigation
-- We continue to research and invest in new data sources,
analytics, technology, capabilities and talent to deliver our
strategic priorities.
-- We continue to develop innovative new products that leverage
our scale and expertise and allow us to deploy capabilities in new
and existing markets and geographies.
-- We use rigorous processes to identify and select our
development investments, so we can efficiently and effectively
introduce new products and solutions to the market.
-- Where appropriate, and available, we make acquisitions, take
minority investments and enter into strategic alliances to acquire
new capabilities and enter into new markets.
Notes to the financial statements (continued)
for the year ended 31 March 2020
27. Risks and uncertainties (continued)
(i) Risk area - Undesirable investment outcomes
Description
We critically evaluate, and may invest in, equity investments
and other growth opportunities, including internal performance
improvement programmes. To the extent invested, any of these may
not produce the desired financial or operating results.
Potential impact
Failure to successfully implement our key business strategies
could have a materially adverse effect on our ability to achieve
our growth targets.
Poorly executed business acquisitions or partnerships could
result in material loss of business, increased costs, reduced
revenue, substantial legal liability, regulatory enforcement
actions and significant harm to our reputation.
The impact of this risk, if it materialises, will typically be
felt in the long term.
Examples of control mitigation
-- We analyse competitive threats to our business model and markets.
-- We carry out comprehensive business reviews.
-- We perform comprehensive due diligence and post-investment
reviews on acquisitions and investments.
-- We employ a rigorous capital allocation framework.
-- We design our incentive programmes to optimise shareholder
value through delivery of balanced, sustainable returns and a sound
risk profile over the long term.
Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the
financial statements are prepared in accordance with the applicable
set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the Company
and the Group taken as a whole; and the Strategic report contains a
fair review of the development and performance of the business and
the position of the Company and the Group taken as a whole,
together with a description of the principal risks and
uncertainties that they face, which is included in note 27.
The names and functions of the directors in office as at 14 May
2019 were listed in the Experian Annual Report 2019. In the period
from 14 May 2019 to the date of this report:
-- Don Robert retired as Chairman and as a director of Experian plc on 24 July 2019;
-- Mike Rogers took up the role of Chairman on 24 July 2019;
-- Paul Walker retired as a non-executive director on 24 July 2019.
A list of current directors is maintained on the Company website
at www.experianplc.com.
By order of the Board
Charles Brown
Company Secretary
19 May 2020
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
FR GPUCWAUPUPPB
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