Annual Report • Mar 31, 2018
Annual Report
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Annual Report 2018 Year ended 31 March 2018
Data powers our world.
By unlocking the power of data, we aim to create a better tomorrow for everyone.
We turn data into information to help people and businesses make use of it and so they can seize opportunities.
We shape ideas and develop world-changing products:
Used responsibly, data can transform businesses, help communities to prosper and people to thrive.
This is the role we play.
To download this Annual Report or our other corporate literature visit www.experianplc.com
We aim to put consumers and our clients at the heart of what we do. Our strategy takes account of this ambition, as well as emerging market trends.
This year, our Business-to-Business1 activities have performed strongly and we have made progress in Consumer Services. We also made signifi cant investments in new product innovation, delivered further improvements in effi ciency and productivity, and are adopting advanced technologies to help transform our business.
We are better serving consumers and clients with new types of data and more sophisticated analytics and decisioning tools, and we are extending further across new market segments.
Revenue
US\$4,662m (2017: US\$4,335m)
+8%
(2017: US\$1,075m)
+2%
Profi t before tax
US\$994m (2017: US\$1,071m) -7%
Basic EPS
2 From ongoing activities.
Benchmark
Revenue2
US\$1,290m (2017: US\$1,197m) +7%*
US\$1,206m (2017: US\$1,124m) +6%*
USc97.8 (2017: USc88.4) +10%*
1 Business-to-Business = business activities of Credit Services, Decision Analytics and Marketing Services.
Financial statements
103 Financial statements contents 104 Independent auditor's report
178 Shareholder and corporate information
180 Glossary
To help you get the most from this report, we have used this page reference symbol to indicate where additional information can be found.
Certain fi nancial data has been rounded in this report. As a result, the totals of data presented may vary slightly from the actual arithmetic totals of the data.
Principal exchange rates used are given in note 9 to the Group fi nancial statements. The average pound sterling to US dollar rate is 1.33 (2017: 1.30).
* Growth rates are calculated at constant currency for Benchmark fi nancial highlights.
We are the leading global information services group with 16,500 people in 39 countries.
We are managed and organised across four regions and work across four business activities.
We hold, protect and manage data that helps organisations to lend fairly, consistently and responsibly, and prevent fraud.
Read more
Read more
We help businesses connect with their customers and give them great experiences.
We help millions of people in the USA, the UK, Brazil and India to manage and improve their fi nancial status, and protect themselves against fraud and identity theft.
| Credit Services |
Decision Analytics |
Marketing Services |
Consumer Services |
Total | |
|---|---|---|---|---|---|
| North America | 1,484 | 178 | 229 | 755 | 2,646 |
| Latin America | 696 | 61 | 31 | n/a | 788 |
| UK and Ireland | 270 | 234 | 155 | 171 | 830 |
| EMEA/Asia Pacifi c | 156 | 195 | 42 | n/a | 393 |
| Total | 2,606 | 668 | 457 | 926 | 4,657 |
A North America US\$2,646m (2017: US\$2,452m)
+6% Read more
on page 37
US\$788m (2017: US\$730m) +6% Read more
B Latin America
on page 38
C UK and Ireland US\$830m (2017: US\$807m)
0% Read more on page 39
D EMEA/Asia Pacifi c US\$393m (2017: US\$341m) +11%
Read more on page 40
Change to our reporting segments – for the fi nancial year
We are making changes to our business segment reporting, to better
| A Financial services – 34% |
|---|
| B Direct-to-consumer – 17% |
| C Health – 8% |
| D Retail – 5% |
| E Automotive – 5% |
| F Software and professional services – 5% |
| G Telecommunications and utilities – 4% |
| H Insurance – 4% |
| I Media and technology – 3% |
| J Government and public sector – 2% |
K Other – 13%
03
Please see page 18 for further information
ending 31 March 2019
refl ect the way we operate.
We sit as a trusted data steward and a partner to consumers and businesses globally. Our ambition and our opportunity is to help these key Experian stakeholders to drive better insights and actions from data.
Don Robert Chairman
Three key external drivers are fundamentally changing the world in which Experian operates: the ever-expanding amount of data being generated; advances in technology to interpret and make use of data; and the rapid change in attitudes and behaviours as we increasingly become digital consumers. We sit as a trusted data steward and a partner to consumers and businesses globally. Our ambition and our opportunity is to help these key Experian stakeholders to drive better insights and actions from data.
Our greatest imperative as an organisation is to make sure that we continue to deliver on this ambition. We achieve this by paying considerable attention to the strength of our foundations, by building on our One Experian cultural approach and through targeted, defi ned strategic investments. The bedrock of our business lies in sustaining the superiority of our data, analytics and advanced decisioning tools. This is not new for Experian – it is a journey we have been on for some time, and indeed a fi eld we have pioneered.
During the year, the benefi ts of our ongoing investments have become increasingly visible in the form of improved business momentum. An important aspect of this lies in our commitment to innovation and the steps we have taken to remain at the forefront of what is a rapidly changing environment. Innovation is a signifi cant driver of growth for Experian, and we launched a series of major new products during the year. Our approach has been recognised externally and, for the fourth consecutive year, Experian has been named in Forbes Magazine's Top 100 list of the 'World's Most Innovative Companies'.
In North America, business-to-business growth has been underpinned by new capabilities such as Experian Ascend, a new analytics platform and one of our most successful product launches ever. Products like these deliver on clients' needs for big data and analytics, real-time access to data ingestion, speed and agility in how they use their data, as well as robust data security.
We are also excited about new prospects emerging in the UK and Ireland and in EMEA, as a result of the implications of the European Open Banking directive, which has the potential to transform European fi nancial services and bring more choice, greater convenience and more relevant credit off ers to consumers. This is possible due, in part, to the investments we have made to transform our core technology.
We also continue to make signifi cant progress across regions where both population and wealth are expanding rapidly. In Asia Pacifi c we are introducing new credit scoring technology which is based on non-traditional datasets such as mobile data usage, and we have been particularly pleased with the performance of the team in Brazil, where we celebrated the 50th anniversary of Serasa Experian. We recently completed the expansion of our São Paulo DataLab where our data scientists are developing new capabilities for our clients, helping them to drive more insights from data and to develop successful strategies for engaging with their customers. This great work sits alongside the exciting innovations we are also seeing at our data labs in San Diego and London.
We are also making signifi cant progress across our business-to-consumer activities, which are now on an improving trajectory having returned to growth in North America in our fourth quarter. Our identity protection off er in the USA has been well received, backed by successful consumer marketing campaigns. In Brazil, the response to our free score off er has been outstanding and we have enrolled over 22 million consumers. Our strategy in the UK is also progressing well and we have signed up nearly four million people and taken an important step to accelerate our strategy with the acquisition of ClearScore (subject to
UK regulatory approval). Once this proposed acquisition completes, our dual-brand strategy will mean we will have more ways to assist individuals who want access to personal fi nancial products at the best prices, while also making it easier for lenders to provide more tailored credit off ers to consumers.
Information security will always be of the highest priority at Experian. This means continually investing and innovating to stay ahead of fraud and the criminals who attempt to exploit businesses and consumers. We have built a very capable information security team, deeply embedded in our businesses around the world and staff ed with top industry talent. We apply signifi cant capital and resource eff orts every year to ensure the security of our data and integrity of our applications, while deploying the latest tools in our environment to detect and prevent intrusions or loss of data of any kind. It's an ongoing eff ort that is simply part of doing business. The Audit Committee is fully engaged in providing information security oversight, supported by a dedicated management security risk committee, as described later in the Risk management section.
Experian is focused on making a positive impact in society. We are using our greatest assets of technology, data, insights and people to empower consumers, create successful businesses and improve public services. We continued to invest in a number of Social Innovation projects during the last fi nancial year, which all support our objective of improving fi nancial inclusion for the most vulnerable and disadvantaged. Notable amongst these was our largest investment in South Africa with the intention of developing a risk score for the millions of people currently unbanked in South Africa and sub-Saharan Africa. The hope is that through the utilisation of a range of alternative data sources such as mobile phone data, we will be able to positively impact the lives of millions of people. Other signifi cant projects included one in Spain in which we are building a debt recovery portal, and another in Brazil where we are working to standardise and automate local government databases to ensure that benefi ts reach the people most in need. Overall we have invested US\$4.5m in 20 Social Innovation projects over the last fi ve years.
We also encourage our people to use their skills to benefi t society. Many volunteer their time and skills to support their communities and improve fi nancial education. In Brazil we launched a mobile fi nancial education truck which will tour over 40 cities, providing fi nancial education to people who are cut off from the digital world. You can see further examples of this type of work throughout this Annual Report.
We are extremely pleased to have been recognised as a leading employer in the UK by the Top Employers Institute for the second successive year. By listening to our people and actively encouraging new ideas, we continue to develop Experian as an outstanding place to work with a high-performance culture.
The diversity of our workforce is crucial to our success as a business. It is our ambition to have a workforce that is as diverse and varied as our clients and customers. We are committed to searching the globe for the very best individuals, so that we can innovate and meet the needs of our increasingly diverse clients. Our progressive policies, in areas such as fl exible working and paid parental leave, ensure that our employees can fl ourish regardless of their individual circumstances.
Mike Rogers was appointed as a new independent non-executive director and Chairman-designate of the Remuneration Committee on 1 July 2017. Mike brings over 30 years of banking and fi nancial services experience, as well as strategic insight and focused execution. We look forward to working with Mike as we continue to develop and execute Experian's growth strategy.
On 1 April 2018, we welcomed Dr Ruba Borno as a new independent non-executive director. Ruba brings extensive expertise in advanced technologies and a focus on supporting businesses adapting to the threats and opportunities of technology. Experian will benefi t from her insight and understanding of digitisation and technology transformation across industries.
At the 2018 AGM, Mike will take over as Chairman of the Remuneration Committee from Roger Davis, who steps down from the Committee. I would like to thank Roger for his valuable contributions as a non-executive director and his outstanding leadership of the Remuneration Committee. Experian has benefi ted greatly from Roger's considerable experience and insight during his tenure.
Experian's performance has strengthened over the past year, demonstrating the success of our strategy, our drive for innovation and the increasing focus we place on engaging both our clients and consumers. Looking ahead, we will build on these foundations. I would like to thank everyone at Experian for their hard work over the past year and look forward to the next twelve months working together.
Innovation is a signifi cant driver of growth for Experian, and we launched a series of major new products during the year. We recently completed the expansion of our São Paulo DataLab where our data scientists are developing new capabilities for our clients, helping them to drive more insights from data and to develop successful strategies for engaging with their customers.
Experian is focused on making a positive impact in society. We are using our greatest assets of technology, data, insights and people to empower consumers, create successful businesses and improve public services.
Information security will always be of the highest priority at Experian. This means continually investing and innovating to stay ahead of fraud and criminals who attempt to exploit businesses and consumers. We have built a very capable information security team deeply embedded in our businesses around the world and staff ed with top industry talent.
USc44.75 Full-year dividend per share
46,000 Volunteering hours by employees
We delivered a strong performance in FY18 as we execute on our innovation agenda and our One Experian approach. Growth was particularly strong across B2B and we have made signifi cant progress in Consumer Services, which returned to growth in North America in the fourth quarter.
The investments we have made will continue to power our performance. We begin the year with momentum in the business, and we expect another year of strong performance, with EBIT growth at or above revenue growth and further strong progress in Benchmark earnings per share.
Brian Cassin Chief Executive Offi cer We made great progress over the course of this year, fi nancially, operationally and strategically. The pace and range of new product innovation has increased dramatically across the business. This, plus the investments we have made in technology and our One Experian approach, position us strongly for the future.
We delivered a strong fi nancial performance, with:
We are executing well against our strategy, and have invested in a series of initiatives to sustain growth in the future. These include:
New sources of data. We acquired Clarity Services, Inc. ('Clarity'), which adds non-traditional credit data assets in the USA, improving visibility of over 60m consumers with traditional lenders, and extending the superiority of our datasets.
With regards to capital allocation and uses of cash:
We invested organically across a broad range of initiatives during the year in support of our strategy. We also made inorganic investments through acquisitions, minority investments and venture investments totalling US\$305m.
To see our latest results presentation please visit www.experianplc.com
Organic revenue growth was strong across three of our four regions, with double-digit growth in EMEA/Asia Pacifi c. Organic revenue was fl at in the UK and Ireland.
Total revenue growth in North America was 8% and organic revenue growth was 6%, refl ecting a strong performance across B2B of 9%, partially off set by Consumer Services' decline of 2%.
Our B2B business is performing very well driven by successful new product introductions and major One Experian client wins. The Experian Ascend Sandbox tool, which gives clients access to current and historic credit data for the development of analytical models and strategies, has grown quickly, and since launch we have signed contracts with 11 of the top fi nancial institutions, with a strong pipeline of future prospects. We have seen early momentum in our strategy to introduce new sources of data to the credit bureau, and the Clarity Services acquisition has exceeded our expectations.
Since completion of the acquisition in October, synergies realised include the roll-out of Clarity Services products to our traditional bureau clients with the introduction of our fi rst new product which will combine data from both Clarity and our credit bureau to enhance credit risk decisions. Credit Services' performance also benefi ted from the new Fannie Mae trended data agreement, which was implemented in Q4. There was also strength in business information, health and Decision Analytics which each delivered double-digit organic revenue growth.
Consumer Services returned to growth during Q4. We have diversifi ed our revenue streams in this business towards high growth market segments, helping to off set an overall decline for the year. Our identity protection off er is growing rapidly, and we have now enrolled approximately 200,000 paying members. We are extending the product off er with good take-up rates for premium plans and new free services such as triple dark web scan. We are developing our credit comparison service which, while still at a relatively early stage, is growing strongly. We are also highly focused on enhancing the experience for both consumers and lenders by using our capabilities to drive relevance and approval rates. Partner solutions, which accounts for c. 40% of North America Consumer Services revenue, is also well positioned as we secure new clients, provide new products for existing client programmes and as we fully benefi t from the client wins secured this year.
Latin America delivered a good performance, with 6% organic revenue growth, refl ecting strength across Credit Services, Decision Analytics and Marketing Services.
In Brazil, we have placed signifi cant strategic emphasis on expanding the services we provide to our larger clients and on developing more extensive services for smaller businesses and for consumers. We see signifi cant potential as the macroeconomic environment in Brazil improves and as we grow our presence across the Latin American region.
We are expanding our position with larger clients in Brazil, moving beyond pure credit data services to off er alternative data sources, analytics, software, consultancy services and client access to our data labs. We see good prospects for Experian software platforms such as PowerCurve and CrossCore, as well as for new product innovations such as mobile credit-prequalifi cation services, recently launched with major Brazilian retailers and where we are establishing a decent pipeline. We are also developing new services for smaller businesses in Brazil, to help them better manage and gain access to relevant credit off ers.
This was an important year for the development of services to consumers in Brazil. By the end of the year we had enrolled over 22m people into Serasa Consumidor. We have introduced a new credit comparison service (eCred), which we will seek to expand over the coming year. Our debt resolution service Limpa Nome is also expanding rapidly. We have converted this into a digital service which helps millions of consumers to negotiate and settle debts with lenders. We see signifi cant potential for Serasa Consumidor in Brazil, and are investing to extend our product range and to scale our existing off ers over the coming year.
In the UK and Ireland, organic revenue was fl at as growth in B2B of 5% was off set by a decline in Consumer Services of 16%.
We saw good momentum across our B2B portfolio in the UK and Ireland. Across our core, we have secured new client wins driven by demand for unique Experian capabilities such as ExPIN (our proprietary data pinning technology), PowerCurve and CrossCore. Regulatory changes such as the Open Banking directive are also opening up new opportunities, with both existing and new clients. Our strategy is to automate key processes to enable better consumer experiences in areas such as aff ordability assessment, which is mandatory for mortgage and in debt management services.
continued
We have developed new capabilities built on Runpath and Experian technology to address this opportunity. We also continue to expand our position in new market segments such as the price comparison sector, background checking and within industry verticals such as telecommunications.
In Consumer Services, we now address an audience of nearly 4m consumers through our free services. We made considerable progress in credit comparison, and CreditMatcher saw a big step up in both traffi c and revenue over the year. We are enabling lenders to be more precise in which off ers they make to which individuals, leading to greater use of data and analytics in the credit comparison process. The proposed acquisition of ClearScore will allow us to address more of this growing market through two complementary brands and to generate signifi cant synergies. Subscription-based credit monitoring services have continued to contract, a trend which we expect to persist, although we have seen the rate of decline start to ease as we have introduced new product features and as we drive greater engagement with our paying membership base.
EMEA/Asia Pacifi c performed strongly, with organic growth of 11%, with positive contributions across Credit Services, Decision Analytics and Marketing Services.
Our operations in EMEA/Asia Pacifi c are growing well. Our business is shifting from providing point solutions to providing more One Experian, integrated solutions. This is leading to a change in perceptions of Experian as we become more of a strategic partner to our clients. It also improves the size and scale of our client engagements and builds recurring revenue streams. We are also making signifi cant investments to access the considerable opportunities we see in these markets, driven by the growth of population and wealth, and the need for new sources of data to assess credit risk. For example, we are developing propositions which use mobile data to conduct credit risk assessment, we are investing in a new innovation hub in Singapore and we are assessing opportunities to expand services to consumers in key bureau markets.
| 2018 US\$m |
20171 US\$m |
Total growth2 % |
Organic growth2 % |
|
|---|---|---|---|---|
| Revenue | ||||
| North America | 2,646 | 2,452 | 8 | 6 |
| Latin America | 788 | 730 | 6 | 6 |
| UK and Ireland | 830 | 807 | 1 | 0 |
| EMEA/Asia Pacifi c | 393 | 341 | 11 | 11 |
| Total – ongoing activities | 4,657 | 4,330 | 7 | 5 |
| Revenue – exited business activities1 | 5 | 5 | n/a | |
| Total revenue | 4,662 | 4,335 | 7 | |
| Benchmark EBIT | ||||
| North America | 833 | 779 | 7 | |
| Latin America | 267 | 251 | 5 | |
| UK and Ireland | 260 | 246 | 2 | |
| EMEA/Asia Pacifi c | 9 | (3) | n/a | |
| Sub-total | 1,369 | 1,273 | 6 | |
| Central Activities – central corporate costs | (79) | (76) | n/a | |
| Benchmark EBIT from ongoing activities | 1,290 | 1,197 | 7 | |
| EBIT – exited business activities1 | 1 | 2 | n/a | |
| Total Benchmark EBIT | 1,291 | 1,199 | 7 | |
| Benchmark EBIT margin – ongoing activities | 27.7% | 27.6% |
1 Results for 2017 are restated for exited business activities which comprise our Experian Public Records business, divested in March 2018.
2 At constant exchange rates.
See the Financial review for analysis of revenue, Benchmark EBIT and Benchmark EBIT margin by business segment and note 6 to the Group fi nancial statements for defi nitions of non-GAAP measures.
Experian is a unique investment proposition operating at the heart of the data and analytics revolution.
Our roots lie in providing credit information in the assessment of risks associated with lending. While this remains a cornerstone of our business, today we do much more. As well as acting for lenders, we serve individuals, telecommunications companies, governments, the automotive sector, US hospitals and many other industries.
Every day, the world creates vast quantities of data. We help people and organisations to derive meaning from data to drive better outcomes for their businesses or in the way they live. We collect, aggregate and analyse substantial amounts of data, and develop sophisticated software platforms to aid analysis and decision-making based on data. We also provide capabilities for the detection and prevention of fraud.
Growing demand for our services has led us to expand beyond our roots in the UK and USA, and today we operate in 39 countries, employing 16,500 people.
We see signifi cant potential to grow further by investing in our people, data and the science of interpreting data, aided by recent advances in technology such as artifi cial intelligence and machine learning.
By putting our clients fi rst and investing in new tools and technologies we aim to build on our strong fi nancial record and create further opportunities for all our stakeholders.
Read more on page 12
We evaluate our performance through fi nancial, environmental and employee-related measures. We review the results, assess scope for improvement, reshape our strategic plans as necessary and then put them into action.
Return on capital employed ('ROCE') 15.7%
Aim: To generate good returns on the investments we make and deliver long-term value for shareholders.
Measure: We use ROCE as a measure because it indicates how eff ectively we've deployed our resources.
Commentary: This year ROCE was 15.7%, up 20 basis points on the prior year.
5% 1% 5% 5%
1,309 27.4% 1,271 27.3%
1,130 27.1% 1,197 27.6%
See page 88
ROCE is a directors' remuneration measure
See note 6 to the Group fi nancial statements for defi nitions of these non-GAAP measures: Organic revenue growth, Benchmark EBIT, ROCE, Benchmark PBT per share, and Benchmark operating cash fl ow and cash fl ow conversion. Further information is given in the Financial review.
Aim: To deliver profi t growth while balancing investment in the business with shareholder returns.
Measure: Benchmark PBT per share measures our success at creating profi ts and generating value for our shareholders. It shows the dollar value we generate for every share invested in the Group, which, after paying tax, we return to shareholders via dividends or share repurchases, or reinvest in the business.
Commentary: Benchmark PBT per share was 131.5 US cents, up 10% at actual exchange rates and up 9% at constant rates.
Growth in Benchmark PBT per share from ongoing activities at constant rates is a directors' remuneration measure
Cash fl ow conversion 93%
Aim: To convert at least 90% of Benchmark EBIT into Benchmark operating cash fl ow. Measure: Cash fl ow gives us the capacity to operate, reinvest and return funds to shareholders. The effi ciency with which we convert profi ts into cash fl ow is measured through cash fl ow conversion.
Commentary: Our cash fl ow conversion is 93% this year, exceeding our target and resulting in strong Benchmark operating cash fl ow of US\$1,196m.
Employee engagement 71%
Aim: To ensure Experian is a great place to work, attracting and retaining the best people.
Measure: How our people feel and how they are engaged at work is a key driver of business performance. We measure engagement levels and we gather feedback through an annual all-employee survey, enabling us to respond to employees at both a regional and global level.
Commentary: Our most recent survey was completed by 84% of employees. Employee engagement levels measured were 71% favourable, 17% neutral and 12% unfavourable. Because we changed the survey format and scoring this year, legacy questions were included in the survey for comparative purposes. We achieved a legacy engagement score of 81% favourable (2016: 78%).
Greenhouse gas emissions (000s CO2 e tonnes¹)
51.0
For further information please refer to the Corporate Responsibility report at www.experianplc.com/ crreport
Aim: To minimise as far as possible our impact on the environment.
Measure: We measure energy use, primarily from energy use at offi ces and data centres, and employee travel, through carbon dioxide emissions, which we're committed to steadily reducing.
Commentary: This year we reduced our total carbon footprint by 6% to 51,000 tonnes of CO2 e, mainly due to our focus on optimising energy use in data centres and offi ce buildings. Since 2015 we've cut our carbon footprint by 10% CO2 e per US\$1,000 of revenue, beating our 5% reduction target for 2018.
2018 survey results and our employee listening strategy
| Total CO2 Buildings |
e emission (000s tonnes) Travel |
Total | CO2 e emission per US\$1,000 of revenue (kilogrammes) |
CO2 e emission per full time equivalent employee (tonnes) |
|
|---|---|---|---|---|---|
| 2018 | 34.7 | 16.3 | 51.0 | 10.8 | 3.1 |
| 20172 | 38.9 | 15.3 | 54.2 | 11.7 | 3.0 |
| 2016 | 39.8 | 14.7 | 54.5 | 12.0 | 3.3 |
| 2015 | 42.9 | 15.0 | 57.9 | 12.0 | 3.5 |
| 2014 | 49.1 | 20.9 | 70.0 | 14.5 | 4.2 |
1 CO2 equivalent tonnes.
2 The calculation includes CCM which was reclassifi ed as a discontinued operation in the 2017 Group fi nancial statements.
There are a number of big trends shaping our markets. These trends are favourable for Experian and revolve around the emergence of data, the need for sophisticated analytics to interpret and make use of that data, and the way digital behaviour is changing the way we all access fi nancial services.
Estimated mobile phone users worldwidein 2017 1
of data will be created every year by 2025
163 zettabytes 2
Globally we operate in over 120 jurisdictions
13
2 Data generated in 2016 was 16.1ZB. One zettabyte ('ZB') is one trillion gigabytes. Source: International Data Corp ,Data Age 2025 report.
1 www.statista.com/statistics/274774/forecast-of-mobile-
phone-users-worldwide/.
We live in a world increasingly driven by data: its use is becoming more pervasive. We believe that data has the potential to transform lives and societies, and to create a better tomorrow for everyone. To do this, data needs to be understood, interpreted and the knowledge it holds acted on.
We unlock the possibilities that data holds to help people and organisations solve their challenges and realise their ambitions.
We are a global group with 16,500 employees serving consumers and clients from offi ces in 39 countries. Our largest markets are the USA, the UK and Brazil. During this year we provided services to consumers and our clients across our four business activities – Credit Services, Decision Analytics, Marketing Services and Consumer Services. We manage our business by region and the performance of these is set out in the North America, Latin America, UK and Ireland, and EMEA/Asia Pacifi c sections of this report.
Because of changes to the shape of our business activities we are making changes to our business segment reporting format for the next fi nancial year ending 31 March 2019. More details can be found in the Change to our reporting segments section on page 18.
Organisations use our data and decisioning tools in the various interactions they have with their customers. We help them at the point they acquire customers for the fi rst time and to manage their customer base over time. Data can help them to decide which product, and on what terms, is best for a customer. In this way they can make more informed decisions to help them grow their business, lend more responsibly and prevent identity fraud and crime. Individuals use our data and services to take control of their credit and access fi nancial services, for example, to help buy a home or a car, or pay for a child's education.
We take an integrated approach to working and providing solutions for our clients. We connect our people and our expertise across our business activities, and we integrate the best, most comprehensive data, with advanced analytics, innovative decision work fl ows and cutting-edge technology. This approach allows us to serve clients better, create faster, more innovative products and joined-up solutions, and allows clients to access everything they need from one provider.
By operating from multiple countries and organising ourselves centrally, we support and serve both local and global clients, and share best practice, technology and innovation across our regions.
We take the lessons from helping consumers and clients in one market and disseminate those into other markets, helping them solve
similar problems quickly and more eff ectively. Businesses can rely on our data and analytics to help them expand into new markets, reach new customers and transact with international suppliers.
Our scale allows us to invest in research, leverage the breadth and depth of our data and develop products centrally that can be deployed locally and multinationally. This reduces costs, standardises products, and improves time to market. Our clients benefi t from easier access to data, higher quality tools and fl exible propositions that can be integrated across their operations.
Innovation allows us to develop new products to meet the changing needs and practices of consumers and our clients.
We embed innovation into our culture through investment in our employees and new technologies.
Employees are empowered to create compelling new ideas; they collaborate across the business, broadening the diversity of ideas available and incubate these at the team level. We then assess and fund the best ones at the Group level. Innovation helps us drive long-term business performance and will continue to be a key focus for us.
Our stable growth and high cash generation allows us to invest in training, innovation and technology, seize growth opportunities and make strategic acquisitions, generating sustainable returns and preserving value for our shareholders.
We have a unique way of working – we call it 'The Experian Way'. It informs how our people act and behave, which shapes our culture. It celebrates delighting our clients, transformative thinking to drive innovation, working collaboratively, and requires that each and every employee acts as a guardian for the protection of data. We also place signifi cant emphasis on driving a high-performance culture, as well as on drawing talent from many backgrounds to ensure our population is diverse and refl ective of the communities we work across.
Read more about our people on page 25
Technology drives our business. We invest in technologies to bring new, innovative products to market so we can better serve our clients and consumers, and to make our operations more effi cient. We use it to deliver data to clients more rapidly, to help them conduct analysis on the data and to automate decision-making in their organisations. We also use it to run our data centres, as well as to provide standard programme interfaces so clients and our own developers can easily connect systems and diff erent datasets.
Data lies at the heart of our business. We hold and manage large datasets which include credit history and repayment data on over one billion people and 145 million businesses.
We invest to increase the breadth and depth of our data, as well as in the accuracy of data.
The data we hold is varied, for example from how an individual or business may have repaid credit in the past, to whether a car has been in an accident, to eligibility for healthcare services in the USA, and to an individual's preferences on how they like to be contacted.
As a trusted steward of this data, the security and integrity of data handling are a top priority for us. We operate within a strict data security and risk management framework which includes policies, processes and controls on data use, as well as continuous monitoring and testing. We continually assess our data security strategy to help us anticipate new threats and to develop responses where we need to.
Read more about our data on page 34
We gather and combine many sources of data, turning it into useful information through the use of analytics and software – this enables people and businesses to act on the knowledge held within, and it plays an increasingly essential role in the data and credit economy.
businesses
credit and other fi nancial services, which they can use to improve their lives. When businesses do better, they can employ more people. When there is a transparent fl ow of data, economies can fl ourish. Our communities benefi t both directly and indirectly from this.
Our communities We help people to access
See the Our people and corporate responsibility section for further information
We recognise that our work carries great responsibility and how we work is as important as what we do. We therefore ensure we listen to what our people have to say, sustain a positive, empowering culture and do all we can to make Experian a great place to work. We encourage employees to use their skills to do interesting work, learn new skills and progress their careers. We also ensure our people get recognition for great performance and feel nurtured and supported in their careers at Experian.
See the Our people and corporate responsibility section for further information
We invest in our business to grow our position in our chosen markets, while driving strong fi nancial performance. In this way we aim to create long-term shareholder value. Indirectly our shareholders also benefi t as the value created for consumers, clients and the wider community and economy fi lters through to shareholders' other investments.
See the Financial review for further information on the value created this year for shareholders
We unlock opportunities for millions of consumers, and for thousands of small, medium, large and multinational organisations, including:
Individuals
Strategic report
continued
We manage our business by geographic region, however it's easiest to understand what we do as described by our four main business activities.
We help organisations lend responsibly and protect themselves and their customers from risk. From our 18 consumer and 11 business information bureaux, we provide millions of credit reports every day, enabling lending decisions to be made fairly, responsibly and quickly for people and businesses.
We collect and sort data from thousands of sources, primarily on the credit a person or business has applied for in the past and how they have repaid it. We turn this information into a credit report.
These credit reports are used by organisations such as banks, automotive dealers, healthcare providers and retailers to help calculate credit scores, make decisions about lending and the terms on which to lend. They can quickly assess whether a loan that a customer has applied for is suitable for them and whether they can aff ord to repay it.
on page 18.
By providing unbiased information on customers we help ensure that people are treated more fairly when applying for credit, and access to credit is widened across society. Our credit bureaux enable millions of people and businesses to get the loans they need, at a rate they can better aff ord.
In our key markets of the USA, the UK and Brazil we are the number one or number two operator.
Primarily a transactional, volume-tiered basis, per credit report delivered.
Because of changes to the shape of our business activities we are changing our business segment reporting format for the fi nancial year ending 31 March 2019. More details can be found in the Change to our reporting segments section
We regularly encounter three main competitors in our key markets: Equifax, TransUnion and Dun & Bradstreet.
We help our customers to lend eff ectively and to minimise the risk of fraud by developing advanced software and models to analyse data. We also help our clients to deliver the customer experiences that people expect. We help them to lend eff ectively, to detect and minimise fraud and to comply with legal requirements. We help them identify new opportunities, including more effi cient ways to run their businesses, meet customer needs and fi nd better ways to cross-sell their products.
Because we know data so well, we are experts at creating and developing analytical and decisioning tools that make the best use of the data attributes. Our industry experts and data scientists work collaboratively with our clients, listening to them, identifying problems and then helping to fi nd the best solutions for their needs, using advanced technologies. We can combine our own data with data from our clients and third parties, organise and analyse this data, and turn it into meaningful information our customers can act on using our decisioning workfl ows.
For example, when a person is in a store and sees something they would like to buy, our software and analytics can help them to apply for credit by text. They simply text a code to the number provided by the retailer. We check the person's credit status, their ability to repay the loan and that the person is who they say they are, we apply the store's lending criteria and then reply back to them within seconds. We have automated and simplifi ed a process for the business and made applying for credit easier for the customer – there are fewer forms to fi ll in and no embarrassment for the customer if they are declined.
We hold leading positions in our key markets, except for the USA where Fair Isaac is the market leader.
Scores and checks are sold on a transactional, volume-tiered basis. Software and system sales include implementation fees, recurring licence fees and transactional charges.
Include Fair Isaac, IBM, SAS and smaller niche providers.
We help businesses to identify and understand their customers, as well as to manage the quality of the data they keep inside their organisations. We use our strengths in data management and analytics to help provide a clear picture of a customer and of their needs, so organisations can interact with them, and send them more relevant off ers and communications.
We use our strengths in data management and analytics to create a picture of what people are interested in, what they're not interested in, and what they need. This picture helps our clients understand their customers better, and more eff ectively plan, build and deliver their marketing campaigns. They can increase customer retention by rewarding loyalty, fi nd new customers to interact with, build relationships with them, and measure how customers respond.
Because people and their preferences are always changing, we're constantly checking and updating data, linking records for our clients and enhancing client records by combining their data with ours. We update millions of customer profi les for our clients every year. This way our clients can be sure their data is as accurate, up-to-date and relevant as possible.
We hold leading positions in targeting and data quality in our key markets.
Revenue is a mix of transactional, data licences and subscription fees.
Include Acxiom, Epsilon, GB Group, Oracle and Trillium.
We help people to take control of their credit so they can better manage their fi nancial position, and we help them to compare credit off ers so they can fi nd off ers which are most relevant to them. We also help them to protect themselves from identity theft and fraud.
Being able to access their Experian credit report and Experian score online means that millions of people in the USA, the UK and Brazil can view their credit history and get an idea of how lenders may view them. This, along with our online tools and call centre experts, can help people better understand their data. We believe the more people learn and understand about credit, the more power they have to manage it and make themselves eligible for better credit deals.
We off er comparison services which show people credit card, personal loan, mortgage and other deals that, based on their credit information, they are more likely to be accepted for. We rank off ers for them in the order that best matches their circumstances.
In Brazil, our recovery portal makes it easier for consumers to see their debts in one place, talk to their lenders and set achievable repayment plans.
For our clients, we constantly monitor the information in their credit reports for suspected fraud patterns. We also protect people's identities by scouring the internet in real time, monitoring websites, blogs and chatrooms to identify the illegal trading of personal information, so we can notify people to take immediate action. If people do become victims of fraud, we are on hand to help – working with them to contact banks and organisations, and even freezing their credit until we have helped them reclaim their identity.
We also 'white label' our services for businesses, allowing them to use these products to provide additional value to their existing customers, help them to obtain new ones and reduce churn.
We hold leading positions in the USA and the UK.
Monthly subscription and one-off transaction fees from consumers, revenue or profi t share on white-label partnerships, and referral fees for pre-approved credit off ers from fi nancial services providers.
Include Credit Karma, CallCredit, Equifax, Fair Isaac, TransUnion and other niche providers.
Contracts with our B2B clients may be for a one-off service, be renewed yearly or on a multi-year basis. Increasingly we are bundling together capabilities from across the Experian portfolio to provide more powerful and better tailored solutions. This is translating into longer and more persistent contractual relationships with our clients.
17
From 1 April 2018 (for the fi nancial year ending 31 March 2019)
Our aim is to represent our operating structure accurately. We have therefore simplifi ed our business segment reporting from 1 April 2018. The new reporting format will be adopted for the fi nancial year ending 31 March 2019 ('FY19'). These changes will help reduce complexity, improve transparency and better present the business according to how it is managed.
We will continue to organise and manage our business by geographic region and we will continue to group these into the four segments of North America, Latin America, UK and Ireland, and EMEA/Asia Pacifi c for reporting purposes.
Historically we have reported, on a voluntary basis, results across four business segments to help investors understand the diversity of our business mix. Increasingly, a signifi cant majority of Experian's B2B products and services from across Credit Services, Decision Analytics and Marketing Services are now bundled, blurring the distinction between these business activities.
Over the past year we have also started to report organic revenue growth for these three businesses together.
With the divestment in recent years of a large portion of the Marketing Services business segment, including the Email/Cross-Channel Marketing ('CCM') business, the remaining Marketing Services businesses are more aligned to activities within Credit Services and Decision Analytics.
This gives Experian an opportunity to reduce its reporting complexity and improve transparency.
Going forward, for FY19, we will consolidate Credit Services, Decision Analytics and Marketing Services into a single 'Business-to-Business' (B2B) segment.
Consumer Services will remain as a separate business-to-consumer segment. In total, there will be two business segments.
Within B2B there will be two sub-divisions: Data and Decisioning. Data will include: Credit Services; and Targeting (from Marketing Services). Decisioning will include: Decision Analytics; Data Quality (from Marketing Services); and Health (from Credit Services) given the nature of solutions it provides.
The chart below provides a revenue reconciliation of the main movements from the old reporting format to the new one.
| 1. Business-to-Business¹ consisting of two sub-divisions: |
|---|
| • Data2 |
| • Decisioning2 |
| (no change) |
| Year ended 31 March 2018 | US\$m |
|---|---|
| Data | |
| Old Credit Services | 2,606 |
| plus Targeting from old | |
| Marketing Services | 296 |
| less Health | (342) |
| less Other | (9) |
| Total Data | 2,551 |
| Decisioning | |
| Old Decision Analytics | 668 |
| plus Data Quality from old | |
| Marketing Services | 161 |
| plus Health | 342 |
| plus Other | 9 |
| Total Decisioning | 1,180 |
| Total B2B | 3,731 |
| Consumer Services | 926 |
| Total revenue | 4,657 |
Revenue from ongoing activities.
As one of the original big data companies we've always been pioneers and now we've opened up the data frontier for our clients.
Vijay Mehta Senior Vice President, Advanced Technology Group, Experian
19
with Experian's Analytical Sandbox™
Historically the process of moving, ingesting and analysing data for businesses was very laborious and took a long time. For example, physically moving 16 years of credit card data on millions of people could take six or more months.
So the data available to perform analyses could often be limited to only an organisation's own data and sub-sets of other databases. Data could go through many teams, moving from the analytics team to the production team, to operations and marketing, before fi nally reaching the end-user.
What each team did with that data might also be revalidated and recoded by another team, duplicating work. Data was spread across diff erent platforms, with inconsistent access and formats.
A team of more than 100 people from around Experian worked for nine months to build the credit platform of the future.
We liberated our data from our legacy IT architecture putting it into a cloud environment, with data encrypted in transit and at rest, to create Experian's Analytical Sandbox™ built on Experian's new big data platform Ascend.
It is an industry fi rst, a self-serve, full-fi le, analytical environment for credit data. It gives businesses: near real-time access to 16 years of anonymised credit data on over 220 million people in the USA; easy-to-use tools to help analyse the deep layers of content, and on-demand access in one place via a secure, online interface.
Time to market is hugely reduced through integration into the Ascend production environment. For example, a credit card company can quickly analyse all its existing customers to develop more timely and competitive credit line increases, balance transfers and retention off ers.
Finding new markets is much easier for example, a bank operating in one US state can look at data of a neighbouring state to fi nd people who meet the bank's lending criteria. The bank can then quickly develop a compelling marketing strategy aligned with its risk tolerances to capture new market share.
Strategy in action:
Extend our lead in analytics and software solutions
Exploit the breadth of our capabilities
We aim to be a trusted partner for consumers, businesses and other organisations, helping them to achieve their goals by providing them with the best tools to manage credit risk and protect against fraud. We do this by combining data with analytics and software. Our strategic ambition is to grow our presence across a number of industry segments and geographies by investing in these foundations.
Strategic report
| Strategic imperatives | Infl uential market drivers | Purpose | |
|---|---|---|---|
| Broaden and deepen our data assets |
Proliferation of data and analytics Population and wealth |
Data lies at the heart of our business. We seek to build the most complete and accurate data fi les in the market. We will continue to do this through organic investment in new sources of data, through acquisition, through minority investments and also by striking partnerships with other data owners. |
|
| Extend our lead in analytics and software solutions |
Proliferation of data and analytics Automation and technology |
As data continues to proliferate, demand is growing to analyse and make decisions based on the data. We plan to extend our leading market position by investing in systems which enable our clients to assess data in real time, build their own models, conduct scenario analysis and make predictions based on the analysis. We are also developing platforms which enable clients to combine datasets from multiple sources, so they can examine correlations between datasets, and to make it easy for our clients to visualise and manipulate the data. |
|
| Exploit the breadth of our capabilities (One Experian) |
Client digital norms Proliferation of data and analytics Population and wealth Automation and technology Regulatory environment |
We seek to combine capabilities from across our business. We aim to connect diff erent data sources, embed data and analytics within our product set and ensure our products are inter-operable. This will allow us to continue to create more innovative products and better service our clients, while also enhancing our own effi ciency. |
|
| Accelerate the pace of innovation |
Automation and technology Proliferation of data and analytics |
Experian has a long and proud history of innovation and over recent years we have invested to substantially increase the pace at which we bring new capabilities to market. We are transforming our technology, moving to open systems and cloud computing, with the goal of continuing to enhance our speed, accuracy and fl exibility in handling data and improving our time to market. |
|
| Scale in targeted verticals and geographies |
Proliferation of data and analytics Population and wealth |
As the uses of data grow, opportunities open up for Experian in new industry segments. Our data and analytics are often applicable to a wide range of clients and are often scalable across diff erent markets. By investing to expand into new industries and geographies we aim to extend our reach and drive the next phase of growth. |
|
| Transform engagement with consumers |
Consumer digital behaviours Population and wealth Regulatory environment |
Our vision is to become consumers' fi rst choice for managing their fi nances and protecting their identity across mobile and digital channels in several of our markets. We plan to continue to transform and enhance the products, services and features, based on consumer needs. We also aim to attract more consumers to our sites by exploiting the strength of our brand and by establishing relationships directly with consumers. |
We've made signifi cant progress implementing our strategy and investing back into the business.
This year, we launched our second-generation analytical sandbox in North America called Experian Ascend. Ascend allows clients to have real-time access to vast datasets so they can build their own custom models, test lending criteria, perform trend analysis and make forecasts. For example, a bank may wish to model how best to target a credit card campaign in a certain locality. With Ascend, what used to take clients weeks or months, can now take minutes. Since launch we have signed contracts with several of our major strategic fi nancial services accounts and we plan to roll the sandbox out to a wider range of clients in North America over the coming year and to introduce it in other Experian regions.
At the end of the last fi nancial year, we launched a new module to extend our fl agship credit risk management suite PowerCurve, called PowerCurve Collections. The new module helps clients to manage risk when credit quality starts to deteriorate. For example, they can formulate strategies which help them to reduce the cost of collection while also delivering a positive consumer experience. We have signed key clients across several regions, contributing to strong growth in Decision Analytics.
In October 2017, we acquired Clarity Services, Inc., the market leader in non-traditional credit reporting in the USA. It compiles information from sources such as low-income lenders, FinTech and rent-to-own companies. The acquisition substantially expands our data coverage in our largest market, adding data on over 60 million thin-fi le consumers to our credit bureau. It has added data on consumers who were previously largely invisible to traditional lenders because they had limited or no credit history.
In September, we introduced the 'Serasa Truck' as part of a marketing campaign to raise awareness of Serasa to promote fi nancial inclusion in the wider population and the Serasa free score. This has helped to drive a signifi cant increase in members for free services in Brazil, Serasa Consumidor, which more than doubled over the year from 11 million to over 22 million, or more than 10% of the entire population of Brazil.
This year we launched our new identity protection service, IdentityWorks, in North America. In an increasingly digitised world, IdentityWorks gives consumers the tools to protect themselves against identity theft, for example, included in the off er is a free dark web scan. By March 2018, the paid membership base for IdentityWorks was almost 200,000 consumers.
For more information see page 36
Text for Credit is an award winning innovation which had its genesis in our data labs. This product uses device identifi cation data and couples it with identity and credit information. It delivers real-time off ers of credit to a mobile device. This allows consumers to apply for credit when they visit a retail outlet simply by sending a text message. It simplifi es the process of applying for credit, while also ensuring that the retailer adheres to its credit risk and fraud prevention policies.
We are looking at ways of using new datasets to grow our coverage of the underbanked. For example, by partnering with telecoms providers, we can generate credit scores using mobile data, enabling credit assessments to be made in markets where access to credit history data is limited. This can also help to promote fi nancial inclusion.
We will continue to develop and invest in the roll-out of CrossCore, our fraud detection and prevention platform. We plan to add new partners and products, developing new capabilities to detect fraud, such as biometric data, as well as machine-learning to deliver real-time fraud scores.
We have plans to develop our nascent services for consumers in Latin America, India, Australia and South East Asia. We are introducing credit comparison services in Brazil and we are evaluating plans to roll out identity protection services in more markets.
We are Software-as-a-Service ('SaaS') enabling the entirety of our PowerCurve suite and will launch these services during the next year. SaaS-enablement of this platform will allow us to support smaller organisations with our decisioning software since it will be easier, quicker and more cost eff ective to install.
We are developing plans to transform the process of applying for a mortgage. Our goal is to turn a currently arduous, manual and paper-based process into a smooth, quick, digital journey. We will accomplish this by applying technologies such as account aggregation, application programming interfaces (APIs) and authentication services.
Information security will continue to be of utmost strategic importance. We will continue to invest in enhancing and hardening our information security environment and in promoting a strong culture of cyber security awareness within Experian.
The thing that really distinguished PowerCurve Collections for us was the roadmap. The vision that Experian has, the artifi cial intelligence and the machine-learning, combined with Experian's know-how in collections systems, was the real diff erentiator for us.
Rob Holt Chief Credit and Collections Offi cer, NewDay
with Experian's PowerCurve Collections
There are lots of reasons that people miss a debt repayment. It could be that they've simply forgotten to pay or maybe they are experiencing fi nancial hardship. Knowing the diff erence is important for businesses. Because when a business has manual, unconnected processes, or incomplete data and potentially only one way to process delinquent debts then it makes for a frustrating and stressful experience for their customers. In this digital age people expect a business to know their circumstances and respond to their needs accordingly, especially in the case of fi nancial diffi culty. It can add up to higher costs for the business and possibly a failure to comply with increasing regulation, while potentially losing the value of the relationship between them and their clients.
We designed PowerCurve Collections to bring together the data, the decisions, and the collections workfl ow into a single, unifi ed system for a business. And it has an online portal to help customers to negotiate and resolve overdue payments in a discreet and convenient way.
It's the fi nal piece of the PowerCurve credit decisioning suite that helps businesses solve their credit problems right across the customer journey: from fi nding and acquiring new customers, to knowing existing customers and now through to managing customers with overdue repayments. The capabilities across the PowerCurve suite are huge, with some of our clients making 100 million customer decisions every day using our products.
of our capabilities
Accelerate the pace of innovation
25
We're delivering our purpose by unlocking the power of data to transform lives and create a better tomorrow for consumers, clients, our people and our communities.
Data is the lifeblood of our business. By unlocking its potential we are able to improve the fi nancial confi dence of individuals all over the world and support communities towards a more prosperous future.
Our 16,500 people across 39 countries are the heart of our business. They make it possible to fulfi l our brand purpose – powering opportunities to create a better tomorrow. We have developed The Experian Way, a consistent way of conducting our business with integrity, to underpin the inclusive, high-performing and innovative culture in which our people will thrive.
The Experian Way encompasses:
Underlying all our work is a fi rm commitment to acting with integrity, putting our consumers fi rst in all that we do, and protecting the environment.
| For more on The Experian Way see page 30 |
||
|---|---|---|
| -- | --------------------------------------------- | -- |
1 Glassdoor ratings are determined by employee feedback left at www.glassdoor.com Experian had 1,436 reviews at the end of March 2018.
| Our focus areas | Our progress |
|---|---|
| Powering opportunities | See pages 26 – 27 |
| Creating a better tomorrow |
Our social innovation products reached 18 million people, giving them access to essential services, and generated an additional US\$9m for our business since 2014. |
| Helping people through life's biggest moments Building people's fi nancial confi dence |
Our employees volunteered over 46,000 hours of their working and out-of-work time to support their communities in FY18. We're using alternative data to help people in South Africa without a bank account build a credit profi le. We enabled 108,000 patients in the USA to get payment plans for healthcare based on their fi nancial needs and the provider's payment terms. Millions of people in the UK and the USA are using Experian to see their credit scores free of charge. |
| We trained over 1,000 teachers on fi nancial education for people in cities and remote areas across Brazil. |
|
| Over 22 million people in Brazil have signed up to our Serasa Consumidor site, giving them access to credit reports and the ability to renegotiate their debts and we've developed a similar platform in Spain. |
|
| Inspiring our people | See pages 28 – 32 |
| Creating a great place to work |
We launched a new agile employee listening strategy including feedback mechanisms across the employee lifecycle, with new joiner, onboarding, pulse and exit surveys. We achieved an 84% participation rate in our new, mobile-enabled annual employee survey. |
| Developing talent | Our Glassdoor1 rating has improved from 3.1 (at the start of 2017) to 3.5 in March 2018. Our top 200 leaders globally have participated in High Performance Masterclasses. |
| Diversity and Inclusion |
Our suite of global and regional talent programmes have continued to enable our people to develop their careers. We have created an Inclusion Taskforce, with leads from all regions collaborating to share best practice and progress on improving gender diversity and our gender pay gap. |
| Our Women in Experian network has grown, with nine executive ambassadors globally championing gender diversity. |
|
| Working with integrity | See pages 34 – 35 |
| Upholding high ethical standards Safeguarding data and privacy |
We've refreshed our Code of Conduct to make it more accessible and align it with The Experian Way. We've made signifi cant investments in upgrading processes and technologies, growing our information security teams and bringing greater organisational clarity to ensure we maintain a world-class cyber security programme. |
| Protecting the environment |
We cut our carbon footprint by a further 6% in 2018 to 51,000 tonnes of CO2 -equivalent (CO2 e) and we beat our target to reduce the carbon intensity per US\$1,000 revenue, of our business, by 5% from 2015. |
continued
Experian technology developed for the Association of British Credit Unions helped its members provide over 97,000 loans to people across the UK.
We deliver our purpose through our core business activities, our Social Innovation programme and our corporate responsibility (CR) programme.
We hold vast quantities of data and we use our core expertise, products and solutions to transform that data into something meaningful to help millions of people around the world. We put consumers at the heart of what we do and we've evolved our approach to help us better understand their needs, develop solutions that respond to those needs and bring people closer to realising their dreams.
Through our Social Innovation programme, we invest in products and solutions designed to off er even more social benefi ts and create new revenue streams for our business. Since 2014, they have reached over 18 million additional people, providing them with access to essential services and generated more than US\$9m in additional revenue.
We go one step further with our CR programme, which channels our funding and product support for causes relevant to our business and enables our employees to donate their time and expertise to support others. In 2018, our employees volunteered over 46,000 hours of their working and out-of-work time and our direct community investment totalled US\$9.4m.
Living in southern rural Vietnam, Ho Thi Thanh My worked hard to make money for her family. She bought fruit and vegetables from her neighbours and sold them at markets. But her stock was dependent on seasonal harvests. Sometimes she had nothing to sell. Most days, she only earned US\$2-US\$3.
Through the microfi nance programme Experian ran with USAID, My completed business training that helped her fi nd new ways to attract customers. She found a good place to set up her stall and display her products in an attractive way. And with the support of her fellow entrepreneurs and micro-loans, she was able to buy new stock and switched to selling breakfast goods that are available year round. With these new products, My has increased her income and her family's life has improved.
'I have frequent customers who are my group members, my neighbours and my relatives. They call me any time when they have parties, weddings, etc. and ask me to cook sticky rice for them. They have helped me earn more money.'
My is just one of the 400 women whose businesses the micro-fi nance programme has helped boost through training and micro-loans.
The big moments of our lives often start with something seemingly small. Someone's credit profi le may seem like a small thing, but it can play a big part in getting their application approved for a mortgage, rental property or business loan – and in helping them access essential services at a rate they can aff ord.
We help people prove who they are and build a strong fi nancial track record. Our data and analytics give lenders – our clients – the information they need to make fairer, faster decisions for the people applying for credit. Experian products like Prove-ID and Identity Authenticate help lenders quickly verify identities and prevent fraud. Other core products provide businesses with sophisticated data and insight that helps them make decisions fast.
Through our Social Innovation programme we have developed products and solutions specifi cally designed to help people with low incomes and poor credit scores get access to the credit they need.
For example, the credit scoring technology we developed for the Association of British Credit Unions helped its members process over 97,000 approved loans in 2018. In Australia, we're partnering with Good Shepherd Microfi nance to provide low or no interest loans to people who otherwise couldn't aff ord essentials.
We're also tapping into alternative data sources like on-time payments of rent or utility bills to help people strengthen their fi nancial profi les and give lenders more confi dence that a loan will be repaid. In the USA, we already incorporate rental payment data on over 18 million tenants through our RentBureau and we hope to expand our alternative data sources through our acquisition of Clarity, a leading specialised consumer credit bureau. In South Africa, we have developed a credit assessment for people without a bank account, using alternative data such as mobile pre-paid airtime or money transfers.
Many of our products play a vital role in meeting one of the most basic human needs: to have a home. In Colombia, we aim to help half a million people build their fi nancial history, become eligible for credit and get access to government subsidies on a mortgage. In the Netherlands, our Personal Housing Adviser is using fi nancial profi les to cut the time it takes house hunters to fi nd the right home, by shortlisting properties that match both their personal priorities and a mortgage they can aff ord.
For people in the USA, paying for healthcare can be a huge worry at a time when they're already facing health concerns. Experian's Patient Estimates enables providers to estimate the potential cost of treatment, to help patients plan for out-of-pocket costs and our Payment Plan Adviser off ers automated payment plans for healthcare organisations, based on patients' fi nancial needs and the provider's payment terms. In 2018, these personalised payment plans helped 108,000 patients.
Our Credit Services business helps entrepreneurs build their fi nancial profi le so they can get loans to grow their business at a fair interest rate. We provide extra support for very small businesses through, for example, our Real Dreams fi nancial education in Brazil and small loans for micro-entrepreneurs in Vietnam.
We give people the tools and knowledge they need to stay on top of their credit profi le and make informed fi nancial decisions to maintain their fi nancial health. A big part of the support we off er is through our Social Innovation and employee volunteering programmes designed to educate people on how to stay in control of their fi nances and pull themselves out of debt.
Seeing and understanding your credit score is the fi rst step to understanding how to improve it. In the UK and the USA, millions of people have viewed their Experian credit scores free of charge in 2018 and over 23 million people worldwide visited our blogs and social media channels, AskExperian and #CreditChat, to get tips on managing their fi nances.
In Brazil, we've made it possible for consumers to access not just their credit profi le but their credit score for the fi rst time. Customers can now go online to access a range of products
that help them access aff ordable credit, protect against fraud and learn how to improve their scores. More than 10 million people have already accessed their free Serasa Experian credit report in 2018, with 8% increasing their score every month.
Our employees volunteered to support a range of fi nancial education and other community programmes in 2018. For example, they volunteered 20 hours helping refugees in Bulgaria learn more about their fi nances, accessing credit and protecting their personal data.
In Brazil, our long-running Real Dreams programme reached over 5,700 more people in 2018. Now we're going the extra mile, visiting remote communities by truck and boat. Together with trainers from the Financial Education Association, our team is travelling to 44 cities to train around 2,000 teachers on fi nancial education to reach more people in these underserved areas. More than 1,000 teachers have already been trained in 2018. Along the way, our team is inviting local people to come and view their credit scores and get advice – all for free (see story on page 33).
In 2018, over three million people in Brazil signed up to the Recovery Portal to renegotiate their debts to help them manage payments. We've also introduced a similar platform in Spain that provides people with insight into their debt problems, advice and education on fi nancial issues.
Many of our products and services, such as CreditExpert and CreditTracker, help people protect their credit profi les – and themselves – from fraud by alerting them to suspicious behaviour. In the UK, we're raising awareness of fraud threats among the elderly, who are particularly vulnerable. We reached over 120,000 people in 2018 and we're extending the programme to more areas.
'While I've always been passionate about human rights, it became more of a lifestyle after spending a year in Jordan working with Syrian refugees. When I returned to the United States and started working for Experian, I decided to volunteer in my free time with the Red Cross. I went through disaster training courses that prepared me for deployment when hurricanes Irma and Maria hit the Virgin Islands and Puerto Rico.
When I arrived in St. Thomas and St. Croix, I immediately saw the devastation not only to people, but to the animals as well. While I was doing disaster recovery work on the islands, I was also keeping an eye out for animals in need. I quickly became acquainted with the team from the American Society for the Prevention of Cruelty to Animals and reported any animals who looked to be lost or hurt. This is how I met my puppy, Croix, who we rescued from a toppled home.
It has been amazing being part of an organisation that not only talks about social responsibility, but is wholly committed. Experian was behind me the whole way. I am so grateful that I can use my project management skills inside and outside Experian to make a positive diff erence to society.'
Product Manager, Experian North America
| 2018 | 2017 | 2016 | |
|---|---|---|---|
| Year ended 31 March | US\$'000 | US\$'000 | US\$'000 |
| Funds from Experian plc | 2,955 | 3,359 | 3,272 |
| Financial donations and investments from Experian subsidiaries |
2,781 | 2,237 | 1,594 |
| Employee time volunteered | 1,524 | 1,243 | 1,296 |
| Gifts in kind | 711 | 648 | 620 |
| Management costs | 1,401 | 907 | 957 |
| Total from Experian | 9,372 | 8,394 | 7,739 |
| As % of Benchmark PBT | 0.78% | 0.75% | 0.68% |
| Employee fundraising | 986 | 656 | 937 |
| Value of out-of-work volunteering enabled | |||
| by Experian | 114 | 229 | 304 |
| Total value of all giving | 10,472 | 9,279 | 8,980 |
| As % of Benchmark PBT | 0.87% | 0.83% | 0.79% |
* For more information on how these fi gures are calculated, see the 2018 Reporting Principles and Methodology at www.experianplc.com/responsibility/data-and-assurance.
continued
Our people help to unlock the power of data for our customers and clients around the world. Our work carries great responsibility and we believe that how we work is as important as what we do. We remain focused on creating a high-performance, inclusive culture in which great talent can thrive, driving sustainable growth and making Experian a great place to work.
Our commitment to creating a great place to work continues, with engaged and committed people, underpinned by a high-performance and inclusive culture. With the introduction of a new employee listening strategy, 2018 provided our fi rst opportunity to measure progress since the launch of our new Brand Purpose 'to create a better tomorrow', and our globally consistent behaviours aligned to our Brand 'The Experian Way'. This new approach captures employee sentiment through employee surveys at all stages of the employee lifecycle: from new joiners when they start and through the onboarding period, for all employees through our main annual survey and again through our six-monthly Pulse survey, and when people leave us, through exit surveys. In May 2017, we ran our fi rst transformed, agile, all-employee annual survey, as part of our ongoing commitment to employee listening and 84% of our employees joined the dialogue by participating.
We are proud of the results in which we achieved a 71% favourable Engagement score (just 2 percentage points below the High Performing Norm (HPN)1 ) and a 74% Enablement score (2 percentage points ahead of the HPN)2 . We were also pleased with improvement in areas such as sentiment around senior leadership and communication which had seen a decline in the previous survey in 2015 (up 5 percentage points this year).
Our new brand purpose and beliefs have been well embedded, with 89% of respondents understanding what Experian stands for, showing pride in who we are and what we do. 83% believe we strive to help customers and consumers realise their goals and 87% believe we have integrity in dealings with consumers and customers (up 5 percentage points compared to 2015 and 1 percentage point above the HPN). Our work to bring to life 'a stronger consumer and client focus' and demonstrate how we 'power opportunities to create a better tomorrow' has resonated for our people. This is due in large part to our approach of empowering local teams through a network of Brand Pioneers. These clear brand messages are now identifi able in our internal and external communications, including our advertising and talent attraction campaigns.
In addition to changing the way we talk about working for Experian internally and externally, we have improved experiences for current and prospective employees by embedding The Experian Way into our core people processes. To support an improved candidate experience, we have invested in a new applicant tracking system to streamline and simplify the recruitment process. For those who receive an off er of employment from us, we have introduced a new off er and onboarding platform, piloted in 2017 in the UK and Ireland and EMEA regions. The Experian Way is also now fully embedded in our global performance management process, Performance For Growth (PFG), and is a key part of an employee's performance assessment, demonstrating our commitment that 'how' we work is as important to us as 'what' we do.
1 KornFerry Hay Group's Global High Performing Companies Norm (HPN) is a stretch benchmark based on both fi nancial results over a fi ve-year period and above-average Engagement and Enablement scores.
2 KornFerry Hay Group's Model of Engaged PerformanceTM focuses on two equally important outcomes of performance:
Engagement – a measure of employee pride, levels of motivation, willingness to recommend Experian as a place to work and long-term commitment to the business
Enablement – a measure of how well an organisation enables people to be productive, based on two distinct parts: job role fi t and supportive work conditions.
D
C
* Number of full-time-equivalent employees.
Andy Sheehan Senior Vice President, General Manager of Clarity Services, Experian
with our acquisition of Clarity Services, Inc.
For millions of Americans, obtaining credit from traditional lenders, like banks, or retailers, can be very challenging or simply impossible. These people are often viewed as a group that is too risky to lend to, often because there is little or no information on the traditional credit fi le that sits with the large credit bureaux.
But does that lack of information mean that a person will be irresponsible with credit, or are they otherwise creditworthy? In times of temporary fi nancial diffi culty, such as due to a job loss or unexpected medical bill, it means that they have to either sell an asset or turn to alternative lenders for smalldollar loans or payday loans. Alternative fi nancial services lenders are often crucial in helping people manage their monthly expenses and cover a shortage of income. They currently provide lending to about 100 million people in the USA.
Clarity Services, Inc. brings together the data from alternative lenders for people who are underserved by traditional lenders and who fall in the underbanked, sub-prime and near-prime lending categories. Clarity's data helps lenders address fraud, credit and risk needs. This data, along with Clarity's analytics, helps lenders better understand the vastly diff erent credit usage behaviours of 'thin fi le' and sub-prime consumers.
With the acquisition of Clarity, we've been able to strengthen and deepen the consumer credit data we hold. This is an important step in improving the visibility on over 60 million sub-prime consumers to lenders.
Broaden and deepen our data assets
Scale in targeted verticals and geographies
A more complete picture for lenders and greater access to credit
The combination of this new source of alternative credit data, from Clarity, and traditional credit data, from Experian, helps to give lenders a more complete picture of a credit applicant. It enables them to develop new products for the underserved and provide the most appropriate credit for their needs. It helps lenders to approve more applications and mitigate the risk of defaults.
It means improved access to credit for responsible borrowers. Interest rates are more aff ordable as people can demonstrate a lower risk of default, helping protect them from excessive rates. It gives them a larger pool of lenders to apply to, which means quicker, easier and more convenient access to credit.
continued
Since the last survey in 2015, there have been signifi cant improvements around perceptions of senior leaders and strategic clarity. 85% have a good understanding of their business unit's goals (up 2 percentage points from 2015) and 88% understand the results expected of them in their job (up 12 percentage points from 2015). We now have regular leadership updates from the Chief Executive and webinars with the top 600 leaders to improve line of sight and interaction on strategic priorities. Our regional management teams have also invested in extended leadership communications to better engage the entire organisation, introducing regular round tables and events geared towards improving employee face-to-face contact, clarity and alignment.
90% of respondents are motivated to help us succeed (16 percentage points ahead of the HPN group) and we know that this motivation is driving great work in every area of our business. To ensure that great work never goes uncelebrated, this year we further embedded our 'One Experian' recognition programme based around The Experian Way. The programme has seen strong engagement from our employees, with over 36,000 nominations and the awarding of 19,000
recognition badges, 9,600 spot awards, 1,200 half-year awards and 36 elite awards. 74% of employees told us they received recognition for a job well done (up 6 percentage points from 2015). 79% said they are encouraged to come up with new ways to do things and 81% that they have autonomy to do their job (up 7 and 8 percentage points respectively from 2015 and both above the HPN).
Having made signifi cant progress on the focus areas from the 2015 annual employee survey, there were a couple of areas highlighted for improvement. Our employees have told us that we need to:
20% of the comments by employees in the survey related to internal barriers they felt were getting in the way of doing their jobs well and helping them be more productive. We have read every comment to understand the insight that our employees, at the front line of our processes, have shared. We have initiated a range of work streams to address employee experience, including a review of processes in Experian IT Services and a user experience working group in compliance and governance. We are committed to monitoring how our employees respond to the question on internal barriers as part of our ongoing dialogue around making Experian a great place to work.
While we made strong progress here, we cannot be complacent and will be investing in helping leaders at all levels drive strong direction and clarity through our continued focus on employee communications. It is essential that our employees have clarity to maximise their contribution to our strategic priorities.
We are proud to see that our work on developing our talent has been recognised by our employees, with responses regarding opportunities for development signifi cantly exceeding the HPN. 79% of respondents state that their manager supports them in their personal development (13 percentage points above HPN).
72% told us they had good opportunities for learning and development (7 percentage points above the HPN) and 67% said they had opportunities to achieve their career objectives at Experian (5 percentage points above the HPN).
At a global level we have focused on maximising the performance of our talent by investing US\$8.5 million in FY18 on development across a range of opportunities, including training programmes, coaching and our e-learning platform which enables employees to self-manage their participation.
We also engage with external platforms such as Everywoman and GetAbstract where all employees have access to blended learning and content to support their personal development. This year, we saw global membership grow by 7% on GetAbstract and 11% on Everywoman. We have set ourselves the target of increasing membership by a further 20% in 2019 as we look to utilise Everywoman content through our employee networks and partner on the translation of content for our Portuguese-speaking employees.
We have enabled employees to seek self-directed assignments which take advantage of our global organisation, with 66 employees making an international move in 2018. In our Asia Pacifi c and EMEA regions, we piloted a programme where employees can apply for an assignment of up to three months in another country and department, as part of their development plan. In the last 12 months, 13 employees have taken up this opportunity. These moves foster better understanding between business areas and encourage our people to think more globally.
We centrally manage a suite of structured global talent programmes which off er growth opportunities targeted at diff erent tiers of the organisation (see below).
To foster a culture of high performance in the organisation, one of our main priorities for 2019 is the development of a Leadership Performance Programme targeting mid-tier and rising leaders. The programme will be piloted in 2019 and reviewed for a roll-out for up to 2,000 leaders at this level in the following year.
Our talent programmes have contributed to a stronger talent pipeline by reducing attrition and improving promotion rates amongst high performers and high-potential employees. For example, our CEO Forum programme has an average promotion rate of 24%, over double the Experian average of 11%, and our Experian Business Network programme has 4% attrition, just over a third of our overall attrition rate1 .
Our overall voluntary attrition rate has seen recent improvement, decreasing from 15.5% in 2015 to 11.5% in 20182 , as part of a concerted eff ort to deploy our in-house predictive analytics tool in all our regions. The tool is driven by our Attrition Risk Model, which enables HR teams to identify critical employees at risk of leaving, for the purpose of taking preventative action. For example, our North America region used the tool to reduce attrition amongst the high-performing female population from 11% in 2016 to 4% in the fi rst half of 2017.
of survey respondents say their manager supports them in their personal development (13 percentage points above HPN)
11.5% Voluntary attrition is now 11.5%, down from 15.5% in 2015
On average 24% of participants in our CEO Forum in the last two years have been promoted, over double the Experian overall average promotion rate
Education Express (e-learning / videos / e-books) Get Abstract / Development Guides / Everywoman Manager Essentials / Get Inclusive / Performance Management modules Emerging Leaders Programme Experian Business Network CEO Forum High Performance Masterclass All Employees All Line Managers Entry-level Leadership Group Rising Leadership Group Mid-tier Leadership Group Senior to Mid-tier Leadership Group Globally runRegionally run
Experian talent development opportunities
1 Average promotion and attrition rates refer to 2016 and 2017 cohort analysis.
2 The 2015 attrition rate includes the CCM business, that has since been divested.
Strategic report
31
continued
By developing and retaining our talent we aim to improve succession for our most senior roles, ensuring that we safeguard our organisational performance from external pressures in the talent marketplace. The emergency coverage for senior leader roles in 2018 is 100%, up from 97% in 2017. We have had a number of new appointments into the senior leader population while maintaining our succession coverage with 77% (the same as 2017) of senior leaders having one successor who is 'ready now' or 'ready in two years' and 50% of senior leaders having at least two successors who are 'ready now' or 'ready in two years' – slightly down from 53% last year.
To complement our global programmes and activity, our regions have targeted action plans to address skills and capability requirements relative to their specifi c workforce needs, for example, analytics and technical skills in North America, digital capability in Latin America and commercial capability in EMEA.
Value each other is one of the fi ve core components laid out in The Experian Way; for us, it is about treating everyone with respect, trust and integrity. Our ambition is to nurture a culture of inclusion where we can all bring our whole selves to work each day. Our primary focus is on encouraging an environment that cultivates diverse perspectives and decision-making, ensuring that individuals are able to be themselves and do their best work. In 2019 we will begin to collect data on the inclusiveness of our culture by expanding our annual people survey to include two new questions to measure the impact of our work in this area.
The female under-representation in our leadership group is the cause of our reported gender pay gap in the UK. Our mean gender pay gap, which compares average hourly rate of pay between all men and all women at Experian UK, is 29.94%. We're confi dent that jobs of equal value are paid appropriately and we have committed to improving the proportion of women in leadership positions to reduce the gap (see our UK Gender Pay Report 2017 for more information). We have introduced goals for the gender diversity of our employee population and talent pipeline which we track on a monthly dashboard.
We have Diversity & Inclusion leaders who partner with our nine executive ambassadors from the Women in Experian network and meet monthly as part of a global taskforce to discuss progress on action plans, share successes and provide cross-region support.
Examples of the activity undertaken by the taskforce include:
2018 saw the launch of Employee Resource Groups across the globe, including groups for parents, veterans, LGBTQ, diff erent ethnic backgrounds and a range of social interests, all powered by the passion of our employees and executive sponsors.
In North America, employees across the region participated in a celebration of diff erent cultures, encouraging all employees to share more about their life outside work. Through sharing their own background, story and journey, an initiative was developed called The Power of You, which has seen short videos released weekly between November 2017 and January 2018 with colleagues talking about what inclusion means to them. The videos have been well received, with 5,700 page views globally since the launch.
These are just some examples of the work in specifi c regions which has contributed to external recognition of our culture and employee experience.
We were recently named on the Anita Borg Leadership Index for Top Companies for Women Technologists 2017 for the fi rst time and as a Top Workplace Honouree on the Orange County Register for the fi fth time. We've achieved Top Employer status again in the UK. External recognition of our progress as an organisation can also be seen in the improvement of our Glassdoor rating this year which has moved from 3.1 out of 5 to 3.5 out of 5.
45% Global employees are female
Workforce classed as millennial
32%1
Female representation in our leadership population
To read our UK Gender Pay Report 2017 visit www.experian.co.uk/assets/about-us/reports/ experian-gpg-report.pdf
1 In 2018 we expanded our gender reporting of the group formerly referred to as 'senior leaders' to include leadership roles that also contribute at a strategic level globally and/or report directly into our Group Operating Committee. To mark this change we now refer to this group as the 'leadership population'.
I discovered that with Serasa Experian I could renegotiate my debts with my creditors. Now my debts have been cleared, I can focus on making my dreams come true.
was left burdened with her ex-husband's debts, but she was able to renegotiate them from R\$15,000 to R\$2,000.
with Serasa Experian's itinerant truck and boat project
Brazil, with its 211 million people spread across its massive landmass, has many diff erent cultures. One thing common throughout however, are the many people aff ected by the economic downturn. 40%¹ of adults are in default with overdue bills and unemployment stands at 12.6%². There is a need for improved access to information and to better fi nancial education. This is diffi cult though in a country where 34%³ of the population has no access to the internet.
In Brazil to be in debt and past-due on your commitments is considered shameful, you are said to have 'a dirty name'. Because of this many people fi nd it diffi cult to talk openly about their debts, to get the help they need or take control of their fi nances. Traditionally Serasa Experian has connected and engaged with people face-to-face through its 'Clear my Name' fairs, helping them to renegotiate their debts, but these fairs only took place in the main cities.
To help more people across the nation we decided to get on the road and visit over 40 cities across Brazil. We are doing this with a purpose-built truck. In some regions, like the Amazon, there are no roads, so you need a boat as well. The truck and boat are self-contained with 8-20 computer stations and a dedicated team of Serasa Experian employees.
On the truck we can host up to 50 people at a time. They can access their credit report and score online, fi nd out how much money they owe and renegotiate their debts with lenders. They can see how much money they could borrow to make a business plan a reality. Most importantly, they can get access to educational tools to help them with their fi nances.
Transform engagement Scale in targeted verticals
with consumers
and geographies
With this project our aim is to reach as many people as possible, promoting fi nancial education and helping people to lead better lives. We've reached 75,000 people so far, in 33 cities. We've also partnered with a teachers' association to provide training for teachers in each city we visit, so they can pass on a fi nancial curriculum to their students. 1,080 teachers have received training – allowing fi nancial education tools to reach thousands of students.
We're connecting with about 700 to 2,000 people every day. It's not just information that we provide, but also a place where people can talk openly about their circumstances, why they're in debt and what their dreams are. A place where they feel empowered to focus on and take control of their fi nances.
1 Serasa Experian.
2 At end of February 2018.
3 IBGE, Brazilian Institute of Geography and Statistics,
Strategic report
33
Our Global Code of Conduct sets out our expectations. It guides our employees to make the right decisions, to help us support the people we serve every day.
For people to trust us, it is essential that we uphold high ethical standards. Our Global Code of Conduct sets out our expectations and guides our employees to make the right decisions to help us support the people we serve every day. We refreshed the Code this year to make it more accessible and align it with The Experian Way – our unique way of working across the business.
Accompanying policies deal with ethical and human rights risks related to bribery and corruption, human resources, health and safety, and labour practices in the supply chain. Our Anti-Corruption Framework reinforces our zero tolerance of bribery or corruption in any form. People can report any ethical concerns, anonymously if they prefer, through our 24-hour confi dential helpline.
Experian is committed to respecting human rights. We align our policies with the principles of the United Nations Universal Declaration of Human Rights. Our commitment to preventing modern slavery in our supply chain is outlined in our statement on slavery and human traffi cking. We have undertaken a programme of training and communication to increase our employees' awareness of the risks and have developed risk-based monitoring of our suppliers.
We are the stewards of personal information concerning consumers around the world. Securing that information is our highest priority.
The threat of cyber crime is ever growing and evolving. We are constantly striving to provide secure systems and processes that refl ect best practices to help us stay ahead of today's increasingly sophisticated cyber criminals. This includes regularly monitoring for fraudulent activity, taking immediate and aggressive action to stop such activity when it is detected, and working closely with law enforcement, as appropriate, to ensure the perpetrators are brought to justice.
We've made further investments in upgrading processes and technologies, growing our information security teams and bringing greater organisational clarity to ensure we maintain a world-class cyber security programme. Our controls are based on the international ISO27001 standard.
Our 16,500 employees are a vital part of our security programme and they are all required to complete training on information security and data protection on an annual basis. Through our SecurityFirst programme, we systematically educate our people and embed the principles of how to handle and treat sensitive data correctly throughout the business. The programme is led from the very top of Experian.
In addition to keeping data safe, we also seek to make our data as accurate as possible. We are committed to continually reviewing and improving the quality of the data we hold and, through our products, we give people the opportunity to view and understand their own credit reports so they can check for inaccuracies that could aff ect their scores.
Lenders need access to secure and accurate information about people's fi nancial profi les from Experian or other credit bureaux. Such information is an integral part of an effi cient and competitive credit ecosystem that delivers better, cheaper products for consumers and contributes to economic growth. We only ever share data with authorised and trusted organisations. When we do so, we follow strict guidelines and comply with all relevant laws.
We also engage with policymakers and other stakeholders to respond to people's concerns about privacy. The EU General Data Protection Regulation ('GDPR') comes into force in May 2018. We recognise the importance of good, well-regulated data protection and we believe the new regulation presents an opportunity for organisations to transform the way they organise and process personal data.
We've been preparing for the new regulation by assessing the potential impact on our business and the industry, and identifying any changes we need to make to comply with the requirements. This includes reviewing our processes and policies, and supporting our clients in managing their GDPR compliance.
We have cut our total carbon footprint by a further 6% to 51,000 tonnes of CO2 -equivalent (CO2 e) in 2018. Since 2015, we have achieved an overall reduction of 12% in our carbon footprint. Over the same time period, we've cut the carbon intensity of our business by 10% to 10.8 kilogrammes of CO2 e per US\$1,000 of revenue – beating our 5% reduction target for 2018.
We have achieved this through our continued focus on optimising energy use in our data centres and offi ce buildings, and by promoting remote collaboration to minimise the need for business travel.
Since 2015, we have reduced energy use at our three main data centres in the UK and the USA by 4%. In 2017/18, we introduced a new global Technology Lifecycle Management Policy ('TLMP') to promote investment in more modern and effi cient IT infrastructure in data centres across the business. To optimise energy use in our offi ce buildings, we have
changed layouts and introduced hotdesking to use space more effi ciently, as well as moving some offi ces to more modern buildings. In Brazil, our new offi ce building in São Carlos is targeting certifi cation to the LEED (Leadership in Energy and Environmental Design) sustainable buildings standard.
Our people can play a big part in helping us protect the environment just by making small energy-saving steps, such as switching off lights and computers. We also ask them to think before they travel and to hold meetings 'virtually' if they can. We off er dedicated videoconferencing facilities and we've introduced a new solution that makes it easier for people to collaborate remotely by enabling them to hold video conferences and share presentations from their own computer. While other factors such as divestments have also had an impact, these solutions have helped us reduce emissions from business travel by around 22% since we began implementing them in 2014.
Since 2015, we've cut the carbon intensity per US\$1,000 revenue, of our business, by 10%.
| Year ended 31 March | 2018 | 2017 | 2016 | |
|---|---|---|---|---|
| Scope 1 | Thousand tonnes of CO2e | 3.9 | 4.4 | 4.4 |
| Location-based Scope 2 | Thousand tonnes of CO2e | 33.0 | 37.0 | 38.0 |
| Market-based Scope 21 | Thousand tonnes of CO2e | 28.0 | 34.2 | 36.6 |
| Scope 1 and 2 normalised | ||||
| by revenue2 | Kilograms of CO2e per US\$1,000 | 7.8 | 8.9 | 9.3 |
| Scope 32 | Thousand tonnes of CO2e | 14.1 | 12.8 | 12.1 |
| Total emissions | Thousand tonnes of CO2e | 51.0 | 54.2 | 54.5 |
| Total emissions normalised | ||||
| by revenue | Kilograms of CO2e per US\$1,000 | 10.8 | 11.7 | 12.0 |
1 New reporting requirement for the year ended 31 March 2016.
2 Using location-based emissions.
We have reported on all the emission sources within our total carbon footprint which includes Scope 1, 2 and 3 (falling within our Group fi nancial statements) in line with the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. There are no material exclusions from this data. The data has been prepared in accordance with the UK Government's Environmental Reporting Guidance (2013 version). Detailed information on Experian's environmental performance and the 2018 Reporting Principles and Methodologies document are available at www.experianplc.com/responsibility/data-and-assurance.
Debbie Hsu VP Product Management Consumer Services, Experian
with Experian's IdentityWorksSM
Technology makes our lives easier. Access to information and applying for services online is quick and convenient. But with that convenience comes the risk of identity thieves who want to steal personal data, such as name, address, date of birth, social security and mobile numbers, with the intention of using it to commit identity fraud. When the data stolen includes an email address and password, they'll then try to target and take over other accounts, like an email account. From there they'll use that to reset passwords elsewhere, like for online banking, enabling them to access and steal money from bank accounts.
In 2016 more than 15 million¹ people in the USA were victims of identity theft, with US\$16bn¹ stolen by fraudsters. This causes severe emotional and fi nancial distress for victims, and may impact their lives negatively for months, even years, as they try to recover from the damage caused.
To help protect against identity theft and reduce the massive impact that it has on people's lives we created a new product called IdentityWorksSM. It is packed full of innovative tools and features, including:
We have also extended a one-time dark web scan to all consumers, for free, to help as many consumers as possible to be able to take appropriate action before account takeover occurs.
Exploit the breadth of our capabilities Accelerate the pace of innovation
Transform engagement with consumers
Better detection, protection and resolution
Strategy in action:
1 Javelin Strategy & Research,
The 2017 Identity Fraud Study, 1 February 2017.
The key to protection is being proactive. IdentityWorksSM detects and alerts consumers when an activity that could indicate fraud happens. For example, when mail is redirected by the US Postal Service, if a new bank account has been opened or if contact details in an online bank account change. If they don't recognise the activity, then consumers can proactively protect themselves by locking their credit fi le. If fraud has already taken place, then consumers can contact our dedicated fraud resolution teams to help fi x things quickly. This is all backed by up to US\$1m insurance coverage. We're putting consumers more in control and giving them the peace of mind that they are protecting their fi nancial wellbeing.
| 8% |
|---|
| 8% |
| 7% |
| 3% |
| 3% |
| 6% |
| Organic revenue growth (%) | 6% |
|---|---|
| 2018 | 6% |
| 2017 | 5% |
| 2016 | 3% |
| 2015 | (2)% |
| 2014 | 4% |
We are very pleased with our performance this year. Clients continue to seek new types of data and tools to help them grow their business, reduce fraud and provide a frictionless customer experience. New consumer products, which focus on protecting personal identity and which make it easier for consumers to fi nd a better credit deal, are also resonating well.
Craig Boundy CEO, North America
| Total | Organic | |||
|---|---|---|---|---|
| 2018 | 2017 | growth | growth | |
| Revenue by activity | US\$m | US\$m | % | % |
| Credit Services | 1,484 1,336 | 11 | 9 | |
| Decision | ||||
| Analytics | 178 | 162 | 10 | 10 |
| Marketing | ||||
| Services | 229 | 215 | 6 | 6 |
| Consumer | ||||
| Services | 755 | 739 | 2 | (2) |
| Total – ongoing | ||||
| activities | 2,646 2,452 | 8 | 6 | |
| Exited activities | 5 | 5 | ||
| Total North | ||||
| America | 2,651 2,457 |
Benchmark EBIT (US\$m) and Benchmark EBIT margin (%)
| 2018 | 833 31.5% | |
|---|---|---|
| 2017 | 779 | 31.8% |
| 2016 | 704 | 30.7% |
| 2015 | 741 | 31.0% |
| 2014 | 757 | 31.5% |
1 For ongoing activities.
Total revenue from ongoing activities in North America was US\$2,646m, with total revenue growth of 8% and organic revenue growth of 6%. The diff erence relates mainly to the contribution from the acquired CSIdentity Corp. (CSIdentity) and Clarity Services businesses.
Total revenue growth was 11%, refl ecting the acquisition of Clarity Services, with organic revenue growth of 9%. We delivered positive organic revenue growth across all business units. In consumer information, we saw good growth in credit marketing, origination and account management volumes. Mortgage performed strongly following the implementation of the new Fannie Mae trended data contract, and there was a fi rst-time contribution from licence fees related to the Experian Ascend platform. Business information performed well as we expand our API hub. In health, there was further growth in new client bookings and we continue to extend our position with existing clients as we cross-sell our services such as the Universal Patient Identifi er.
Total and organic revenue was up 10%, refl ecting a series of new client wins, with good demand across decisioning software, fraud prevention tools and analytics.
Total and organic revenue increased 6%, as we continue to gain traction with digital advertisers.
Total revenue growth was 2%, refl ecting the acquisition of CSIdentity, with organic revenue of (2)%. Across our direct-to-consumer activities, we delivered growth in identity protection subscriptions and price comparison services, off set by a decline in the revenue from subscription based credit monitoring services. Partner solutions benefi ted from new client wins and as we expand our position with existing clients.
North America Benchmark EBIT from ongoing activities was US\$833m, up 7%. The Benchmark EBIT margin from ongoing activities was 31.5%, down 30 basis points year-on-year refl ecting strong operating leverage in B2B, off set by investment to support the launch of new consumer off ers.
37
| Total revenue growth (%) | 6% |
|---|---|
| 2018 | 6% |
| 2017 | 9% |
| 2016 | 7% |
| 2015 | 3% |
| 2014 | 7% |
We have delivered good growth this year. We are building broader, strategic relationships with our larger clients by off ering software, alternative data, consultancy services and access to our data labs. We are helping small and medium businesses to better manage and access credit off ers, and millions of consumers in Brazil have enrolled to receive fi nancial education and access our online credit marketplace and debt resolution services.
Managing Director, Latin America
| Total | Organic | |||
|---|---|---|---|---|
| 2018 | 2017 | growth | growth | |
| Revenue by activity | US\$m | US\$m | % | % |
| Credit Services | 696 | 658 | 4 | 4 |
| Decision | ||||
| Analytics | 61 | 48 | 25 | 25 |
| Marketing | ||||
| Services | 31 | 24 | 29 | 29 |
| Total | 788 | 730 | 6 | 6 |
Benchmark EBIT (US\$m) and Benchmark EBIT margin (%)
| 2018 | 267 | 33.9% | |
|---|---|---|---|
| 2017 | 251 | 34.4% | |
| 2016 | 226 | 35.8% | |
| 2015 | 313 | 36.6% | |
| 2014 | 344 37.2% |
Total revenue from ongoing activities in Latin America was US\$788m, with total and organic revenue growth of 6% at constant exchange rates.
At constant exchange rates, total and organic revenue growth was 4%. There was strong growth in Brazil refl ecting higher core volumes and new contract wins secured with the major Brazilian banks. This was slightly off set by a headwind from countercyclical products and a softer performance in Spanish Latin America.
Total and organic revenue growth was 25% at constant exchange rates refl ecting strong demand across the region for decisioning software, analytics and scoring.
Total and organic revenue at constant exchange rates increased 29%. We made good progress in Marketing Services with a strong contribution from digital marketing and data insights.
Latin America Benchmark EBIT from ongoing activities was US\$267m, up 5% at constant exchange rates. Benchmark EBIT margin from ongoing activities was 33.9% (2017: 34.4%) as operating leverage and productivity enhancements were off set by adverse mix eff ects and margin contraction in Spanish Latin America.
| Total revenue growth (%) | 1% |
|---|---|
| 2018 | 1% |
| 2017 | 1% |
| 2016 | 5% |
| 2015 | 5% |
| 2014 | 7% |
| Organic revenue growth (%) | 0% |
|---|---|
| 2018 | 0% |
| 2017 | 1% |
| 2016 | 5% |
| 2015 | 4% |
| 2014 | 7% |
Our business-to-business operations have seen good momentum this year. We're helping our clients to better manage credit risk, assess eligibility for loans and tackle fraud using data, our unique pinning technologies and software. More consumers are taking control of their credit by using our free online services and checking their eligibility for credit cards, mortgages, loans, insurance and energy off ers.
Managing Director, UK and Ireland and EMEA
| Total | Organic | |||
|---|---|---|---|---|
| 2018 | 2017 | growth | growth | |
| Revenue by activity | US\$m | US\$m | % | % |
| Credit Services | 270 | 246 | 7 | 4 |
| Decision | ||||
| Analytics | 234 | 214 | 6 | 6 |
| Marketing | ||||
| Services | 155 | 145 | 4 | 4 |
| Consumer | ||||
| Services | 171 | 202 | (16) | (16) |
| Total | 830 | 807 | 1 | 0 |
Revenue split
Benchmark EBIT (US\$m) and Benchmark EBIT margin (%)
In the UK and Ireland, total revenue from ongoing activities was US\$830m, with total revenue growth of 1% and fl at organic revenue at constant exchange rates. The diff erence is due to the contribution from the acquired Runpath business.
Total revenue at constant exchange rates increased 7% and organic revenue growth was 4%. There was good growth in credit reference and background checking volumes, as well as across credit pre-qualifi cation services. We also expanded our position with clients across the banking, telecommunications and price comparison sectors and secured new agreements for Verdus, our new aff ordability Open Banking platform.
At constant exchange rates, both total and organic revenue increased 6%. Growth was driven by strong demand for origination and customer management. We also secured new agreements for fraud prevention and identity verifi cation services.
Total and organic revenue growth at constant exchange rates was 4%, driven by strong growth across digital marketing tools.
At constant exchange rates, total and organic revenue declined by 16%. Revenue declined by 18% in the fi rst half, and by 14% in the second half. There was very strong growth in referral fees through CreditMatcher, off set by attrition in subscription-based credit monitoring revenues.
Benchmark EBIT from ongoing activities was US\$260m, up 2% at constant exchange rates. Benchmark EBIT margin from ongoing activities was 31.3% (2017: 30.5%). The improvement refl ected operating leverage across B2B which off set ongoing investment in Consumer Services.
| Total revenue growth (%) | 11% |
|---|---|
| 2018 | 11% |
| 2017 | 9% |
| 2016 | 7% |
| 2015 | 4% |
| 2014 | 4% |
| Organic revenue growth (%) | 11% |
|---|---|
| 2018 | 11% |
| 2017 | 9% |
| 2016 | 7% |
| 2015 | 3% |
| 2014 | 2% |
Benchmark EBIT (US\$m) and Benchmark EBIT margin (%)
| 2018 | 9 | 2.3% | |
|---|---|---|---|
| 2017 | (3) | (0.9)% | |
| 2016 | (14) | (4.8)% | |
| 2015 | (10) | (2.3)% | |
| 2014 | 7 | 1.4% |
Total revenue from ongoing activities in EMEA/Asia Pacifi c was US\$393m, with total and organic revenue growth of 11% at constant exchange rates.
Total and organic revenue at constant exchange rates was up 3%. Declines in the Nordics were off set by strong volumes in Italy and Spain, and we saw good growth in Southeast Asia and India.
At constant exchange rates total and organic revenue growth was 18%, as we secured multiple new agreements for PowerCurve decisioning software and for our fraud and identity management solutions.
Total and organic revenue growth at constant exchange rates was 12%, with strong growth across data quality and targeting services.
Benchmark EBIT was US\$9m (2017: US\$(3)m). Benchmark EBIT margin from ongoing activities improved 320 basis points at 2.3% as the business gains in scale.
We are becoming more of a strategic partner to our clients in EMEA. Services which combine data, decisioning, analytics and fraud are key to helping them, and we're seeing the benefi t of this in the strong growth we've delivered this year.
Managing Director, UK and Ireland and EMEA
We have delivered strong growth in Asia Pacifi c this year as demand rises for our powerful decisioning tools and fraud prevention services. Across the region, new sources of data, like mobile phone data, are increasing and we are helping our clients to fi nd new ways to assess credit risk while also broadening the envelope of consumer fi nancial inclusion.
Ben Elliot CEO, Asia Pacifi c
with Experian's Text for Credit™
Giving customers a great experience is becoming ever more crucial for businesses. But with advances in mobile technology, where you can do so much online, it can be quite disengaging for a customer to receive a credit off er and then have to fi ll in a form in-store. It's slow and tedious, and providing personal information while in a queue of people can expose customers to privacy and fraud risk, as well as potential embarrassment if turned down for credit.
With most adults in the USA owning a mobile phone and spending on average almost three hours a day¹ on it, the mobile channel is now an obvious way for businesses to send a customer a credit off er.
But the challenge for businesses is two-fold. They might unintentionally exclude customers during the traditional pre-screen process as well as miss potential new customers who might otherwise qualify for the credit off er. Customers also want to shop when it's convenient for them, when they're ready, wherever they are. That is key to engaging with customers.
We want to enable people to get credit wherever they are. That might be in-store while they're browsing, afterwards when they're at home and had time to think about their purchase, or on-the-go at the airport. So we combined our scientifi c know-how with our device recognition technology and credit information to create an industry fi rst – Text for Credit – that allows customers to obtain real-time credit via text.
When a customer is in a store they're invited to text a number to see if they pre-qualify for credit to help them purchase an item. We then confi rm the person's identity, their creditworthiness, and respond back with a personalised off er of credit. Customers don't need to fi ll out a cumbersome credit application because our innovative technology allows us to recognise and verify a person through their mobile number and device. Consumers can also fi nd out what they qualify for before they come to a dealership or a retail store.
For consumers, this places them in control of when they want to apply for credit. It's convenient and confi dential. They can complete a credit application securely and without embarrassment. There is no more paperwork, no more anxious minutes hoping for credit approval and there is a dramatic reduction in risk from a paper-intensive exchange of sensitive information.
For businesses like retailers, card issuers, lenders and auto fi nance companies, it helps them to better connect with customers in the moment that they are shopping and travelling, and provide them with instant credit decisions. It means increased credit approval and take-up rates, and on higher priced items. They have happier customers and a higher sales conversion rate.
Winner of the 'Consumer Lending Innovation Award' in the international 2018 FinTech Breakthrough Awards programme.
involved.
Alex Lintner
Experian
Extend our lead in analytics and software solutions
We're modernising the lending industry by allowing customers
President Consumer Information Services,
to obtain real-time credit via text, with no paperwork
We reported strong fi nancial results in 2018, with a 10% increase in Benchmark earnings per share* and revenue growth of 7%, at constant exchange rates. The operating performance of the business made good progress, with momentum building during the year.
Lloyd Pitchford Chief Financial Offi cer
* The Group has identifi ed and defi ned certain non-GAAP measures, as they are the key measures used within the business by management to assess the underlying performance of the Group's ongoing businesses, and these are used to report fi nancial results, unless otherwise stated, in this Financial review. A summary of these measures is shown on page 50 with further detail provided in note 6 to the Group fi nancial statements.
We made good strategic and fi nancial progress during the year, with 7% revenue growth from ongoing activities and a 10% increase in Benchmark EPS, both at constant currency, and strong Benchmark operating cash fl ow. Benchmark EBIT margin from ongoing activities was 27.7%, up ten basis points. Performance across our B2B operations was very strong, and there is an improving outlook in our Consumer Services business which is making good progress in identity protection and credit comparison services.
| 2018 | 2017 | Growth | |
|---|---|---|---|
| US\$m | US\$m | % | |
| Revenue | 4,662 | 4,335 | 8 |
| Operating profi t | 1,095 | 1,075 | 2 |
| Profi t before tax | 994 | 1,071 | (7) |
| Profi t for the fi nancial year from continuing operations | 845 | 812 | 4 |
| Basic EPS from continuing operations | USc92.1 | USc86.5 | 6 |
| Basic EPS | USc88.9 | USc92.1 | (3) |
| 2018 US\$m |
2017 US\$m |
Constant rates growth % |
|
|---|---|---|---|
| Revenue1,2 | 4,657 | 4,330 | 7 |
| Benchmark EBIT | 1,291 | 1,199 | 7 |
| Benchmark PBT | 1,206 | 1,124 | 6 |
| Benchmark EPS | USc97.8 | USc88.4 | 10 |
1 Revenue from ongoing activities. See note 6 to the Group fi nancial statements for defi nitions of non-GAAP measures.
2 Results for 2017 are restated for exited business activities which comprise our Experian Public Records business, divested in March 2018.
We report our fi nancial results in US dollars. The strengthening of our other trading currencies, primarily the pound sterling, against the US dollar during the year increased total revenue by US\$50m and Benchmark EBIT by US\$14m, with a favourable impact on Benchmark EBIT margin from ongoing activities of ten basis points.
Details of the principal exchange rates used and currency exposures are given in note 9 to the Group fi nancial statements.
Commentary on revenue and Benchmark EBIT performance by region is provided earlier in the Strategic report, within the regional reviews.
The table overleaf summarises our performance by business segment. This review also includes a further reconciliation of our underlying profi tability to our statutory profi t before tax.
The Group reported Benchmark PBT of US\$1,206m (2017: US\$1,124m).
Benchmark EPS of 97.8 US cents (2017: 88.4 US cents) represents an increase of 11% at actual exchange rates and 10% at constant currency. The net interest expense included in Benchmark PBT was US\$85m (2017: US\$75m).
| 2018 | 4,657 |
|---|---|
| 2017 Restated |
4,330 |
| 2016 | 4,164 |
| 2015 | 4,658 |
| 2014 | 4,772 |
| Benchmark EPS (USc) | |
|---|---|
| 2018 | 97.8 |
| 2017 | 88.4 |
| 2016 | 84.4 |
| 2015 | 95.2 |
| 2014 | 91.7 |
Includes the performance of CCM
Summaries of our key fi nancial metrics are shown in the charts above, including fi ve-year summaries showing the progression of Revenue, Benchmark EBIT and Benchmark EBIT margin, Benchmark EPS and Dividend per share. The results for 2016 to 2018 refl ect the divestment of CCM in May 2017, earlier years include the performance of CCM.
continued
This Financial review reports underlying fi nancial results excluding disposals, certain remeasurements and impairments, as the exclusion of these items provides readers with a clear and consistent presentation of the underlying operating performance of the Group's ongoing businesses. A summary of these measures is shown on page 50 of this Financial review with further detail provided in note 6 to the Group fi nancial statements.
We continued to deliver strong cash generation, with a 93% conversion of Benchmark EBIT to Benchmark operating cash fl ow (2017: 96%). Cash conversion refl ects the changing mix of our business during the year, as our B2B revenue has a longer cash cycle than that observed in our Consumer Services business. Investment activity in the year has been undertaken within the capital allocation framework previously outlined and includes the acquisitions of Clarity Services, Inc. for US\$113m and Runpath Group Limited for US\$66m.
| Growth % | ||||
|---|---|---|---|---|
| 2018 | 2017 | Total at | Organic at | |
| Year ended 31 March | US\$m | US\$m | constant rates | constant rates |
| Revenue | ||||
| Credit Services | 2,606 | 2,384 | 8 | 7 |
| Decision Analytics | 668 | 584 | 12 | 12 |
| Marketing Services | 457 | 421 | 7 | 7 |
| Consumer Services | 926 | 941 | (2) | (5) |
| Ongoing activities | 4,657 | 4,330 | 7 | 5 |
| Exited business activities1 | 5 | 5 | n/a | |
| Total revenue | 4,662 | 4,335 | 7 | |
| Benchmark EBIT | ||||
| Credit Services | 898 | 815 | 9 | |
| Decision Analytics | 144 | 120 | 15 | |
| Marketing Services | 133 | 95 | 39 | |
| Consumer Services | 194 | 243 | (20) | |
| Business segments | 1,369 | 1,273 | 6 | |
| Central Activities – central corporate costs | (79) | (76) | 3 | |
| Ongoing activities | 1,290 | 1,197 | 7 | |
| Exited business activities1 | 1 | 2 | n/a | |
| Total Benchmark EBIT | 1,291 | 1,199 | 7 | |
| Benchmark EBIT margin – ongoing activities | ||||
| Credit Services | 34.5% | 34.2% | ||
| Decision Analytics | 21.6% | 20.5% | ||
| Marketing Services | 29.1% | 22.6% | ||
| Consumer Services | 21.0% | 25.8% | ||
| Benchmark EBIT margin | 27.7% | 27.6% |
1 Results for 2017 are restated for exited business activities which comprise our Experian Public Records business, divested in March 2018.
The Group continued to deliver good growth during the year, with organic revenue growth within our long-term mid-single-digit target range and double-digit growth in Benchmark EPS.
Total revenue growth from ongoing activities was 7% at constant exchange rates and 8% at actual rates in the year ended 31 March 2018. The development of revenue from the prior year is shown in the chart below. We achieved growth at constant currency across all four regions.
* Regional growth rates are organic revenue growth at constant currency.
This year, Benchmark EBIT from ongoing activities was US\$1,290m, growing at 8% at actual exchange rates and 7% at constant currency. This represented a Benchmark EBIT margin of 27.7%, which included a ten basis point benefi t from foreign exchange movements.
45
continued
We made strong operational and fi nancial progress during the year, with growth improving as the year progressed. Performance across our B2B operations was very strong as clients engage with us to access new superior sources of data and decisioning solutions. There is an improving outlook in our Consumer Services business as we increase the depth and breadth of our product off erings.
We continue to invest in new sources of data and analytics, such as income and asset verifi cation, mobile phone and low-income lending data. Investment included strategic technology investments in our Experian Consumer Services platform, product innovations in our new PowerCurve product suite, and CrossCore and call centre technology.
1 B2B defi ned as Credit Services, Decision Analytics and Marketing Services.
The Group reported strong progress in Benchmark EPS, increasing to 97.8 US cents during the year. Strong operating performance and disciplined capital management enabled us to deliver double-digit EPS growth and improving momentum during the year.
Our interest expense and related cash fl ows continue to benefi t from low interest rates globally and the mix of our funding, though there has been upward pressure on rates over the year, which has resulted in an increase to our Benchmark net fi nance costs of US\$10m. At 31 March 2018, the interest on 60% of our net funding was at fi xed rates (2017: 63%).
The total tax charge was US\$149m (2017: US\$259m). There were a number of one-off movements during the year refl ected in the total tax charge. Excluding these and other items, the Benchmark tax charge was US\$309m (2017: US\$294m) representing an eff ective tax rate on Benchmark PBT of 25.6% (2017: 26.2%).
Our total tax charge for the year benefi ted from the recognition of a credit of US\$116m as our US net deferred tax liabilities were revalued following the US Tax Cuts and Jobs Act in December 2017, which reduced the US federal corporate tax rate from 35% to 21% from 1 January 2018.
We believe the Group's eff ective tax rate in the year ending 31 March 2019 will be broadly unchanged, notwithstanding US tax reform impacts.
The equivalent cash tax rate remains below our Benchmark tax rate and a reconciliation is provided in the table below. It is currently anticipated that our cash tax rate will increase and move closer to our Benchmark tax rate over the course of the next fi ve years, as tax amortisation of goodwill on earlier acquisitions and prior tax losses are utilised. For 2019 the cash tax rate is expected to be in a range from 17% to 20%.
| 2018 | 2017 | |
|---|---|---|
| Year ended 31 March | % | % |
| Tax charge on Benchmark PBT | 25.6 | 26.2 |
| Tax relief on intangible assets | (4.8) | (6.6) |
| Benefi t of brought forward tax losses | (1.1) | (3.9) |
| Other | (3.8) | (2.9) |
| Tax paid as a percentage of Benchmark PBT | 15.9 | 12.8 |
Basic EPS was 88.9 US cents (2017: 92.1 US cents). Basic EPS is reduced by 8.9 US cents (2017: increased by 3.7 US cents) in respect of discontinued operations and other adjustments made to derive Benchmark EPS. The tax charge recognised in respect of discontinued operations was US\$53m. The prior year benefi ted from a tax credit of US\$45m in respect of discontinued operations. Benchmark EPS was 97.8 US cents, an increase of 11% at actual and 10% at constant currency exchange rates. Further information is given in note 17 to the Group fi nancial statements.
Our progressive dividend policy aims to increase the dividend over time broadly in line with the underlying growth in Benchmark EPS. This aligns shareholder returns with the underlying profi tability of the Group.
The Board has announced a second interim dividend of 31.25 US cents per share (2017: 28.50 US cents per share) giving a total dividend for the year of 44.75 US cents per share (2017: 41.50 US cents per share), an increase of 8% on the prior year.
The total dividend per share for the year is covered 2.2 times by Benchmark EPS (2017: 2.1 times). Ordinary dividends paid in the year amounted to US\$388m (2017: US\$381m). The Group has signifi cant distributable reserves of US\$3.49bn in the UK entity responsible for distributing the Group's dividend. See note K to the Company fi nancial statements for further detail.
For the year ended 31 March 2018 net share purchases totalled US\$566m, of which US\$1m was settled on 6 April 2018. We expect to execute share purchases of up to US\$400m in the period to the end of June 2019.
The table below summarises returns to our shareholders by way of net share purchases and dividends over a fi ve-year period.
Total return to shareholders (US\$m)
Dividend history and comparators (USc) Payout ratio (%)
A fi ve-year summary showing the progression of our Benchmark operating cash fl ow performance is shown in the chart below. The continued strength of our Benchmark operating cash fl ow performance refl ects the nature of our business and fi nancial model. We anticipate the Group's Benchmark operating cash fl ow will continue to be over 90%.
Benchmark operating cash flow (US\$m) and cash flow conversion (%)
| 2018 | 1,196 | 93% |
|---|---|---|
| 2017 | 1,149 | 96% |
| 2016 | 1,210 | 106% |
| 2015 | 1,359 | 104% |
| 2014 | 1,321 | 101% |
Includes the performance of CCM
As shown in the table below, we generated strong operating and free cash fl ows in the year. Cash infl ow from discontinued operations was US\$215m (2017: US\$20m) primarily from the divestment of CCM.
Cash fl ow and Net debt summary
| 2018 | 2017 | |
|---|---|---|
| Year ended 31 March | US\$m | US\$m |
| Benchmark EBIT | 1,291 | 1,199 |
| Amortisation and depreciation charged to | ||
| Benchmark PBT | 326 | 322 |
| Net capital expenditure | (422) | (393) |
| Increase in working capital | (70) | (39) |
| Profi t retained in associates | (5) | (1) |
| Charge for share incentive plans | 76 | 61 |
| Benchmark operating cash fl ow | 1,196 | 1,149 |
| Net interest paid | (86) | (70) |
| Tax paid – continuing operations | (191) | (144) |
| Dividends paid to non-controlling interests | (4) | (2) |
| Benchmark free cash fl ow | 915 | 933 |
| Acquisitions | (169) | (385) |
| Purchase of investments | (87) | (47) |
| Disposal of businesses and investments – ongoing | ||
| activities | 2 | (4) |
| Exceptional items other than disposal of businesses | (54) | 8 |
| Ordinary dividends paid | (388) | (381) |
| Net cash infl ow – continuing operations | 219 | 124 |
| Net debt at 1 April | (3,173) | (3,023) |
| Net share purchases | (565) | (353) |
| Discontinued operations | 215 | 20 |
| Foreign exchange and other movements | (104) | 59 |
| Net debt at 31 March | (3,408) | (3,173) |
Total investment of US\$678m (2017: US\$825m) comprised cash fl ows for net capital expenditure, acquisitions and investments.
Net debt at 31 March 2018 was US\$3,408m (2017: US\$3,173m), with undrawn committed borrowing facilities of US\$2,325m (2017: US\$2,375m). Our Net debt at 31 March 2018 was 2.1 times Benchmark EBITDA (2017: 2.1 times), compared to our target range of 2.0 to 2.5 times.
We did not breach any covenants given on borrowings in either the year under review, or the prior year, and have no undue concentration of repayment obligations in respect of borrowings.
Our capital expenditure of US\$431m (2017: US\$399m) was 9% (2017: 9%) of total revenue, in line with our target range of around 9%. Net capital expenditure was US\$422m (2017: US\$393m). Acquisition cash fl ow in the year totalled US\$169m and included the acquisition of Clarity Services, Inc. and Runpath Group Limited. In the year to 31 March 2017 we acquired CSIdentity Corporation for US\$358m.
| Year ended 31 March | 2018 US\$m |
2017 US\$m |
|---|---|---|
| Capital expenditure as reported in the Group | ||
| cash fl ow statement | 431 | 399 |
| Disposal of property, plant and equipment | (26) | (15) |
| Profi t on disposals of fi xed assets | 17 | 9 |
| Net capital expenditure as reported in the | ||
| Cash fl ow and Net debt summary | 422 | 393 |
continued
Our capital allocation framework is based on balancing a number of competing priorities, notably operating and capital investment, dividends, acquisitions and share repurchases, while targeting Net debt within the range of 2.0 to 2.5 times EBITDA. The mix between these categories will vary over time. Acquisition opportunities are assessed against a range of metrics, including economic valuations and the earnings per share enhancement that they bring relative to share repurchases.
It has been three years since we reviewed our capital allocation framework to rigorously optimise capital. During that time we have pruned our portfolio and been disciplined in our acquisitions. This has allowed us to return a total of US\$2.7bn to shareholders in net share purchases and dividends, with US\$954m being returned in FY18, refl ecting the underlying strength of the business as we drive our One Experian and innovation agendas.
In FY18, the net spend on share repurchases totalled US\$566m (at an average price of 1,554p) and the number of shares in circulation was reduced by 24m (2.6%). During the year, the average number of shares in circulation was 917m and the closing number of shares at 31 March 2018 was 906m.
The chart below shows our capital framework as executed during FY18. Capital framework 2018 (US\$m)
1,800
Cash generated Uses of cash
* Funds from Operations is defi ned as Benchmark free cash fl ow plus organic investment (capital expenditure).
Supported by active prioritisation, and robust investment and governance process
The table below summarises our net assets and ROCE over the past three years.
| 2018 | 2017 | 2016 |
|---|---|---|
| US\$m | US\$m | US\$m |
| 4,452 | 4,245 | 4,198 |
| 1,538 | 1,461 | 1,431 |
| 1,453 | 1,196 | 1,165 |
| 7,443 | 6,902 | 6,794 |
| (1,377) | (1,161) | (1,147) |
| 6,066 | 5,741 | 5,647 |
| 283 | 120 | 111 |
| — | 300 | — |
| (7) | (12) | (14) |
| 5,744 | ||
| (3,408) | (3,173) | (3,023) |
| (317) | (337) | (297) |
| 7 | 12 | 14 |
| 2,624 | 2,651 | 2,438 |
| 6,134 | 5,704 | 5,921 |
| 15.7% | 15.5% | 15.4% |
| 6,342 | 6,149 |
The chart below shows the fi ve-year trend of ROCE, which was 15.7% (2017: 15.5%) for the year ended 31 March 2018. ROCE is a post-tax measure and we use our Benchmark tax rate for ease of calculation.
Includes the performance of CCM
* ROCE is a non-GAAP measure. See note 6 to the Group fi nancial statements for defi nitions of non-GAAP measures.
Each of our regions has balance sheet and income statement responsibility. Further information on net assets by region is given in note 8 to the Group fi nancial statements.
The key fi nancial risks that are specifi c to our business are set out in the Risk management section. We continue to assess the risk arising from the UK's referendum decision to leave the EU and have deployed a Brexit response programme and steering committee. We will consider what action is needed as more information on the impact of Brexit becomes available.
We have identifi ed unpredictable fi nancial markets or fi scal developments as a principal risk, including evolving tax laws and the resolution of uncertainties relating to prior year tax liabilities. This includes the conclusion of legal arguments between the European Commission and the UK Government over whether part of the UK's tax regime is contrary to the European Union State Aid provisions. Detailed narrative disclosures are contained in note 7 to the Group fi nancial statements, with further numeric disclosures for foreign exchange, interest rate and credit risk in notes 9, 14 and 23 respectively.
Over time the shape of our business and how we organise and manage it has evolved. The disposal of CCM and other Marketing Services businesses in recent years gives us an opportunity to rethink the presentation of our results.
We have reviewed our operating segments and have concluded that the existing presentation across four regions remains appropriate; consequently no change will be made to our statutory segmentation.
From 2019 we are making changes to the way we report our business segments in order to present the segments in the way in which they are managed.
Two business segments will be reported – Business-to-Business, with revenue analysed between our Data and Decisioning businesses, and Consumer Services. The new segments refl ect the way we service our clients, bundle our products under the One Experian approach and organise our business around the diff erent market dynamics associated with each environment.
This revised presentation will coincide with the change in revenue reporting and the required restatement of results under IFRS 15 'Revenue from Contracts with Customers'.
1 Business-to-Business disclosures will be of revenue, Benchmark EBIT and Benchmark
EBIT margin. 2 Disclosures for the Data and Decisioning sub-divisions will be on a revenue-only basis.
| US\$m |
|---|
| 2,606 |
| 296 |
| (342) |
| (9) |
| 2,551 |
| 668 |
| 161 |
| 342 |
| 9 |
| 1,180 |
| 3,731 |
| 926 |
| 4,657 |
Revenue from ongoing activities.
continued
The Group makes certain adjustments to derive Benchmark PBT which are summarised in the table opposite. Note 6 to the Group fi nancial statements explains the reasons for the exclusion from our defi nition of Benchmark PBT of Exceptional items and Other adjustments made to derive Benchmark PBT.
The table below provides a reconciliation of our underlying profi tability, as measured by Benchmark EBIT, to our statutory profi t before tax.
| Year ended 31 March | 2018 US\$m |
2017 US\$m |
|---|---|---|
| Benchmark EBIT from ongoing activities | 1,290 | 1,197 |
| Exited business activities | 1 | 2 |
| Benchmark EBIT | 1,291 | 1,199 |
| Net interest expense | (85) | (75) |
| Benchmark PBT | 1,206 | 1,124 |
| Exceptional items | (57) | — |
| Other adjustments made to derive Benchmark PBT | (155) | (53) |
| Profi t before tax | 994 | 1,071 |
| Year ended 31 March | 2018 US\$m |
2017 US\$m |
|---|---|---|
| Exceptional items: | ||
| Canadian legal settlement | 32 | — |
| Legal provisions movements | 25 | — |
| Charge for Exceptional items | 57 | — |
| Other adjustments made to derive Benchmark PBT: | ||
| Amortisation of acquisition intangibles | 112 | 104 |
| Interest on uncertain tax provisions | 20 | — |
| Acquisition expenses | 20 | 16 |
| Adjustment to the fair value of contingent | ||
| consideration | 3 | — |
| Fair value gain on step acquisition | (4) | — |
| Financing fair value remeasurements | 4 | (67) |
| Other adjustments made to derive Benchmark PBT | 155 | 53 |
| Charge for Exceptional items and Other | ||
| adjustments made to derive Benchmark PBT | 212 | 53 |
Further detail on each of the Exceptional items is provided in note 13 to the Group fi nancial statements.
IFRS 15 'Revenue from Contracts with Customers' will be eff ective for the year ending 31 March 2019. We will restate our results for this fi nancial year as a prior year comparative. We see a mix of revenue acceleration on some contracts and revenue deferral on other contracts due to accounting changes when adopting IFRS 15. Further detail on the changes is provided in note 3 to the Group fi nancial statements.
The Group has identifi ed and defi ned certain non-GAAP measures, shown below, as they are the key measures used within the business by management to assess the underlying performance of the Group's ongoing businesses. A summary of these is shown in the table below with further detail provided in note 6 to the Group fi nancial statements.
| Benchmark PBT | Profi t before amortisation and impairment charges, acquisition expenses, Exceptional items, fi nancing fair value remeasurements, tax (and interest thereon) and discontinued operations |
|---|---|
| Benchmark EBIT | Benchmark PBT before net interest expense |
| Benchmark EBITDA | Benchmark EBIT before depreciation and amortisation |
| Exited business activities | Businesses sold, closed or identifi ed for closure during a fi nancial year |
| Ongoing activities | Businesses which are not disclosed as exited business activities |
| Constant exchange rates | Results and growth calculated after translating both years' performance at the prior year's average exchange rates |
| Total growth | This is the year-on-year change in the performance of Experian's activities at actual exchange rates |
| Organic revenue growth | This is the year-on-year change in the revenue of ongoing activities, translated at constant exchange rates |
| Benchmark earnings | Benchmark PBT less attributable tax and non-controlling interests |
| Total benchmark earnings | Benchmark PBT less attributable tax |
| Return on capital employed | Benchmark EBIT less tax at the Benchmark rate divided by average capital employed. Capital employed is net assets |
| ('ROCE') | less non-controlling interests, plus Net debt and plus/minus the net tax liability or asset, adjusted for the average capital employed in discontinued operations |
Risk management is an essential element of how we run Experian, to help us deliver long-term shareholder value and to protect our business, people, assets, capital and reputation.
Sets our overarching risk appetite and ensures that we appropriately manage risks across the Group. The Board delegates oversight of risk management activities to the Audit Committee.
Regularly monitors the principal risks and uncertainties identifi ed by our risk assessment processes, along with the strategies we've developed and the actions we've taken, where possible, to mitigate them. Management also continually reviews the eff ectiveness of our system of risk management and internal controls, which supports our risk identifi cation, assessment and reporting.
Comprises senior Group executives, including the executive directors and the Company Secretary. It oversees how we manage global risks.
The Security and Continuity Steering Committee ('SCSC') is a sub-committee of the ERMC. The primary responsibility of the SCSC is to oversee management of global information security, physical security, and business continuity risks.
sub-committee of the ERMC and oversees the development and implementation of the Group's assurance framework.
Committee oversees management of fi nancial risks, including tax, credit, liquidity, funding, market and currency risks.
Committees ensure that we appropriately resource our strategic projects, and that they are risk assessed, and commercially and technically appraised. Depending on the outcomes of their discussions, the committees' conclusions are then considered by the Board or relevant Group Principal Operating Subsidiary for approval.
management of regional risks and feed up to the ERMC.
The Group Operating Committee is made up of our most senior executives. Its remit includes identifying, debating and achieving consensus on issues involving strategy, risk, growth, people and culture, and operational effi ciency. Its meetings tend to be focused on the key issues facing the Group.
Our executive management takes day-to-day responsibility for implementing the Board's policies on risk management and internal control. In doing so, it designates who is responsible and accountable through its design and implementation of necessary systems of internal control, including policies, standards and guidance.
continued
The Board is responsible for maintaining and reviewing the eff ectiveness of our risk management activities, from a strategic, fi nancial 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.
We've built the risk management framework to identify, assess, respond, report and monitor the risks that threaten our ability to achieve our business strategy and objectives, within our risk appetite.
Risks are owned and managed within the business, and reviewed by our businesses at least quarterly. Global governance teams review risks and controls, including those relating to information security, regulatory compliance and business continuity. Internal Audit independently and objectively assesses our risks and controls. The results of these reviews feed into our quarterly reporting cycle.
Our risk identifi cation processes follow a dual approach:
continued
We assess the level of risk and our associated risk appetite to ensure we focus appropriately on the risks we face. We target risks for assessment based on gross risk and measure them based on net risk using a scoring methodology. We then prioritise risks for mitigation by considering these scores against our risk tolerance and appetite. The Board and Audit Committee review the principal risks, of which there are currently 10, on an ongoing basis, and the ERMC monitors these risks. The Board has defi ned risk appetites for certain principal risks that Experian faces during the normal course of business. We use a variety of information sources to show whether we're working within our tolerance for these risks and whether any require additional executive attention.
The Board is committed to maintaining a strong risk culture that emphasises the importance of managing risk and encourages transparent and timely risk reporting across the Group. We therefore work to align employees' behaviours, attitudes and incentives with our risk appetite and other governance and risk management policies. Our risk governance process reinforces and facilitates appropriate ownership, accountability, escalation and management of our principal risks. This process includes: well-defi ned roles and responsibilities across our Three Lines of Defence model; assigning accountability for risk-taking when making key business decisions; documenting clear boundaries and behavioural expectations in policies and standards; and creating an environment that reinforces adherence and accountability.
We continue to refi ne our risk management framework to further improve our risk monitoring capabilities. We have made signifi cant progress in advancing our Three Lines of Defence model. This will further strengthen our business so that we continue to deliver competitive, consistent and quality solutions to our clients.
We continue to leverage enterprise global risk management software to give managers an enhanced tool for monitoring their risks. The tool also provides live data reporting across the Group and supports our global governance teams in risk assessment and reporting. We continue to develop this software, as we broaden its support capabilities across various risk management activities.
Our risk landscape continues to change as both the business and regulatory environments evolve. The pace of change and the need for greater visibility across the organisation continue to grow and we're developing our risk practices to meet these challenges.
The following pages set out what the Board believes to be the principal risks and uncertainties facing Experian, the mitigating actions for each and the trends in the risk environment during the year ended 31 March 2018.
The list is not exhaustive and may change during the next fi nancial year, as some risks may assume greater importance and others may become less signifi cant.
For the purposes of assessing the Group's viability, the directors focused on three principal risks which are critical to our success. These risks are summarised below and further discussed in the Viability statement.
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.
V Part of the viability assessment
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 signifi cant harm to our reputation.
The trend of external cyber security threats to companies continues to increase, as shown by the reported number and scale of cyber-attacks, including a data breach at one of our competitors. However, we continue to accelerate and improve our security capabilities to meet this evolving threat.
Over the past year, we have continued to upgrade our cyber security culture and awareness, and better aligned our security personnel across our Three Lines of Defence model. We have enhanced our protection, detection and response capabilities by strengthening our cyber security policies, practices and training and continue to ensure that we apply them consistently across our regions and business units. We intend to continue to invest in the tools, resources and initiatives necessary to maintain our global information security programme.
We hold and manage sensitive consumer information and must therefore comply with a range of privacy and consumer protection laws, regulations and contractual obligations.
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, as well as damage to our reputation.
While we face existing regulatory and government investigations in several jurisdictions, and over the past year the number of US class action lawsuits has increased, the risk of non-compliance remains stable as a result of our mitigating controls. While we continue to manage the eff ects associated with these investigations and lawsuits, the cost of defending litigation continues to rise, and the risk of potential liability remains.
continued
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.
A signifi cant failure or interruption could have a materially adverse eff ect on our business, fi nancial performance, fi nancial condition and/or our reputation.
Throughout the year we experienced isolated events, including weather and power disruptions that tested our plans and processes.
We believe that the overall risk of non-resilient systems is decreasing, due in large part to continued enhancements to our global integrated business continuity framework and advancements in our application architecture framework.
Where applicable, we have either enhanced or commenced training of our key responders and continue to perform periodic exercises to validate that our documented global business continuity and crisis management procedures are fi t for purpose. We have designed our applications using a 'build anywhere, deploy anywhere' strategy, to support portability and maximum resilience. Our approach to asset lifecycle management helps ensure that we retire and replace our technology in a timely fashion.
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 aff ect our clients, consumers or counterparties.
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 signifi cant harm to our reputation.
While regulators have continued to put public trust and consumer and investor protection at the centre of their mission statements and promote prudent conduct risk management, we believe our mitigation eff orts have stabilised the overall risk to Experian.
Our success depends on the ability to attract, motivate and retain key talent and build future leadership.
Not having the right people could materially aff ect our ability to service our clients and grow our business.
We have taken steps to eff ectively manage our ability to attract, develop and retain employee talent and believe our mitigation eff orts have stabilised the overall risk to Experian.
We continue to monitor employee engagement through a variety of channels, and have been implementing the action plans from our last Global People Survey. We conducted a Global Pulse Survey in December 2017 and we are now tracking progress against action plans.
Voluntary attrition rates have decreased over the past year, but continue to be a focus for us as the labour market in the USA and the UK is tightening. In the UK, the impact on free movement of labour resulting from Brexit may pose a risk, but the impact remains unclear at this stage. We have deployed a Brexit response programme and steering committee; and as more information on the impact of Brexit for both Experian and our employees becomes available, we will consider what action we need to take to address those impacts.
Talent, succession planning and reward remain key initiatives, and our Global Talent Acquisition team is working hard to enhance recruitment practices and outcomes across the business. For further information on our succession and retention programmes please refer to the Our people and corporate responsibility section.
We operate globally and our results could be aff ected by global, regional or national changes in fi scal or monetary policies.
A substantial change in credit markets in the US, the UK or Brazil could reduce our fi nancial performance and growth potential in those countries.
We present our Group fi nancial statements in US dollars. However, we transact business in a number of currencies. Changes in other currencies relative to the US dollar aff ect our fi nancial 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 signifi cantly. These changes may increase our eff ective tax rates in the future. Uncertainty about the application of these laws may also result in diff erent outcomes from the amounts we provide.
Experian has a number of outstanding tax matters and resolving them could have a substantial impact on our fi nancial statements, cash and reputation.
The US, UK and Brazil markets are signifi cant contributors to our revenue. A reduction in one or more of these consumer and business credit services markets could reduce our revenue and profi t.
We benefi t from the strengthening of currencies relative to the US dollar and are adversely aff ected by currencies weakening relative to it.
We have outstanding debt denominated principally in euros, pounds sterling and US dollars. As this debt matures, we may need to replace it with borrowings at higher interest rates.
Earnings could be reduced and tax payments increased either as a result of settling historical tax positions or increases in our eff ective tax rates.
Adverse publicity around tax could damage our reputation.
Global and regional economic trends and forecasts continue to infl uence our capital allocation and calculated returns. Recent developments in tax legislation in some of our key markets have stabilised the overall risk to Experian.
The Brazilian real remains weak and volatile by historic standards, creating a drag on Group revenue. We continue to monitor the Brazilian economy and infl ation to determine the impact on our business results, and note that the positive data Provisional Measure could prove benefi cial by allowing Serasa Experian to be a more comprehensive bureau with signifi cant positive and negative data. The UK may experience recessionary pressures as a result of Brexit and the pound sterling may come under further pressure as the implications of Brexit become clearer.
In December 2017 the US administration passed widescale corporate tax reform. We expect the eff ect of the reduction in the headline tax rate will be broadly off set by the reduction in availability of tax deductions for interest and other Group costs. Serasa Experian was successful in its challenge against the Brazil tax authorities for the deduction of the initial goodwill amortisation arising from its acquisition by Experian in 2007. Historic UK tax disputes may come to fi nal decisions in fi scal years 2019 or 2020.
Following publication of the Organisation for Economic Co-operation and Development ('OECD') G20 Base Erosion and Profi t Shifting ('BEPS') actions, governments are continuing to review tax laws and tax treatment in many jurisdictions where we do business. Tax authorities continue to adopt longer and more formal processes to agree signifi cant outstanding matters, and in some cases are challenging or overturning previously agreed positions.
57
V Part of the viability assessment
continued
We operate in an increasingly complex environment, in which many of our activities and services are subject to legal and regulatory infl uences. New laws, new interpretations of existing laws, changes to existing regulations and/or heightened regulatory scrutiny could aff ect how we operate. For example, future regulatory changes could impact how we collect and use consumer information for marketing, risk management and fraud detection. Regulatory changes could impact how we serve Consumer Services clients or how we market services to clients or consumers.
V Part of the viability assessment
We may suff er increased costs or reduced revenue resulting from modifi ed business practices, adopting new procedures, self-regulation and/or litigation or regulatory actions resulting in liability or fi nes.
New laws, new interpretations of existing laws, changes to existing regulations and regulatory scrutiny continue to increase, especially in the wake of a data breach at a competitor and other fi rms.
Increasing regulation by the UK Financial Conduct Authority ('FCA'), uncertainty in the direction of the US Consumer Financial Protection Bureau ('CFPB'), and various federal and state legislative actions in Brazil, may aff ect our access to data, increase our costs, and require us to modify our products or reduce our revenue.
The data breach at a competitor may result in additional laws and regulations related to credit freezes and other security-related matters.
In the UK and Ireland and in Europe, General Data Protection Regulation ('GDPR') is expected to take eff ect in May 2018 and is intended to provide greater transparency and control for consumers.
In Brazil, federal and state public prosecutors continue to bring actions that emphasise their regulatory focus in areas such as use of marketing and enquiry data, and restrictions on utility default data.
Our competitive landscape continues to evolve, with traditional players reinventing themselves, emerging players investing heavily and new entrants making large commitments in new technologies or new approaches to our markets, including marketing, consumer services, and business and consumer credit information. There is a risk that we will not respond adequately to such disruptions or that our products and services will fail to meet changing client and consumer preferences.
Price reductions may reduce our margins and fi nancial results. Increased competition may reduce our market share, harm our ability to obtain new clients or retain existing ones, aff ect our ability to recruit talent and can infl uence our investment decisions. We might also be unable to support changes in the way our businesses and clients use and purchase information, aff ecting our operating results.
While the competitive risk to our business remains high, we believe our mitigation eff orts have stabilised the overall risk to Experian. We remain proactive in our eff orts to evaluate competitors and markets, and pursue investments and enhancements to our data, analytics and technology where appropriate.
During the past year our established competitors have been strengthening their data assets and underlying technology, including pursuing acquisitions of non-traditional data sources to round out their off erings. We have responded by understanding emerging business models in our core markets and invested in specifi c plans to respond. We have also strengthened our competitive intelligence and strategy capabilities, and enhanced our eff orts to identify investment opportunities in early-stage industry and technology companies.
Our Consumer Services business in the USA continues to face competition from traditional competitors as well as alternative 'freemium' providers. We have responded by investing in our core capabilities as well as diversifying our business model through the introduction of new paid-for and free off ers. In the UK, we have responded to the evolving market with our own free score off er and recently announced plans to acquire ClearScore to further enhance our value proposition.
Finally, we continue to monitor the group of major banks in Brazil that have agreed to build a new 'credit intelligence bureau' that will include positive data. This entity will partner with other fi rms to provide technology infrastructure and support to the bureau.
Our business model depends on our ability to collect, aggregate, analyse and use consumer and client information. There is a risk that we may not have access to data because of consumer privacy and data accuracy concerns, or data providers being unable or unwilling to provide their data to us or imposing a diff erent fee structure for using their data.
Our ability to provide products and services to our clients could be aff ected, leading to a materially adverse impact on our business, reputation and/or operating results.
The overall trend in data collection, aggregation and use restrictions remains stable.
Consumer advocates and regulators in various jurisdictions are focused on driving changes and restrictions on data collection, aggregation and use based on consumer privacy concerns, including providing greater transparency and control options for consumers. In the USA, the CFPB has focused on data security matters in the wake of the data breach at a competitor, and there continues to be negative press surrounding the accuracy of credit bureau data. In the UK and Ireland and in Europe, GDPR is intended to provide greater transparency and control for consumers. In some instances, data providers are looking to further monetise the data they provide. Momentum towards reporting positive data continues in some countries and we continue to advance the importance and value of positive data in countries such as Brazil, India and Australia.
We critically evaluate and may invest in acquisitions and other growth opportunities, including internal performance improvement programmes, any of which may not produce the desired fi nancial or operating results.
Failure to successfully implement our key business strategies could have a materially adverse eff ect 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/or signifi cant harm to our reputation.
We believe our mitigation eff orts have stabilised the overall risk to Experian of undesirable investment outcomes.
We utilise an economic returns framework for both organic and inorganic investments, which focuses on risk-adjusted investment hurdles. We are also implementing policies and standards that will apply minimum requirements to our acquisition and integration processes, including enhanced information security requirements.
We continue to analyse competitive threats to our business model and markets, and will take advantage of strategic partnerships and invest in new technologies where appropriate.
Our business model and strategy continue to be central to understanding our prospects, and details of these can be found in the Strategic report. We conduct a regular cycle of strategic planning, budgeting and forecasting, which considers current year business performance and our future prospects. The process appraises Group revenue, Benchmark EBIT, cash fl ows, dividend cover, committed and forecast funding, liquidity positions and other key fi nancial ratios, including those relevant to maintaining our investment-grade credit ratings. Our track record over the last decade has been consistently robust, even as changes have occurred in the economic cycle or in the senior leadership team.
Our strategic aims are to focus on our core areas of competitive strength and develop growth opportunities in our key markets. Our plans for the Group's core operations therefore include organic strategic initiatives and acquisitions.
We assess our prospects through our planning process and review our growth expectations and the external environment annually, as part of the strategic planning process. The Board participates in this process, using the January Strategy meeting each year to focus on the Group's strategy. We then develop our annual budget plus a further two-year fi nancial plan. The key assumptions in the latest fi nancial forecasts, presented to the March 2018 Board meeting, refl ect the approved strategy and include:
The table of principal risks in the Strategic report summarises the risks that could prevent the Group from executing its strategy. As explained below, we have considered a number of these risks as part of our assessment of the Group's viability.
The directors have concluded that the most relevant time period for this assessment remains the three-year period of our normal strategic planning cycle. While our scenario analysis is based over three years, this year we have considered if there are any relevant factors over a ten-year period that could impact the fi nancial stability of the Group. One example is recognising our longer-term investments.
Although the strategic plan refl ects the directors' best estimate of the Group's future prospects, the directors have also assessed the potential impact of a number of scenarios over and above those included in the plan. This has been achieved by quantifying the fi nancial impact of the scenarios and considering them alongside the detailed fi nancial forecasts.
These scenarios, which are based on aspects of the principal risks highlighted above, represent 'severe but plausible' circumstances that we could experience.
The scenarios tested included:
In making their assessment, the directors have taken account of the strongly cash-generative nature of our business, our robust capital solvency position, our ability to raise new fi nance in most market conditions, and potential mitigating actions such as restricting acquisitions, capital investment and, in considering scenarios which aff ect viability, reducing dividend payments.
The results of the stress testing showed that, due to the Group's diversifi ed nature, the resilience of the core business, its substantial free cash fl ows and its strong investmentgrade rating, the Group would withstand the considered scenarios, were these to occur during the forecast period, assuming mitigating actions were taken.
Based on their assessment of prospects and viability, the directors confi rm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period ending 31 March 2021. Looking further forward, the directors have considered whether they are aware of any specifi c relevant factors beyond the three-year horizon that would threaten the long-term fi nancial stability of the Group over a ten-year period and have confi rmed that they are aware of none.
This Strategic report was approved by a duly authorised committee of the Board of directors on 16 May 2018 and signed on its behalf by:
Company Secretary
16 May 2018
One of the key roles for the Board includes establishing the culture, values and ethics of the Company.
Don Robert Chairman
I'm pleased to present the Corporate governance report for the year ended 31 March 2018. This governance report provides insight into the Group's governance framework and the Board's approach to achieving good corporate governance during the year. As Chairman, one of my key roles is to ensure that the Board and Experian continue to have high standards of corporate governance while, at the same time, we establish and continually develop the right controls to provide the Board with the appropriate level of oversight and assurance. By having a sound corporate governance framework we can ensure eff ective and effi cient decision-making, and the right balance of diversity, skills and experience to monitor and manage the risks we face. As Chairman, I ensure that the Board is empowered and resourced to do these things. The Board is committed to operating openly and with integrity, and these principles are embedded in the boardroom and in how the Board operates.
One of the Board's key roles is to set the Group's strategic aims and to ensure that the Group has the fi nancial resources to meet these strategic aims. The Board held its annual strategy sessions in January 2018. The world around Experian is changing, with many key trends and forces shaping our plans and direction. The Board has taken many actions to improve our position over the past few years, such as signifi cant investments in new product innovation and great progress on technology. The plans include key actions to further strengthen our position, seize attractive opportunities and ultimately accelerate our growth.
In line with the UK Corporate Governance Code ('Code'), a comprehensive and externally facilitated Board evaluation took place last year. This year, our Board evaluation was an internal one. The evaluation concentrated on the progress on last year's areas of focus and the resulting actions, as well as agreeing areas of focus for the coming year. The evaluation provided the Board with insights into its performance, and the Board concluded that it was operating eff ectively. The evaluation also identifi ed opportunities for the Board to further improve its eff ectiveness. You will read later about the results of the evaluation and the areas of focus that we've agreed.
I work closely with the Chief Executive Offi cer, Brian Cassin, and the Company Secretary, Charles Brown, to plan the agenda for each Board meeting. This ensures the right balance between strategic planning and performance updates, corporate development and governance matters. We plan for an appropriate mix of standing items and subjects that may, in the context of events or challenges, be directly relevant at the time. This process, together with the visits to the business and presentations on relevant issues, means that the Board is focused on the important areas.
Governance
The Nomination and Corporate Governance Committee, under the chairmanship of George Rose, the Deputy Chairman and Senior Independent Director, continues to regularly review Board composition and executive succession. During the year, Mike Rogers was appointed as an independent non-executive director on 1 July 2017, and as Chairmandesignate of the Remuneration Committee from the July 2018 Annual General Meeting ('AGM'). He brings over 30 years of banking and fi nancial services experience, with a reputation for strategic insight and focused execution. As we continue to develop and execute Experian's strategy for growth, Mike's insight and extensive experience are valuable attributes. Dr Ruba Borno joined the Board on 1 April 2018 as an independent non-executive director. Ruba will bring advanced technologies expertise, with the Board and Experian benefi tting from her insight and understanding of digitisation and technology transformation across industries.
Following these appointments, both Mike and Ruba commenced a comprehensive induction programme, which includes briefi ngs and presentations on all key aspects of Experian's operations. We provide more detail on Board induction, training and ongoing interaction with the business later in this report.
Roger Davis notifi ed the Company of his intention to step down as a director and Chairman of the Remuneration Committee with eff ect from the AGM of the Company to be held in July 2018. He will continue to chair the Board of Experian Limited, the Group's UK Financial Conduct Authority ('FCA') regulated subsidiary. Roger has served with great eff ectiveness on our Board since 2007 and I would like to thank him and wish him well.
The importance of considering the Company's responsibilities to our stakeholders, including our customers, shareholders and employees, has always been core to the Experian culture, values and decision-making processes.
The corporate governance landscape continues to evolve and, during the year, a consultation on the draft new UK Corporate Governance Code was published by the UK Financial Reporting Council ('FRC'). The Nomination and Corporate Governance Committee will continue to evaluate the potential impact of the new code, and other governance developments, on the Group, and will oversee any changes required within Experian or at Board level.
The Board considers that the Company has applied the principles and complied with the provisions of the Code, published in April 2016, throughout the year ended 31 March 2018.
The Corporate governance report, together with the Report on directors' remuneration, explains how we have applied the Code's main principles and complied with its provisions during the year. The information required by the FCA Disclosure Guidance and Transparency Rules Sourcebook ('DTR') 7.2 is set out on these pages and the Corporate governance report, other than that required by DTR 7.2.6R, which is set out in the Directors' report.
65 & 77 Gender diversity of the Board
Don Robert (59) Chairman Nm
Appointed to the Board on 6 July 2006,
and as Chairman on 16 July 2014. Key/other roles: Member of Court of the
Bank of England.
Skills and experience: Prior to appointment as Chairman, Don was Experian's Chief Executive Offi cer and previously Chief Executive Offi cer of Experian North America, giving him a deep insight into the Experian business. Don has extensive international business expertise, as well as more recent regulatory knowledge gained with his Bank of England role, and he ensures that the Experian Board culture is one of robust debate, openness and transparency. He previously held senior roles at The First American Corporation and was President of Credco, Inc., former chairman of the US Consumer Data Industry Association, trustee of Sage Hill School, California, a director and trustee of the UK National Education and Employer Partnership Taskforce and a non-executive Director (and Senior Independent Director) at Compass Group PLC.
Brian Cassin (50) Chief Executive Offi cer
Appointed to the Board as Chief Financial Offi cer on 30 April 2012, and as Chief Executive Offi cer on 16 July 2014.
Key/other roles: Brian is a non-executive director of J Sainsbury plc.
Skills and experience: Brian brings strong leadership, a clear view of strategic objectives and decisive management skills to this role. He also has strong fi nancial and commercial acumen, and a broad range of operational competencies. Brian was previously the Chief Financial Offi cer of Experian and, before that, Managing Director at Greenhill & Co. He has also held various senior roles at Baring Brothers International and at the London Stock Exchange.
Lloyd Pitchford (46) Chief Financial Offi cer
Appointed to the Board on 1 October 2014. Key/other roles: Lloyd is a non-executive director (and chairs the Audit Committee) of
Bunzl plc. Skills and experience: Lloyd is a qualifi ed accountant holding an MBA, and has deep fi nancial knowledge and experience, built
up through a career working in complex, change-oriented, global organisations. Before joining Experian, Lloyd held a wide portfolio of fi nance and operational responsibilities, including as Chief Financial Offi cer of Intertek Group plc, senior fi nance positions (including Group Financial Controller) at BG Group plc, and fi nancial and commercial roles at Mobil Oil.
Kerry Williams (56) Chief Operating Offi cer
Appointed to the Board on 16 July 2014.
Key/other roles: A Board member of Pacifi c LifeCorp, and the US Institute for Intergovernmental Research.
Skills and experience: Kerry holds an MBA qualifi cation and has built up a signifi cant and deep knowledge of Experian's global business and operations, through the leadership roles he has held, including as the Group's Deputy Chief Operating Offi cer, President of Credit Services, President of Experian Latin America, and Group President of Credit Services and Decision Analytics, Experian North America. Kerry also brings to Experian and the Board a wide range of skills from his broad background in the fi nancial services industry, including as President at ERisk Holdings Incorporated, Senior Vice President/General Manager at Bank of America and senior management positions at Wells Fargo Bank.
Caroline Donahue (57) Non-executive director Au Re Nm
Appointed to the Board on 1 January 2017.
Key/other roles: Caroline is on the board of Emerge America, and the Computer History Museum. She is also on the Executive Committee of Northwestern C100, and is a mentor for She-Can.
Skills and experience: Caroline brings extensive international markets and technology experience and knowledge of consumer sales and marketing, innovation and consumer-centricity. The Board also benefi ts from her insight and extensive experience in mass-market, digital, multi-channel and business-to-consumer distribution, marketing, and brand and sales management. Caroline previously held roles at Intuit – Executive Vice President, Chief Marketing and Sales Offi cer; Senior Vice President, Sales and Channel Marketing; Vice President and Director of Sales – and sales and channel management roles at Knowledge Adventure, NeXT Computer and Apple, Inc.
Luiz Fleury (61) Non-executive director
Au Re Nm Appointed to the Board on 8 September
Skills and experience: Luiz has spent the majority of his career in fi nancial services, and has extensive insight and deep local knowledge of the Brazilian fi nancial market. He has held Chief Executive roles at Cetip S.A., Banco Ibi and Redecard, together with senior fi nance and investment positions at Banco Citibank S.A., Banco Marka S.A. and C&A Brenninkmeyer Brasil. Luiz was President and a member of the Executive Board at Cetip S.A., and a Board member of Grupo Sequóia de Logística, Eneva S.A., Discount Malls do Brasil and Banco Ibi, and this considerable boardroom experience adds to the strength, depth and eff ectiveness of our Board.
Appointed to the Board on 1 September 2012.
Key/other roles: Deirdre chairs our Audit Committee, and is President of Diageo North America.
Skills and experience: Deirdre is a qualifi ed accountant with an MBA, with many years' experience in senior fi nance roles such as Chief Financial Offi cer, Deputy Chief Financial Offi cer and Head of Tax and Treasury at Diageo plc, Senior Vice President, Chief Financial Offi cer at Diageo North America, and Vice President of Finance at Diageo Guinness USA, as well as various senior fi nance roles in Joseph Seagram and Sons, Inc. and PricewaterhouseCoopers. This fi nancial expertise and experience ensures eff ective leadership of our Audit Committee, and Deirdre also brings her previous Board-level experience with Diageo plc to Experian.
Appointed to the Board on 1 July 2017.
Key/other roles: Mike is Chairmandesignate of the Remuneration Committee. He is also a non-executive director of The Royal Bank of Scotland Group plc (and sits on the Group Performance and Remuneration Committee, and the Sustainable Banking Committee) and the non-executive Chairman of Aegon UK.
Skills and experience: Mike brings to the Experian Board over 30 years of banking and fi nancial services experience, with a reputation for strategic insight and focused execution. He was Group Chief Executive Offi cer of LV= Group from 2006 until 2016, growing that organisation into a signifi cant player in the life and general insurance market. Before that, Mike was with Barclays plc for over 20 years holding a number of senior roles, most recently as Managing Director, UK Retail Banking. Mike was previously a non-executive director of the Association of British Insurers.
Appointed to the Board on 1 April 2018.
Key/other roles: Ruba is a member of the Executive Leadership Team at Cisco, and also sits on the Board of The Tech Museum of Innovation in Silicon Valley.
Skills and experience: Ruba holds a Ph.D. and a Master of Science in Electrical Engineering, and a Bachelor of Science in Computer Engineering and was an Intel Ph.D. fellow at the National Science Foundation's Engineering Research Center for Wireless Integrated MicroSystems. She was previously at The Boston Consulting Group (BCG), where she specialised in helping enterprises through complex technology transformations, and was a leader in BCG's Technology, Media & Telecommunications, and People & Organization practice groups. Ruba brings advanced technologies expertise to Experian, and we will benefi t greatly from her focus on supporting businesses in strategically adapting to the threats and opportunities created by technology, as well as pushing disruptive technology to create new opportunities.
Appointed to the Board on 1 January 2007. Key/other roles: Roger is Chairman of our Remuneration Committee, and the non-executive Chairman of Experian Limited, the Group's regulated UK subsidiary. He is also Chairman of Sainsbury's Bank, Global RadioData Communications and Future for Heroes, and a non-executive director of Bupa.
Skills and experience: Roger spent over 20 years leading and managing change at large global businesses, including as Chief Executive Offi cer of Barclays UK banking operation. Roger was also a Board member of Barclays plc and Chairman of Gem Diamonds Limited and Cabot Credit Management, and the Experian Board benefi ts greatly from this experience. Before Barclays, Roger spent a number of years in investment banking in London and Asia with Flemings and BZW.
George Rose (66) Deputy Chairman and Senior Independent Director
Appointed to the Board on 1 September 2012 and as Deputy Chairman and Senior Independent Director on 16 July 2014.
Key/other roles: George is Chairman of the Nomination and Corporate Governance Committee. He is also Senior Independent Director (and Audit Committee Chairman) of Genel Energy plc, and a non-executive director of EXPO 2020 LLC.
Skills and experience: George is a qualifi ed accountant, whose career has included high-level fi nance positions such as Group Finance Director, and Director of Finance and Treasury, at BAE Systems plc (where he was a Board member), and senior fi nance positions at Leyland DAF plc and Rover Group. He adds to the collective strength of the Board from the numerous non-executive positions he has held with leading companies such as National Grid plc, SAAB AB, Orange plc and Laing O'Rourke plc (where he also chaired the Audit Committee). He has also been a member of the UK Industrial Development Advisory Board.
Appointed to the Board on 1 June 2010.
Key/other roles: Paul is the non-executive Chairman of Perform Group Ltd and Halma plc. He is also Chair of the Newcastle Science City Partnership, and a director of Sophos plc.
Skills and experience: Paul spent 16 years as Chief Executive Offi cer of The Sage Group plc, giving him a great understanding of the challenges of running a global business. He is an economics graduate and qualifi ed accountant, with a strong fi nancial background and high-level non-executive experience, which adds to the Board's strength. Paul's roles at Sage included Chief Executive Offi cer, Finance Director and Financial Controller. He has also been non-executive Chairman of WANdisco plc, and a non-executive director at Diageo plc and MyTravel Group plc.
| Au | Member of the Audit Committee |
|---|---|
| Re | Member of the Remuneration Committee |
| Nm | Member of the Nomination and Corporate Governance Committee |
| Committee Chairman | |
| * Dr Ruba Borno's committee memberships commenced |
Governance
The Board currently comprises the Chairman, three executive directors and eight independent non-executive directors, including the Deputy Chairman, George Rose. On 1 July 2017, Mike Rogers was appointed as an independent non-executive director. In line with emerging best practice corporate governance, having served on the Remuneration Committee for 12 months, Mike will succeed Roger Davis as Chairman of the Remuneration Committee with eff ect from the AGM of the Company to be held on 18 July 2018. Dr Ruba Borno was appointed as a non-executive director on 1 April 2018. The directors' biographical details are set out on pages 64 and 65.
The principal role of the Board is to lead the Company, oversee its conduct and aff airs to create sustainable value for our stakeholders. The Board has collective responsibility for setting the Group's strategy and ensuring the necessary fi nancial and human resources are in place to achieve our goals. In January each year, senior management presents the proposed strategic plan to the Board. This takes place over two days and allows the Board to critically review the proposed strategy with management, before considering it for approval. Last year, the Board had agreed a number of focus areas for itself, one of which related to the Board's engagement with strategy. As a result of this, it was agreed that, in addition to its ongoing oversight, the Board would receive progress updates, in July each
Board review* January Financial planning and prioritisation October to November Internal review September Preliminary steps March to May Management conference June Group Operating Committee review meeting June Board mid-year review July Strategic planning July to August
year, on key strategic initiatives, to provide an opportunity for feedback on progress, and to solicit its ongoing input into the annual strategic planning process. The budget discussions in March ensure that we have the right resources to deliver the agreed strategy. The discussions also include detailed focus on both regional and global business budgets.
The Board continually monitors management and fi nancial performance against the Group's objectives. To enable it to do this, the Board receives operational and fi nancial updates at every scheduled Board meeting, as well as between meetings. The Board also conducts post-investment reviews on an agreed timeline, for any acquisitions it has previously approved.
The Board is not involved in managing the Group's day-to-day activities but it is accountable to shareholders for delivering fi nancial performance and long-term shareholder value. To achieve this, the Board has put in place a framework of controls and delegated authorities, which enables the Group to appraise and manage risk eff ectively, through clear and robust procedures and delegated authorities. In addition, the Board has reserved certain key activities to itself for decision, including:
Strategy and management – approving and overseeing Experian's long-term objectives and commercial strategy, ensuring that we have the fi nancial and human resources to meet our objectives.
Management oversight – reviewing operating, fi nancial and risk performance.
Regulatory and statutory activity – including approving the Group's results, key stakeholder documents and dividends.
Finance and treasury – approving the framework for the Group's fi nance, banking and capital structure arrangements.
Appointments – approving appointments to the Board, on the recommendation of the Nomination and Corporate Governance Committee.
Approval of certain Group policies – including, for example, an Anti-Corruption Policy, a Gifts and Hospitality Policy, an Environmental Policy, a Global Code of Conduct, a Tax Policy and the Group's Treasury Policy.
* Including two days of strategy presentations.
This key document comprises the schedule of matters reserved to the Board, the Board committees' terms of reference and the authority levels for the Group's principal
subsidiaries, directors and senior executives. For matters not reserved to the Board, the matrix prescribes the cascade of authorities delegated throughout the Group by respective Group companies, together with their monetary limits. The matrix is reviewed
and refreshed regularly and the Board monitors the exercise of delegations to the Group's principal subsidiaries, which are reported to it at each Board meeting. Regional matrices are also in place.
These are Group companies to which the Board has delegated certain decision-making powers, for example implementing decisions agreed in principle by the Board; executive management of the operations of the Group within the strategy and budget approved by the Board; acquisitions and disposals with a value up to US\$20m, and capital expenditure projects.
Operating businesses
The OpCo comprises the most senior executives from the Group. Its remit includes identifying, debating and achieving consensus on issues involving strategy, growth, people and culture, and operational effi ciency. It also focuses on ensuring strong communication and co-operative working relationships among the top team. Its meetings tend to be issues oriented and focus on selected Group issues worthy of debate.
The Executive Risk Management Committee ('ERMC') comprises senior Group executives, including the executive directors and the Company Secretary. Its primary responsibility is to oversee the management of global risks. The regional risk management committees oversee the management of regional risks, consistent with Experian's risk appetite, strategies and objectives, and are comprised of senior regional leaders.
The Security and Continuity Steering Committee ('SCSC') is a sub-committee of the ERMC. The SCSC's primary responsibility is to oversee management of global information security, physical security, and business continuity risks, consistent with Experian's risk appetite, strategies and objectives.
The Assurance Steering Committee ('ASC') is also a sub-committee of the ERMC and oversees the development and implementation of Experian's risk management framework.
These committees comprise the most senior global and regional executives. Their remit is to oversee a process to ensure that all strategic projects are appropriately resourced, risk assessed and commercially, fi nancially and technically appraised. A similar body, the Investment Committee, performs the same function in respect of proposals regarding minority investments. Depending on the outcome of the discussions, the committees' conclusions are then considered by the board of the relevant Group company for approval.
Internal Audit conducts a range of independent audit reviews throughout the Group during the year and is represented at each Audit Committee meeting. Internal Audit's plans, results and key fi ndings are presented to and discussed with the Audit Committee. The internal audit programme and methodology are aligned to the risk categories and risk assessment parameters established by the global risk management function. Internal Audit also makes use of risk assessment information at a business level, in planning and conducting its audits.
continued
The Board meets regularly and holds additional meetings when required, e.g. for a specifi c transaction. Each scheduled meeting is normally held over two or three days, with Board committee meetings also taking place during this time. Board members spending this time together further enhances the eff ectiveness of the Board and its
committees, and contributes to the cohesive and collegiate Board culture.
The Board met at overseas business locations twice this year, which allowed management and employees across the Group to present to the Board and to meet the directors informally. In September 2017, the Board
spent three days in San Diego and Costa Mesa, California, USA, and held Board and committee meetings during the visit. In March 2018, the Board spent time in São Paulo and São Carlos, Brazil for site visits and business presentations, as well as Board and committee meetings.
* Including two days of strategy presentations.
| Board | Nomination and Corporate Governance Committee |
Remuneration Committee |
Audit Committee |
|
|---|---|---|---|---|
| Directors as at 31 March 2018 | ||||
| Don Robert | 6/6 – 100% | 6/6 – 100% | n/a | n/a |
| Brian Cassin | 6/6 – 100% | n/a | n/a | n/a |
| Lloyd Pitchford | 6/6 – 100% | n/a | n/a | n/a |
| Kerry Williams | 6/6 – 100% | n/a | n/a | n/a |
| Roger Davis | 5/6 – 83% | 4/6 – 66% | 4/4 – 100% | 2/4 – 50% |
| Caroline Donahue | 6/6 – 100% | 6/6 – 100% | 4/4 – 100% | 4/4 – 100% |
| Luiz Fleury | 6/6 – 100% | 6/6 – 100% | 4/4 – 100% | 4/4 – 100% |
| Deirdre Mahlan | 6/6 – 100% | 6/6 – 100% | 4/4 – 100% | 4/4 – 100% |
| Mike Rogers (from 1 July 2017) | 5/5 – 100% | 5/5 – 100% | 3/3 – 100% | 3/3 – 100% |
| George Rose | 6/6 – 100% | 6/6 – 100% | 4/4 – 100% | 4/4 – 100% |
| Paul Walker | 6/6 – 100% | 6/6 – 100% | 4/4 – 100% | 4/4 – 100% |
The Board's key activities during the year are set out below. These include activities related to the Group's strategy, which the Board decided on in light of its risk appetite and risk management processes.
* The strategy time does not include the two-day strategy session described below.
Received and considered a presentation on the EU General Data Protection Regulation ('GDPR'), including the implications for Experian, our compliance planning and potential opportunities.
Reviewed and approved risk appetite statements for the Group.
69
continued
The Code provides that the Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors, and that the Board evaluation should be externally facilitated at least every three years. This year was Year 2 of the Board's three-year review cycle, which is as follows:
Year 1 a full external evaluation;
Last year, an independent external evaluation of Board eff ectiveness was carried out by Condign Board Consulting. Overall, the evaluation concluded that the Board operated in a fully functional, eff ective, purposeful and challenging way, on behalf of shareholders.
Following that evaluation, the Board agreed areas of focus for FY18. The second year of the cycle involved the Board performing an internal evaluation of progress against these areas of focus and the resulting actions, as well as agreeing areas of focus for the coming year. The third year of the cycle, to be undertaken later in FY19, is intended to be an interview/questionnaire-based internal evaluation.
This year's internal evaluation comprised a discussion on the Board's eff ectiveness at the January 2018 Board meeting, based on materials circulated before the meeting. These materials included management's update to the Board on the status of the focus areas and resulting actions, following last year's external evaluation. There were also separate meetings between each director being proposed for re-election at the 2018 AGM and the Chairman, in relation to performance and training requirements. The Deputy Chairman and Senior Independent Director evaluated the Chairman, taking account of input from the Chief Executive Offi cer and the other directors. Each principal Board committee also evaluated its own performance.
At the January 2018 meeting, the Board noted that there had been good progress against the agreed areas of focus. In particular:
| Area and focus | Progress |
|---|---|
| Board succession | |
| The Nomination and Corporate Governance Committee will action the forward plan for Board and committee succession, to ensure orderly |
The Nomination and Corporate Governance Committee, on behalf of the Board, reviews Board/committee structure, size and composition in detail at its March meeting each year, and on an ongoing basis at other times during the year, through a standing Board structure paper circulated for each Committee meeting. |
| succession to key posts, eff ective recruitment and smooth onboarding of new Board members (including any required transition). |
The Nomination and Corporate Governance Committee and the Board undertook an eff ective recruitment process during 2018 which involved extensive referencing and the opportunity for all Board/ Committee members to meet candidates prior to appointment. |
| Board discussions | |
| Continued focus on strategic priorities and deep dives into certain areas, as well as tackling more general topics, through additional time at or adjacent to the Board meetings, as appropriate. |
The Board received numerous focused business presentations, and presentations from external subject matter experts as part of Board meetings and Board visit programmes adjacent to the Board meetings. The extent of such focus is kept under review by the non-executive directors as part of their private meetings. |
| Board's use of time, and agenda | |
| formation | |
| To assist in agenda formation and appropriate focus and challenge in the right areas, the standing forward agenda planner will be used as a prompt for thought on wider issues, in particular by the non-executive directors in their private meetings. |
The standing forward agenda planner is included within Board papers for each scheduled meeting, enabling it to be used by the Deputy Chairman/Senior Independent Director as a discussion tool at the private meetings of the non-executive directors. |
| Board engagement with | |
| strategy The Board will receive progress updates, at appropriate points in the year, on key strategic |
The Chief Executive Offi cer provided an update on progress against key strategic objectives as part of normal Board reporting for each meeting during the year. |
| objectives to provide opportunities for feedback on progress, and to solicit its ongoing input into the annual |
In addition, at the mid-point of the year, the Board received a more formal initiatives/strategy update prior to commencement of the strategic planning cycle for the upcoming year. |
| strategic planning process. | The non-executive directors keep this under review as part of their private discussions. |
| Risk and assurance | |
| The Board will continue to monitor, and seek to further enhance, the risk and assurance processes in the Group, in the context of the structure and |
Risk reporting during the year continued to evolve following the earlier introduction of more focused legal, compliance and risk reporting. The Audit Committee keeps this under review, and management responds to any requests for additional/modifi ed reporting. |
| culture of the Group. | During the year, the Audit Committee spent further time considering its oversight of information security and undertook a review of associated reporting to ensure continued eff ective oversight of |
this area.
| Area | Focus |
|---|---|
| Board structure and composition |
The Nomination and Corporate Governance Committee will continue to review Board structure, size and composition, ensuring critical skills and experience are appropriately refreshed. Areas for consideration should include: diversity; serving executive experience; geographic representation; other identifi ed Board skills and experience gaps; ongoing succession planning for scheduled director retirements over the coming years; and the optimal size of the Board. |
| Information security risk reporting and governance |
As noted in the Audit Committee report, and in light of external events over 2018, the Audit Committee Chairman commissioned a review of information security risk reporting and oversight during the year. Work will continue over 2018 to further align reporting with risks, and ensure that an appropriate and clear reporting framework (that identifi es and adjusts for evolving risks) is embedded, which supports the Board as it assesses cyber security risk and the related response of the business. |
| Corporate governance developments |
As noted elsewhere in this report, the Nomination and Corporate Governance Committee has spent a lot of time this year considering various corporate governance developments that have the potential to impact the Group. The Committee (and the Board) will maintain its focus on the developments, in particular making any appropriate changes that may be necessary in relation to the upcoming new Code. |
The Group Corporate Secretariat, under the leadership of Charles Brown, the Company Secretary, provides administrative and logistical support to the Board. The Company Secretary's responsibilities also include:
He is secretary to the Board, its principal committees and the Global Strategic Projects Committee, and is a member (and secretary) of the Group Operating Committee.
All directors receive fi nancial and operational information each month, to help them discharge their duties. Board papers are circulated at least a week ahead of each Board meeting, to ensure directors have time to review them before meetings.
Directors have access to independent professional advice at the Company's expense, if they consider it appropriate. No director obtained any such advice during the year ended 31 March 2018.
During the year, the Board appointed Mike Rogers as an independent non-executive director and as the Chairman-designate of the Remuneration Committee. By the time he assumes the Remuneration Committee Chairman role at the 2018 AGM, Mike will have been a member of the Committee for 12 months, in line with emerging best practice and the new draft UK Corporate Governance Code, published in December 2017. In addition, Ruba Borno was appointed as an independent non-executive director with technology/ information expertise.
Mike Rogers has engaged with senior executives and other employees, as part of a comprehensive business and functional induction in North America and the UK and Ireland. He also participated in the Board's visits to the USA and Brazil during the year. In March 2018, Ruba Borno commenced a similar business and corporate induction. Highlights from the induction programmes include:
Business/operations – briefi ngs, business overviews and product demonstrations in respect of a number of business areas, including: Credit Services, Consumer Services, Decision Analytics, the health and insurance verticals, as well as a global sales overview; and business market and fi nancial overviews.
Corporate – focused briefi ngs on the Group's history, corporate governance, audit, and investor relations, communications and brand. Other areas covered include remuneration, talent and people; strategy and organisation; a fi nancial overview, budget and capital strategy; strategic planning, corporate development and competition; technology and information security; legal compliance, regulation, government aff airs, risk management; and corporate responsibility.
The Company's articles of association allow the Board to authorise actual or potential confl icts of interest. The authorisation procedure involves Group Corporate Secretariat issuing guidance and a questionnaire each August, asking directors to identify any confl icts or potential confl icts, which the Board then considers at its September meeting. In addition, directors are expected to advise the Company Secretary of any actual or potential confl icts as soon as they arise, so the Board can consider them at the next available opportunity. In the Board's view, this procedure operated eff ectively during the year under review.
continued
The Board as a whole also received the following training and business updates during the year:
In September 2017, the Board visited our operational headquarters in Costa Mesa where senior leaders of the Group's North America business briefed the Board on a number of important areas, including: Decision Analytics and Fraud; Consumer Services – Direct to Consumer and Partner Solutions; Health; Credit Services – Business Information Services and Consumer Information Services; Political and Regulatory matters and Information Security. The Board also received a tour and demonstrations in our North America DataLab in San Diego, as well as briefi ngs from an external FinTech entrepreneur and a cyber security specialist.
Alongside the March 2018 Board and committee meetings, the Board visited our Serasa Experian DataLab in São Paulo and received innovation presentations, together with a number of product demonstrations. As well as receiving a briefi ng from an economist and consumer, talent and regulatory updates, Board members engaged with employees at events. The Board then travelled to our facility in São Carlos, where they received a comprehensive update on Experian's Latin America business together with a tour of the facility.
There is a clear division of responsibilities between the Chairman and the Chief Executive Offi cer. These responsibilities, which we have formalised in writing, can be found on the Company's website, www.experianplc.com, and are summarised below.
The Chairman, Don Robert, is primarily responsible for the Board's leadership and governance, ensuring its eff ectiveness, setting agendas, ensuring that directors receive accurate, timely and clear information, and that there is eff ective communication with shareholders. He facilitates the non-executive directors' eff ective contribution to the Board, and ensures constructive relationships between the executive and non-executive directors.
The Chief Executive Offi cer, Brian Cassin, is responsible for the Group's day-to-day business, in line with the strategy, risk profi le, objectives and policies set by the Board and its committees. He is accountable to the Board for the Group's development and its operations.
Running the Board eff ectively and ensuring that the Board as a whole plays a full and constructive part in developing and determining the Group's strategy and overall commercial objectives. Promoting the highest standards of integrity, probity and corporate governance throughout the Group and particularly at Board level. Ensuring that the Board receives accurate, timely and clear information on the Group's performance and its issues, challenges and opportunities.
Ensuring eff ective communication with the Company's shareholders, including by the Chief Executive Offi cer, the Chief Financial Offi cer and other executive management, and ensuring that members of the Board develop an understanding of the views of the Company's major investors.
The Deputy Chairman, George Rose, is also the Senior Independent Director. He is responsible for providing support and guidance to the Chairman and for serving as a trusted intermediary for the other directors. He is available to meet shareholders who have concerns that cannot be resolved through discussion with the Chairman, the Chief Executive Offi cer or the Chief Financial Offi cer, or where such contact is inappropriate.
Non-executive directors are initially appointed for three years which may, subject to satisfactory performance and election or re-election by the shareholders, be extended by mutual agreement. They normally serve for a maximum of nine years, through three terms of three years each.
Chairman's responsibilities include: Chief Executive Offi cer's responsibilities include: Running the Group's business and developing the Group's strategy and overall commercial objectives.
Implementing, with the executive team, the decisions of the Board, its committees and the principal subsidiaries.
Maintaining a dialogue with the Chairman on the important and strategic issues facing the Group, and alerting the Chairman to forthcoming complex, contentious or sensitive issues. Leading the communication programme with shareholders.
In addition to attending Board and committee meetings, the non-executive directors meet without the executive directors at the end of each scheduled Board meeting. The non-executive directors also meet at least once a year with the Deputy Chairman, without the Chairman present, and did so once during the year to discuss matters including the Chairman's performance.
The Board considers each of the nonexecutive directors to be independent in character and judgment and that there are no relationships or circumstances that are likely to aff ect (or could appear to aff ect) each director's judgment.
Set out below are some of the ways in which the Company interacts with investors and others, and keeps abreast of their views.
Board – an investor relations and media report is circulated before every Board meeting and contains a commentary on the investment community's perception of the Company, media reports, share price performance and analysis.
Engagement with investors – over the year, both Roger Davis, as Chairman of the Remuneration Committee, and our reward team, consulted with our major investors and institutional investor bodies in relation to Experian's executive remuneration arrangements. In November 2016 and again in May 2017, we wrote to approximately 25 of our largest shareholders and to institutional investor bodies to gather feedback on a limited number of changes being proposed to our Directors' remuneration policy. We received little feedback on these letters, but much of the feedback we did receive was largely positive.
Following the 2017 AGM, and in response to the outcome of the vote in relation to the Directors' remuneration policy, a series of constructive and useful face-to-face meetings were held with key shareholders and institutional investor bodies, to discuss the Company's remuneration arrangements and to receive feedback on any potential areas of concern. The Company considers the meetings to have been benefi cial to all involved and the Remuneration Committee Chairman, Roger Davis, and Chairman-designate, Mike Rogers, were in attendance, as well as senior management, the Group Human Resources Director and the Company Secretary.
Investors and analysts – the executive team has an ongoing programme of dialogue and meetings with institutional investors and analysts, at which they discuss a wide range of issues including strategy, performance, management and governance, within the constraints of information already made public. We also have an active programme of engaging with investors through industry conferences and by hosting events with members of the senior management team. The announcements of the annual and half-year results and trading updates provide opportunities for us to answer questions from analysts, covering a wide range of topics. Investor roadshows took place during the year in Boston, Frankfurt, London, New York, Paris and Toronto.
Annual General Meeting – the AGM provides a valuable opportunity for the Board to communicate with shareholders and to meet them informally before the main business of the meeting. All directors, with the exception of Paul Walker, attended the 2017 AGM, including the Audit, Remuneration, and Nomination and Corporate Governance Committee chairmen.
The 2018 AGM will take place on Wednesday 18 July 2018 in Dublin. Shareholders are encouraged to attend and to use the opportunity to ask questions. However, if it is not practical for shareholders to attend, we encourage them to use proxy voting on the resolutions put forward, all of which (with the exception of procedural resolutions) are taken by a poll. In 2017, voting levels at the AGM were 74% of the Company's issued share capital, compared with 72% in 2016.
Private shareholders – the Company Secretary, Charles Brown, oversees communication with private shareholders, and ensures direct responses as appropriate in respect of any matters raised by shareholders. The Company issues a 'Shareholder Questions' card each year, with the AGM documentation. Charles ensures that the Company responds to shareholders directly, as appropriate, either at or following the meeting.
Website – our website is an important channel for communicating with shareholders. All material information reported to the regulatory news services is published there, together with copies of annual and half-year results announcements and trading updates.
Investor relations app – this contains information on our fi nancial performance, together with reports, presentations and news of upcoming events.
The Experian website (www.experianplc.com) contains additional information on our corporate governance. There you will fi nd:
www.experianplc.com
continued
The Board is responsible for maintaining and monitoring sound risk management and internal control systems and for determining the nature and extent of the principal risks the Company is willing to take to achieve its strategic objectives. There is an ongoing process for identifying, evaluating and managing the principal risks we face. This process was in place for the fi nancial year and up to the date of approval of this Annual Report. Full details of our risk management and internal control systems and processes can be found in the Risk management section of this Annual Report. The specifi c processes underlying the elements of the Group's risk framework are set out below.
Risk management is an essential element of running a global, innovation-driven business like Experian. It helps to create long-term shareholder value and to protect our business, people, assets, capital and reputation. It operates at all levels throughout the organisation, across regions, business activities and operational support functions. Our approach to risk management encourages clear decisions about which risks we take and how we manage them, based on an understanding of their potential strategic, commercial, fi nancial, compliance, legal and reputational implications.
| Identify | Assess the potential eff ect of each strategic, operational and fi nancial risk on the achievement of our business objectives, and the Group's corresponding risk appetite. |
|---|---|
| Identify and escalate new, emerging or changing risks, signifi cant incidents, signifi cant control gaps and risk acceptance. | |
| Consider external factors arising from our operating environment and internal risks arising from the nature of our business, our controls and processes, and our management decisions. |
|
| Analyse | Produce Board- and Group-level fi nance reports, including fi nancial summaries, results, forecasts and revenue trends, investor relations analysis and detailed business trading summaries. |
| Conduct regional-level detailed performance reviews. | |
| Report to regional risk committees, the ERMC and the Audit Committee on the status of principal and emerging risks, the progress of strategic projects and acquisitions, and escalation of signifi cant accepted risks. |
|
| Report to the Audit Committee by Global Internal Audit on assurance testing and confi dential helpline investigation results. | |
| Report to the Audit Committee by Group Compliance on fraud management. | |
| Evaluate | Evaluate compliance with policies and standards addressing risk management, compliance, accounting, treasury management, fraud, information security and business continuity. |
| Follow formal review and approval procedures for major transactions, capital expenditure and revenue expenditure. | |
| Monitor budgetary and performance reviews tied to KPIs and achievement of objectives. | |
| Apply a risk scoring system, based on our assessment of the probability of a risk materialising, and the impact (including speed) if it does. |
|
| Require executive management confi rmations of compliance with our corporate governance process. | |
| Mitigate | Apply active risk remediation strategies, including internal controls, formal exception processes, insurance and specialised treasury instruments. |
| Use formal review and approval procedures for signifi cant accepted risks. | |
| Monitor | Maintain comprehensive risk registers representing the current risk and control environment, using a software solution to provide enhanced monitoring. |
| Review of controls and follow-ups by management, Global Internal Audit and third parties. | |
| Use Global Internal Audit to independently assess the adequacy and eff ectiveness of the system of internal controls. | |
| Report on risk to the Audit Committee, addressing material and emerging risks, material litigation, information security, business continuity and regulatory compliance. |
|
| Utilise the Audit Committee to monitor the Group's risk management and internal control systems. | |
| Review by the Audit Committee of the eff ectiveness of our systems of risk management and internal control; receive an annual report on the controls over relevant risks; and ongoing review of principal risks identifi ed by the Group's risk assessment processes. |
As risk management and internal control systems are designed to manage rather than eliminate the risk of failure to achieve business objectives, they can provide reasonable, but not absolute, assurance against material fi nancial misstatement or loss. For certain joint arrangements, the Board relies on the systems of internal control operating within the partners' infrastructure and the obligations of the partners' boards, relating to the eff ectiveness of their own systems.
The Code requires companies to review the eff ectiveness of their risk management and internal control systems, at least annually. The Audit Committee performs this review under delegated authority from the Board. Following this year's review, the Board considers that the information enabled it to review the eff ectiveness of the Group's system of internal control in accordance with the FRC's 'Guidance on Risk Management, Internal Control and Related Financial and Business Reporting', and that the system has no signifi cant failings or weaknesses.
In addition, and in line with the Code, the Audit Committee monitors our risk management and internal control systems and robustly assesses the principal risks identifi ed by our risk assessment processes (including those that would threaten our business model, future performance, solvency or liquidity), and monitors actions taken, where possible, to mitigate them.
For more on our approach to risk management in the Strategic report see page 51
We have detailed policies and procedures to ensure the accuracy and reliability of our fi nancial reporting and the preparation of Group fi nancial statements. This includes our comprehensive Group Accounting Manual ('GAM,') which contains the detailed requirements of International Financial Reporting Standards.
The Group's fi nance team owns the GAM and we have rolled it out across the Group, obliging all of our companies to follow its requirements. The GAM's aims are to: guide on accounting issues; enable consistent and well-defi ned information for IFRS reporting; provide uniform quantitative and qualitative measures of Group performance; and increase the effi ciency of the Group's reporting process.
Through a combination of ongoing and annual reviews, the Board is able to review the ongoing eff ectiveness of the Group's risk management and internal control systems
We spent a lot of time considering the recruitment of two new non-executive directors, and the key attributes that the Board would require.
Chairman of the Nomination and Corporate Governance Committee
| George Rose (Chairman) |
|---|
| Don Robert |
| Ruba Borno* |
| Roger Davis |
| Caroline Donahue |
| Luiz Fleury |
| Deirdre Mahlan |
| Mike Rogers |
| Paul Walker |
* From 1 April 2018.
The Committee's terms of reference can be found at www.experianplc.com/about-us/ corporate-governance/board-committees/
We continued to monitor the Board's balance of skills, knowledge, experience and diversity, and recommend any required changes to the Board throughout the year. We spent much time considering the recruitment of two new non-executive directors, and the key attributes that the Board would require, considering Experian's current opportunities and challenges, as well as current Board composition. We were delighted to recommend to the Board the appointment of Mike Rogers and Dr Ruba Borno as independent non-executive directors, and as members of the Audit, Remuneration and Nomination and Corporate Governance Committees, with Mike Rogers also being appointed Chairman-designate of the Remuneration Committee.
The Committee also continued to focus on the executive talent pool and our senior management succession plans, refl ecting the Board's responsibility to ensure appropriate plans are in place. In January 2018, the Committee received a comprehensive executive succession and talent management update from the Group Human Resources Director. In March 2018, the Committee considered an update on the structure, size and composition of the Board and its committees, to ensure critical skills and experience are appropriately refreshed.
During the year, the Committee received a number of corporate governance reform updates, including in the areas of executive pay, strengthening employee, customer and supplier voices in boardrooms and the extension of corporate governance to large, private companies.
We met six times during the year ended 31 March 2018. The list of Committee members appears opposite and, of the nine Committee members, the Board considers eight (including me as Committee Chairman) to be independent non-executive directors, in accordance with the Code. The Group Human Resources Director is invited to attend certain meetings, as is the Chief Executive Offi cer, Brian Cassin, who provides valuable contributions.
The Board strongly believes that good governance and strong, responsible, balanced leadership by the Board are critical to business success and creating long-term shareholder value. As a Committee, our responsibilities include:
During the year ended 31 March 2018, the Committee:
The Board's diversity policy is unchanged. We strongly believe that diversity throughout the Group and at Board level is a driver of business success. We respect, value and welcome diversity, including gender diversity, and seek to refl ect the diversity of our client, investor and general employee bases in our Board. We recruit talented and diverse Board members, who have the appropriate mix of skills, capabilities and market knowledge to ensure the Board is eff ective. When recruiting, we look across all sectors and non-traditional talent pools, and we require diversity of candidates on our shortlists.
As well as the Board policy outlined above, the Group's Code of Conduct further outlines our approach and how we think about diversity. We understand the fundamental value diversity and inclusion brings to our business, and there are many initiatives underway to create a work environment where everyone is treated with fairness and respect, has equal access to opportunities and resources, and can contribute fully to our success. At Experian, we embrace diversity and appreciate diff erent perspectives and the unique value each employee brings. Fundamentally, we do not discriminate against anyone on the basis of race, colour, religion, gender, sexual orientation, gender identity or expression, national origin, disability, age, covered veteran status, or any other characteristic protected by law. The Code of Conduct applies to everyone at Experian, including contractors, suppliers and others who do business with us.
Although we do not publish specifi c Board diversity targets, after the changes that will take eff ect at the 2018 AGM, 27% of the Board will be female. This compares favourably to the recommended target of 33% by 2020 in the Hampton-Alexander Review, and we recognise the signifi cant benefi ts of a diverse Board. When recruiting, we will continue to seek to address any diversity gaps on our Board, including gender and ethnicity.
For more on our approach to diversity see the People and corporate responsibility section in the Strategic Report, page 32
When making Board appointments, the Committee reviews and approves an outline brief and role specifi cation and appoints a search agent for the assignment. We disclose the name of the search agent and any other connection with Experian in the next Annual Report.
The Committee then meets the search agent, to discuss the specifi cation and the search, following which the agent prepares an initial longlist of candidates. The Committee then considers a shortlist and holds interviews. Ultimately, the Committee makes a recommendation to the Board for its consideration. Following Board approval, the appointment is announced in line with the requirements of the FCA's Listing Rules and, in due course, a tailored induction programme is developed for the new director.
We used Russell Reynolds as the specialist search company involved with the search for the appointment of Mike Rogers during the year and we used JCA Group in respect of the appointment of Dr Ruba Borno. Russell Reynolds also provides other executive search services to the Group. JCA Group does not provide additional services to the Group.
Committee reviews and approves an outline brief and role specifi cation and appoints a search agent for the assignment
The agent prepares an initial longlist of candidates
The Committee then considers a shortlist and we hold interviews
The Committee makes a recommendation to the Board for its consideration
Following Board approval, the appointment is announced in line with the requirements of the FCA's Listing Rules
We commissioned a review of information security risk reporting and oversight during the year.
Chairman of the Audit Committee
| Members |
|---|
| Deirdre Mahlan (Chairman) |
| Ruba Borno* |
| Roger Davis |
| Caroline Donahue |
| Luiz Fleury |
| Mike Rogers |
| George Rose |
| Paul Walker |
All Committee members are considered to be appropriately experienced, but Deirdre Mahlan and George Rose are considered to have signifi cant, recent and relevant fi nancial experience, in line with the UK Corporate Governance Code.
The Committee's terms of reference can be found at www.experianplc.com/about-us/ corporate-governance/board-committees/
The Committee's overarching role is to: monitor the integrity of, and review, the Group's fi nancial reporting, ensuring that any judgments made are appropriate; ensure the external auditor is independent and eff ective in its role, and recommend the appointment of the external auditor; and ensure that the Group has an eff ective internal control framework, including risk management systems. The Committee members' collective international and fi nancial experience enables them to act eff ectively in these areas.
This report also contains details of the signifi cant issues we considered in relation to the fi nancial statements and how these were addressed, and our process for concluding that this Annual Report was fair, balanced and understandable.
The Committee was in place throughout the year ended 31 March 2018. We met four times during the year, with each meeting timed to coincide with key dates in the Group's fi nancial reporting and audit cycle. The list of Committee members appears opposite, and the Board considers all of them to be independent non-executive directors, in line with the Code. In addition to the Committee members, the Chairman and the executive directors also attend Committee meetings by invitation. The Group General Counsel, Global Head of Internal Audit and representatives from the external auditor also attend Committee meetings. We also meet, as a Committee, with the external auditor and the Global Head of Internal Audit, without management present.
During the year ended 31 March 2018, the work of the Committee included the following:
Governance
79
In October 2017, the FRC wrote to the Company following its review of the 2017 Annual Report. This review, which was based solely on that report, did not identify any questions or queries which the FRC wished to pursue, although some suggestions for improvements were noted, and these have been taken into account in preparing this report. The FRC's review provides no assurance that the report and accounts are correct in all material respects; the FRC's role is not to verify the information provided but to consider compliance with reporting requirements.
The table below summarises the signifi cant matters considered by the Committee in relation to the Group and Company fi nancial statements and the manner in which they were concluded. These matters, together with any other signifi cant considerations of the Committee, are reported to the Board. The minutes of each Audit Committee meeting are also circulated to all members of the Board.
| Matter considered | Conclusion | ||||
|---|---|---|---|---|---|
| Tax | |||||
| The Committee received a regular update from management on the adequacy of provisions, and the increase in the year, in respect of signifi cant open tax matters. The review included details of ongoing correspondence with tax authorities in |
The Committee agreed that the assessment of the uncertain tax positions was appropriate and that the judgment taken in respect of the year end provision in the Group fi nancial statements was reasonable. |
||||
| the UK, the USA and Brazil and the principal areas of tax challenge. |
The Committee also noted the evolving and complex tax laws that applied to the Group, and the |
||||
| The Committee also received an update on the Group's deferred tax position following the |
uncertainty that these might bring. It concluded that the Group tax risk disclosures were appropriate. |
||||
| enactment of the US Tax Cuts and Jobs Act in December 2017. |
The Committee concluded that the revaluation of the Group's net deferred tax liabilities was appropriate. |
||||
| Litigation and regulatory matters | |||||
| The Committee received an update and analysis of open litigation and regulatory matters aff ecting the Group. |
The Committee concluded that these matters had been appropriately provided for at 31 March 2018 and approved the settlement in relation to the Canadian legal matter. |
||||
| The Committee considered and concurred with the proposed contingent liability disclosures included in the notes to the Group fi nancial statements. |
|||||
| Impairment review – goodwill and other | |||||
| intangible assets A summary of the impairment analysis and |
The Committee concurred with management's | ||||
| underlying process was provided to the Committee. The Committee scrutinised the |
conclusion that no impairment of goodwill was required. |
||||
| methodology applied by management. The analysis indicated that the estimated recoverable amounts of the assets of all segments continued to suffi ciently exceed their carrying amounts, with the excess (the 'headroom') in respect of the EMEA cash generating unit ('CGU') having increased during the year. |
The Committee noted the headroom and the sensitivity to changes in assumptions and concurred with the proposed disclosure of these in note 19 to the Group fi nancial statements. |
||||
| Acquisitions and disposal | |||||
| The Committee received an update on the acquisitions made during the year and the reporting aspects of the disposal of CCM which completed in May 2017. |
The Committee approved the valuation of acquisition intangibles and agreed the treatment of the disposal. |
||||
| IFRS 15 | |||||
| The Committee received specifi c training on | The Committee approved the Group's accounting |
policy and the proposed disclosures under the new standard.
IFRS 15 'Revenue from Contracts with Customers'.
continued
Each year, the Committee is asked to consider, in line with the Code and the Committee's terms of reference, whether, in its opinion, the Annual Report is fair, balanced and understandable ('FBU') and whether it provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy. There is an established process to support the Audit Committee in making this assessment, and we use a similar process for the Group's half-yearly fi nancial report.
KPMG LLP has been the Company's auditor since July 2016. There are currently no contractual obligations restricting our choice of external auditor, and we confi rm that we have complied on a voluntary basis (as a non-UK-incorporated company) with the provisions of the UK Competition and Markets Authority Order (Mandatory Use of Competitive Tender Processes and Audit Committee responsibilities) for the fi nancial year under review.
At its September 2017 meeting, the Audit Committee reviewed and discussed KPMG's audit strategy for the year ended 31 March 2018. Then, in March and May 2018, the Committee received detailed updates on the audit's progress, which included details of the external auditor's actions, such as the audit procedures undertaken, the audit's coverage, the segregation of duties and the status of any signifi cant fi ndings. These updates give the Committee an insight into the audit process.
The Committee reviews the eff ectiveness of the external auditor at its September meeting. This year, tailored questionnaires were issued to all directors and the senior fi nance leadership. As part of the evaluation, the FRC Guidance on Audit Committees (the 'Guidance') was reviewed to ensure that the external auditor was following best practice. The evaluation focused on the four key areas used in the FRC's Guidance, being transition; mind-set and culture; skills, character and knowledge; and quality control. The overall results were favourable, particularly in respect of the smoothness of the transition for 2017 and the quality of service. Further enhancements on communications were noted but it was recognised that this was the fi rst year since the audit transition; as such, these enhancements would be dealt with as part of the focus on continuous improvements, as the relationship continues to develop. The Committee concluded, based on this feedback and information it obtained during the course of its other work, that the external auditor had performed eff ectively. The Committee concluded that the Group and the auditor had complied with the Guidance.
Governance
Independence is an important element of the external audit. To ensure auditor objectivity and independence, the Committee reviews potential threats to independence and the associated safeguards. The safeguards that KPMG had in place during the year to maintain independence included annual confi rmation by KPMG staff of compliance with ethics and independence policies and procedures. KPMG also has in place underlying safeguards to maintain independence through instilling professional values; communications; international accountability; risk management, and independent reviews. It also ensures that there is appropriate pre-approval for non-audit services, which are only provided if permissible under relevant ethical standards. The Committee concluded that the external auditor had maintained its independence throughout the year.
KPMG provides other services to Experian. To ensure auditor objectivity and independence, we have a policy relating to providing such services. The policy includes fi nancial limits above which any proposed non-audit services must be pre-approved, depending on the amount proposed to be spent.
The Committee receives half-yearly reports detailing non-audit assignments carried out by the external auditor, together with the related fees. Under the policy, non-audit fees paid to KPMG are capped at 50% of the fees for audit services (excluding audit-related assurance services), except in exceptional circumstances. Pre-approval by the Audit Committee or Audit Committee Chairman is required in that situation. An analysis of fees paid to the external auditor for the year ended 31 March 2018 is set out in note 12 to the Group fi nancial statements.
The Audit Committee reviews the policy on the provision of non-audit services annually and the latest review took place in March 2018, when the policy regarding the employment of former employees of the external auditor was also reviewed. The non-audit fee policy recognises the importance of the external auditor's independence and objectivity.
The external auditor may provide services, provided that decisions to award work are taken on the basis of demonstrable competence and cost eff ectiveness. However, the external auditor is specifi cally prohibited from the following areas of work:
Immaterial services in some of the above areas may be acceptable, if written permission is obtained in advance from the Chairman of the Audit Committee (via the Group Financial Controller). The appointment of the external auditor for any non-audit work up to US\$50,000 must be approved by the Group Financial Controller. The appointment of the external auditor for any non-audit work where the expected fees are over US\$50,000 and up to US\$100,000 requires the approval, in advance, of the Group Chief Financial Offi cer. Where the expected fees are over US\$100,000, the approval of the Chairman of the Audit Committee is required in advance.
Where cumulative annual fees exceed the 50% annual limit, all expenditure must be approved by the Chairman of the Audit Committee (via the Group Financial Controller) up to 55%. Where cumulative annual fees exceed the 55% annual limit, all expenditure has to be approved by the Audit Committee.
All expenditure is subject to a tender process, unless express permission is provided by the Chairman of the Audit Committee, the Group Chief Financial Offi cer or the Group Financial Controller based on the above approval limits. Any expenditure below US\$100,000 not subject to a tender will be notifi ed to the Chairman of the Audit Committee.
Commercial agreements where Experian provides services to the auditor must be approved by the Group Financial Controller and not exceed the lower of 5% of the local Experian entity's total revenue and US\$250,000, and all transactions should be undertaken on an arm's length basis. Transactions in excess of this limit require approval of the Chairman of the Audit Committee in advance.
The Committee will receive half-yearly reports providing details of assignments and related fees carried out by the external auditor in addition to its normal work.
Roger Davis Chairman of the Remuneration Committee
| Members |
|---|
| Roger Davis (Chairman) |
| Ruba Borno* |
| Caroline Donahue |
| Luiz Fleury |
| Deirdre Mahlan |
| Mike Rogers |
| George Rose |
| Paul Walker |
* From 1 April 2018.
The Committee's terms of reference can be found at www.experianplc.com/about-us/ corporate-governance/board-committees/
Page
'Report') for the year ended 31 March 2018. The following pages provide details of the business performance of the Group and what our executive directors were paid during the year for achieving those performance levels. The key decisions made by the Committee over the year are also detailed and we highlight some key changes being proposed to the executive pay structure in response to feedback received from some of our major shareholders.
At Experian, we have always had strong relationships with our shareholders. We consulted with our major shareholders and institutional investor bodies in November 2016, to discuss with them our plans for the year ahead, and followed up with further written communication in May 2017, communicating our fi nal proposals.
At the 2017 AGM, we tabled two remunerationrelated resolutions. While we were pleased that the voting outcome on the Annual report on remuneration was 83.8% in favour, it was disappointing that, at 75.5%, the vote on the Directors' remuneration policy ('the Policy') was lower than we had hoped for. Following that AGM, we again met with some major shareholders and institutional investor bodies to better understand the reasons behind the voting outcome, since the policy contained only very minor changes to the one that was approved by over 85% of shareholders in 2014. I am pleased to say that these meetings were informative and provided us with helpful, constructive feedback, which we have taken on board.
Some of the feedback was directed at the mechanics of our incentive plans, such as the lack of a holding period on long-term incentive awards, the desire for the mandatory deferral of annual bonus and the potential for over-reliance on a profi t metric. The Committee considered this feedback and I am happy to report that both the mandatory deferral of annual bonus and a holding period on the long-term incentive awards will apply to the executive directors from this current fi nancial year onwards. We are also bringing forward the disclosure of the annual bonus targets to the end of the fi nancial year being reported. Therefore, the information relating to both the year ended 31 March 2017 and the year ended 31 March 2018 can be found in the Annual report on remuneration.
We noted the comments about the use of a profi t metric throughout our incentive plans but, as detailed below, the Committee continues to feel that we use a balanced range of measures in our incentive plans, so no changes have been proposed in this regard.
During the course of our consultation with shareholders, we had considerable discussions about the appropriate comparator group of companies for a global business such as Experian, where most of its people and revenues come from outside the UK. We use a comparator group of companies, as shown below, that best refl ects our unique product mix, size and the markets in which we operate, as well as featuring the companies with whom the analysts and brokers compare us. While the people talent market in which we compete includes these particular companies, our sources of new talent and the challenges to retaining our existing talent extend more widely across the fi nancial services and technology sectors. This is particularly true for senior positions both within and outside the UK.
| Acxiom (US) | Fair Isaac (US) |
|---|---|
| Alliance Data Systems (US) Moody's (US) | |
| CoreLogic (US) | RELX (UK) |
| Dun & Bradstreet (US) | Thomson Reuters (US) |
| Equifax (US) | TransUnion (US) |
It is through the lens of this international comparator group and the broader people talent agenda that the Committee assesses our remuneration structure and quantum. During the shareholder meetings, we discussed this point and demonstrated that both the structure and quantum of our executive remuneration packages were positioned appropriately against these organisations.
All of the key themes emerging from the shareholder meetings were discussed at length by the Remuneration Committee. The Committee includes all my fellow non-executive directors, and this helps us to ensure that our decisions are made in the broadest business context. Our external remuneration advisers provided a review of best practice across our key markets, and the Committee then debated and agreed a small number of important changes to the executive remuneration structure. All of the proposed changes fall within the parameters of our existing Policy, which has been a critical element of our ability to attract and retain key talent globally – particularly in our large business operations in Brazil and the USA. Importantly, we consider that the changes detailed overleaf will continue to incentivise our executive directors to drive the desired business performance with a sustainable, long-term focus.
The Committee is proposing to make the following changes to the executive remuneration structure:
| Change | Detail | Rationale |
|---|---|---|
| Mandatory deferral of annual bonus |
Starting with the bonus award made in 2018, all executive directors will be required to defer at least 50% of any award paid out. However, they will continue to be able to defer up to 100% voluntarily. Deferral will be for three years into Experian shares. |
Mandatory deferral of bonus will ensure that long-term thinking is at the heart of our executive remuneration package. It aligns executives with the shareholder experience through share price performance. It makes it easier for the Committee to apply malus to adjust any bonus outcomes in certain circumstances prior to awards being paid. |
| Introduction of holding period in respect of all long-term incentive awards |
Executive directors will be required to retain the net amount of any shares vesting from the Performance Share Plan ('PSP') and Co-investment Plan ('CIP') for an additional two-year period. This will apply from PSP awards made in 2018. However, it will not apply to CIP awards until 2019 as, when the decision to introduce the holding period was made, we were already halfway through the bonus year which determines the bonus to be invested into the CIP. The holding period will continue to apply post-departure if an executive director leaves the Company as a 'good leaver'. |
Much like the introduction of mandatory deferral, this change will ensure that long-term thinking is at the heart of our executive remuneration package. It aligns executives with the shareholder experience through share price performance. It makes it easier for the Committee to apply clawback to recover shares in certain circumstances, prior to the shares being released. |
| Introduction of a 'threshold' level of vesting to the CIP |
A 'threshold' level of vesting of 25% will be introduced to the CIP. For this level of vesting, one matching share will be delivered for every two shares deferred. Previously there was no vesting below target performance. There is no change to the level of vesting at target and maximum performance. Performance targets will be adjusted to ensure a similar degree of stretch remains, but without the 'all or nothing' nature of the target number. This will apply from the CIP awards made in 2018. |
This level of threshold is more in line with best practice in the market, and ensures a smoother vesting schedule, removing the 'all or nothing' nature of the target. Benchmark PBT per share targets for the PSP and CIP will be fully aligned. |
As we do every year, the Committee reviewed the performance measures to satisfy ourselves that they remain fully aligned to our business strategy. We believe that Benchmark PBT continues to be the key performance measure for our annual bonus plan, as well as being a common barometer by which the external analysts assess our annual performance. Our long-term incentive plans have the multiple performance measures of cumulative Benchmark operating cash fl ow, total shareholder return ('TSR') and a return on capital employed ('ROCE') underpin as well as Benchmark PBT per share, a measure which is similar to earnings per share ('EPS'). We continue to believe that this combination of measures aligns with our strategy and provides a balanced approach to assessing performance over the longer term.
We are aware of some shareholders' preference for a non-fi nancial measure and last year the Committee introduced the fl exibility into the Directors' remuneration policy to be able to introduce such a measure. We would consider the introduction of any robust non-fi nancial measure that we felt would further improve our current suite of performance metrics. In the meantime, we will continue to review and assess performance before approving any vesting outcomes from the annual and long-term incentive plans.
For these reasons, we have not proposed to make any changes to the performance measures we use in any of our incentive plans. However, for long-term incentive awards to be granted in 2018, the Committee has reviewed the performance targets and determined that the Benchmark PBT per share and cumulative Benchmark operating cash fl ow targets should be increased. The targets for the CIP and PSP awards to be granted in 2018 are set out in the Annual report on remuneration.
This was a good year for Experian. We made signifi cant progress not just fi nancially, but also operationally and strategically. As well as delivering strong fi nancial results, particularly in B2B, we have also taken a number of steps to transition Consumer Services, which returned to growth towards the end of the year.
We grew Organic revenue by 5%, with growth accelerating as the year progressed. At the same time, we grew our Benchmark EBIT by 8%, with an Benchmark EBIT margin of 27.7%. This all translated into Benchmark earnings per share growth of 11%.
Our management team has invested in a series of targeted initiatives to take advantage of material new market opportunities, and has
signifi cantly increased the pace and range of new product innovation. At the same time, we continue to invest heavily in data security, to ensure that our systems and processes are as robust and up-to-date as possible.
There is strong momentum running through the business. We are confi dent that we are well placed to sustain this level of growth over the coming years as we look to push forward and grow further.
During the year, the Committee approved salary increases of between 2.4% and 2.6% for the executive directors. These increases were in line with the increases awarded to the general employee population across the Group.
Of the maximum Benchmark PBT target set at the start of the year, 57.5% was achieved, resulting in overall bonus payouts of 115% of each of the executive directors' salaries. Prior to approving these awards, the Committee reviewed the calculated outcome in the context of wider business and fi nancial performance and was satisfi ed that the level of payout was warranted.
Introduction from the Chairman continued
Further details of the annual bonus outcomes including, for the fi rst time, details of the Benchmark PBT targets against which performance was measured, are set out in the Annual report on remuneration.
The PSP and CIP awards granted in 2015 will vest on 21 May 2018. As shown in the diagram below, the vesting of the CIP awards was based equally on Benchmark PBT per share and cumulative Benchmark operating cash fl ow targets, while vesting of the PSP awards was based on Benchmark PBT per share growth (75% of the award) and Relative TSR targets (25% of the award):
| Benchmark PBT per share |
Cumulative Benchmark operating cash fl ow |
|||
|---|---|---|---|---|
| Total | ||||
| Maximum | 50% | 50% | 100% | |
| Actual | 50% | 42% | 92% |
| Benchmark PBT per share |
Relative TSR |
Total | |
|---|---|---|---|
| Maximum | 75% | 25% | 100% |
| Actual | 75% | 22% | 97% |
As shown in the charts set out above, 92.3% of the 2015 CIP awards and 96.7% of the 2015 PSP awards vested. Given the business performance set out above, the Committee considered this level of vesting to be appropriate.
While this report focuses on our three executive directors, Experian's strength is built on the combined eff orts of 16,500 employees across the world, and I would like to outline some of the highlights of our all-employee off ering:
In January 2017, we consolidated our existing employee recognition programmes into one platform. Since then we have made more than 34,500 awards to employees across the Group, ranging from virtual badges and small monetary rewards to all-expenses-paid holidays.
We operate an Experian Sharesave plan in over 20 countries, off ering over three-quarters of our overall workforce the chance to buy Experian shares at a signifi cant discount. Of those employees off ered, over 40% currently choose to participate. In 2018, we will be extending the plan into three new countries.
We think it is really important to listen to what our employees think about working at Experian.
In FY18, we carried out our People Survey with both Employee Engagement and Employee Enablement scores at over 70%.
I have been proud to serve as Chairman of the Remuneration Committee since 2007, and it is therefore with great sadness that I will step down from my role following the 2018 AGM. It has been a privilege to chair a committee that has always brought the wider context of employee engagement, succession planning and diversity across the Group to its remuneration focus. Over the past eleven years, I have watched Experian grow into the tremendous organisation it is today, and I truly believe that the approach we have taken to executive remuneration at Experian has had a part to play in its success.
I also believe that Experian is well positioned to consolidate its place in the markets in which it operates, grow into new and exciting markets and, in doing so, deliver shareholder value over the coming years.
I am extremely pleased to announce that, following the 2018 AGM, I will be handing over the Remuneration Committee chairmanship to Mike Rogers. Having served alongside him over the past 12 months, I fi rmly believe that Mike will be a strong, principled Remuneration Committee Chairman, and wish him all the best for the future.
Finally, I look forward to receiving the support of our shareholders for the Annual report on remuneration at the 2018 AGM.
6% Benchmark PBT growth* 8.5% Three-year average Benchmark
PBT per share growth*
20.6%
Three-year TSR outperformance of the FTSE 100 Index
US\$3.7bn Three-year cumulative Benchmark operating cash fl ow*
* At constant currency.
| Brian Cassin £'000 |
Lloyd Pitchford £'000 |
Kerry Williams US\$'000 |
|
|---|---|---|---|
| Salary | 921 | 568 | 973 |
| Pension and benefi ts | 212 | 139 | 38 |
| Annual bonus | 1,059 | 653 | 1,116 |
| Share-based incentives | 3,660 | 2,757 | 3,667 |
| Total | 5,852 | 4,117 | 5,794 |
Fixed elements of pay
Variable elements of pay
Governance
Set out below is the Annual report on remuneration, which will be put to shareholders for an advisory vote at the AGM on 18 July 2018. The Remuneration Committee has prepared this report on behalf of the Board, in line with the UK Companies Act 2006, Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended) and the Listing Rules of the UK Financial Conduct Authority. All the sections which have been audited by the Company's external auditor, KPMG, have been noted.
The following table shows the single total fi gure of remuneration for the executive directors, for the years ended 31 March 2018 and 31 March 2017. Further explanatory information is set out below the table.
| Brian Cassin | Lloyd Pitchford | Kerry Williams | ||||
|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | |
| £'000 | £'000 | £'000 | £'000 | US\$'000 | US\$'000 | |
| Salary1 | 921 | 896 | 568 | 553 | 973 | 948 |
| Benefi ts | 28 | 22 | 26 | 29 | 37 | 29 |
| Pension | 184 | 179 | 113 | 111 | 1 | 11 |
| Annual bonus | 1,059 | 1,586 | 653 | 978 | 1,116 | 1,674 |
| Share-based incentives | 3,660 | 964 | 2,757 | 997 | 3,667 | 1,275 |
| Total | 5,852 | 3,647 | 4,117 | 2,668 | 5,794 | 3,937 |
1 Salary increases are eff ective 1 June. Therefore, the fi gures shown in the table above do not refl ect annual salary levels. For Kerry Williams, the salary also refl ects the timing of US payroll payments.
This fi gure represents the salary paid to executive directors during the year.
All salary increases took eff ect from 1 June 2017. The Committee approved salary increases for executive directors of between 2.6% and 2.8% with eff ect from this date:
| 1 June 2017 | 1 June 2016 | ||
|---|---|---|---|
| '000 | '000 | % increase | |
| Brian Cassin | £925 | £900 | 2.78% |
| Lloyd Pitchford | £570 | £555 | 2.70% |
| Kerry Williams | US\$975 | US\$950 | 2.63% |
In awarding these increases, the Committee considered a number of factors, including the approach to employee remuneration throughout the Group, the prevailing economic conditions and positioning against the market. The salary review budget in the USA and the UK was between 2.5% and 3%.
Taxable benefi ts include life insurance, private healthcare and a company car.
Brian Cassin and Lloyd Pitchford are eligible to participate in a defi ned contribution pension plan but elected not to do so during the year ended 31 March 2018. Over the fi nancial year, Brian Cassin received a cash supplement of £184,167 (2017: £179,167), and Lloyd Pitchford received a cash supplement of £113,500 (2017: £110,500), in lieu of their pension contributions.
Kerry Williams participates in a defi ned contribution plan (401k). As a result of him reaching the US Internal Revenue Service ('IRS') calendar limit for this plan, the company contribution to this during the year was limited to US\$569 (2017 401k employer contribution maximum: US\$10,800).
No executive director has a prospective right to a defi ned benefi t pension.
There is one annual bonus plan in operation across Experian and the majority of our workforce participate in this, with the remainder of employees participating in a sales commission plan. However, the operation of the plan varies depending on geography and grade. For example, while executive directors' bonuses are based on Group-wide Benchmark PBT growth, employees in other parts of the Group have their bonus based on the performance of their particular business line and/or region.
Starting with the bonus awards to be made in 2018, executive directors will be required to defer half of any bonus earned for three years, though they may choose to defer more. As in previous years, all three executive directors chose to defer their full 2018 bonus payments into the CIP on a voluntary basis.
Annual bonus outcomes depend on Benchmark PBT growth relative to stretching targets set at the start of each fi nancial year. We consider Benchmark PBT to be an important measure of performance for Experian because:
For the purposes of the annual bonus, performance is measured on a constant currency basis to strip out the eff ects of exchange rate fl uctuations. The Committee also excludes the impact of any material acquisitions or disposals made in the year to ensure that Benchmark PBT is measured consistently. This is in line with our approach for long-term incentive plan measures.
Each year we undertake a rigorous exercise to ensure that we set suffi ciently stretching targets. Before fi nalising them, there are a number of steps that the Committee takes to ensure that targets are appropriate in the context of expected performance, and are suffi ciently stretching. We consider the targets at three separate Remuneration Committee meetings over the year:
In January, the Committee considers the wider context, and is presented with an early indication of how Benchmark PBT growth is tracking in the current year. Our external remuneration consultants are also invited to this meeting to provide the Committee with a wider assessment of the pay environments in the relevant locations for our business.
At its March meeting, the Committee has a fi rst look at possible targets for the forthcoming year, taking into account a number of factors including:
the strategic plan
Our Committee is able to take a balanced approach to target setting since all the non-executive directors sit on the Remuneration Committee, as well as on all our other principal Board Committees. This ensures that the Committee members are fully apprised of the wider business context and the Group's business prospects over the coming years, particularly since the Audit Committee has sight of the budget and business plan prior to the Remuneration Committee meeting taking place.
In the 2016 Report we announced that the Committee had agreed to disclose annual bonus targets one year following the completion of the relevant performance period. However, as discussed in the Introduction from the Chairman section of this report, following feedback received during the shareholder consultation process carried out during the year, the Committee has decided to bring the disclosure forward. As such, targets will now be disclosed immediately following the end of the relevant fi nancial year. The outcomes for the 2017 and 2018 annual bonus are shown below, relative to targets.
Outcomes for the year ended 31 March 2018
The table below shows our growth in Benchmark PBT for bonus purposes relative to the targets set at the start of the year, and the resulting annual bonus outcomes for each executive director, for the year ended 31 March 2018.
| % growth | % growth | % growth | % of bonus | ||||||
|---|---|---|---|---|---|---|---|---|---|
| required for | required | required for | Achievement | Bonus | Bonus | deferred | |||
| threshold | for target | maximum | Benchmark | % of | payout | payout | under | ||
| payout | payout1 | payout | PBT growth | maximum | '000 | % of salary | the CIP | ||
| Brian Cassin | £1,059 | 100% | |||||||
| Lloyd Pitchford | } | 4% | 6% | 8% | 6.3% | 57.5% | £653 | 115% | 100% |
| Kerry Williams | US\$1,116 | 100% |
1 This compares to the consensus forecast of the Committee's selected analysts of 5% Benchmark PBT growth at the time that the targets were set.
In determining the outcome of the annual bonus, the Committee discussed whether this level of vesting was refl ective of the Group's wider business performance during the year. After careful consideration, the Committee was satisfi ed that the level of payout was justifi ed, and approved the bonus awards at its May 2018 meeting, subject to the fi nalisation of the results and external audit. Further details about Experian's performance during the year, which were taken into account by the Committee, are set out in the Introduction from the Chairman section of this Report.
The executive directors have elected to defer their full bonus into Experian shares under the CIP for a three-year period. Deferred bonus shares are not subject to any further conditions but may be matched, subject to the conditions set out in the CIP awards section below.
Annual report on remuneration continued
Last year, we disclosed that 89% of the maximum Benchmark PBT growth target was achieved, resulting in a bonus payout equivalent to 177% of salary for each of the executive directors.
As disclosed in last year's Report, the bonus structure was modifi ed with eff ect from FY18 onwards to include a 'threshold' level of vesting. This bonus award was made prior to that change taking place, and targets were therefore set accordingly. The targets for the award for the 2017 fi nancial year are set out in the table below:
| % growth required for target payout1 |
% growth required for maximum payout |
Benchmark PBT growth |
Achievement % of maximum |
Bonus payout '000 |
Bonus payout % of salary |
% of bonus deferred under the CIP |
|
|---|---|---|---|---|---|---|---|
| Brian Cassin | £1,586 | 100% | |||||
| Lloyd Pitchford | } 4% |
6% | 6% | 89% | £978 | 177% | 100% |
| Kerry Williams | US\$1,674 | 100% |
1 This compares to the consensus forecast of the Committee's selected analysts of 2.5% Benchmark PBT growth at the time that the targets were set.
As disclosed last year, the Committee considered this level of payout to be refl ective of Group performance over 2017.
The share-based incentive amount included in the single total fi gure of remuneration is the combined value of the CIP and PSP awards vesting in respect of the relevant fi nancial year. For 2017, these relate to the awards granted on 19 May 2014 and for 2018 they relate to the awards granted on 21 May 2015. Vesting in 2018 for both the CIP and PSP awards depended on performance over the three years ended 31 March 2018 as well as continued service.
The following tables show the performance achieved against the targets for CIP and PSP awards granted in May 2015:
| CIP awards | |||||||
|---|---|---|---|---|---|---|---|
| Vesting1 | |||||||
| Performance measure | Weighting | No match | 1:1 match | 2:1 match | Actual | Percentage vesting2 |
|
| Benchmark PBT per share (annual growth) | 50% | Below 4% | 4% | 8% | 8.5% | 100% | |
| Cumulative Benchmark operating cash fl ow3 | 50% | Below US\$3.4bn | US\$3.4bn | US\$3.8bn | US\$3.7bn | 84.5% | |
| Total | 92.3% |
| Vesting1 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Performance measure | Weighting | 0% | 25% | 100% | Actual | Percentage vesting4 |
||
| Benchmark PBT per share (annual growth) | 75% | Below 4% | 4% | 8% | 8.5% | 100% | ||
| TSR of Experian vs TSR of FTSE 100 Index | 25% | Below Index | Equal to Index | 25% above Index |
20.6% above Index |
86.7% | ||
| Total | 96.7% |
1 Straight-line vesting between the points shown.
2 The maximum opportunity was for a two-for-one match on the bonus deferred.
3 In line with the approach taken in previous years, the cumulative Benchmark operating cash fl ow targets shown above have been adjusted compared to those originally set to take into account the impact of acquisitions and disposals made over the performance period. The actual cumulative Benchmark operating cash fl ow over the performance period, of US\$3,699m, is determined on a constant currency basis. This is in line with our approach for all performance metrics, to ensure that awards are measured on a consistent basis.
4 The maximum opportunity was the original award with a face value of 200% of salary. Vesting of these awards was also subject to the Committee agreeing that the return on capital employed ('ROCE') performance over the period was satisfactory. Year-end ROCE was 15.7%, and so the Committee was comfortable that the payout determined by applying the performance criteria was appropriate in the context of this level of performance.
As these awards had not vested at the date this report was fi nalised, we have based the reported value of the awards on the average share price in the last three months of the fi nancial year, which was £15.90. The value of the awards included in the single total fi gure of remuneration is as follows:
| CIP | PSP | Value of | ||||||
|---|---|---|---|---|---|---|---|---|
| Value of shares |
dividend equivalent |
Total value of shares |
||||||
| Shares awarded |
Shares vesting |
Shares awarded |
Shares vesting |
vesting '000 |
payments '000 |
vesting '000 |
||
| Brian Cassin | 88,596 | 81,730 | 141,015 | 136,326 | £3,466 | £194 | £3,660 | |
| Lloyd Pitchford | 86,820 | 80,091 | 87,026 | 84,132 | £2,611 | £146 | £2,757 | |
| Kerry Williams | 69,906 | 64,488 | 95,799 | 92,613 | US\$3,475 | US\$192 | US\$3,667 |
The value of Kerry Williams' shares has been converted into US dollars at a rate of £1:US\$1.39, which is the average rate during the last three months of FY18.
Dividend equivalents of 122.0 US cents per share will be paid on vested shares. These represent the value of the dividends that would have been paid to the owner of one share between the date of grant and the date of vesting.
Last year we calculated the value of the share awards realised by Brian Cassin, Lloyd Pitchford and Kerry Williams in 2017 using the average share price from 1 January 2017 to 31 March 2017, in line with the prescribed single-fi gure methodology. This has now been revised to refl ect the actual share price on vesting, as follows:
| Three-month | Estimated value | Actual value | |||
|---|---|---|---|---|---|
| average | of long-term | of long-term | |||
| share price to | incentive awards | Share price | incentive awards | ||
| 31 March 2017 | '000 | on vesting | '000 | ||
| Brian Cassin | £944 | £964 | |||
| Lloyd Pitchford | } | £15.90 | £981 | £16.26 | £997 |
| Kerry Williams | US\$1,192 | US\$1,275 |
On 7 June 2017, awards were granted to the executive directors under the CIP and PSP. The face value of awards made to Brian Cassin and Lloyd Pitchford is given in pounds sterling, and the face value of awards made to Kerry Williams is given in US dollars. The number of awards made to Kerry Williams has been calculated using the average exchange rate for the three days prior to grant of £1:US\$1.29. All awards have been calculated using a three-day average share price.
In line with the CIP rules, invested shares for Brian Cassin and Lloyd Pitchford were purchased with their bonuses net of tax. In line with the rules of The Experian North America Co-investment Plan, invested shares for Kerry Williams were calculated with reference to his gross bonus. Matching awards are based on the gross value of the bonus deferred.
Details of these awards are set out in the following table:
| Type of interest in | Face value | Number | Vesting at threshold |
|||
|---|---|---|---|---|---|---|
| shares | Basis of award | '000 | of shares | performance | Vesting date | |
| Brian Cassin | ||||||
| CIP invested shares | Deferred shares | 100% of net bonus | £840 | 52,333 | n/a | 7 June 2020 |
| CIP matching shares1 | Nil-cost options | 200% of value of gross bonus deferral | £3,171 | 197,484 | 25% | 7 June 2020 |
| PSP2 | Conditional shares | 200% of salary | £1,850 | 115,745 | 25% | 7 June 2020 |
| Lloyd Pitchford | ||||||
| CIP invested shares | Deferred shares | 100% of net bonus | £518 | 32,276 | n/a | 7 June 2020 |
| CIP matching shares1 | Nil-cost options | 200% of value of gross bonus deferral | £1,956 | 121,797 | 25% | 7 June 2020 |
| PSP2 | Conditional shares | 200% of salary | £1,140 | 71,324 | 25% | 7 June 2020 |
| Kerry Williams | ||||||
| CIP invested shares | Deferred shares | 100% of gross bonus | US\$1,674 | 80,887 | n/a | 7 June 2020 |
| CIP matching shares1 | Conditional shares | 200% of value of gross bonus deferral | US\$3,348 | 161,774 | 25% | 7 June 2020 |
| PSP2 | Conditional shares | 200% of salary | US\$1,950 | 94,655 | 25% | 7 June 2020 |
1 The number of shares awarded to executive directors under the CIP was based on the share price at which invested shares were purchased in the market and the face value shown above is based on this. This price was £16.06.
2 The number of shares awarded to executive directors under the PSP was based on the average share price for the three days prior to grant, which was £15.98, and the face value shown above is based on this.
These awards will vest subject to the achievement of the following performance conditions:
| Vesting1 | ||||
|---|---|---|---|---|
| Performance measure | Weighting | No match | 1:1 match | 2:1 match |
| Benchmark PBT per share (average annual growth) | 50% | Below 4% | 4% | 8% |
| Cumulative Benchmark operating cash fl ow | 50% | Below US\$3.6bn | US\$3.6bn | US\$4.0bn |
| Vesting1 | |||||
|---|---|---|---|---|---|
| Performance measure | Weighting | 0% | 25% | 100% | |
| Benchmark PBT per share (average annual growth) | 75% | Below 4% | 4% | 8% | |
| TSR of Experian vs TSR of FTSE 100 Index | 25% | Below Index | Equal to Index | 25% above Index |
1 Straight-line vesting between the points shown.
CIP and PSP awards only vest if the Committee is satisfi ed that the vesting is not based on materially misstated fi nancial results. The Committee also has the discretion to vary the level of vesting if it is considered that the level of vesting determined by measuring performance is inconsistent with the Group's underlying fi nancial and operational performance. The vesting of PSP awards is also subject to the Committee agreeing that ROCE performance over the performance period was satisfactory.
Annual report on remuneration continued
The Committee selected Benchmark PBT per share, Cumulative Benchmark operating cash fl ow and ROCE as performance metrics for our long-term incentive plans, as they refl ect three of our key performance indicators. Using these metrics therefore directly links to Experian's strategic aims and business objectives. Using relative TSR recognises the importance of creating value for shareholders. As such, we believe these measures to be the most appropriate measures of the Group's success and, together, they ensure that executive directors are incentivised to deliver on a wide range of business and fi nancial measures. While they are very similar in nature, we consider Benchmark PBT per share to be a better performance measure than EPS as it excludes the distorting impact of tax and discontinued operations. We measure our TSR performance relative to the FTSE 100 Index, rather than against our bespoke comparator group, given the diffi culties in measuring TSR against such a narrow group of companies, many of whom are listed in diff erent markets. As such, they may be subject to diff erent market forces. Details of Experian's performance relative to the FTSE 100 Index is set out in the following section.
The chart below shows Experian's annual TSR performance against the FTSE 100 Index over the last nine years. The FTSE 100 Index is the most appropriate index against which TSR should be measured, as it is widely used and understood, and Experian is a constituent of the index.
| CEO total single fi gure of remuneration ('000)1 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Don Robert | US\$6,729 | US\$5,714 | US\$23,206 | US\$22,974 | US\$16,290 | US\$620 | — | — | — |
| Brian Cassin | — | — | — | — | — | £1,976 | £3,678 | £3,647 | £5,852 |
| Annual bonus paid against maximum opportunity (%) |
|||||||||
| Don Robert | 100% | 98% | 100% | 75% | 50% | — | — | — | — |
| Brian Cassin | — | — | — | — | — | 38% | 100% | 89% | 58% |
| LTIP vesting against maximum opportunity (%) |
|||||||||
| Don Robert | 70% | n/a2 | 100% | 100% | 94% | 69% | — | — | — |
| Brian Cassin | — | — | — | — | — | 40% | 33% | 32% | 95% |
1 Prior year numbers have been updated to refl ect actual long-term incentive plan outcomes.
2 No long-term incentive plan ('LTIP') awards vested in respect of performance periods ending in 2011.
The following table shows a single total fi gure of remuneration for the Chairman and non-executive directors in respect of the years ended 31 March 2018 and 31 March 2017:
| Fees '000 | Benefi ts '000 | Share-based incentives '000 |
Total '000 |
||||||
|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||
| Don Robert1 | £625 | £600 | £6 | £20 | — | £1,178 | £631 | £1,798 | |
| Roger Davis2 | €263 | €255 | — | — | — | — | €263 | €255 | |
| Caroline Donahue3 | €177 | €42 | — | — | — | — | €177 | €42 | |
| Luiz Fleury4 | €240 | €243 | — | — | — | — | €240 | €243 | |
| Deirdre Mahlan | €221 | €216 | — | — | — | — | €221 | €216 | |
| Mike Rogers5 | €117 | — | — | — | — | — | €117 | — | |
| George Rose | €247 | €235 | — | — | — | — | €247 | €235 | |
| Paul Walker | €159 | €149 | — | — | — | — | €159 | €149 |
1 The 2017 share-based incentive data for Don Robert shows the value of PSP and CIP awards made to him while serving as Chief Executive Offi cer. This fi gure consists of awards which vested after the 2017 report was published and, as such, the value shown for share-based incentives in that report was based on the average share price during the last three months of the fi nancial year, of £15.90, in line with the prescribed single fi gure methodology. The share price on the vesting date was £16.26, and the share-based incentive fi gure shown in the table above has been updated accordingly. Don Robert also receives an unfunded pension payment from the Group of £466,375 per annum (2017: £467,311).
2 Roger Davis acted as independent Chairman of Experian Limited, which is regulated by the UK Financial Conduct Authority. His remuneration in respect of this role comprises an annual non-executive director's fee (including a fee for his role as Chairman of the Remuneration Committee) and a fee for his role as independent Chairman of Experian Limited.
3 Caroline Donahue joined the Board on 1 January 2017.
4 Luiz Fleury acted as an independent adviser to Serasa S.A., our Brazilian business. His remuneration includes a fee for this role, paid in Brazilian reais, along with the annual non-executive director's fee.
5 Mike Rogers joined the Board on 1 July 2017.
Non-executive director fees are reviewed every two years, they were last reviewed during this year. With eff ect from 1 October 2017, the fee levels are as follows:
| Annual fee from | Annual fee prior to | |
|---|---|---|
| 1 October 2017 | 1 October 2017 | |
| Base fee | €150,750 | €142,500 |
| Audit Committee Chairman fee | €45,500 | €43,000 |
| Remuneration Committee Chairman fee | €36,500 | €34,500 |
| Deputy Chairman/Senior Independent Director fee | €91,000 | €86,000 |
Other than the Chairman, non-executive directors required to undertake intercontinental travel to attend Board meetings receive a supplementary payment of €6,000 per trip, in addition to any travel expenses. This amount is unchanged since October 2009.
As noted in the 2017 Report, Don Robert's fee was reviewed last year, and was increased with eff ect from 1 April 2017 to £625,000.
The following table sets out the percentage change in the CEO's salary, benefi ts and annual bonus between 2017 and 2018, and how this compares to the average percentage change for our UK and Ireland employees. Consistent with our approach in previous years, we've selected this group of employees because Experian operates in 39 countries and, as such, has widely varying approaches to pay across diff erent regions. This also avoids the complexities involved in collating and comparing remuneration data across diff erent geographic populations, including the impact of foreign exchange rate movements.
The fi gures for UK and Ireland employees refl ect average salaries and average employee numbers each year. The annual bonus fi gure includes payments from sales incentive plans.
| Base salary | Taxable benefi ts | Annual bonus | |
|---|---|---|---|
| CEO | 2.8% | 29% | (33.2)% |
| UK and Ireland employees | 3.0% | (3.7)% | 1.2% |
Annual report on remuneration continued
The following salary increases will take eff ect from 1 June 2018:
| 1 June 2018 | 1 June 2017 | ||
|---|---|---|---|
| '000 | '000 | % increase | |
| Brian Cassin | £948 | £925 | 2.4% |
| Lloyd Pitchford | £585 | £570 | 2.6% |
| Kerry Williams | US\$1,000 | US\$975 | 2.6% |
In approving these increases, the Committee took into account a number of factors, with the pay and increases made across the Group being chief among them.
The Committee's approach to operating the annual bonus plan for the year ending 31 March 2019 will be unchanged from 2018, albeit executive directors will be required to defer 50% of any payout for a period of three years. They may choose to defer up to 100% on a voluntary basis.
The entire bonus will be subject to clawback provisions, allowing the Company to recover all or part of any vested award for a period of three years from the end of the performance period. The targets for this award will be disclosed in next year's Annual report on remuneration.
The executive directors have each elected to defer 100% of their bonuses into the CIP. We expect to grant matching shares in the fi rst quarter of the year ending 31 March 2019, on a two-for-one basis. We also expect to grant PSP awards equivalent to 200% of salary at the same time. Both CIP and PSP awards will vest subject to meeting the following performance conditions, measured over three years:
| Vesting1 | |||||||
|---|---|---|---|---|---|---|---|
| Performance measure | Weighting | 0% | 25% | 50% | 100% | ||
| CIP awards | |||||||
| Benchmark PBT per share (average annual growth)2 | 50% | Below 5% | 5% | 6% | 9% | ||
| Cumulative Benchmark operating cash fl ow | 50% | Below US\$3.7bn | US\$3.7bn | US\$3.8bn | US\$4.1bn | ||
| PSP awards | |||||||
| Benchmark PBT per share (average annual growth)2 | 75% | Below 5% | 5% | 6% | 9% | ||
| TSR of Experian vs TSR of FTSE 100 Index | 25% | Below Index | Equal to Index 8.3% above Index | 25% above Index |
1 Straight-line vesting between the points shown.
2 Measured on an ongoing activities and constant currency basis.
Vesting of CIP and PSP awards will be subject to the Committee being satisfi ed that the vesting is not based on materially misstated fi nancial results. The Committee also retains the discretion to vary the level of vesting if we consider that the level of vesting determined by measuring performance is inconsistent with the Group's underlying fi nancial and operational performance. The vesting of PSP awards will also be subject to the Committee agreeing that ROCE performance over the period is satisfactory.
As discussed in the Introduction from the Chairman section of this Report, a holding period of two years will apply to PSP awards. The additional holding period will also apply to CIP awards made from next year. This is because, when the decision to introduce the holding period was made, we were already halfway through the bonus year which determines the level of bonus award to be invested into the CIP.
Both award types will be subject to clawback provisions, allowing the Company to recover all or part of any vested award during the holding period.
We believe it's important that executive directors build up a signifi cant holding in Experian shares, to align their interests with those of shareholders. Under our guidelines, the CEO should hold the equivalent of three times his or her base salary in Experian shares and other executive directors should hold the equivalent of two times their base salary. These guidelines include invested or deferred shares held under the CIP, but not matching shares. Shares that have vested but are subject to the two-year holding period will also count towards the guideline. Until the shareholding guideline is met, we expect executive directors to retain at least 50% of any shares vesting (net of tax) under a share award. Unvested shares don't count towards the guideline.
We also have guidelines for the non-executive directors to build up a holding in Experian's shares equal to their annual fee. Each fi nancial year, the fi rst quarter's net fee is used to purchase Experian shares until the non-executive director reaches this holding.
All executive and non-executive directors that served during the year hold shares in excess of the relevant shareholding guidelines. The interests of the directors (and their connected persons) in the Company's ordinary shares are shown below and there have been no changes between 31 March 2018 and the date of this report:
| Shares held in | Shareholding guidelines | Share awards subject to performance conditions |
|||||
|---|---|---|---|---|---|---|---|
| Experian plc at 31 March 2018 |
Guideline (% of salary/fee) |
Shareholding (% of salary)1 |
Guideline met? | CIP matching awards2 |
PSP awards |
Share options3 |
|
| Brian Cassin4 | 366,789 | 300% | 595% | Yes | 551,952 | 395,257 | — |
| Lloyd Pitchford4 | 175,459 | 200% | 461% | Yes | 372,698 | 243,756 | 1,470 |
| Kerry Williams5 | 213,182 | 200% | 461% | Yes | 426,364 | 291,715 | — |
| Don Robert | 1,198,435 | 100% | 2,948% | Yes | — | — | — |
| Roger Davis | 60,000 | 100% | 562% | Yes | — | — | — |
| Caroline Donahue | 10,000 | 100% | 116% | Yes | — | — | — |
| Luiz Fleury | 9,650 | 100% | 112% | Yes | — | — | — |
| Deirdre Mahlan | 15,000 | 100% | 134% | Yes | — | — | — |
| Mike Rogers | 9,287 | 100% | 108% | Yes | — | — | — |
| George Rose | 20,000 | 100% | 145% | Yes | — | — | — |
| Paul Walker | 15,000 | 100% | 174% | Yes | — | — | — |
1 Shareholding guidelines have been calculated using the closing share price on 31 March 2018, which was £15.38 and exchange rates at 31 March 2018 of £1:US\$1.41 and £1:€1.14.
2 Matching shares granted to Brian Cassin and Lloyd Pitchford are in the form of nil-cost options, which are unvested at 31 March 2018. Those granted to Kerry Williams are conditional share awards.
3 Share options have been granted under the all-employee Sharesave plan.
4 The number of Experian shares held by Brian Cassin and Lloyd Pitchford at 31 March 2018 includes 146,267 and 98,764 invested shares in the CIP respectively.
5 The number of Experian shares held by Kerry Williams at 31 March 2018 includes 213,182 shares awarded to him under The Experian North America Co-investment Plan as a result of his annual bonus deferral elections, in addition to his personal benefi cial shareholding. Kerry Williams has an unconditional right to receive these Experian shares at the end of the relevant three-year deferral period. These shares do not carry dividend or voting rights prior to receipt.
Three former directors of Experian Finance plc (formerly GUS plc) received unfunded pensions from the Group. Two of the former directors are now paid under the Secured Unfunded Retirement Benefi t Scheme, which provides security for the unfunded pensions of executives aff ected by the HMRC ('Her Majesty's Revenue and Customs') earnings cap. The total unfunded pensions paid to the former directors was £438,508 in the year ended 31 March 2018.
Annual report on remuneration continued
No payments for loss of offi ce were made in the year (2017: nil).
We recognise the value of external non-executive directorships in enabling executive directors to broaden their experience and development, which we believe ultimately benefi ts Experian. In line with the Code's recommendations, the executive directors may accept one external non-executive directorship, although they may not serve as the chairman of a FTSE 100 company, given the time requirement this is likely to entail. We allow the executive directors to keep any fees they may receive in respect of their non-executive directorship roles.
Brian Cassin was a non-executive director of J Sainsbury plc throughout the year, and Lloyd Pitchford was a non-executive director of Bunzl plc. They received fees of £66,154 and £84,112 respectively for the period under review. During the year, Kerry Williams also took on a non-executive director role at Pacifi c LifeCorp, for which he received a fee of US\$207,097 over the period.
The table below illustrates the relative importance of spend on pay for all employees, compared to the fi nancial distributions to shareholders, through dividends and earnings-enhancing share repurchases:
| 2018 US\$m |
2017 US\$m |
% change | |
|---|---|---|---|
| Employee remuneration costs | 1,716 | 1,768 | (2.9)% |
| Dividends paid on ordinary shares | 388 | 381 | 1.8% |
| Estimated value of earnings-enhancing share repurchases1 | 494 | 299 | 65.2% |
1 The increase is largely due to increased spend under the share repurchase programme after a decrease in 2017. For reference, the 2016 fi gure was US\$487m.
All of our non-executive directors are members of the Committee and met four times during the year ended 31 March 2018 to discuss remuneration. Each of the Committee's members is considered to be independent in accordance with the UK Corporate Governance Code.
The Committee's terms of reference can be found at www.experianplc.com/about-us/corporate-governance/board-committees/.
The Committee is responsible for:
Recommending to the Board senior management remuneration policy and the Chairman's remuneration.
Determining individual remuneration packages for executive directors and certain senior executives.
Communicating with shareholders on remuneration policy.
Making recommendations to the Board on the design of the Group's shortand long-term incentive plans.
Overseeing the Group's executive pension arrangements.
During the year, the Committee:
Governance
As all non-executive directors sit on all of the Board committees, they were exposed to all aspects of employee pay and conditions throughout the organisation, including succession planning, talent management and employee engagement, and assessed executive director remuneration in this context.
In making its decisions, the Committee consults the Chairman, the Chief Executive Offi cer and the Group Human Resources Director where required. We also invite members of the Global Reward team to attend Committee meetings as appropriate. We normally consult the Chief Financial Offi cer about performance conditions applying to short- and long-term incentive arrangements. However, we do not consider it appropriate that executives are present when their own remuneration arrangements are being discussed.
The Committee has access to independent consultants to ensure that it receives objective advice. We reviewed our external advisers in 2013 and appointed Towers Watson Ltd ('Willis Towers Watson'), who remained our external advisers throughout the year ended 31 March 2018. Willis Towers Watson provides other services to Experian globally, including advice on benefi ts and provision of market data.
In addition, Kepler (a brand of Mercer) provided incentive plan award valuations and remuneration data, as well as supporting data for the target calibration process. Kepler does not provide any other services to the Group, although Mercer, Kepler's parent company, does provide unrelated services to the Group.
Both Willis Towers Watson and Kepler are members of the Remuneration Consultants Group and voluntarily operate under the Code of Conduct in relation to executive remuneration consulting in the UK. We were satisfi ed that their advice was objective and independent.
The fees paid to these advisers for services to the Committee in the year ended 31 March 2018 are set out in the following table, and are based on hours spent:
| Adviser | Fees paid in 2018 |
|---|---|
| Willis Towers Watson | £47,056 |
| Kepler | £9,200 |
The voting to approve the Annual report on remuneration and the Directors' remuneration policy at the AGM held on 20 July 2017, is set out in the following table:
| Votes for (including discretionary |
||||
|---|---|---|---|---|
| votes) % Number |
Votes against % Number |
Total number of votes cast |
Number of votes withheld |
|
| Annual report on remuneration | 83.8% 579,215,551 |
16.2% 111,633,541 |
690,849,092 | 4,334,446 |
| Directors' remuneration policy | 75.5% 523,841,449 |
24.5% 169,911,599 |
693,753,048 | 1,430,490 |
The Introduction from the Chairman section of this Report contains details of our discussions with shareholders and investor representative bodies, both prior to and following the 2017 AGM, and sets out the steps that the Committee has taken to address the key issues raised. The Committee has always been, and remains committed to, ongoing dialogue with our key shareholders. We will continue to speak to them every year, and take on board their views on our executive remuneration structures. As noted elsewhere in this Report, this year we consulted with shareholders and institutional investor bodies on a number of diff erent occasions, and took their feedback on board to determine the proposed changes to the executive remuneration framework.
The Directors' remuneration policy was approved by shareholders at the AGM on 20 July 2017 and the Committee intends to implement this Policy for the three years to July 2020.
We have included, below, the Policy table and the Which clawback provisions apply? section, which we consider to be the most helpful sections of the policy for shareholders. The full and original version of the Policy, as approved by shareholders, is available on the Company's website at www.experianplc.com/investors/reports/.
We intend to change how we operate our Policy to refl ect the introduction of additional holding periods in respect of our long-term incentive plans, compulsory bonus deferral and the inclusion of a threshold level of vesting in respect of the Co-investment Plan. To assist clarity, this has been refl ected by the inclusion of additional wording, in italics below, within our Policy table but it will not form part of our formal Policy until approved by shareholders in future years.
| Element and link to strategy |
Operation | Maximum potential value and payment at target |
Performance metrics and weightings |
|---|---|---|---|
| Base salary | |||
| To help with attracting and retaining executive directors of the right calibre. |
Base salary is paid in equal instalments during the year. |
Annual executive director salary increases will, in normal circumstances, be limited to the increases awarded across the Group as a |
When the Committee considers salary increases, it takes into |
| Provides a base level of pay | Salaries are reviewed annually, with any increases generally taking eff ect from 1 June. |
whole. | account individual performance over the |
| and refl ects the competitive market salary for the role. |
Salary levels and increases take into account a number of factors, including the approach |
Higher increases may be made in exceptional circumstances including, but not limited to, a |
preceding fi nancial year. |
| Base salary level takes account of personal contribution and performance against Group strategy. |
to employee remuneration throughout the Group, prevailing economic conditions, best practice and positioning against the market. |
change in role or responsibility, and will take account of market practice in relation to the new role. |
|
| Benefi ts | |||
| Benefi ts are provided as part of a competitive and cost-eff ective overall remuneration package. |
The Group provides a range of market competitive benefi ts that include, but are not limited to, healthcare, death-in-service |
The cost of providing such benefi ts may vary from year to year, refl ecting the cost to the Company. |
None. |
| Certain benefi ts may also be provided to support expatriates, |
provision, company car or allowance and fi nancial and tax advice. |
The Committee sets benefi ts at a level it considers appropriate against relevant |
|
| where they have relocated. | Executive directors can also participate in any of the Group's all-employee share plans, for example the Sharesave plan, on the same basis as other eligible employees. |
market practice, the role and particular circumstances (for example, in the case of expatriate benefi ts, where the individual is required to relocate). |
|
| In the USA, eligible executive directors may participate in a deferred compensation plan, which is standard market practice in the USA. |
|||
| For expatriate assignments, we retain the fl exibility to tailor benefi ts to the circumstances of the assignment. |
|||
| Additional benefi ts may include relocation expenses at the beginning and end of each assignment, housing allowance and school fees. |
|||
| Pension | |||
| Provides a market-aligned retirement provision. |
Pension arrangements are in line with local market practice. |
In the UK, the cash payment or pension contribution for executive directors is |
None. |
| In the UK, the Group operates a defi ned contribution plan, with company contributions |
normally equal to 20% of annual gross base salary. |
||
| set as a percentage of base salary. If | In the USA, the contribution rate is up to 4% | ||
| impacted by HMRC pension limits, an individual may elect to receive a cash |
of earnings, up to an annual compensation limit set by the Internal Revenue Service. |
||
| allowance instead. In the USA, executive directors are eligible to join a defi ned contribution plan. |
If required, pension arrangements in other jurisdictions would be in line with local market practice. |
| Element and link to strategy |
Operation | Maximum potential value and payment at target |
Performance metrics and weightings |
||
|---|---|---|---|---|---|
| Annual bonus | |||||
| Motivates and rewards the achievement of specifi c annual objectives, linked to Experian's |
The Committee sets appropriate performance targets at the start of each fi nancial year. |
Threshold performance results in a bonus payout equivalent to 25% of the maximum. No bonus is payable for below-threshold |
The annual bonus may be based entirely on fi nancial performance or on a |
||
| business strategy. | At the end of the fi nancial year, the Committee | performance. | combination of fi nancial, | ||
| determines the extent to which these have been satisfi ed, based on audited results, and agrees the level of bonus to be paid. |
Achieving target performance results in a bonus payout equivalent to 50% of the maximum. |
strategic and/or operational objectives. However, the fi nancial element will comprise at |
|||
| Half of any bonus must be deferred for a period | Achieving maximum performance results | least 70% of the bonus. | |||
| of three years. However, the executive director may elect to defer all of their bonus into the CIP. Where they elect not to do so, payment is made as soon as practicable after the fi nancial year-end. |
in full bonus payout of 200% of salary. | The Committee retains the ability to exercise its judgment to vary the level of payout if it considers that the formulaic payout determined by measuring performance is inconsistent with the Group's actual underlying fi nancial and operational performance. |
|||
| Malus and clawback provisions apply, under which annual bonus payments may be reduced or recovered in certain circumstances. Further details about our clawback and malus policy are set out in the Which clawback provisions apply? section of the Report. |
|||||
| See page 99 Which clawback provisions apply? |
|||||
Aligns with shareholder interests through voluntary investment of personal capital, delivery of Experian shares and the long-term time horizons.
Use of stretching fi nancial metrics incentivises performance.
Encourages participants' long-term commitment to the Group through personal investment.
Participants are invited to invest between 50% and 100% of their annual bonus into Experian shares.
A conditional award of matching shares or nil-cost options is granted on a two-for-one basis on the gross bonus deferred, and vests over a three-year period subject to achieving performance targets. Any vested awards are subject to a further two-year holding period.
Dividend equivalents accrue on all awards of shares.
Malus and clawback provisions apply, under which CIP awards may be reduced or recovered in certain circumstances. Further details about our clawback and malus policy are set out in the Which clawback provisions apply? section of the Report.
See page 99 Which clawback provisions apply? Maximum award levels depend on the bonus deferred, which will be matched on up to a two-for-one basis.
There is no vesting for below-target performance.
Achieving threshold performance results in 25% vesting of the matching shares.
Achieving target performance results in 50% vesting of the matching shares.
Achieving maximum performance results in full vesting of the matching shares.
Awards vest based on fi nancial performance and subject to the Committee being satisfi ed that the vesting is not based on materially misstated fi nancial results.
The Committee retains the discretion to exercise its judgment to vary the level of vesting if it considers the formulaic vesting level determined by measuring performance to be inconsistent with the Group's actual underlying fi nancial and operational performance.
Governance
Directors' remuneration policy continued
| Element and link to strategy |
Operation | Maximum potential value and payment at target |
Performance metrics and weightings |
|---|---|---|---|
| Performance Share Plan | |||
| Use of stretching fi nancial metrics incentivises performance. |
Participants receive an annual award of conditional shares or nil-cost options, which vest over a three-year period subject to |
Normal maximum award levels are 200% of salary. |
Vesting of up to 25% of the awards is based on a share-based metric, with |
| Aligns with shareholder interests through delivery of shares and the long-term |
achieving performance targets. Any vested awards are subject to a further two-year holding period. |
Awards of up to 400% of salary may be made in exceptional circumstances such as on recruitment. |
the balance based on fi nancial performance. Awards are also subject |
| time horizons. | Dividend equivalents accrue on all awards of shares. |
There is no vesting for below-target performance. |
to a fi nancial underpin. |
| Malus and clawback provisions apply, under which PSP awards may be reduced |
Achieving target performance results in 25% of the shares vesting. |
The Committee retains the ability to vary the level of vesting if it considers the |
|
| or recovered in certain circumstances. Further details about our clawback and malus policy are set out in the Which clawback provisions apply? section of the Report. See page 99 Which clawback provisions apply? |
Achieving maximum performance results in full vesting of the shares. |
formulaic vesting level determined by measuring performance to be inconsistent with the Group's actual underlying fi nancial and operational performance. |
|
| Chairman and non-executive director ('NED') fees To attract individuals with a broad range of experience and skills, to oversee the implementation of our strategy. |
The Chairman is paid an annual fee in equal monthly instalments. The Group may provide the Chairman with a limited range of benefi ts such as healthcare, tax advice or use of a car. |
The Committee sets the Chairman's fees, while NED fees are set by the Board. Both are set based on a number of factors, including the time commitment required |
No performance-related arrangements are in place for the Chairman or the NEDs. |
| The NEDs are paid a basic fee plus additional fees for chairing a Board Committee and for the role of Deputy Chairman or Senior Independent Director. NED fees are paid in equal quarterly instalments during the year. |
and positioning against the market. Fees are normally reviewed every two years. |
||
| NEDs receive an additional fee where attendance at Board meetings involves intercontinental travel from their home location. The Company may settle any tax due on travel expenses incurred by the Chairman and NEDs. |
|||
| Share Option Plan ('SOP') | |||
| Provides focus on increasing Experian's share price over |
Options are granted with an exercise price equivalent to the market value of an Experian |
Normal maximum award levels are 200% of salary. |
The vesting of options is based on fi nancial |
| the medium to longer term. | share at the date of grant. These vest subject to achieving performance targets that are tested over a three-year period and are exercisable for seven years thereafter. |
Grants of up to 400% of salary may be made in exceptional circumstances such as on recruitment. |
performance targets. |
| No option grants have been made since 2009 and the Committee has agreed that |
There is no vesting for below-target performance. |
||
| no further awards will be made, unless warranted by exceptional circumstances |
Achieving target performance results in 25% of the options vesting. |
||
| such as recruitment. |
Malus and clawback provisions apply, under which SOP awards may be reduced or recovered in certain circumstances. Further details about our clawback and malus policy are set out in the Which clawback provisions apply? section of the Report.
See page 99 Which clawback provisions apply?
Achieving maximum performance results in full vesting of the options.
The Committee reserves the right to make any remuneration payments and payments for loss of offi ce (including exercising any discretions available to it in connection with such payments), notwithstanding that they are not in line with the Policy set out in this Report, where the entitlement to the payment arose (i) before the 2014 AGM; (ii) at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a director of the Company; or (iii) under a remuneration policy previously approved by the Company's shareholders. For these purposes, entitlements arising under the Company's current remuneration policy (as approved by shareholders at the 2014 AGM) will be incorporated into this Policy and 'payments' includes the Committee satisfying awards of variable remuneration, and an entitlement under an award over shares arises at the time the award is granted.
Clawback and/or malus applies to the Company's incentive plans and applies for fi ve years from grant.
Under these provisions, the Committee may apply clawback or malus in circumstances which have:
Under our malus and clawback policy, should a trigger event be identifi ed, a Clawback Committee would be appointed by the Remuneration Committee to investigate the issue. The Clawback Committee would report back with recommendations on whether malus and/or clawback should be applied, which individuals this should aff ect, which remuneration should be subject to malus and/or clawback and the value that should be impacted. The Remuneration Committee would then have fi nal sign-off on any decision to operate clawback or malus.
On behalf of the Remuneration Committee
Charles Brown Company Secretary 16 May 2018
The directors present their report and the audited fi nancial statements for the year ended 31 March 2018. The report has been prepared in line with the UK Companies Act 2006, and the Corporate governance report and the Shareholder and corporate information section form part of this Directors' report. The Strategic report contains certain information equivalent to that required in a report of the directors.
The Group income statement shows a profi t for the year ended 31 March 2018 of US\$815m (2017: US\$865m). The directors have announced the payment of a second interim dividend, in lieu of a fi nal dividend, of 31.25 US cents per ordinary share (2017: 28.5 US cents) to be paid on 20 July 2018 to shareholders on the register of members on 22 June 2018. A fi rst interim dividend of 13.5 US cents per ordinary share was paid on 2 February 2018, giving a total dividend for the year of 44.75 US cents per ordinary share (2017: 41.5 US cents).
Innovation, supported by our talented people, and by research and development, plays a key role in supporting Experian's business performance. Details of such activities are given in the Strategic report.
Information in respect of acquisitions and disposals made during the year is contained in note 39 and note 41 respectively to the Group fi nancial statements.
The Company has a branch registered in Ireland under branch number 905565.
Details of events occurring after the end of the reporting period are contained in note 45 to the Group fi nancial statements.
Descriptions of the use of fi nancial instruments and Experian's treasury and risk management objectives and policies are set out in note 7 to the Group fi nancial statements.
Details of the Company's share capital and changes during the year ended 31 March 2018 are set out in note O to the Company fi nancial statements.
Experian did not make any political donations during the year ended 31 March 2018.
Details of the adoption of the going concern basis in preparing the Group fi nancial statements are set out in note 2 to the Group fi nancial statements and are incorporated into this report by reference.
The directors' names, biographical details and skills and experience are shown in the Board of directors section. Mike Rogers was appointed as a non-executive director on 1 July 2017 and Dr Ruba Borno was appointed as a non-executive director on 1 April 2018.
Particulars of directors' remuneration, service contracts and interests in the Company's ordinary shares are shown in the Report on directors' remuneration. There were no changes in the directors' interests in the ordinary shares between the end of the fi nancial year and 16 May 2018.
In line with the UK Corporate Governance Code, all directors (with the exception of Roger Davis, who will retire from the Board with eff ect from the conclusion of the 2018 AGM on 18 July 2018), being eligible, will off er themselves for election or re-election at the 2018 AGM. An evaluation of the performance of the Board, its committees and individual directors was carried out during the fi nancial year. The Board is satisfi ed that all directors seeking election or re-election contribute eff ectively and demonstrate commitment to their roles. The Corporate governance report contains further details of the evaluation process.
During the year and up to the date of approval of this Annual Report, the Company maintained liability insurance and third-party indemnifi cation provisions for its directors and offi cers.
Both the Company, by ordinary resolution, and the directors may elect any person to be a director. The number of directors shall not exceed the maximum number fi xed by the Company's articles of association. Any person appointed by the directors shall only hold offi ce until the next AGM and shall then be eligible for election. The offi ce of a director shall be vacated on the occurrence of any of the events listed in article 92 of the Company's articles of association. The Company may, in accordance with its articles of association, remove any director from offi ce and elect another person in their place.
The Company's 2018 AGM will be held at The Shelbourne Hotel, 27 St Stephen's Green, Dublin 2, D02 H529, Ireland, at 9.30am on Wednesday 18 July 2018. Shareholders who are unable to attend may submit questions beforehand via email to [email protected] or on the prepaid card sent to shareholders with the notice of meeting. The questions will be addressed at the meeting, via the Company's website at www.experianplc.com or individually as appropriate. The notice of meeting has been circulated to shareholders and can also be viewed on the Company's website.
The rights and obligations attaching to the ordinary and deferred shares are set out in note O to the Company fi nancial statements and in the Company's articles of association, a copy of which can be obtained from the Experian website, www.experianplc.com. The Company's articles of association may be amended by passing a special resolution.
The Company has a Level 1 American Depositary Receipt (ADR) programme in the USA, for which the Bank of New York Mellon acts as depositary. The ADRs are traded on the highest tier of the US over-the-counter market, OTCQX, with each ADR representing one Experian plc ordinary share. Further details are given in the Shareholder and corporate information section.
The Company's articles of association oblige shareholders to comply with the notifi cation obligations contained in the UK Disclosure Guidance and Transparency Rules Sourcebook. As at 16 May 2018, the Company had been notifi ed of the indirect interest below in its issued ordinary share capital or voting rights.
The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of securities and/or voting rights and, apart from the matters described below, there are no restrictions on the transfer of the Company's ordinary shares and/or voting rights:
The deferred shares in the Company carry no voting rights.
Unless the directors determine otherwise, members are not entitled to vote personally or by proxy at a shareholders' meeting, or to exercise any other member's right in relation to shareholders' meetings, in respect of any share for which any call or other sum payable to the Company remains unpaid.
Details of deadlines in respect of voting for the 2018 AGM are contained in the notice of meeting that has been circulated to shareholders and which can also be viewed at the Company's website.
The existing authority for the Company to purchase its own shares was given at the AGM held on 20 July 2017. It permits the Company to purchase 94,133,811 of its own shares in the market.
On 18 May 2017, the Company announced its intention to repurchase shares, through a US\$600m share repurchase programme. During the year ended 31 March 2018, the Company purchased 26,614,287 of its own shares, at a cost of US\$544m (with 9,754,406 shares purchased before the 2017 AGM). 496,299 shares have been purchased by the Company since 31 March 2018. All shares purchased under this programme were cancelled.
On 18 May 2017, 400,302 ordinary shares in the Company were transferred from treasury to Global Shares Ireland Limited, the administrator of Experian's share plans, for nil consideration, to be used to meet obligations under employee share plans.
As at the date of approval of this Annual Report, the Company holds 61,958,503 (2017: 62,358,805) of its own shares as treasury shares, and had an unexpired authority to purchase up to 77,770,229 of its own shares.
Details of the new authority being requested at the 2018 AGM are contained in the circular to shareholders, which either accompanies this Annual Report and/or is available on the Company's website at www.experianplc.com.
Details of the shares in the Company purchased by and held under The Experian plc Employee Share Trust and the Experian UK Approved All Employee Share Plan are set out in note P to the Company fi nancial statements.
The Group is party to a number of agreements that take eff ect, alter, terminate, or have the potential to do so, upon a change of control of the Company following a takeover bid. These agreements are as follows:
continued
People with disabilities have equal opportunities when applying for vacancies. In addition to complying with legislative requirements, the Group has procedures to ensure that it treats disabled employees fairly and carefully manages their training and career development needs. The policies are considered to operate eff ectively. The Group supports employees who become disabled during the course of their employment, by off ering re-training or re-deployment, to enable them to remain with the Group whenever possible.
Experian is committed to employee involvement throughout the business. The Group is intent on motivating staff , keeping them informed on matters that concern them in the context of their employment, and involving them through local consultative procedures. Where there are recognition agreements with trade unions, the consultation process is established through national and local trade union representatives and through joint consultation committees.
Employees are kept well informed on matters of interest and the fi nancial and economic factors aff ecting the Group's performance. This is done through management channels, conferences, meetings, publications and intranet sites. More detail on employee engagement, together with information on corporate responsibility, diversity, succession planning and talent development, can be found in the Our people and corporate responsibility section of the Strategic report.
Experian supports employee share ownership by providing, whenever possible, employee share plan arrangements which are intended to align employees' interests with those of shareholders.
As at 16 May 2018, so far as each director is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing the audit report, of which the auditor is unaware, and each director has taken all steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the auditor is aware of that information.
The auditor, KPMG LLP, has indicated its willingness to continue in offi ce and a resolution that it be re-appointed as the Company's auditor will be proposed at the AGM.
The directors are responsible for:
In addition, the directors consider that, in preparing the fi nancial statements:
The directors also confi rm that, to the best of their knowledge, the fi nancial statements are prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, fi nancial position and profi t 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 that they face.
In addition, each of the directors considers that the Annual Report and fi nancial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
By order of the Board
Company Secretary
16 May 2018
Newenham House Northern Cross Malahide Road Dublin 17 D17 AY61 Ireland
22 Grenville Street St Helier Jersey JE4 8PX Channel Islands
Independent auditor's report
to the members of Experian plc only
We have audited the Financial Statements of Experian plc ('the Company', or 'the Parent Company') for the year ended 31 March 2018 which comprise the Group income statement, Group statement of comprehensive income, Group balance sheet, Group statement of changes in total equity, Group cash fl ow statement, Company profi t and loss account, Company statement of comprehensive income, Company balance sheet, Company statement of changes in total equity and the related notes, including the accounting policies in note 4.
In our opinion:
We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities are described below. We have fulfi lled our ethical responsibilities under, and are independent of the Group in accordance with, UK ethical requirements including the FRC Ethical Standard as applied to listed entities. We believe that the audit evidence we have obtained is a suffi cient and appropriate basis for our opinion.
| Overview | ||
|---|---|---|
| Materiality | US\$50m (2017: US\$53m) | |
| Group fi nancial statements as a whole |
5% (2017: 5%) of Group profi t before tax (continuing operations) |
|
| Coverage | 89% (2017: 90%) of Group revenue 83% (2017: 81%) of Group profi t before tax (continuing operations) 92% (2017: 92%) of Group total assets |
|
| Risks of material misstatement vs 2017 | ||
| Recurring risks | Provisions for taxation |
| Recurring risks | Provisions for taxation | |
|---|---|---|
| Provisions for litigation and contingent liabilities | ||
| Impairment of goodwill | ||
| Recoverability of Parent Company's investment in and amounts due from subsidiaries |
Key audit matters are those matters that, in our professional judgment, were of most signifi cance in the audit of the fi nancial statements and include the most signifi cant assessed risks of material misstatement (whether or not due to fraud) identifi ed by us, including those which had the greatest eff ect on: the overall audit strategy; the allocation of resources in the audit; and directing the eff orts of the engagement team. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon and we do not provide a separate opinion on these matters. In arriving at our audit opinion above, the key audit matters, in decreasing order of audit signifi cance, were as follows.
We continue to perform procedures over the goodwill impairment assessment in respect of the Asia Pacifi c cash generating unit. However, following an increase in headroom and a reduction in the sensitivity to key assumptions used in the impairment model in the year, we have not assessed this as one of the most signifi cant risks in our current year audit and, therefore, it is not separately identifi ed in our report.
| The risk | Our response | |
|---|---|---|
| Tax – uncertain tax positions | Dispute Outcome | Our procedures included: |
| and tax planning (US\$301m; 2017: US\$213m) Refer to the Audit committee report within the Corporate Governance Report and the Group Financial Statements notes 4, 5, 15, 34 and 43(b). |
Experian operates in a number of territories worldwide with complex local and international tax legislation. Signifi cant uncertainties arise over the ongoing tax matters in the UK, the USA and Brazil. Tax provisioning for uncertain tax positions is judgmental and requires estimates to be made in relation to existing and potential tax matters. |
Our tax expertise: Using our own tax specialists to perform an assessment of the Group's tax positions through the review of correspondence with the relevant tax authorities and discussions with the Group's external advisors. We challenged the assumptions applied using our own expectations based on our knowledge of the Group and considered relevant judgements passed by authorities; and Assessing transparency: Assessing the adequacy of the Group's disclosures in respect of tax and uncertain tax positions. |
| The risk | Our response | |
|---|---|---|
| Litigation and contingent | Dispute Outcome | Our procedures included: |
| liabilities (US\$44m; 2017: US\$21m) Refer to the Audit Committee report within the Corporate Governance Report and the Group Financial Statements notes 5, 35 and 43. |
The Group operates in an industry with continuously increasing levels of regulation, including the Consumer Finance Protection Bureau ('CFPB') in the USA and various federal and state legislative actions in Brazil, which increase the potential for regulatory breaches and penalties. High levels of consumer litigation continue in the USA and Brazil. The outcome of such litigation is uncertain and any position taken by management involves signifi cant judgment and estimation. |
Enquiry of lawyers: On all signifi cant legal cases where available, assessment of correspondence with the Group's external lawyers in order to corroborate our understanding of these matters, accompanied by discussions with internal counsel; and Assessing transparency: Assessing whether the Group's disclosures detailing signifi cant legal proceedings adequately disclose the potential liabilities of the Group. |
| Goodwill impairment | Forecast-based valuation | Our procedures included: |
| assessment in respect of the EMEA cash generating unit ('CGU') (US\$143m; 2017: US\$123m) Refer to the Audit committee report within the Corporate governance report and the Group Financial Statements notes 4, 5 and 19. |
The total carrying value of goodwill as at 31 March 2018 is US\$4,452m. Of this, US\$4,309m relates to CGUs where there is signifi cant headroom between the value-in-use and the carrying value of net assets. The remaining balance of US\$143m relates to the EMEA CGU. The estimated recoverable amount of this CGU shows relatively low headroom and the model is particularly sensitive to changes in assumptions along with any decline in forecast trading which could have a material impact on the carrying value of associated goodwill. Key inputs in the impairment models are inherently judgmental, which increases the potential risk of error. |
Assessing methodology: Assessing whether the principles and integrity of the cash fl ow model is in accordance with the relevant accounting standards; Challenging growth assumptions: Challenging management's assumptions and obtaining support, such as board-approved strategy plans and customer contracts, where available, for the growth initiatives used in the cash fl ow model, as well as corroborating long term growth rates to external sources; Our sector experience: Reviewing the appropriateness of discount rate through the use of our valuations specialists; Sensitivity analysis: Performing both breakeven and reasonably foreseeable scenario sensitivity analysis on the key assumptions noted above to identify the most sensitive; Historical comparisons: Evaluating the track record of historical assumptions used against actual results achieved; and Assessing transparency: Assessing whether the Group's disclosures about the sensitivity of the outcome of the impairment assessment to a reasonably possible change in key assumptions refl ected the risks inherent in the valuation of goodwill. |
| Recoverability of Parent Company's investment in and amounts due from subsidiaries (Investment in subsidiaries – US\$8,357.7m; 2017: US\$5,713.2m. Amounts owed by subsidiary undertakings – US\$15,733.6m; 2017: US\$12,587.3m) Refer to the Parent Company Financial Statements notes L and M. |
Low risk, high value The carrying amount of the Parent Company's investments in, and amounts due from, subsidiaries represents 35% (2017: 31%) and 65% (2017: 69%) of the Parent Company's total assets respectively. Their recoverability is not at a high risk of signifi cant misstatement or subject to signifi cant judgment. However, due to their materiality in the context of the Parent Company Financial Statements, this is considered to be the area that had the greatest eff ect on our overall parent company audit. |
Our procedures included: Tests of detail: Comparing the carrying amount of 100% of investments and amounts due from subsidiaries, with the relevant subsidiaries' draft balance sheet to identify whether their net assets, being an approximation of the minimum recoverable amount of the related investments and amounts owed by subsidiary undertakings, were in excess of their carrying amount, and assessing whether those subsidiaries have historically been profi t-making; Our sector experience: For those subsidiaries where the carrying amount exceeded the net asset value, comparing the carrying amount of the investment with the expected value of the business; and Benchmarking assumptions: Comparing the relevant subsidiary investment's forecast cash fl ow assumptions to externally derived data in relation to key inputs such as projected long term growth and (using our valuation specialists) discount rates. |
continued
Materiality for the Group Financial Statements as a whole was set at US\$50m (2017: US\$53m), determined with reference to a benchmark of consolidated Group profi t before tax on continuing operations of which it represents 5% (2017: 5%).
Materiality for the Parent Company Financial Statements as a whole was set at US\$25m (2017: US\$25m), determined with reference to a benchmark of Company total assets, of which it represents 0.1% (2017: 0.1%).
We agreed to report to the Audit Committee any corrected or uncorrected identifi ed misstatements exceeding US\$2.4m (2017: US\$2.6m), in addition to other identifi ed misstatements that warranted reporting on qualitative grounds.
Of the Group's 175 (2017: 173) reporting components, we subjected three (2017: three) to full scope audits for Group purposes.
The three reporting components and work performed by the group audit team accounted for the percentages illustrated opposite.
The remaining 11% of total Group revenue, 17% of total profi ts and losses that make up Group profi t before tax (continuing operations) and 8% of total Group assets is represented by 170 reporting components, none of which individually represented more than 3% of any of total Group revenue, Group profi t before tax (continuing operations) or total Group assets.
For these residual components, we performed analysis at an aggregated Group level to re-examine our assessment that there were no signifi cant risks of material misstatement within these.
The group audit team instructed component auditors as to the signifi cant areas to be covered, including the relevant risks detailed above and the information to be reported back. The group audit team approved the component materialities, which ranged from US\$13m to US\$32m, (2017: US\$9m to US\$32m) having regard to the mix of size and risk profi le of the Group across the components. The work on three of the 175 components (2017: three of the 173 components) was performed by component auditors and the rest, including the audit of the Parent Company, was performed by the group audit team.
The Group operates fi ve shared service centres in the UK, the USA, Malaysia, Chile and Bulgaria, the outputs of which are included in the fi nancial information of the reporting components they service and therefore they are not separate reporting components. Each of the service centres is subject to specifi ed risk-focused audit procedures, predominantly the testing of transaction processing and review controls. Additional procedures are performed at certain reporting components to address the audit risks not covered by the work performed over the shared service centres.
The group audit team visited three (2017: three) component locations in the USA, the UK and Brazil (2017: the USA, the UK and Brazil) to assess the audit risk and strategy. Telephone conference meetings were also held with these component auditors. At these visits and meetings, the fi ndings reported to the group audit team were discussed in more detail, and any further work required by the group audit team was then performed by the component auditor. The US component team also visited the UK during the year where meetings were held with the group, the UK and the shared service centre audit teams as well as Group management.
US\$32m Range of materiality at three reporting components (US\$13m-US\$32m) (2017: US\$9m-US\$32m)
Group materiality US\$50m (2017: US\$53m)
Misstatements reported to the audit committee (2017: US\$2.6m)
Total profits and losses that make up Group profit before tax (continuing operations)
83% (2017: 81%) 83 81
Group total assets
Full scope for group audit purposes 2018 Full scope for group audit purposes 2017 Residual components
In addition to our audit of the Financial Statements, the Directors have engaged us to audit the information in the Report on Directors' Remuneration that is described as having been audited, which the Directors have decided to prepare as if the Company were required to comply with the requirements of Schedule 8 to The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008 No. 410) made under the UK Companies Act 2006.
In our opinion, the part of the Report on Directors' Remuneration to be audited has been properly prepared in accordance with the UK Companies Act 2006, as if it applied to the Company.
We are required to report to you if we have anything material to add or draw attention to in relation to the Directors' statement in note 2 to the Financial Statements on the use of the going concern basis of accounting with no material uncertainties that may cast signifi cant doubt over the Group and Company's use of that basis for a period of at least twelve months from the date of approval of the Financial Statements. We have nothing to report in this respect.
The Directors are responsible for the other information presented in the Annual Report together with the Financial Statements. Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our fi nancial statements audit work, the information therein is materially misstated or inconsistent with the Financial Statements or our audit knowledge. Based solely on that work we have not identifi ed material misstatements in the other information.
Based on the knowledge we acquired during our fi nancial statements audit, we have nothing material to add or draw attention to in relation to:
We are required to report to you if:
We are required to report to you if the Corporate Governance Statement does not properly disclose a departure from the eleven provisions of the 2016 UK Corporate Governance Code specifi ed by the Listing Rules for our review.
We have nothing to report in these respects.
We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:
As explained more fully in their statement set out on page 102, the Directors are responsible for: the preparation of the Financial Statements including being satisfi ed that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error; assessing the Group and Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or other irregularities (see below), or error, and to issue our opinion in an auditor's report. Reasonable assurance is a high level of assurance, but does not guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud, other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to infl uence the economic decisions of users taken on the basis of the Financial Statements.
A fuller description of our responsibilities is provided on the FRC's website at www.frc.org.uk/auditorsresponsibilities.
This report is made solely to the Company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991 and the terms of our engagement by the Company. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report, and the further matters we are required to state to them in accordance with the terms agreed with the Company and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Senior Statutory Auditor for and on behalf of KPMG LLP Chartered Accountants and Recognized Auditor 15 Canada Square, London E14 5GL
16 May 2018
for the year ended 31 March 2018
| 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Benchmark1 | Non-benchmark2 | Total | Benchmark1 | Non-benchmark2 | Total | |||
| Revenue | Notes 8 |
US\$m 4,662 |
US\$m — |
US\$m 4,662 |
US\$m 4,335 |
US\$m — |
US\$m 4,335 |
|
| Labour costs | 10(a) | (1,716) | (7) | (1,723) | (1,609) | (6) | (1,615) | |
| Data and information technology costs | (608) | — | (608) | (521) | — | (521) | ||
| Amortisation and depreciation charges | 11 | (326) | (112) | (438) | (322) | (104) | (426) | |
| Marketing and customer acquisition costs | (328) | — | (328) | (322) | — | (322) | ||
| Other operating charges | (401) | (69) | (470) | (366) | (10) | (376) | ||
| Total operating expenses | (3,379) | (188) | (3,567) | (3,140) | (120) | (3,260) | ||
| Operating profi t/(loss) | 1,283 | (188) | 1,095 | 1,195 | (120) | 1,075 | ||
| Interest income | 15 | — | 15 | 14 | — | 14 | ||
| Finance (expense)/credit | (100) | (24) | (124) | (89) | 67 | (22) | ||
| Net fi nance (costs)/income | 14 | (85) | (24) | (109) | (75) | 67 | (8) | |
| Share of post-tax profi t of associates | 8 | — | 8 | 4 | — | 4 | ||
| Profi t/(loss) before tax | 8 | 1,206 | (212) | 994 | 1,124 | (53) | 1,071 | |
| Group tax (charge)/credit | 15 | (309) | 160 | (149) | (294) | 35 | (259) | |
| Profi t/(loss) for the fi nancial year from | ||||||||
| continuing operations | 897 | (52) | 845 | 830 | (18) | 812 | ||
| (Loss)/profi t for the fi nancial year from | ||||||||
| discontinued operations | 16(a) | — | (30) | (30) | — | 53 | 53 | |
| Profi t/(loss) for the fi nancial year | 897 | (82) | 815 | 830 | 35 | 865 | ||
| Attributable to: | ||||||||
| Owners of Experian plc | 897 | (82) | 815 | 831 | 35 | 866 | ||
| Non-controlling interests | — | — | — | (1) | — | (1) | ||
| Profi t/(loss) for the fi nancial year | 897 | (82) | 815 | 830 | 35 | 865 | ||
| Total Benchmark EBIT1 | 1,291 | — | 1,291 | 1,199 | — | 1,199 | ||
| Notes | US cents | US cents | US cents | US cents | US cents | US cents | ||
| Earnings/(loss) per share | ||||||||
| Basic | 17(a) | 97.8 | (8.9) | 88.9 | 88.4 | 3.7 | 92.1 | |
| Diluted | 17(a) | 96.9 | (8.9) | 88.0 | 87.7 | 3.7 | 91.4 | |
| Earnings/(loss) per share from continuing operations |
||||||||
| Basic | 17(a) | 97.8 | (5.7) | 92.1 | 88.4 | (1.9) | 86.5 | |
| Diluted | 17(a) | 96.9 | (5.7) | 91.2 | 87.7 | (1.9) | 85.8 | |
| Benchmark PBT per share1,3 | 131.5 | 119.6 | ||||||
| Full-year dividend per share1 | 18 | 44.75 | 41.50 |
1 Total Benchmark EBIT, Benchmark PBT per share and Full-year dividend per share are non-GAAP measures, defi ned where appropriate in note 6.
2 The loss before tax for non-benchmark items of US\$212m (2017: US\$53m) comprises a charge for Exceptional items of US\$57m (2017: US\$nil) and charges for Other adjustments made to derive Benchmark PBT of US\$155m (2017: US\$53m). Further information is given in note 13.
3 Benchmark PBT per share is calculated by dividing Benchmark PBT of US\$1,206m by the weighted average number of ordinary shares of 917 million. The amount is stated in US cents per share.
The segmental disclosures in note 8 indicate the impact of business disposals on the comparative revenue and Total Benchmark EBIT fi gures.
for the year ended 31 March 2018
| 2018 | 2017 | |
|---|---|---|
| Profi t for the fi nancial year | US\$m 815 |
US\$m 865 |
| Other comprehensive income | ||
| Items that will not be reclassifi ed to profi t or loss: | ||
| Remeasurement of post-employment benefi t assets and obligations (note 33(a)) | 28 | (13) |
| Deferred tax (charge)/credit | (6) | 2 |
| Items that will not be reclassifi ed to profi t or loss | 22 | (11) |
| Items that may be reclassifi ed subsequently to profi t or loss: | ||
| Fair value gains recognised on available-for-sale fi nancial assets | — | 3 |
| Currency translation gains | 28 | 18 |
| Items that may be reclassifi ed subsequently to profi t or loss | 28 | 21 |
| Other comprehensive income for the fi nancial year1 | 50 | 10 |
| Total comprehensive income for the fi nancial year | 865 | 875 |
| Attributable to: | ||
| Continuing operations | 895 | 823 |
| Discontinued operations | (30) | 53 |
| Owners of Experian plc | 865 | 876 |
| Non-controlling interests | — | (1) |
| Total comprehensive income for the fi nancial year | 865 | 875 |
1 Amounts reported within Other comprehensive income are in respect of continuing operations and, except as reported for post-employment benefi t assets and obligations, there is no associated tax. Currency translation items are recognised in the translation reserve within other reserves. Other items within Other comprehensive income are recognised in retained earnings.
at 31 March 2018
| 2018 | 2017 | ||
|---|---|---|---|
| Notes | US\$m | US\$m | |
| Non-current assets | |||
| Goodwill | 19 | 4,452 | 4,245 |
| Other intangible assets | 20 | 1,538 | 1,461 |
| Property, plant and equipment | 21 | 335 | 329 |
| Investments in associates | 22 | 125 | 42 |
| Deferred tax assets | 34(a) | 140 | 83 |
| Post-employment benefi t assets | 33(a) | 47 | 14 |
| Trade and other receivables | 23(a) | 11 | 6 |
| Available-for-sale fi nancial assets | 28(a) | 84 | 57 |
| Other fi nancial assets | 28(b) | 194 | 57 |
| 6,926 | 6,294 | ||
| Current assets | |||
| Trade and other receivables | 23(a) | 1,112 | 910 |
| Current tax assets | 34(b) | 27 | 26 |
| Other fi nancial assets | 28(b) | 4 | 20 |
| Cash and cash equivalents | 24(a) | 156 | 83 |
| 1,299 | 1,039 | ||
| Assets classifi ed as held-for-sale | 40 | — 1,299 |
358 1,397 |
| Current liabilities | |||
| Trade and other payables | 25(a) | (1,294) | (1,109) |
| Borrowings | 26(a) | (956) | (759) |
| Current tax liabilities | 34(b) | (278) | (150) |
| Provisions | 35 | (70) | (50) |
| Other fi nancial liabilities | 28(b) | (86) | (15) |
| (2,684) | (2,083) | ||
| Liabilities classifi ed as held-for-sale | 40 | — | (58) |
| (2,684) | (2,141) | ||
| Net current liabilities | (1,385) | (744) | |
| Total assets less current liabilities | 5,541 | 5,550 | |
| Non-current liabilities | |||
| Trade and other payables | 25(a) | (44) | (15) |
| Borrowings | 26(a) | (2,558) | (2,285) |
| Deferred tax liabilities | 34(a) | (206) | (296) |
| Post-employment benefi t obligations | 33(a) | (58) | (54) |
| Other fi nancial liabilities | 28(b) | (51) | (249) |
| (2,917) | (2,899) | ||
| Net assets | 2,624 | 2,651 | |
| Equity | |||
| Called-up share capital | 36 | 97 | 100 |
| Share premium account | 36 | 1,546 | 1,530 |
| Retained earnings | 37(a) | 18,745 | 18,813 |
| Other reserves | 37(b) | (17,771) | (17,804) |
| Attributable to owners of Experian plc | 2,617 | 2,639 | |
| Non-controlling interests | 7 | 12 | |
| Total equity | 2,624 | 2,651 |
These fi nancial statements were approved by the Board on 16 May 2018 and were signed on its behalf by:
Director
for the year ended 31 March 2018
| Called-up | Share premium |
Retained | Other | Attributable to | |||
|---|---|---|---|---|---|---|---|
| share capital (Note 36) US\$m |
account (Note 36) US\$m |
earnings (Note 37) US\$m |
reserves (Note 37) US\$m |
owners of Experian plc US\$m |
Non-controlling interests US\$m |
Total equity US\$m |
|
| At 1 April 2017 | 100 | 1,530 | 18,813 | (17,804) | 2,639 | 12 | 2,651 |
| Profi t for the fi nancial year | — | — | 815 | — | 815 | — | 815 |
| Other comprehensive income for the fi nancial year |
— | — | 22 | 28 | 50 | — | 50 |
| Total comprehensive income for the fi nancial year |
— | — | 837 | 28 | 865 | — | 865 |
| Transactions with owners: | |||||||
| Employee share incentive plans: | |||||||
| – value of employee services | — | — | 76 | — | 76 | — | 76 |
| – shares issued on vesting | — | 16 | — | — | 16 | — | 16 |
| – other exercises of share awards and options |
— | — | (32) | 42 | 10 | — | 10 |
| – purchase of shares by employee trusts |
— | — | — | (37) | (37) | — | (37) |
| – other payments | — | — | (2) | — | (2) | — | (2) |
| Purchase and cancellation of own shares |
(3) | — | (542) | — | (545) | — | (545) |
| Transactions in respect of | |||||||
| non-controlling interests | — | — | (17) | — | (17) | (1) | (18) |
| Dividends paid | — | — | (388) | — | (388) | (4) | (392) |
| Transactions with owners | (3) | 16 | (905) | 5 | (887) | (5) | (892) |
| At 31 March 2018 | 97 | 1,546 | 18,745 | (17,771) | 2,617 | 7 | 2,624 |
| Share | |||||||
|---|---|---|---|---|---|---|---|
| Called-up | premium | Retained | Other | Attributable to | |||
| share capital (Note 36) |
account (Note 36) |
earnings (Note 37) |
reserves (Note 37) |
owners of Experian plc |
Non-controlling interests |
Total equity | |
| US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | |
| At 1 April 2016 | 102 | 1,519 | 18,633 | (17,830) | 2,424 | 14 | 2,438 |
| Profi t for the fi nancial year | — | — | 866 | — | 866 | (1) | 865 |
| Other comprehensive income for | |||||||
| the fi nancial year | — | — | (8) | 18 | 10 | — | 10 |
| Total comprehensive income for | |||||||
| the fi nancial year | — | — | 858 | 18 | 876 | (1) | 875 |
| Transactions with owners: | |||||||
| Employee share incentive plans: | |||||||
| – value of employee services | — | — | 61 | — | 61 | — | 61 |
| – shares issued on vesting | — | 11 | — | — | 11 | — | 11 |
| – other exercises of share awards | |||||||
| and options | — | — | (28) | 36 | 8 | — | 8 |
| – related tax credit | — | — | 7 | — | 7 | — | 7 |
| – purchase of shares by | |||||||
| employee trusts | — | — | — | (28) | (28) | — | (28) |
| – other payments | — | — | (3) | — | (3) | — | (3) |
| Purchase and cancellation of | |||||||
| own shares | (2) | — | (334) | — | (336) | — | (336) |
| Transactions in respect of | |||||||
| non-controlling interests | — | — | — | — | — | 1 | 1 |
| Dividends paid | — | — | (381) | — | (381) | (2) | (383) |
| Transactions with owners | (2) | 11 | (678) | 8 | (661) | (1) | (662) |
| At 31 March 2017 | 100 | 1,530 | 18,813 | (17,804) | 2,639 | 12 | 2,651 |
for the year ended 31 March 2018
| 2018 | 2017 | ||
|---|---|---|---|
| Notes | US\$m | US\$m | |
| Cash fl ows from operating activities Cash generated from operations |
38(a) | 1,529 | 1,525 |
| Interest paid | (98) | (85) | |
| Interest received | 12 | 15 | |
| Dividends received from associates | 3 | 3 | |
| Tax paid | (191) | (144) | |
| Net cash infl ow from operating activities – continuing operations | 1,255 | 1,314 | |
| Net cash (outfl ow)/infl ow from operating activities – discontinued operations | 16(b) | (63) | 41 |
| Net cash infl ow from operating activities | 1,192 | 1,355 | |
| Cash fl ows from investing activities | |||
| Purchase of other intangible assets | 38(c) | (360) | (319) |
| Purchase of property, plant and equipment | (71) | (80) | |
| Sale of property, plant and equipment | 26 | 15 | |
| Purchase of other fi nancial assets | (31) | (14) | |
| Acquisition of subsidiaries, net of cash acquired | 38(d) | (146) | (363) |
| Purchase of investments in associates | (56) | (33) | |
| Disposal of subsidiaries – continuing operations | 2 | (4) | |
| Net cash fl ows used in investing activities – continuing operations | (636) | (798) | |
| Net cash fl ows from/(used in) investing activities – discontinued operations | 16(b) | 278 | (21) |
| Net cash fl ows used in investing activities | (358) | (819) | |
| Cash fl ows from fi nancing activities | |||
| Cash infl ow in respect of shares issued | 38(e) | 16 | 11 |
| Cash outfl ow in respect of share purchases | 38(e) | (581) | (364) |
| Other payments on vesting of share awards | (2) | (3) | |
| Payments to acquire non-controlling interests | (8) | (9) | |
| New borrowings | 864 | 159 | |
| Repayment of borrowings | (653) | (3) | |
| Net payments for cross-currency swaps and foreign exchange contracts | (13) | (23) | |
| Net receipts from equity swaps | 1 | 2 | |
| Dividends paid | (392) | (383) | |
| Net cash fl ows used in fi nancing activities | (768) | (613) | |
| Net increase/(decrease) in cash and cash equivalents | 66 | (77) | |
| Cash and cash equivalents at 1 April | 81 | 151 | |
| Exchange movements on cash and cash equivalents | (10) | 7 | |
| Cash and cash equivalents at 31 March | 38(f) | 137 | 81 |
for the year ended 31 March 2018
Experian plc (the 'Company') is the ultimate parent company of the Experian group of companies ('Experian' or the 'Group'). Experian is the 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 offi ce is at 22 Grenville Street, St Helier, Jersey JE4 8PX, Channel Islands. The Company's ordinary shares are traded on the London Stock Exchange's Regulated Market and have a Premium Listing.
There has been no change in this information since the Annual Report for the year ended 31 March 2017.
The Group fi nancial statements are:
The Company's own fi nancial statements are prepared under UK accounting standards in accordance with FRS 101 'Reduced Disclosure Framework'.
There has been no change in the above information since the Annual Report for the year ended 31 March 2017.
The use of critical accounting estimates and management judgment is required in applying the accounting policies. Areas involving a higher degree of judgment or complexity, or where assumptions and estimates are signifi cant to the Group fi nancial statements, are highlighted in note 5.
The going concern basis continues to be adopted in preparing these fi nancial statements. The Board has assessed the principal risks and uncertainties and the other matters discussed in connection with the Viability statement, and the directors consider it appropriate to adopt the going concern basis of accounting in preparing the fi nancial statements.
There have been no accounting standards, amendments or interpretations eff ective for the fi rst time in these fi nancial statements which have had a material impact on the fi nancial statements.
There are a number of new standards and amendments to existing standards currently in issue but not yet eff ective, including three signifi cant standards:
IFRS 9 and IFRS 15 are eff ective for us for the year ending 31 March 2019 with IFRS 16 eff ective for us for the year ending 31 March 2020.
IFRS 9 'Financial Instruments' replaces IAS 39 'Financial Instruments: Recognition and Measurement'. IFRS 9 contains a new classifi cation and measurement approach for fi nancial assets that refl ects the business model in which assets are managed and their cash fl ow characteristics.
Most of the fi nancial assets we hold are measured at amortised cost or 'fair value through the profi t and loss account' ('FVTPL') and no material change is expected for these assets. Those investments in the IAS 39 category of 'available for sale assets' will be designated as measured at 'fair value through other comprehensive income' ('FVOCI'), retaining the same fi nancial statement eff ect as under IAS 39.
IFRS 9 replaces the 'incurred loss' impairment model in IAS 39 with a forward-looking 'expected credit loss' ('ECL') model. We will apply the hedge accounting requirements of IFRS 9. No material changes are expected to our hedge accounting relationships.
The Group will apply the classifi cation and impairment changes retrospectively, however we will take advantage of the exemption allowing no restatement of comparative information for prior periods. IFRS 9 will require new disclosures, in particular regarding hedge accounting, credit risk and ECLs which we are currently assessing.
IFRS 15 'Revenue from Contracts with Customers' establishes principles for reporting useful information to users of fi nancial statements about the nature, amount, timing and uncertainty of revenue and cash fl ows arising from an entity's contracts with customers. IFRS 15 replaces all existing revenue requirements in EU-IFRS and applies to all sales contracts with customers, unless the contracts are in the scope of the accounting standards on leases, insurance contracts and fi nancial instruments.
The Group has undertaken a detailed review of its contracts and revenue recognition procedures to implement the new standard and is now evaluating the additional disclosure requirements that IFRS 15 introduces. In accordance with the IFRS 15 transition guidance, we will restate our fi nancial results for the year ended 31 March 2018 upon application of the new standard. While the Group sees a mix of revenue acceleration on some contracts and revenue deferral on other contracts, growth rates are not expected to materially change and there is no eff ect on cash fl ow.
for the year ended 31 March 2018 continued
IFRS 15 is based on the principle that revenue is recognised when control of goods or services is transferred to the customer and provides a single, principles-based fi ve-step revenue recognition model to be applied to all sales contracts. In implementing IFRS 15, the primary eff ect is in relation to certain contracts which are predominantly in the Decision Analytics and Credit Services business segments. The contracts aff ected represent less than 15% of Group revenue, with the eff ect being a change in the period in which multi-year revenue is recognised.
The key change for the Group under IFRS 15 is the introduction of the concept of separately identifi able performance obligations and recognising revenue when these have been met and the customer takes control. It will therefore result in fewer of our services being separated/unbundled. We see the largest impacts in the following areas:
Our provisional fi ndings are that the eff ect of adopting IFRS 15 is not considered material to the Group. The estimated adjustment to total equity at 1 April 2018 is a decrease of US\$134m. For the fi nancial year ended 31 March 2018, the restatement to an IFRS 15 basis is expected to result in our revenue and profi t after tax for the fi nancial year being US\$78m and US\$31m lower respectively than under the previous accounting standards. Our Benchmark operating cash fl ow will not be aff ected by this restatement and on a full-year basis we do not expect a material eff ect on our future growth rates.
IFRS 16 introduces a new on-balance sheet approach for all lease payables. A range of transition options are available: these and potential disclosures are currently being assessed by the Group. It is expected that the discounted value of operating commitments as disclosed will be brought onto the balance sheet in the form of a material right-of-use asset and lease liability. This change is not expected to have a material eff ect on the net assets or profi t of the Group once implemented.
There are no other new standards, amendments to existing standards or interpretations that are not yet eff ective that would be expected to have a material eff ect on the Group. Such developments are routinely reviewed by the Group and its fi nancial reporting systems are adapted as appropriate.
The signifi cant accounting policies applied are summarised below. They have been applied consistently to both years presented. The explanations of these policies focus on areas where judgment is applied or which are particularly important in the fi nancial statements. For ease of reference, the content within this note is arranged as follows:
Experian follows EU-IFRS including:
The Group fi nancial statements incorporate the fi nancial statements of the Company and its subsidiary undertakings.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date that the Group no longer has control. All business combinations are accounted for using the acquisition method.
Intra-Group transactions, balances and unrealised gains on transactions between Group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of subsidiaries and segments are consistent with the policies adopted by the Group for the purposes of the Group's consolidation. The Group fi nancial statements incorporate the fi nancial statements of the Company and its subsidiary undertakings for the year ended 31 March 2018. A list of the signifi cant subsidiaries is given in note 44(a) to these fi nancial statements.
Interests in associates are accounted for using the equity method. They are initially recognised at cost, which includes transaction costs. Subsequent to initial recognition, the Group fi nancial statements include the Group's share of the profi t or loss and other comprehensive income of equity-accounted investees, until the date on which signifi cant infl uence ceases.
The non-controlling interests in the Group balance sheet represent the share of net assets of subsidiary undertakings held outside the Group. The movement in the year comprises the profi t attributable to such interests together with any dividends paid, movements in respect of corporate transactions and related exchange diff erences.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. For purchases from non-controlling interests, the diff erence between any consideration paid and the relevant share acquired of the carrying value of the net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
Where put/call option agreements are in place in respect of shares held by non-controlling shareholders, the put element of the liability is stated at the net present value of the expected future payments. Such liabilities are shown as fi nancial liabilities in the Group balance sheet. The change in the net present value of such options in the year is recognised in the Group income statement within net fi nance costs, while any change in that value attributable to exchange rate movements is recognised directly in Other comprehensive income.
We follow EU-IFRS, including IAS 21 'The Eff ects of Changes in Foreign Exchange Rates'.
Transactions in foreign currencies are recorded in the functional currency of the relevant Group undertaking at the exchange rate prevailing on the date of the transaction. At each balance sheet date, monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rate prevailing at the balance sheet date. Translation diff erences on monetary items are taken to the Group income statement except when recognised in other comprehensive income, as qualifying net investment hedges or cash fl ow hedges. Translation diff erences on non-monetary available-for-sale fi nancial assets are reported as part of the fair value gains or losses in Other comprehensive income.
The results and fi nancial position of Group undertakings whose functional currencies are not the US dollar are translated into US dollars as follows:
On consolidation, exchange diff erences arising from the translation of the net investment in Group undertakings whose functional currencies are not the US dollar, and of borrowings and other currency instruments designated as hedges of such investments, are recognised in Other comprehensive income to the extent that such hedges are eff ective. Tax attributable to those exchange diff erences is taken directly to Other comprehensive income. When such undertakings are sold, these exchange diff erences are recognised in the Group income statement as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of such undertakings are treated as assets and liabilities of the entities and are translated into US dollars at the closing exchange rate.
We follow EU-IFRS, including IFRS 13 'Fair Value Measurement'. The fair values of derivative fi nancial instruments and other fi nancial assets and liabilities are determined by using market data and established estimation techniques such as discounted cash fl ow and option valuation models. The fair value of foreign exchange contracts is based on a comparison of the contractual and year-end exchange rates. The fair values of other derivative fi nancial instruments are estimated by discounting the future cash fl ows to net present values, using appropriate market rates prevailing at the year-end.
We follow EU-IFRS, including IAS 36 'Impairment of Assets'. Assets that are not subject to amortisation or depreciation are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment when there is an indication that the carrying amount may not be recoverable. An impairment charge is recognised for the amount by which an asset's carrying amount exceeds its recoverable amount, which is the higher of an asset's fair value less costs of disposal, and value-in-use. For the purposes of assessing impairment, assets are grouped into cash generating units ('CGUs'), determined by the lowest levels for which there are separately identifi able cash fl ows.
for the year ended 31 March 2018 continued
We follow EU-IFRS, including IAS 38 'Intangible Assets'.
Goodwill is stated at cost less any accumulated impairment, where cost is the excess of the fair value of the consideration payable for an acquisition over the fair value at the date of acquisition of the Group's share of identifi able net assets of a subsidiary or associate acquired. Fair values are attributed to the identifi able assets, liabilities and contingent liabilities that existed at the date of acquisition, refl ecting their condition at that date. Adjustments are made where necessary to align the accounting policies of acquired businesses with those of the Group. Goodwill is not amortised but is tested annually for impairment. An impairment charge is recognised for any amount by which the carrying value of the goodwill exceeds the recoverable amount.
Goodwill is allocated to CGUs and monitored for internal management purposes by operating segment. The allocation is made to those CGUs or groups of CGUs that are expected to benefi t from the business combination in which the goodwill arose. Where the recoverable amount of the CGU is less than its carrying amount, including goodwill, an impairment charge is recognised in the Group income statement.
Gains and losses on the disposal of an undertaking take account of the carrying amount of goodwill relating to the undertaking sold, allocated where necessary on the basis of relative fair value.
Intangible assets acquired as part of a business combination are capitalised on acquisition at fair value and separately from goodwill, if those assets are identifi able (separable or arising from legal rights). Such assets are referred to as acquisition intangibles in these fi nancial statements. Amortisation is charged on a straight-line basis as follows:
Other intangibles are capitalised at cost, in accordance with IAS 38. Certain costs incurred in the developmental phase of an internal project are capitalised provided that a number of criteria are satisfi ed. These include the technical feasibility of completing the asset so that it is available for use or sale, the availability of adequate resources to complete the development and to use or sell the asset, and how the asset will generate probable future economic benefi t.
The cost of such assets with fi nite useful economic or contractual lives is amortised on a straight-line basis over those lives. The carrying values are reviewed for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable. If impaired, the carrying values are written down to the higher of fair value less costs of disposal, and value-in-use which is determined by reference to projected future income streams using assumptions in respect of profi tability and growth.
Further details on the capitalisation and amortisation policy for the key asset classifi cations within other intangibles are:
Research expenditure, together with other costs associated with developing or maintaining computer software programs, is recognised in the Group income statement as incurred.
Items of property, plant and equipment are held at cost less accumulated depreciation and any impairment in value, in accordance with IAS 16 'Property, Plant and Equipment'. Cost includes the original purchase price of the asset and amounts attributable to bringing the asset to its working condition for its intended use.
Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Such leases are capitalised at inception at the lower of the fair value of the leased asset and the present value of the minimum lease payments.
Depreciation is charged on a straight-line basis as follows:
Trade receivables are initially recognised at fair value and subsequently measured at this value less any provision for impairment. Where the time value of money is material, receivables are then carried at amortised cost using the eff ective interest rate method, less any provision for impairment.
A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to their original terms. Such evidence is based primarily on the pattern of cash received, compared to the terms upon which the receivable is contracted. The amount of the provision is the diff erence between the carrying amount and the value of estimated future cash fl ows. Any charges or credits in respect of such provisions and irrecoverable trade receivables are recognised in the Group income statement, within other operating charges.
Cash and cash equivalents include cash in hand, term and call deposits held with banks and other short-term, highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the Group balance sheet. For the purposes of the Group cash fl ow statement, cash and cash equivalents are reported net of bank overdrafts.
The Group classifi es its fi nancial assets into four categories set out below, with the classifi cation determined at initial recognition and dependent on the purpose for which such assets are acquired:
Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities more than one year after the balance sheet date which are classifi ed as non-current assets. The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents.
Derivative fi nancial assets used for hedging are included in current assets, except for maturities more than one year after the balance sheet date, which are classifi ed as non-current assets. Derivatives utilised by the Group include interest rate swaps, cross-currency swaps, foreign exchange contracts and equity swaps.
Assets at fair value through profi t and loss comprise non-hedging derivative fi nancial instruments.
Available-for-sale fi nancial assets are non-derivative fi nancial assets that are either designated to this category or not classifi ed in the other fi nancial asset categories. They are carried at fair value and are included in non-current assets unless management intends to dispose of the assets within one year of the balance sheet date.
The Group uses derivative fi nancial instruments to manage its exposures to fl uctuations in foreign exchange rates, interest rates and certain obligations relating to share incentive plans, including social security obligations. Instruments used include interest rate swaps, cross-currency swaps, foreign exchange contracts and equity swaps. These are recognised as assets or liabilities as appropriate and are classifi ed as non-current, unless they mature within one year of the balance sheet date.
Derivatives are initially recognised at their fair value on the date the contract is entered into, and are subsequently remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the hedge relationship.
The Group designates certain derivatives as fair value hedges, which are hedges of the fair value of a recognised asset or liability. The Group does not currently enter into cash fl ow or net investment hedges.
The Group documents the relationship between hedging instrument and hedged item at the hedge inception, and its risk management objective and strategy for undertaking hedge transactions. The Group also documents its assessment of whether the derivatives used in hedging transactions are highly eff ective in off setting changes in fair values of hedged items. This eff ectiveness testing is performed at every reporting date throughout the life of the hedge to confi rm that the hedge remains, and will continue to remain, highly eff ective. Hedge accounting is discontinued when the hedging instrument expires, is sold, terminated or exercised, or no longer qualifi es for hedge accounting.
Amounts payable or receivable in respect of interest rate swaps are taken to net fi nance costs over the period of the contracts, together with the interest diff erentials refl ected in foreign exchange contracts.
Changes in the fair value of derivatives that are designated and qualify as fair value hedging instruments are recognised in the Group income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The ineff ective portion of a fair value hedge is recognised in net fi nance costs in the Group income statement.
Changes in the fair value of such derivative instruments are recognised immediately in the Group income statement. Cost and income amounts in respect of derivatives entered into in connection with social security obligations on employee share incentive plans, other than amounts of a fi nancing nature, are charged or credited within labour costs. Other costs and changes in the fair value of such derivatives are charged or credited within fi nancing fair value remeasurements in the Group income statement.
Trade payables are recognised initially at fair value. Where the time value of money is material, payables are then carried at amortised cost using the eff ective interest rate method.
Borrowings are recognised initially at fair value, net of any transaction costs incurred. Borrowings are subsequently stated at amortised cost, except where they are hedged by an eff ective fair value hedge, in which case the carrying value is adjusted to refl ect the fair value movements associated with the hedged risk.
Borrowings are classifi ed as non-current to the extent that the Group has an unconditional right to defer settlement of the liability for at least one year after the balance sheet date.
The post-employment benefi t assets and obligations recognised in the Group balance sheet in respect of funded plans comprise the fair value of plan assets of funded plans less the present value of the related defi ned benefi t obligation at that date. The defi ned benefi t obligation is calculated annually by independent qualifi ed actuaries, using the projected unit credit method.
The present value of the defi ned benefi t obligation is determined by discounting the estimated future cash outfl ows, using market yields on high-quality corporate sterling bonds with maturity terms consistent with the estimated average term of the related pension liability.
for the year ended 31 March 2018 continued
Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions, are recognised immediately in the Group statement of comprehensive income.
The pension cost recognised in the Group income statement comprises the cost of benefi ts accrued plus interest on the opening net defi ned benefi t obligation. Service costs and fi nancing income and expenses are recognised separately in the Group income statement. Plan expenses are deducted from the expected return on the plan assets over the year.
Unfunded pension obligations are determined and accounted for in accordance with the principles used in respect of the funded arrangements.
The assets of defi ned contribution plans are held separately in independently administered funds. The pension cost recognised in the Group income statement represents the contributions payable by the Group to these funds, in respect of the year.
Obligations in respect of post-retirement healthcare plans are calculated annually by independent qualifi ed actuaries, using an actuarial methodology similar to that for the funded defi ned benefi t pension arrangements.
Actuarial gains and losses arising from experience adjustments, and changes in actuarial assumptions, are recognised in the Group statement of comprehensive income. The cost recognised in the Group income statement comprises only interest on the obligation.
The Group has a number of equity-settled, share-based employee incentive plans. In connection with these, shares in the Company are held by The Experian plc Employee Share Trust and the Experian UK Approved All-Employee Share Plan. The assets of these entities mainly comprise Experian plc shares, which are shown as a deduction from equity at cost.
Shares in the Company purchased and held as treasury shares, in connection with the above plans and any share purchase programme, are also shown as a deduction from equity at cost. The par value of shares in the Company that are purchased and cancelled, in connection with any share purchase programme, is accounted for as a reduction in called-up share capital, with any cost in excess of that amount being deducted from retained earnings.
Assets and liabilities are classifi ed as held-for-sale when their carrying amounts are to be recovered or settled principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of the carrying amount and fair value less costs to sell. No depreciation or amortisation is charged in respect of non-current assets classifi ed as held-for-sale.
Revenue represents the fair value of consideration receivable on the provision of services, net of any sales taxes, rebates and discounts. This includes the provision and processing of data, subscriptions to services, software and database customisation and development, and the sale of software licences, maintenance and related consulting services.
Revenue in respect of the provision and processing of data is recognised in the period in which the service is provided. Subscription revenues, and revenues in respect of services to be provided by an indeterminate number of acts over a specifi ed period of time, are recognised on a straight-line basis over those periods. Customisation, development and consulting revenues are recognised by reference to the stage of completion of the work, which is generally on the basis of costs incurred to date as a percentage of estimated total costs. Revenue from software licences is recognised upon delivery. Revenue from maintenance agreements is recognised on a straight-line basis over the term of the maintenance period.
Where a single arrangement comprises a number of elements which are capable of operating independently of one another, the total revenues are allocated amongst the elements, based on an estimate of the fair value of each element. Where the elements are not capable of operating independently, or reasonable measures of fair value for each element are not available, total revenues are recognised on a straight-line basis over the contract period, to refl ect the timing of services performed.
Sales are typically invoiced in the geographic area in which the customer is located. As a result, the geographic location of the invoicing undertaking is used to attribute revenue to individual countries.
Operating charges are reported by nature in the Group income statement, refl ecting the Group's cost-management control structure.
Details of the types of charges within labour costs in respect of share incentive plans are set out in note (t) below. Those for post-employment benefi ts are set out in note (m) above.
Details of the Group's amortisation and depreciation policy are given in notes (f) and (g) above. The principles upon which impairment charges are recognised are set out in notes (d) and (e) above.
Payments made under operating leases are charged in the Group income statement on a straight-line basis over the lease period. Incentives from lessors are recognised as a systematic reduction of the charge over the lease period.
Incremental transaction costs which are directly attributable to the issue of debt are capitalised and amortised over the expected life of the borrowing, using the eff ective interest rate method. All other borrowing costs are charged in the Group income statement in the year in which they are incurred.
Amounts payable or receivable in respect of interest rate swaps are taken to net fi nance costs over the periods of the contracts, together with the interest diff erentials refl ected in foreign exchange contracts.
Details of the nature of movements in the fair value of derivatives which are reported as fi nancial fair value remeasurements are included in note (j) above. The change in the year in the present value of put/call option agreements, in respect of shares held by non-controlling shareholders, is recognised as a fi nancing fair value remeasurement within net fi nance costs.
The tax charge or credit for the year is recognised in the Group income statement, except for tax on items recognised in Other comprehensive income or directly in equity.
Current tax is calculated on the basis of the tax laws substantively enacted at the balance sheet date, in the countries where the Group operates. Current tax assets and liabilities are off set where there is a legally enforceable right of off set.
Uncertain tax positions are considered on an individual basis. Where management considers it probable that an additional outfl ow will result from any given position, a provision is made. Such provisions are measured using management's best estimate of the most likely outcome. Further details are given in note 5.
Deferred tax is provided in full on temporary diff erences arising between the tax bases of assets and liabilities and their carrying amounts in the Group fi nancial statements. Deferred tax is not recognised on taxable temporary diff erences arising on the initial recognition of goodwill. Deferred tax is not accounted for when it arises from the initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction aff ects neither accounting nor taxable profi t or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply when the asset is realised or the liability settled, based on the tax rates and laws that have been enacted or substantively enacted by the balance sheet date, in the countries where the Group operates.
Deferred tax assets are recognised in respect of tax losses carried forward and other temporary diff erences, to the extent that it is probable that the related tax benefit will be realised through future taxable profits. Deferred tax is provided on temporary diff erences arising on investments in subsidiaries and associates, except where the Group controls the timing of the reversal of the temporary diff erence and it is probable that the temporary diff erence will not reverse in the foreseeable future. Deferred tax assets and liabilities are off set where there is a legally enforceable right to off set current tax assets and liabilities and where they relate to the same tax authority.
The fair value of share incentives granted in connection with the Group's equity-settled, share-based employee incentive plans is recognised as an expense on a straight-line basis over the vesting period. Fair value is measured using whichever of the Black-Scholes model, Monte Carlo model or closing market price is most appropriate. The Group takes into account the best estimate of the number of awards and options expected to vest and revises such estimates at each balance sheet date. Non-market performance conditions are included in the vesting estimates. Market-based performance conditions are included in the fair value measurement but are not revised for actual performance.
Contingent consideration is recognised in accordance with EU-IFRS, including IFRS 3. The initially recorded cost of any acquisition includes a reasonable estimate of the fair value of any contingent amounts expected to be payable in the future. Any cost or benefi t arising when such estimates are revised is recognised in the Group income statement (see note 13).
Where part or all of the amount of disposal consideration is contingent on future events, the disposal proceeds initially recorded include a reasonable estimate of the value of the contingent amounts expected to be receivable and payable in the future. The proceeds and profi t or loss on disposal are adjusted when revised estimates are made, with corresponding adjustments made to receivables and payables as appropriate, until the ultimate outcome is known and the related consideration received.
A discontinued operation is a component of the Group's business that represents a separate geographic area of operation or a separate major line of business. Classifi cation as a discontinued operation occurs upon disposal or earlier, if the operation meets the criteria to be classifi ed as held-for-sale. Discontinued operations are presented in the Group income statement as a separate line and are shown net of tax.
When an operation is classifi ed as a discontinued operation, comparatives in the Group income statement and the Group statement of comprehensive income are re-presented as if the operation had been discontinued from the start of the comparator year.
Earnings per share are reported in accordance with EU-IFRS, including IAS 33.
We are organised into, and managed on a worldwide basis through, the following fi ve operating segments, which are based on geographic areas and supported by central functions:
The chief operating decision maker assesses the performance of these operating segments on the basis of Benchmark EBIT, as defi ned in note 6.
The 'All other segments' category required to be disclosed has been captioned as EMEA/Asia Pacifi c in these fi nancial statements. This combines information in respect of the EMEA and Asia Pacifi c segments, as neither of these operating segments is individually reportable, on the basis of their share of the Group's revenue, reported profi t or loss, and assets.
We separately present information equivalent to segment disclosures in respect of the costs of its central functions, under the caption 'Central Activities', as management believes that this information is helpful to users of the fi nancial statements. Costs reported for Central Activities include costs arising from fi nance, treasury and other global functions.
Inter-segment transactions are entered into under the normal commercial terms and conditions that would be available to third parties. Such transactions do not have a material impact on the Group's results.
for the year ended 31 March 2018 continued
Segment assets consist primarily of property, plant and equipment, intangible assets including goodwill, inventories, derivatives designated as hedges of future commercial transactions, and receivables. They exclude tax assets, cash and cash equivalents, and derivatives designated as hedges of borrowings. Segment liabilities comprise operating liabilities, including derivatives designated as hedges of future commercial transactions. They exclude tax liabilities, borrowings and related hedging derivatives. Net assets reported for Central Activities comprise corporate head offi ce assets and liabilities, including certain post-employment benefi t assets and obligations, and derivative assets and liabilities. Capital expenditure comprises additions to property, plant and equipment and intangible assets, other than additions through business combinations.
Information required to be presented also includes analysis of the Group's revenues by groups of service lines. This is supplemented by voluntary disclosure of the profi tability of those 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. Our four business segments, details of which are given in the Strategic report section of this Annual Report, are:
The North America and the UK and Ireland operating segments derive revenues from all of the Group's business segments. The EMEA and Asia Pacifi c segments currently do not derive revenue from the Consumer Services business segment and such revenue generated in the Latin America segment is not yet suffi ciently material to be disclosed separately.
Reportable segment information for the full year provided to the chief operating decision maker is set out in note 8(a).
In preparing these fi nancial statements, management is required to make estimates and assumptions that aff ect the reported amount of revenues, expenses, assets, liabilities and the disclosure of contingent liabilities. The resulting accounting estimates, which are based on management's best judgment at the date of these fi nancial statements, will seldom equal the subsequent actual amounts. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in future fi nancial years are summarised below. Revenue recognition is excluded from this summary on the grounds that the policy adopted in this area is suffi ciently objective.
The Group is subject to tax in numerous jurisdictions. The Group has a number of open tax returns with various tax authorities with whom it is in active dialogue. 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. Significant judgment is required in determining the related assets or provisions, as there are transactions in the ordinary course of business and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities based on estimates of whether additional tax will be due. Where the final tax outcome of these matters is diff erent from the amounts that were initially recognised, the diff erences will aff ect the results for the year and the respective income tax and deferred tax assets or provisions in the year in which such determination is made. The Group recognises deferred tax assets based on forecasts of future profi ts against which those assets may be utilised.
The Group tests goodwill for impairment annually, or more frequently if there is an indication that it may be impaired. The recoverable amount of each CGU is generally determined on the basis of value-in-use calculations, which require the use of cash fl ow projections based on financial budgets, looking forward up to fi ve years. Management determines budgeted profi t margin based on past performance and its expectations for the market's development. Cash flows are extrapolated using estimated growth rates beyond a fi ve-year period. The growth rates used do not exceed the long-term average growth rate for the CGU's markets. The discount rates used refl ect the Group's pre-tax weighted average cost of capital ('WACC'), as adjusted for region-specifi c risks and other factors.
In applying the Group's accounting policies, management has made judgments that have a signifi cant eff ect on the amounts recognised in the Group fi nancial statements and the reported amounts of assets, liabilities, income and expenses. Actual results may diff er from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.
The most signifi cant of these judgments are in respect of intangible assets and contingencies:
Certain costs incurred in the developmental phase of an internal project, which include the development of databases, internal use software and internally generated software, are capitalised as intangible assets if a number of criteria are met. Management has made judgments and assumptions when assessing whether a project meets these criteria, and on measuring the costs and the economic life attributed to such projects.
On acquisition, specifi c intangible assets are identifi ed and recognised separately from goodwill and then amortised over their estimated useful lives. These include items such as brand names and customer lists, to which value is fi rst attributed at the time of acquisition. The capitalisation of these assets and the related amortisation charges are based on judgments about the value and economic life of such items.
The economic lives of intangible assets are estimated at between three and ten years for internal projects and between two and 20 years for acquisition intangibles. Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Further details of the amounts of, and movements in, such assets are given in note 20.
In the case of pending and threatened litigation claims, management has formed a judgment as to the likelihood of ultimate liability. No liability has been recognised where the likelihood of any loss arising is possible rather than probable.
As detailed below, the Group has identifi ed and defi ned certain measures that it uses to understand and manage our performance. The measures are not defi ned under IFRS and they may not be directly comparable with other companies' adjusted measures. These non-GAAP measures are not intended to be a substitute for any IFRS measures of performance but management has included them as they consider them to be key measures used within the business for assessing the underlying performance of the Group's ongoing businesses.
Benchmark PBT is disclosed to indicate the Group's underlying profi tability. It is defi ned as profi t before amortisation and impairment of acquisition intangibles, impairment of goodwill, acquisition expenses, adjustments to contingent consideration, Exceptional items, fi nancing fair value remeasurements, tax (and interest thereon) and discontinued operations. It includes the Group's share of continuing associates' 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:
Benchmark EBIT is defi ned as Benchmark PBT before the net interest expense charged therein and accordingly excludes Exceptional items as defi ned below. Benchmark EBIT margin is Benchmark EBIT from ongoing activities expressed as a percentage of revenue from ongoing activities.
Benchmark EBITDA is defi ned as Benchmark EBIT before the depreciation and amortisation charged therein (note 11).
Exited business activities are businesses sold, closed or identifi ed for closure during a fi nancial 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 diff ers from the defi nition of discontinued operations in IFRS 5.
The results of businesses trading at 31 March 2018, which are not disclosed as exited business activities, are reported as ongoing activities.
To highlight its 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.
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 eff ects arising on the consolidation of our activities and comprises one of our measures of performance at constant exchange rates.
This is the year-on-year change in the revenue of ongoing activities, translated at constant exchange rates, excluding acquisitions until the fi rst anniversary of their consolidation.
Benchmark earnings comprises Benchmark PBT less attributable tax and non-controlling interests. The attributable tax for this purpose excludes signifi cant 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.
for the year ended 31 March 2018 continued
Benchmark EPS comprises Benchmark earnings divided by the weighted average number of issued ordinary shares, as adjusted for own shares held.
Benchmark PBT per share comprises Benchmark PBT divided by the weighted average number of issued ordinary shares, as adjusted for own shares held.
The Benchmark tax charge is the tax charge applicable to Benchmark PBT. It diff ers 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 15(b)(ii) to these fi nancial statements. The Benchmark eff ective rate of tax is calculated by dividing the Benchmark tax charge by Benchmark PBT.
The separate reporting of Exceptional items gives an indication of the Group's underlying performance. Exceptional items include those arising from the profi t or loss on disposal of businesses, closure costs of major business units, costs of signifi cant restructuring programmes and other fi nancially signifi cant one-off items. All other restructuring costs are charged against Benchmark EBIT, in the segments in which they are incurred.
Full-year dividend per share comprises the total of dividends per share announced in respect of the fi nancial year.
Benchmark operating cash fl ow 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 and the profi t or loss retained in continuing associates. Benchmark free cash fl ow is derived from Benchmark operating cash fl ow by excluding net interest, tax paid in respect of continuing operations and dividends paid to non-controlling interests.
Cash fl ow conversion is Benchmark operating cash fl ow expressed as a percentage of Benchmark EBIT.
Net debt is borrowings (and the fair value of derivatives hedging borrowings) excluding 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 eff ective portion of derivatives hedging borrowings) excluding accrued interest, less cash held in Group Treasury.
ROCE is defi ned as Benchmark EBIT less tax at the Benchmark rate divided by a three-point average of capital employed 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 the average capital employed in discontinued operations, and to add Net debt.
The Group's activities expose it to a variety of fi nancial risks. These are market risk, including foreign exchange risk and interest rate risk, credit risk, and liquidity risk. These risks are unchanged from those reported in the 2017 Annual Report. The numeric disclosures in respect of fi nancial risks are included within later notes to the fi nancial statements, to provide a more transparent link between fi nancial risks and results.
Financial risks represent part of the Group's risks in relation to its strategy and business objectives. There is a full discussion of the most signifi cant risks in the Risk management section of this Annual Report. The Group's fi nancial risk management focuses on the unpredictability of fi nancial markets and seeks to minimise potentially adverse eff ects on the Group's fi nancial performance. The Group seeks to reduce its exposure to fi nancial risks and uses derivative fi nancial instruments to hedge certain risk exposures. However the Group does not, nor does it currently intend to, borrow in the Brazilian real or the Colombian peso.
The Group also ensures surplus funds are prudently managed and controlled.
The Group is exposed to foreign exchange risk from future commercial transactions, recognised assets and liabilities and investments in, and loans between, Group undertakings with diff erent functional currencies. The Group manages such risk, primarily within undertakings whose functional currencies are the US dollar, by:
The principal transaction exposures are to the pound sterling and the euro. An indication of the sensitivity to foreign exchange risk is given in note 9.
The Group's interest rate risk arises principally from components of its Net debt that are at variable rates.
The Group has a policy of normally maintaining between 50% and 100% of Net funding at rates that are fi xed for more than six months. The Group manages its interest rate exposure by:
Further information in respect of the Group's net fi nance costs for the year and an indication of the sensitivity to interest rate risk is given in note 14.
In the case of derivative fi nancial instruments, deposits and trade receivables, the Group is exposed to credit risk from the nonperformance of contractual agreements by the contracted party.
Credit risk is managed by:
The credit risk on derivative fi nancial instruments utilised and deposits held by the Group is therefore not considered to be signifi cant. The Group does not anticipate that any losses will arise from non-performance by its chosen counterparties. Further information on the Group's derivative fi nancial instruments at the balance sheet dates is given in note 28 and that in respect of amounts recognised in the Group income statement is given in note 14. Further information on the Group's cash and cash equivalents at the balance sheet dates is given in note 24.
To minimise credit risk for trade receivables, the Group has implemented policies that require appropriate credit checks on potential clients before granting credit. The maximum credit risk in respect of such fi nancial assets is their carrying value. Further information in respect of the Group's trade receivables is given in note 23.
The Group manages liquidity risk by:
Details of such facilities are given in note 26. A maturity analysis of contractual undiscounted future cash fl ows for fi nancial liabilities is given in note 30.
The Group's defi nition and management of capital focuses on capital employed:
The Group has a progressive dividend policy which aims to increase the dividend over time broadly in line with the underlying growth in Benchmark EPS. This aligns shareholder returns with the underlying profi tability of the Group. In determining the level of dividend in any one year, in accordance with the policy, the Board also considers a number of other factors, including the outlook for the Group, the opportunities for organic investment, the opportunities to make acquisitions and disposals, the cash fl ow generated by the Group, and the level of dividend cover. Further detail on the distributable reserves of the Company can be found in note K to the Company fi nancial statements.
for the year ended 31 March 2018 continued
(i) Income statement
| North | Latin | UK and | EMEA/ | Total operating | Central | Total continuing | |
|---|---|---|---|---|---|---|---|
| America | America | Ireland | Asia Pacifi c | segments | Activities | operations | |
| Year ended 31 March 2018 | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m |
| Revenue from external customers | |||||||
| Ongoing activities | 2,646 | 788 | 830 | 393 | 4,657 | — | 4,657 |
| Exited business activities | 5 | — | — | — | 5 | — | 5 |
| Total | 2,651 | 788 | 830 | 393 | 4,662 | — | 4,662 |
| Reconciliation from Benchmark | |||||||
| EBIT to profi t/(loss) before tax | |||||||
| Benchmark EBIT | |||||||
| Ongoing activities | 833 | 267 | 260 | 9 | 1,369 | (79) | 1,290 |
| Exited business activities | 1 | — | — | — | 1 | — | 1 |
| Total | 834 | 267 | 260 | 9 | 1,370 | (79) | 1,291 |
| Net interest expense included in | |||||||
| Benchmark PBT (note 14(b)) | — | — | — | — | — | (85) | (85) |
| Benchmark PBT | 834 | 267 | 260 | 9 | 1,370 | (164) | 1,206 |
| Exceptional items (note 13(a)) | (57) | — | — | — | (57) | — | (57) |
| Amortisation of acquisition | |||||||
| intangibles | (79) | (20) | (9) | (4) | (112) | — | (112) |
| Acquisition expenses | (13) | — | (5) | (2) | (20) | — | (20) |
| Adjustment to the fair value of | |||||||
| contingent consideration | — | — | (3) | — | (3) | — | (3) |
| Fair value gain on step acquisition | — | — | 4 | — | 4 | — | 4 |
| Interest on uncertain tax provision | — | — | — | — | — | (20) | (20) |
| Financing fair value | |||||||
| remeasurements (note 14(c)) | — | — | — | — | — | (4) | (4) |
| Profi t/(loss) before tax | 685 | 247 | 247 | 3 | 1,182 | (188) | 994 |
| North America |
Latin America |
UK and Ireland |
EMEA/ Asia Pacifi c |
Total operating segments |
Central Activities |
Total continuing operations |
|
|---|---|---|---|---|---|---|---|
| Year ended 31 March 2017 | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m |
| Revenue from external customers | |||||||
| Ongoing activities | 2,452 | 730 | 807 | 341 | 4,330 | — | 4,330 |
| Exited business activities | 5 | — | — | — | 5 | — | 5 |
| Total | 2,457 | 730 | 807 | 341 | 4,335 | — | 4,335 |
| Reconciliation from Benchmark EBIT to profi t/(loss) before tax |
|||||||
| Benchmark EBIT | |||||||
| Ongoing activities | 779 | 251 | 246 | (3) | 1,273 | (76) | 1,197 |
| Exited business activities | 2 | — | — | — | 2 | — | 2 |
| Total | 781 | 251 | 246 | (3) | 1,275 | (76) | 1,199 |
| Net interest expense included in | |||||||
| Benchmark PBT (note 14(b)) | — | — | — | — | — | (75) | (75) |
| Benchmark PBT | 781 | 251 | 246 | (3) | 1,275 | (151) | 1,124 |
| Amortisation of acquisition | |||||||
| intangibles | (70) | (22) | (8) | (4) | (104) | — | (104) |
| Acquisition expenses | (12) | (1) | (1) | (2) | (16) | — | (16) |
| Financing fair value | |||||||
| remeasurement (note 14(c)) | — | — | — | — | — | 67 | 67 |
| Profi t/(loss) before tax | 699 | 228 | 237 | (9) | 1,155 | (84) | 1,071 |
A profi t before tax of US\$23m (2017: US\$8m) arose in the year in respect of discontinued operations. Further information on such operations which comprise CCM, the Group's email/cross-channel marketing business, in the current and prior years, and the Group's comparison shopping and lead generation businesses in the prior year, is given in note 16(a).
Revenue and Benchmark EBIT by operating segment for the year ended 31 March 2017 have been re-analysed between ongoing and exited business activities, following the disposal of our Experian Public Records business in March 2018.
Additional information by operating segment, including that on total and organic growth at constant exchange rates, is provided in the Strategic report.
| North America US\$m |
Latin America US\$m |
UK and Ireland US\$m |
EMEA/ Asia Pacifi c US\$m |
Total ongoing activities US\$m |
|
|---|---|---|---|---|---|
| Revenue for the year ended 31 March 2017 | 2,452 | 730 | 807 | 341 | 4,330 |
| Adjustment to constant exchange rates | — | (3) | (3) | 1 | (5) |
| Revenue at constant exchange rates for the year ended 31 March 2017 |
2,452 | 727 | 804 | 342 | 4,325 |
| Organic revenue growth | 139 | 46 | (2) | 36 | 219 |
| Revenue from acquisitions | 55 | — | 8 | — | 63 |
| Revenue at constant exchange rates for the year ended 31 March 2018 |
2,646 | 773 | 810 | 378 | 4,607 |
| Adjustment to actual exchange rates | — | 15 | 20 | 15 | 50 |
| Revenue for the year ended 31 March 2018 | 2,646 | 788 | 830 | 393 | 4,657 |
| Organic revenue growth at constant rates | 6% | 6% | — | 11% | 5% |
| Total revenue growth at constant rates | 8% | 6% | 1% | 11% | 7% |
The table above demonstrates the application of the methodology set out in note 6 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 2017.
Net assets/(liabilities)
| At 31 March 2018 | North America US\$m |
Latin America US\$m |
UK and Ireland US\$m |
EMEA/ Asia Pacifi c US\$m |
Total operating segments US\$m |
Central Activities and other US\$m |
Total Group US\$m |
|---|---|---|---|---|---|---|---|
| Goodwill | 2,728 | 782 | 717 | 225 | 4,452 | — | 4,452 |
| Investments in associates | 21 | — | 62 | 8 | 91 | 34 | 125 |
| Other assets | 1,570 | 592 | 452 | 286 | 2,900 | 748 | 3,648 |
| Total assets | 4,319 | 1,374 | 1,231 | 519 | 7,443 | 782 | 8,225 |
| Total liabilities | (707) | (167) | (318) | (185) | (1,377) | (4,224) | (5,601) |
| Net assets/(liabilities) | 3,612 | 1,207 | 913 | 334 | 6,066 | (3,442) | 2,624 |
| At 31 March 2017 | North America US\$m |
Latin America US\$m |
UK and Ireland US\$m |
EMEA/ Asia Pacifi c US\$m |
Total operating segments US\$m |
Central Activities and other US\$m |
Total Group US\$m |
|---|---|---|---|---|---|---|---|
| Goodwill | 2,641 | 801 | 603 | 200 | 4,245 | — | 4,245 |
| Investments in associates | 22 | — | 13 | 7 | 42 | — | 42 |
| Other assets | 1,447 | 580 | 364 | 224 | 2,615 | 789 | 3,404 |
| Total assets | 4,110 | 1,381 | 980 | 431 | 6,902 | 789 | 7,691 |
| Total liabilities | (603) | (147) | (276) | (135) | (1,161) | (3,879) | (5,040) |
| Net assets/(liabilities) | 3,507 | 1,234 | 704 | 296 | 5,741 | (3,090) | 2,651 |
Central Activities and other comprises:
| 2018 | 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Assets US\$m |
Liabilities US\$m |
Net assets/ (liabilities) US\$m |
Assets US\$m |
Liabilities US\$m |
Net assets/ (liabilities) US\$m |
||
| Central Activities | 394 | (145) | 249 | 224 | (104) | 120 | |
| Investment in associate | 34 | — | 34 | — | — | — | |
| Assets/(liabilities) classifi ed as held-for-sale | — | — | — | 358 | (58) | 300 | |
| Net debt | 187 | (3,595) | (3,408) | 98 | (3,271) | (3,173) | |
| Tax | 167 | (484) | (317) | 109 | (446) | (337) | |
| 782 | (4,224) | (3,442) | 789 | (3,879) | (3,090) |
The total tax liability for the Group at 31 March 2017 also included a net liability of US\$18m classifi ed as held-for-sale (note 40).
for the year ended 31 March 2018 continued
(iii) Balance sheet (continued)
Capital employed
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| North America | 3,612 | 3,507 |
| Latin America | 1,207 | 1,234 |
| UK and Ireland | 913 | 704 |
| EMEA/Asia Pacifi c | 334 | 296 |
| Total operating segments | 6,066 | 5,741 |
| Central Activities | 283 | 120 |
| Assets and liabilities classifi ed as held-for-sale (note 40) | — | 300 |
| Non-controlling interests | (7) | (12) |
| Capital employed attributable to owners | 6,342 | 6,149 |
| Capital expenditure | Amortisation | Depreciation | |||||
|---|---|---|---|---|---|---|---|
| 2018 US\$m |
2017 US\$m |
2018 US\$m |
2017 US\$m |
2018 US\$m |
2017 US\$m |
||
| North America | 187 | 172 | 113 | 105 | 37 | 40 | |
| Latin America | 112 | 120 | 72 | 63 | 11 | 9 | |
| UK and Ireland | 54 | 59 | 32 | 31 | 13 | 13 | |
| EMEA/Asia Pacifi c | 33 | 26 | 21 | 23 | 6 | 8 | |
| Total operating segments | 386 | 377 | 238 | 222 | 67 | 70 | |
| Central Activities | 45 | 22 | 19 | 28 | 2 | 2 | |
| Total Group | 431 | 399 | 257 | 250 | 69 | 72 |
Amortisation and depreciation above only include amounts charged to Benchmark PBT.
For the year ended 31 March 2017, capital expenditure of US\$24m, amortisation of US\$14m and depreciation of US\$6m arose in respect of discontinued operations. Further information is given in note 16.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| USA | 2,646 | 2,449 |
| UK | 823 | 800 |
| Brazil | 707 | 649 |
| Colombia | 63 | 62 |
| Other | 423 | 375 |
| 4,662 | 4,335 |
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% (2017: 90%) of Group revenue.
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| USA | 3,746 | 3,643 |
| UK | 1,052 | 830 |
| Brazil | 923 | 951 |
| Colombia | 237 | 233 |
| Other | 383 | 352 |
| Segment non-current assets by country | 6,341 | 6,009 |
| Central Activities | 445 | 202 |
| Deferred tax | 140 | 83 |
| 6,926 | 6,294 |
To add clarity to the presentation of this information, non-current assets for Central Activities and deferred tax have been excluded from the analysis by country. The Group has no signifi cant non-current assets located in Ireland.
| Year ended 31 March 2018 | Credit Services US\$m |
Decision Analytics US\$m |
Marketing Services US\$m |
Consumer Services US\$m |
Total business segments US\$m |
Central Activities US\$m |
Total continuing operations US\$m |
|---|---|---|---|---|---|---|---|
| Revenue from external customers | |||||||
| Ongoing activities | 2,606 | 668 | 457 | 926 | 4,657 | — | 4,657 |
| Exited business activities | 5 | — | — | — | 5 | — | 5 |
| Total | 2,611 | 668 | 457 | 926 | 4,662 | — | 4,662 |
| Reconciliation from Benchmark EBIT to profi t/(loss) before tax Benchmark EBIT |
|||||||
| Ongoing activities | 898 | 144 | 133 | 194 | 1,369 | (79) | 1,290 |
| Exited business activities | 1 | — | — | — | 1 | — | 1 |
| Total | 899 | 144 | 133 | 194 | 1,370 | (79) | 1,291 |
| Net interest expense included in Benchmark PBT (note 14(b)) |
— | — | — | — | — | (85) | (85) |
| Benchmark PBT | 899 | 144 | 133 | 194 | 1,370 | (164) | 1,206 |
| Exceptional items (note 13(a)) | (29) | (28) | — | — | (57) | — | (57) |
| Amortisation of acquisition intangibles |
(80) | (9) | (4) | (19) | (112) | — | (112) |
| Acquisition expenses | (12) | — | — | (8) | (20) | — | (20) |
| Adjustment to the fair value of contingent consideration |
(3) | — | — | — | (3) | — | (3) |
| Fair value gain on step acquisition | 4 | — | — | — | 4 | — | 4 |
| Interest on uncertain tax provision | — | — | — | — | — | (20) | (20) |
| Financing fair value remeasurements (note 14(c)) |
— | — | — | — | — | (4) | (4) |
| Profi t/(loss) before tax | 779 | 107 | 129 | 167 | 1,182 | (188) | 994 |
| Year ended 31 March 2017 | Credit Services US\$m |
Decision Analytics US\$m |
Marketing Services US\$m |
Consumer Services US\$m |
Total business segments US\$m |
Central Activities US\$m |
Total continuing operations US\$m |
| Revenue from external customers | |||||||
| Ongoing activities | 2,384 | 584 | 421 | 941 | 4,330 | — | 4,330 |
| Exited business activities | 5 | — | — | — | 5 | — | 5 |
| Total | 2,389 | 584 | 421 | 941 | 4,335 | — | 4,335 |
| Reconciliation from Benchmark EBIT to profi t/(loss) before tax Benchmark EBIT |
|||||||
| Ongoing activities | 815 | 120 | 95 | 243 | 1,273 | (76) | 1,197 |
| Exited business activities | 2 | — | — | — | 2 | — | 2 |
| Total | 817 | 120 | 95 | 243 | 1,275 | (76) | 1,199 |
| Net interest expense included in Benchmark PBT (note 14(b)) |
— | — | — | — | — | (75) | (75) |
| Benchmark PBT | 817 | 120 | 95 | 243 | 1,275 | (151) | 1,124 |
| Amortisation of acquisition intangibles |
(76) | (9) | (4) | (15) | (104) | — | (104) |
| Acquisition expenses | (7) | — | — | (9) | (16) | — | (16) |
| Financing fair value | |||||||
| remeasurements (note 14(c)) | — | — | — | — | — | 67 | 67 |
| Profi t/(loss) before tax | 734 | 111 | 91 | 219 | 1,155 | (84) | 1,071 |
A profi t before tax of US\$23m (2017: US\$8m) arose in respect of discontinued operations. Further information is given in note 16(a).
Revenue and Benchmark EBIT by business segment for the year ended 31 March 2017 have been re-analysed between ongoing and exited business activities, following the disposal of our Experian Public Records business in March 2018.
Additional information by business segment, including that on total and organic growth at constant exchange rates, is provided in the Strategic report.
for the year ended 31 March 2018 continued
| Average | Closing | ||||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | 2016 | |
| US dollar : Brazilian real | 3.22 | 3.30 | 3.31 | 3.17 | 3.56 |
| Pound sterling : US dollar | 1.33 | 1.30 | 1.41 | 1.25 | 1.44 |
| Euro : US dollar | 1.17 | 1.10 | 1.23 | 1.07 | 1.14 |
| US dollar : Colombian peso | 2,935 | 2,969 | 2,794 | 2,894 | 2,997 |
In 2012, Brazilian real intra-Group funding was provided to Serasa S.A. in Brazil from a Group company whose functional currency was not the Brazilian real. As the funding was considered to be permanent, no foreign exchange volatility was recognised within fi nancing fair value remeasurements in the Group income statement. In November 2014, the funding was partially repaid. The Group exchanged the repayment into US dollars and used it to repay debt. Following the partial repayment of the debt, the remaining funding was no longer regarded as permanent for the purposes of EU-IFRS. In the year end ended 31 March 2017, an additional element of the funding was repaid. As a result of the weakening of 4% in the Brazilian real against the US dollar in the year ended 31 March 2018, a charge of US\$12m has been recognised within fi nancing fair value remeasurements (2017: gain of US\$34m due to 11% strengthening) (note 14(c)).
The Group is similarly exposed to the impact of the Brazilian real strengthening or weakening against the US dollar in the future. A movement of 21% would result in a US\$57m impact on profi t before tax. There is no eff ect on total equity as a result of this exposure, since it arises on intra-Group funding and there would be a related equal but opposite foreign exchange movement recognised in the translation reserve within equity.
On the basis of the profi le of foreign exchange exposures, and an assessment of reasonably possible changes in such exposures, there are no other material sensitivities to foreign exchange risk at the balance sheet dates. In making these assessments, actual data on movements in the principal currencies over the most recent three-year period has been considered together with exposures at the balance sheet dates. This methodology has been applied consistently.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Wages and salaries | 1,236 | 1,192 |
| Social security costs | 200 | 176 |
| Share incentive plans (note 31(a)) | 84 | 60 |
| Pension costs – defi ned benefi t plans (note 33(a)) | 8 | 8 |
| Pension costs – defi ned contribution plans | 50 | 48 |
| Employee benefi t costs | 1,578 | 1,484 |
| Other labour costs | 138 | 131 |
| 1,716 | 1,615 |
Other labour costs includes those in respect of external contractors, outsourcing and the recruitment, development and training of employees. The defi nition of key management personnel, and an analysis of their remuneration, is given in note 44(d).
| 2018 | 2017 | |||||
|---|---|---|---|---|---|---|
| Full-time | Part-time | Full-time equivalent |
Full-time | Part-time | Full-time equivalent |
|
| North America | 6,565 | 37 | 6,583 | 6,225 | 40 | 6,245 |
| Latin America | 3,131 | 106 | 3,184 | 3,130 | 113 | 3,187 |
| UK and Ireland | 3,604 | 276 | 3,742 | 3,500 | 264 | 3,632 |
| EMEA/Asia Pacifi c | 2,770 | 71 | 2,806 | 2,583 | 64 | 2,615 |
| Total operating segments | 16,070 | 490 | 16,315 | 15,438 | 481 | 15,679 |
| Central Activities | 169 | 22 | 180 | 149 | 20 | 159 |
| 16,239 | 512 | 16,495 | 15,587 | 501 | 15,838 |
for the year ended 31 March 2018 continued
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Benchmark: | ||
| Amortisation of other intangible assets | 257 | 250 |
| Depreciation of property, plant and equipment | 69 | 72 |
| 326 | 322 | |
| Non-benchmark: | ||
| Amortisation of acquisition intangibles | 112 | 104 |
| 438 | 426 |
An analysis by segment of amounts charged within Benchmark PBT is given in note 8(a)(iv). Analyses by asset type are given in notes 20 and 21.
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Audit of the Company and Group fi nancial statements | 0.6 | 0.5 |
| Audit of the fi nancial statements of the Company's subsidiaries | 3.2 | 2.6 |
| Audit-related assurance services | 0.4 | 0.4 |
| Other assurance services | 0.2 | 0.1 |
| Other services | — | 0.5 |
| Total fees payable to the Company's auditor and its associates | 4.4 | 4.1 |
| Summary of fees by nature: | ||
| Fees for audit services | 3.8 | 3.1 |
| Fees for audit-related assurance services | 0.4 | 0.4 |
| Fees for other services | 0.2 | 0.6 |
| 4.4 | 4.1 |
The guidelines covering the use of the Company's auditor for non-audit services are set out in the Corporate governance report. Current policy is that such fees are capped at 50% of the fees for audit services. In the year ended 31 March 2018, fees payable for services, other than fees for audit-related assurance services, were 5% (2017: 19%) of fees payable for audit services. Such fees are reported within Other operating charges.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Exceptional items: | ||
| Canadian legal settlement (note 13(b)) | 32 | — |
| Legal provisions movements (note 13(c)) | 25 | — |
| Charge for Exceptional items | 57 | — |
| Other adjustments made to derive Benchmark PBT: | ||
| Amortisation of acquisition intangibles (note 20) | 112 | 104 |
| Acquisition expenses | 20 | 16 |
| Adjustment to the fair value of contingent consideration | 3 | — |
| Interest on uncertain tax provisions | 20 | — |
| Fair value gain on step acquisition | (4) | — |
| Financing fair value remeasurements (note 14(a)) | 4 | (67) |
| Charge for other adjustments made to derive Benchmark PBT | 155 | 53 |
| Charge for Exceptional items and Other adjustments made to derive Benchmark PBT | 212 | 53 |
| By income statement caption: | ||
| Labour costs | 7 | 6 |
| Amortisation and depreciation charges | 112 | 104 |
| Other operating charges | 69 | 10 |
| Within operating profi t | 188 | 120 |
| Finance expense (note 14(a)) | 24 | (67) |
| Net charge for other adjustments made to derive Benchmark PBT | 212 | 53 |
Acquisition expenses comprise professional fees and expenses associated with completed, ongoing and terminated acquisition processes, as well as the integration costs associated with completed deals.
On 6 March 2018 we settled a contractual dispute in Canada that arose following a 2008 sales process in our now divested BakerHill business. All costs relating to the dispute have been paid in the year.
During the year ended 31 March 2018, we paid US\$7m of legal fees and increased provisions by a further net US\$18m in respect of a number of related legal claims. We may benefi t from applicable insurance recoveries in future years.
for the year ended 31 March 2018 continued
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Interest income: | ||
| Bank deposits, short-term investments and loan notes | (15) | (14) |
| Interest income | (15) | (14) |
| Finance expense: | ||
| Eurobonds and notes | 83 | 86 |
| Bank loans, commercial paper, overdrafts and other | 23 | 13 |
| Commitment and facility utilisation fees | 5 | 5 |
| Interest expense on pension plan liabilities | 1 | 1 |
| Interest diff erentials on derivatives | (12) | (16) |
| Interest expense | 100 | 89 |
| Charge/(credit) in respect of fi nancing fair value remeasurements (note 14(c)) | 4 | (67) |
| Interest on uncertain tax provisions | 20 | — |
| Finance expense | 124 | 22 |
| Net fi nance costs included in profi t before tax | 109 | 8 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Interest income | (15) | (14) |
| Interest expense | 100 | 89 |
| Net interest expense included in Benchmark PBT | 85 | 75 |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Fair value gains on borrowings – attributable to interest rate risk | (46) | (29) |
| Fair value losses/(gains) on borrowings – attributable to currency risk | 209 | (125) |
| Losses on interest rate swaps – fair value hedges | 7 | 1 |
| (Gains)/losses on cross-currency swaps – fair value hedges | (167) | 160 |
| Fair value gains on non-hedging derivatives | (15) | (39) |
| Foreign exchange losses/(gains) on Brazilian real intra-Group funding | 12 | (34) |
| Other foreign exchange losses/(gains) on fi nancing activities | 2 | (3) |
| Increase in present value of put options | 2 | 2 |
| 4 | (67) |
The following table shows the sensitivity to interest rate risk, on the basis of the profi le of Net debt at the balance sheet dates and an assessment of reasonably possible changes in the principal interest rates, with all other variables held constant. In making this assessment, actual movements in relevant interest rates over the most recent three-year period have been considered and a consistent methodology applied. An indication of the primary cause of the reported sensitivity of profi t for the fi nancial year is included.
| Gain/(loss) | 2018 US\$m |
2017 US\$m |
|---|---|---|
| Eff ect of an increase of 0.4% (2017: 0.2%) on US dollar-denominated Net debt: | ||
| Due to fair value gains on interest rate swaps off set by higher interest on fl oating rate borrowings | 8 | 2 |
| Eff ect of an increase of 0.1% (2017: 0.1%) on pound sterling-denominated Net debt: Due to the revaluation of borrowings and related derivatives |
— | (1) |
| Eff ect of an increase of 2.8% (2017: 2.0%) on Brazilian real-denominated Net debt: Due to higher interest income on cash and cash equivalents |
1 | — |
| Eff ect of an increase of 0.2% (2017: 0.2%) on euro-denominated Net debt: Due to fair value gains on interest rate swaps off set by higher interest on fl oating rate borrowings |
(1) | — |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Current tax: | ||
| Tax on income for the year | 323 | 177 |
| Adjustments in respect of prior years | 5 | (5) |
| Total current tax charge | 328 | 172 |
| Deferred tax: | ||
| Origination and reversal of temporary diff erences | (183) | 74 |
| Adjustments in respect of prior years | 4 | 13 |
| Total deferred tax (credit)/charge | (179) | 87 |
| Group tax charge | 149 | 259 |
| The Group tax charge comprises: | ||
| UK tax | 105 | 72 |
| Non-UK tax | 44 | 187 |
| 149 | 259 |
As the Group is subject to the tax rates of more than one country, it has chosen to present its reconciliation of the Group tax charge using the main rate of corporation tax in the UK. The eff ective rate of tax for each year based on profi t before tax is lower (2017: higher) than the main rate of corporation tax in the UK, with the diff erences explained in note 15(c).
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Profi t before tax | 994 | 1,071 |
| Profi t before tax multiplied by the main rate of UK corporation tax of 19% (2017: 20%) | 189 | 214 |
| Eff ects of: | ||
| Adjustments in respect of prior years | 9 | 8 |
| Tax on Exceptional items | (2) | — |
| Other income not taxable | (10) | (12) |
| Losses not recognised | 45 | 16 |
| Expenses not deductible | 117 | 61 |
| Diff erent eff ective tax rates in non-UK businesses | (16) | (28) |
| Credit on restatement of deferred tax balances in North America | (116) | — |
| Recognition of previously unrecognised tax losses | (67) | — |
| Group tax charge | 149 | 259 |
| Expenses not deductible include movements in uncertain tax provisions. |
Eff ective rate of tax based on profi t before tax 15.0% 24.2%
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Group tax charge | 149 | 259 |
| Tax relief on Exceptional items and Other adjustments made to derive Benchmark PBT | 53 | 35 |
| Exceptional tax items | 107 | — |
| Benchmark tax charge | 309 | 294 |
| Benchmark PBT | 1,206 | 1,124 |
| Benchmark tax rate | 25.6% | 26.2% |
Exceptional tax items include the credit on restatement of deferred tax balances in North America, the recognition of previously unrecognised tax losses and an increase in the Group's uncertain tax provisions.
for the year ended 31 March 2018 continued
Prior year adjustments refl ect the net movement on historical tax positions, including adjustments for matters that have been substantively agreed with local tax authorities, and adjustments to deferred tax assets based on latest estimates and assumptions.
Expenses not deductible include charges in respect of uncertain tax positions, fi nancing fair value remeasurements not allowable for tax purposes, and losses on the disposal of businesses which are not subject to tax relief.
The US Tax Cuts and Jobs Act was enacted on 22 December 2017. This reduced the federal corporate tax rate in the USA from 35% to 21% with eff ect from 1 January 2018, and closing deferred tax assets and liabilities of USA companies within the Group have been calculated at this rate. The resulting credit of US\$116m has been recognised in the Group income statement.
We have recognised a deferred tax asset of US\$67m in respect of previously unrecognised losses which arose from a group reorganisation, resulting in a corresponding credit to the Group income statement.
The Group's tax rate refl ects its internal fi nancing arrangements in place to fund non-UK businesses.
In addition, 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 2018 the Group held current provisions of US\$301m (2017: US\$213m) 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. The Group does not expect to materially increase its uncertain tax provision 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.
The Group's tax charge will continue to be infl uenced by the profi le of profi ts earned in the diff erent countries in which the Group's subsidiaries operate. The Group could be aff ected by changes in tax law in the future, as we expect countries to amend legislation in respect of international tax.
The main rate of UK corporation tax was reduced to 19% from 1 April 2017 and will be reduced further to 17% from 1 April 2020.
On 31 May 2017, the Group completed the divestment of CCM, and the results and cash fl ows of this business are accordingly classifi ed as discontinued. We completed a transaction to divest our comparison shopping and historic lead generation businesses in October 2012, and their results and cash fl ows are classifi ed as discontinued.
The loss for the fi nancial year from discontinued operations of US\$30m (2017: profi t of US\$53m) comprises a loss of US\$30m (2017: profi t of US\$66m) in respect of CCM. In the prior year, a loss of US\$13m was recognised in respect of the comparison shopping and lead generation businesses. This disposal has now been fi nalised with receipt of US\$15m in respect of the loan note outstanding.
The results of CCM were:
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Revenue | 48 | 308 |
| Labour costs | (28) | (153) |
| Data and information technology costs | (8) | (27) |
| Depreciation and amortisation charges | — | (27) |
| Marketing and customer acquisition costs | (1) | (3) |
| Other operating charges | (14) | (50) |
| Total operating expenses | (51) | (260) |
| Separation and transaction related charges | (28) | (18) |
| (Loss)/profi t before tax | (31) | 30 |
| Tax credit | 8 | 36 |
| (Loss)/profi t after tax of discontinued operations | (23) | 66 |
| Profi t on disposal of discontinued operations (note 41(a)) | 54 | — |
| Tax charge in respect of disposal | (61) | — |
| (Loss)/profi t for the fi nancial year from discontinued operations | (30) | 66 |
Depreciation and amortisation includes amortisation of acquisition intangibles of US\$nil (2017: US\$7m). The operating loss for the year ended 31 March 2018 includes certain restructuring and one-off costs of separation. A deferred tax credit on the disposal of US\$45m was recognised in the year ended 31 March 2017.
The results of the comparison shopping and lead generation businesses were:
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Loss on disposal of discontinued operations | — | (22) |
| Tax credit in respect of disposal | — | 9 |
| Loss for the fi nancial year from discontinued operations | — | (13) |
The loss on disposal in the prior year arose from the reduction in the carrying value of the loan note receivable issued as part of the disposal. The remaining carrying value of the loan note (US\$15m) was received during the year.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Cash (outfl ow)/infl ow from operating activities | (63) | 41 |
| Cash fl ow from/(used in) investing activities | 278 | (21) |
| 215 | 20 |
The cash outfl ow from operating activities of US\$63m (2017: infl ow of US\$41m) relates to CCM and is stated after tax paid of US\$22m (2017: US\$9m).
Cash fl ow from investing activities of US\$278m (2017: used in investing activities US\$21m) comprises an infl ow of US\$263m (2017: outfl ow of US\$24m) relating to CCM, and a cash infl ow of US\$15m (2017: US\$3m) on the redemption of the loan note which arose on the disposal of the comparison shopping and lead generation businesses.
| Basic | Diluted | |||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | |
| US cents | US cents | US cents | US cents | |
| Continuing and discontinued operations | 88.9 | 92.1 | 88.0 | 91.4 |
| Add/(less): discontinued operations loss/(profi t) | 3.2 | (5.6) | 3.2 | (5.6) |
| Continuing operations | 92.1 | 86.5 | 91.2 | 85.8 |
| Add: other adjustments made to derive Benchmark PBT, net of related tax | 5.7 | 1.9 | 5.7 | 1.9 |
| Benchmark EPS (non-GAAP measure) | 97.8 | 88.4 | 96.9 | 87.7 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Continuing and discontinued operations | 815 | 866 |
| Add/(less): discontinued operations loss/(profi t) | 30 | (53) |
| Continuing operations | 845 | 813 |
| Add: other adjustments made to derive Benchmark PBT, net of related tax | 52 | 18 |
| Benchmark earnings attributable to owners of Experian plc (non-GAAP measure) | 897 | 831 |
| (ii) Attributable to non-controlling interests |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Continuing and discontinued operations | — | (1) |
| Add: amortisation of acquisition intangibles attributable to non-controlling interests, net of related tax | — | — |
| Benchmark earnings attributable to non-controlling interests (non-GAAP measure) | — | (1) |
for the year ended 31 March 2018 continued
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Total Benchmark earnings (non-GAAP measure) | 897 | 830 |
| (Loss)/profi t from discontinued operations | (30) | 53 |
| Loss from other adjustments made to derive Benchmark PBT, net of related tax | (52) | (18) |
| Profi t for the fi nancial year | 815 | 865 |
| 2018 | 2017 | |
|---|---|---|
| million | million | |
| Weighted average number of ordinary shares | 917 | 940 |
| Add: dilutive eff ect of share incentive awards, options and share purchases | 9 | 8 |
| Diluted weighted average number of ordinary shares | 926 | 948 |
| 2018 | 2017 | |||
|---|---|---|---|---|
| US cents per share |
US\$m | US cents per share |
US\$m | |
| Amounts recognised and paid during the fi nancial year: | ||||
| First interim – paid in February 2018 (2017: January 2017) | 13.50 | 124 | 13.00 | 121 |
| Second interim – paid in July 2017 (2017: July 2016) | 28.50 | 264 | 27.50 | 260 |
| Dividends paid on ordinary shares | 42.00 | 388 | 40.50 | 381 |
| Full-year dividend for the fi nancial year | 44.75 | 407 | 41.50 | 386 |
A second interim dividend in respect of the year ended 31 March 2018 of 31.25 US cents per ordinary share will be paid on 20 July 2018, to shareholders on the register at the close of business on 22 June 2018. This dividend is not included as a liability in these fi nancial statements. This second interim dividend and the fi rst interim dividend paid in February 2018 comprise the full-year dividend for the fi nancial year of 44.75 US cents per ordinary share. Further administrative information on dividends is given in the Shareholder and corporate information section.
In the year ended 31 March 2018, the employee trusts waived their entitlements to dividends of US\$5m (2017: US\$5m). There is no entitlement to dividend in respect of own shares held as treasury shares.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Cost and net book amount | ||
| At 1 April | 4,245 | 4,198 |
| Diff erences on exchange | 75 | (31) |
| Additions through business combinations (note 39(a)) | 133 | 292 |
| Disposals | (1) | — |
| Transfer in respect of assets held-for-sale (note 40) | — | (214) |
| At 31 March | 4,452 | 4,245 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| North America | 2,728 | 2,641 |
| Latin America | 782 | 801 |
| UK and Ireland | 717 | 603 |
| EMEA | 143 | 123 |
| Asia Pacifi c | 82 | 77 |
| At 31 March | 4,452 | 4,245 |
| 2018 | ||||
|---|---|---|---|---|
| Discount rate % pa |
Long-term growth rate % pa |
Discount rate % pa |
Long-term growth rate % pa |
|
| North America | 12.8 | 2.3 | 12.9 | 2.3 |
| Latin America | 17.8 | 4.7 | 17.8 | 4.7 |
| UK and Ireland | 10.5 | 2.3 | 9.7 | 2.3 |
| EMEA | 14.0 | 3.9 | 12.8 | 2.9 |
| Asia Pacifi c | 11.7 | 5.9 | 11.0 | 5.3 |
As indicated in note 5(a), value-in-use calculations are underpinned by fi nancial budgets, looking forward up to fi ve years. Management's key assumptions in setting the fi nancial budgets for the initial fi ve-year period were as follows:
forecast operating cash fl ow conversion rates were based on historic experience and performance expectations in a range of 75% to 95%.
During the year ended 31 March 2017, CCM met the defi nition of a CGU. Goodwill was allocated to this CGU and tested for impairment by comparison to the expected proceeds from its divestment. No impairment of goodwill was identifi ed and the goodwill attributable to this CGU was classifi ed as held-for-sale at 31 March 2017.
Further details of the principles used in determining the basis of allocation by CGU and annual impairment testing are given in note 5(a).
The review for the EMEA CGU indicated that the recoverable amount exceeded the carrying value by US\$64m and that any decline in estimated value-in-use in excess of that amount would result in the recognition of an impairment charge. The sensitivities, which result in the recoverable amount being equal to the carrying value, can be summarised as follows:
The recoverable amount of the other CGUs signifi cantly exceeded their carrying value, on the basis of the assumptions set out in the table in note 19(c) and any reasonably possible changes thereof.
for the year ended 31 March 2018 continued
| Acquisition intangibles | |||||||
|---|---|---|---|---|---|---|---|
| Customer and other relationships US\$m |
Acquired software development US\$m |
Marketing related assets US\$m |
Databases US\$m |
Internal use software US\$m |
Internally generated software US\$m |
Total US\$m |
|
| Cost | |||||||
| At 1 April 2017 | 1,016 | 274 | 97 | 1,281 | 323 | 455 | 3,446 |
| Diff erences on exchange | 11 | 3 | — | 6 | 2 | 28 | 50 |
| Additions through business | |||||||
| combinations | 38 | 35 | 5 | — | — | — | 78 |
| Other additions | — | — | — | 192 | 39 | 129 | 360 |
| Disposal of businesses | (6) | — | — | (8) | — | — | (14) |
| Other disposals | — | (2) | (1) | (68) | (1) | (21) | (93) |
| At 31 March 2018 | 1,059 | 310 | 101 | 1,403 | 363 | 591 | 3,827 |
| Accumulated amortisation and impairment |
|||||||
| At 1 April 2017 | 478 | 159 | 73 | 814 | 243 | 218 | 1,985 |
| Diff erences on exchange | 10 | 3 | (1) | 7 | 2 | 15 | 36 |
| Charge for the year | 73 | 30 | 9 | 168 | 34 | 55 | 369 |
| Disposal of businesses | (5) | — | — | (3) | — | — | (8) |
| Other disposals | — | (2) | (1) | (68) | (1) | (21) | (93) |
| At 31 March 2018 | 556 | 190 | 80 | 918 | 278 | 267 | 2,289 |
| Net book amount at 31 March 2017 | 538 | 115 | 24 | 467 | 80 | 237 | 1,461 |
| Net book amount at 31 March 2018 | 503 | 120 | 21 | 485 | 85 | 324 | 1,538 |
| Acquisition intangibles | |||||||
|---|---|---|---|---|---|---|---|
| Customer and other relationships US\$m |
Acquired software development US\$m |
Marketing related assets US\$m |
Databases US\$m |
Internal use software US\$m |
Internally generated software US\$m |
Total US\$m |
|
| Cost | |||||||
| At 1 April 2016 | 1,021 | 209 | 96 | 1,131 | 308 | 461 | 3,226 |
| Diff erences on exchange | 8 | — | 4 | 26 | 4 | (28) | 14 |
| Additions through business | |||||||
| combinations | 21 | 87 | — | — | — | 5 | 113 |
| Other additions | — | — | — | 187 | 41 | 108 | 336 |
| Other disposals | (11) | (8) | (1) | (63) | (2) | (21) | (106) |
| Transfer in respect of assets | |||||||
| held-for-sale | (23) | (14) | (2) | — | (28) | (70) | (137) |
| At 31 March 2017 | 1,016 | 274 | 97 | 1,281 | 323 | 455 | 3,446 |
| Accumulated amortisation and impairment |
|||||||
| At 1 April 2016 | 427 | 156 | 64 | 704 | 213 | 231 | 1,795 |
| Diff erences on exchange | — | 1 | 3 | 15 | 3 | (14) | 8 |
| Charge for the year | 78 | 24 | 9 | 158 | 46 | 60 | 375 |
| Other disposals | (11) | (8) | (1) | (63) | (2) | (21) | (106) |
| Transfer in respect of assets | |||||||
| held-for-sale | (16) | (14) | (2) | — | (17) | (38) | (87) |
| At 31 March 2017 | 478 | 159 | 73 | 814 | 243 | 218 | 1,985 |
| Net book amount at 31 March 2016 | 594 | 53 | 32 | 427 | 95 | 230 | 1,431 |
| Net book amount at 31 March 2017 | 538 | 115 | 24 | 467 | 80 | 237 | 1,461 |
There are no assets held under fi nance lease agreements and capitalised in Other intangible assets. Within the above are the following individually material assets:
North America Healthcare customer relationships net book value of US\$287m at 31 March 2018, with a remaining amortisation period of ten years.
Acquired CSID platform with a net book value of US\$84m at 31 March 2018, and a remaining amortisation period of eight years.
In addition to the development capitalised above we charged US\$142m (2017: US\$143m) of research and development in the Group income statement.
| Freehold | Short leasehold | Plant and | ||
|---|---|---|---|---|
| properties US\$m |
properties US\$m |
equipment US\$m |
Total US\$m |
|
| Cost | ||||
| At 1 April 2017 | 158 | 145 | 478 | 781 |
| Diff erences on exchange | 10 | — | 20 | 30 |
| Additions through business combinations (note 39 (a)) | — | — | 1 | 1 |
| Other additions | 4 | 7 | 60 | 71 |
| Disposals of businesses | — | (2) | (1) | (3) |
| Disposals | (13) | (10) | (18) | (41) |
| At 31 March 2018 | 159 | 140 | 540 | 839 |
| Accumulated depreciation | ||||
| At 1 April 2017 | 47 | 73 | 332 | 452 |
| Diff erences on exchange | 3 | — | 15 | 18 |
| Charge for the year | 4 | 8 | 57 | 69 |
| Disposals of businesses | — | (2) | (1) | (3) |
| Disposals | (9) | (10) | (13) | (32) |
| At 31 March 2018 | 45 | 69 | 390 | 504 |
| Net book amount at 31 March 2017 | 111 | 72 | 146 | 329 |
| Net book amount at 31 March 2018 | 114 | 71 | 150 | 335 |
| Freehold properties US\$m |
Short leasehold properties US\$m |
Plant and equipment US\$m |
Total US\$m |
|
|---|---|---|---|---|
| Cost | ||||
| At 1 April 2016 | 174 | 152 | 475 | 801 |
| Diff erences on exchange | (12) | 1 | (15) | (26) |
| Additions through business combinations | — | — | 1 | 1 |
| Other additions | 9 | 2 | 76 | 87 |
| Disposals | (13) | (2) | (8) | (23) |
| Transfer in respect of assets held-for-sale | — | (8) | (51) | (59) |
| At 31 March 2017 | 158 | 145 | 478 | 781 |
| Accumulated depreciation | ||||
| At 1 April 2016 | 57 | 74 | 318 | 449 |
| Diff erences on exchange | (4) | — | (13) | (17) |
| Charge for the year | 3 | 9 | 66 | 78 |
| Disposals | (9) | (2) | (6) | (17) |
| Transfer in respect of assets held-for-sale | — | (8) | (33) | (41) |
| At 31 March 2017 | 47 | 73 | 332 | 452 |
| Net book amount at 31 March 2016 | 117 | 78 | 157 | 352 |
| Net book amount at 31 March 2017 | 111 | 72 | 146 | 329 |
The net book amount of assets held under fi nance lease agreements and capitalised in plant and equipment is US\$8m (2017: US\$3m).
for the year ended 31 March 2018 continued
During the year ended 31 March 2018 an additional associate undertaking was created following the divestment of the email/cross-channel marketing business ('CCM') as disclosed in note 41. As a result of this transaction, the Group now owns 25% of the issued share capital of Vector CM Holdings (Cayman), L.P., a partnership incorporated in Cayman Islands. The Group also acquired a 25% stake in London & Country Mortgages Limited, a company registered in England and Wales, for US\$60m.
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| At 1 April | 42 | 8 |
| Diff erences on exchange | — | — |
| Additions | 60 | 33 |
| Interest in associate arising on a business disposal | 31 | — |
| Fair value gain on step acquisition | 4 | — |
| Acquisition of controlling stake in associate | (17) | — |
| Share of profi t after tax | 8 | 4 |
| Dividends received | (3) | (3) |
| At 31 March | 125 | 42 |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Trade receivables | 746 | 619 |
| Credit note provision | (21) | (16) |
| Trade receivables – after credit note provision | 725 | 603 |
| Impairment provision | (22) | (21) |
| Trade receivables – net | 703 | 582 |
| VAT and equivalent taxes recoverable | 1 | 6 |
| Prepayments | 194 | 154 |
| Accrued income | 225 | 174 |
| 1,123 | 916 | |
| As reported in the Group balance sheet: | ||
| Current trade and other receivables | 1,112 | 910 |
| Non-current trade and other receivables | 11 | 6 |
| 1,123 | 916 |
There is no material diff erence between the fair value and the book value stated above. The only impaired assets are within trade receivables. Non-current trade and other receivables comprise prepayments.
Trade receivables with fi nancial institutions comprise 35% (2017: 28%) of such receivables in Brazil, 43% (2017: 44%) in the UK and 9% (2017: 19%) in the USA. Together these represent 19% (2017: 23%) of trade receivables, with other balances spread across a number of sectors and geographies.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Financial instruments | 780 | 621 |
| VAT and equivalent taxes recoverable | 1 | 6 |
| Amounts within prepayments and accrued income | 342 | 289 |
| Items other than fi nancial instruments | 343 | 295 |
| 1,123 | 916 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| US dollar | 529 | 427 |
| Pound sterling | 204 | 160 |
| Brazilian real | 174 | 156 |
| Euro | 60 | 42 |
| Colombian peso | 28 | 29 |
| Other | 128 | 102 |
| 1,123 | 916 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Neither past due nor impaired: | ||
| New customers (of less than six months' standing) | 29 | 30 |
| Existing customers (of more than six months' standing) | 453 | 383 |
| Neither past due nor impaired | 482 | 413 |
| Past due but not considered impaired: | ||
| Up to three months past due | 171 | 126 |
| Three to six months past due | 18 | 20 |
| Over six months past due | 21 | 18 |
| Past due but not considered impaired | 210 | 164 |
| Trade receivables not considered impaired | 692 | 577 |
| Trade receivables considered partially impaired (note 23(e)) | 33 | 26 |
| 725 | 603 |
In the case of trade receivables reported as not considered impaired, there is no evidence of impairment.
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| At 1 April | 21 | 21 |
| Provision for impairment | 19 | 21 |
| Provision utilised in respect of debts written off | (2) | (7) |
| Transfer in respect of assets held-for-sale | — | (2) |
| Unused amounts reversed | (16) | (12) |
| At 31 March | 22 | 21 |
for the year ended 31 March 2018 continued
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Cash at bank and in hand | 103 | 56 |
| Short-term investments | 53 | 27 |
| 156 | 83 |
The eff ective interest rate for cash and cash equivalents held at 31 March 2018 is 2.3% (2017: 4.4%). There is no material diff erence between the fair value and the book value stated above.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Counterparty holding of more than US\$2m: | ||
| A rated | 104 | 50 |
| B rated | 21 | 6 |
| Not rated | — | 3 |
| Counterparty holding of more than US\$2m | 125 | 59 |
| Counterparty holding of less than US\$2m | 31 | 24 |
| 156 | 83 |
| 2018 | 2017 | |||
|---|---|---|---|---|
| Current US\$m |
Non-current US\$m |
Current US\$m |
Non-current US\$m |
|
| Trade payables | 227 | — | 201 | — |
| VAT and other equivalent taxes payable | 40 | — | 30 | — |
| Social security costs | 98 | — | 71 | — |
| Accruals | 483 | 9 | 447 | 11 |
| Deferred income | 287 | 4 | 257 | 4 |
| Other payables | 159 | 31 | 103 | — |
| 1,294 | 44 | 1,109 | 15 |
There is no material diff erence between the fair value and the book value stated above. Other payables include employee benefi ts of US\$68m (2017: US\$73m) and deferred consideration of US\$33m (2017: US\$5m).
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Financial instruments | 568 | 434 |
| VAT and other equivalent taxes payable | 40 | 30 |
| Social security costs | 98 | 71 |
| Amounts within accruals and deferred income | 632 | 589 |
| Items other than fi nancial instruments | 770 | 690 |
| 1,338 | 1,124 |
Contractual undiscounted future cash fl ows in respect of fi nancial instruments are shown in note 30.
| Carrying amount | Fair value | ||||
|---|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2017 | ||
| US\$m | US\$m | US\$m | US\$m | ||
| Current: | |||||
| Bonds: | |||||
| US\$600m 2.375% notes 2017 | — | 604 | — | 601 | |
| £400m 4.75% Euronotes 2018 | 581 | — | 575 | — | |
| Commercial paper | 353 | 152 | 353 | 152 | |
| Bank overdrafts | 19 | 2 | 19 | 2 | |
| Finance lease obligations | 3 | 1 | 3 | 1 | |
| 956 | 759 | 950 | 756 | ||
| Non-current: | |||||
| Bonds: | |||||
| £400m 4.75% Euronotes 2018 | — | 529 | — | 530 | |
| €500m 4.75% Euronotes 2020 | 660 | 588 | 671 | 604 | |
| £400m 3.50% Euronotes 2021 | 577 | 517 | 597 | 548 | |
| €500m 1.375% Euronotes 2026 | 615 | — | 613 | — | |
| Bank loans | 700 | 650 | 700 | 650 | |
| Finance lease obligations | 6 | 1 | 6 | 1 | |
| 2,558 | 2,285 | 2,587 | 2,333 | ||
| Total borrowings | 3,514 | 3,044 | 3,537 | 3,089 |
The eff ective interest rates for bonds approximate to the coupon rates indicated above. Other than fi nance lease obligations, the borrowings are unsecured. Further information on the methodology used in determining fair values is given in note 29.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Less than one year | 956 | 759 |
| One to two years | 1,262 | 1,080 |
| Two to three years | 102 | 688 |
| Three to four years | 579 | — |
| Four to fi ve years | — | 517 |
| Over fi ve years | 615 | — |
| 3,514 | 3,044 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| US dollar | 2,822 | 2,400 |
| Pound sterling | 603 | 462 |
| Euro | 43 | 97 |
| Other | 46 | 85 |
| 3,514 | 3,044 |
The above analysis takes account of the eff ect of cross-currency swaps and forward foreign exchange contracts and refl ects the way in which the Group manages exposures.
for the year ended 31 March 2018 continued
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Facilities expiring in: | ||
| One to two years | 150 | 200 |
| Two to three years | 375 | 150 |
| Three to four years | 1,800 | 225 |
| Four to fi ve years | — | 1,800 |
| 2,325 | 2,375 |
These facilities are at variable interest rates and are in place for general corporate purposes, including the fi nancing of acquisitions and the refi nancing of other borrowings.
There is one fi nancial covenant in connection with the borrowing facilities. Benchmark EBIT must exceed three times net interest expense before fi nancing fair value remeasurements. The Group monitors this, and the Net debt to Benchmark EBITDA gearing ratio, and has complied with this covenant throughout the year.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Cash and cash equivalents (net of overdrafts) | 137 | 81 |
| Debt due within one year – commercial paper | (353) | (152) |
| Debt due within one year – bonds and notes | (572) | (600) |
| Debt due within one year – fi nance lease obligations | (3) | (1) |
| Debt due after more than one year – bonds and notes | (1,837) | (1,618) |
| Debt due after more than one year – bank loans and fi nance lease obligations | (706) | (651) |
| Derivatives hedging loans and borrowings | (74) | (232) |
| (3,408) | (3,173) |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Cash and cash equivalents | 156 | 83 |
| Current borrowings | (956) | (759) |
| Non-current borrowings | (2,558) | (2,285) |
| Total reported in the Group balance sheet | (3,358) | (2,961) |
| Accrued interest reported within borrowings above but excluded from Net debt | 24 | 20 |
| Derivatives reported within fi nancial assets | 50 | 15 |
| Derivatives reported within fi nancial liabilities | (124) | (247) |
| (3,408) | (3,173) |
| Derivatives hedging loans and borrowings US\$m |
Current borrowings1 US\$m |
Non-current borrowings1 US\$m |
Total fi nancing liabilities US\$m |
Accrued interest US\$m |
Cash and cash equivalents1 US\$m |
Movement in Net debt US\$m |
|
|---|---|---|---|---|---|---|---|
| At 1 April 2017 | (232) | (759) | (2,285) | (3,276) | 20 | 83 | (3,173) |
| Cash infl ow | 13 | — | — | 13 | — | 716 | 729 |
| Borrowings cash fl ow | — | 404 | (613) | (209) | — | — | (209) |
| Reclassifi cation of borrowings | — | (572) | 572 | — | — | — | — |
| Net interest paid | — | — | — | — | — | (86) | (86) |
| Movement on accrued interest | — | (5) | 1 | (4) | 4 | — | — |
| Net cash infl ow/(outfl ow) | 13 | (173) | (40) | (200) | 4 | 630 | 434 |
| Net share purchases | — | — | — | — | — | (565) | (565) |
| Fair value gains/(losses) | (72) | — | 46 | (26) | — | — | (26) |
| Exchange and other movements | 217 | (24) | (279) | (86) | — | 8 | (78) |
| At 31 March 2018 | (74) | (956) | (2,558) | (3,588) | 24 | 156 | (3,408) |
| Derivatives hedging loans and borrowings US\$m |
Current borrowings1 US\$m |
Non-current borrowings1 US\$m |
Total fi nancing liabilities US\$m |
Accrued interest US\$m |
Cash and cash equivalents1 US\$m |
Movement in Net debt US\$m |
|
|---|---|---|---|---|---|---|---|
| At 1 April 2016 | (79) | (52) | (3,068) | (3,199) | 20 | 156 | (3,023) |
| Cash infl ow | 23 | — | — | 23 | — | 343 | 366 |
| Borrowings cash fl ow | — | (106) | (50) | (156) | — | — | (156) |
| Reclassifi cation of borrowings | — | (600) | 600 | — | — | — | — |
| Net interest paid | — | 3 | — | 3 | — | (70) | (67) |
| Movement on accrued interest | — | (4) | 4 | — | — | — | — |
| Net cash infl ow/(outfl ow) | 23 | (707) | 554 | (130) | — | 273 | 143 |
| Net share purchases | — | — | — | — | — | (353) | (353) |
| Fair value gains/(losses) | (48) | — | 29 | (19) | — | — | (19) |
| Exchange and other movements | (128) | — | 200 | 72 | — | 7 | 79 |
| At 31 March 2017 | (232) | (759) | (2,285) | (3,276) | 20 | 83 | (3,173) |
Assets of US\$84m (2017: US\$57m) include listed investments of US\$38m (2017: US\$36m) held in the UK to secure certain unfunded pension arrangements (note 32(b)) and trade investments overseas of US\$46m (2017: US\$21m).
(i) Summary
| 2018 | 2017 | |||||
|---|---|---|---|---|---|---|
| Assets | Current US\$m |
Non-current US\$m |
Total US\$m |
Current US\$m |
Non-current US\$m |
Total US\$m |
| Loans and receivables | — | 85 | 85 | 15 | — | 15 |
| Derivative fi nancial instruments: | ||||||
| Fair value hedge of borrowings (cross-currency swaps) | — | 47 | 47 | — | — | — |
| Fair value hedge of borrowings (interest rate swaps) | — | 11 | 11 | — | 17 | 17 |
| Derivatives used for hedging | — | 58 | 58 | — | 17 | 17 |
| Non-hedging derivatives (equity swaps) | — | — | — | 1 | 1 | 2 |
| Non-hedging derivatives (foreign exchange contracts) | 1 | — | 1 | 3 | — | 3 |
| Non-hedging derivatives (interest rate swaps) | 3 | 51 | 54 | 1 | 39 | 40 |
| Assets at fair value through profi t and loss | 4 | 51 | 55 | 5 | 40 | 45 |
| Derivative fi nancial instruments – total | 4 | 109 | 113 | 5 | 57 | 62 |
| Total other fi nancial assets | 4 | 194 | 198 | 20 | 57 | 77 |
for the year ended 31 March 2018 continued
(i) Summary (continued)
| 2018 | 2017 | ||||||
|---|---|---|---|---|---|---|---|
| Liabilities | Current US\$m |
Non-current US\$m |
Total US\$m |
Current US\$m |
Non-current US\$m |
Total US\$m |
|
| Derivative fi nancial instruments: | |||||||
| Fair value hedge of borrowings (cross-currency swaps) |
63 | 51 | 114 | — | 238 | 238 | |
| Derivatives used for hedging | 63 | 51 | 114 | — | 238 | 238 | |
| Non-hedging derivatives (foreign exchange contracts) |
2 | — | 2 | 2 | — | 2 | |
| Non-hedging derivatives (interest rate swaps) | 6 | — | 6 | 1 | 11 | 12 | |
| Liabilities at fair value through profi t and loss | 8 | — | 8 | 3 | 11 | 14 | |
| Derivative fi nancial instruments – total | 71 | 51 | 122 | 3 | 249 | 252 | |
| Options in respect of non-controlling interests | 15 | — | 15 | 12 | — | 12 | |
| Total other fi nancial liabilities | 86 | 51 | 137 | 15 | 249 | 264 |
Amounts recognised in the Group income statement in connection with the Group's hedging instruments are disclosed in note 14. There is no material diff erence between the fair values and the book values stated above.
Loans and receivables principally comprise amounts due following the disposal of businesses, including accrued interest, and the amount of US\$15m at 31 March 2017 is stated after an impairment charge of US\$22m in that year. This charge is reported within the loss for the fi nancial year from discontinued operations (note 16(a)).
| 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Assets | Liabilities | Assets | Liabilities | |||||
| Fair value US\$m |
Notional US\$m |
Fair value US\$m |
Notional US\$m |
Fair value US\$m |
Notional US\$m |
Fair value US\$m |
Notional US\$m |
|
| Cross-currency swaps | 47 | 504 | 114 | 1,347 | — | — | 238 | 1,347 |
| Interest rate swaps | 65 | 2,453 | 6 | 608 | 57 | 2,073 | 12 | 930 |
| Equity swaps | — | 19 | — | — | 2 | 12 | — | — |
| Foreign exchange contracts | 1 | 297 | 2 | 482 | 3 | 231 | 2 | 194 |
| 113 | 3,273 | 122 | 2,437 | 62 | 2,316 | 252 | 2,471 |
Notional principal amounts are the amount of principal underlying the contracts at the reporting dates.
| Assets | Liabilities | ||||
|---|---|---|---|---|---|
| 2018 2017 |
2018 | 2017 | |||
| US\$m | US\$m | US\$m | US\$m | ||
| Reported in the Group balance sheet | 113 | 62 | 122 | 252 | |
| Related amounts not off set in the Group balance sheet | (53) | (30) | (53) | (30) | |
| Net amount | 60 | 32 | 69 | 222 |
There are no amounts off set within the assets and liabilities reported in the Group balance sheet.
| 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Level 1 US\$m |
Level 2 US\$m |
Level 3 US\$m |
Total US\$m |
Level 1 US\$m |
Level 2 US\$m |
Level 3 US\$m |
Total US\$m |
|
| Financial assets: | ||||||||
| Derivatives used for hedging | — | 58 | — | 58 | — | 17 | — | 17 |
| Assets at fair value through profi t and loss | — | 55 | — | 55 | — | 45 | — | 45 |
| Amounts reported as other fi nancial assets (note 28(b)) |
— | 113 | — | 113 | — | 62 | — | 62 |
| Available-for-sale (note 28(a)) | 38 | — | 46 | 84 | 36 | — | 21 | 57 |
| 38 | 113 | 46 | 197 | 36 | 62 | 21 | 119 | |
| Financial liabilities: | ||||||||
| Derivatives used for hedging | — | (114) | — | (114) | — | (238) | — | (238) |
| Liabilities at fair value through profi t and loss | — | (8) | (39) | (47) | — | (14) | (14) | (28) |
| — | (122) | (39) | (161) | — | (252) | (14) | (266) | |
| Net fi nancial assets/(liabilities) | 38 | (9) | 7 | 36 | 36 | (190) | 7 | (147) |
The analysis by level is a requirement of IFRS 13 and the defi nitions are summarised here for completeness:
Level 3 items principally comprise minority shareholdings in unlisted businesses, trade investments, contingent consideration and put and call options associated with corporate transactions. The inputs used in determining valuations are a mix of earnings and asset valuations, refl ecting diff erent contractual arrangements. There would be no material eff ect on the amounts stated from any reasonably possible change in such inputs at 31 March 2018.
| Year ended 31 March 2018 | Year ended 31 March 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| Available for-sale US\$m |
Contingent consideration US\$m |
Other US\$m |
Total US\$m |
Available for-sale US\$m |
Contingent consideration US\$m |
Other US\$m |
Total US\$m |
|
| At 1 April | 21 | (2) | (12) | 7 | 10 | (7) | (10) | (7) |
| Additions | 30 | (21) | — | 9 | 15 | — | — | 15 |
| Settlement of contingent consideration | — | 5 | — | 5 | — | 5 | — | 5 |
| Adjustment to the fair value of contingent consideration |
— | (3) | — | (3) | — | — | — | — |
| Valuation (losses)/gains recognised in Group income statement |
— | — | (2) | (2) | — | — | (2) | (2) |
| Disposals | — | — | — | — | (2) | — | — | (2) |
| Currency translation losses recognised directly in Other comprehensive income |
(5) | — | — | (5) | — | — | — | — |
| Other | — | (3) | (1) | (4) | (2) | — | — | (2) |
| At 31 March | 46 | (24) | (15) | 7 | 21 | (2) | (12) | 7 |
for the year ended 31 March 2018 continued
Information in respect of the fair value of borrowings is included in note 26(a). There are no material diff erences between the carrying value of the Group's other fi nancial assets and liabilities not measured at fair value and their estimated fair values. The following assumptions and methods are used to estimate the fair values:
| Less than one year |
One to two years |
Two to three years |
Three to four years |
Four to fi ve years |
Over fi ve years |
Total | |
|---|---|---|---|---|---|---|---|
| At 31 March 2018 | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m |
| Borrowings | 1,015 | 1,276 | 130 | 592 | 8 | 650 | 3,671 |
| Net settled derivative fi nancial instruments – interest rate swaps |
8 | 2 | 2 | 2 | 2 | 1 | 17 |
| Gross settled derivative fi nancial instruments: |
|||||||
| Outfl ows for derivative contracts | 1,166 | 732 | — | — | — | — | 1,898 |
| Infl ows for derivative contracts | (1,100) | (646) | — | — | — | — | (1,746) |
| Gross settled derivative fi nancial instruments |
66 | 86 | — | — | — | — | 152 |
| Options in respect of non-controlling interests |
15 | — | — | — | — | — | 15 |
| Trade and other payables (note 25(b)) | 525 | 35 | 1 | 1 | 1 | 5 | 568 |
| Cash outfl ows | 1,629 | 1,399 | 133 | 595 | 11 | 656 | 4,423 |
| Less than | One to | Two to | Three to | Four to | Over | ||
|---|---|---|---|---|---|---|---|
| At 31 March 2017 | one year US\$m |
two years US\$m |
three years US\$m |
four years US\$m |
fi ve years US\$m |
fi ve years US\$m |
Total US\$m |
| Borrowings | 829 | 1,116 | 677 | 17 | 516 | — | 3,155 |
| Net settled derivative fi nancial instruments – interest rate swaps |
7 | 7 | 1 | — | — | — | 15 |
| Gross settled derivative fi nancial instruments: |
|||||||
| Outfl ows for derivative contracts | 231 | 672 | 726 | — | — | — | 1,629 |
| Infl ows for derivative contracts | (243) | (547) | (559) | — | — | — | (1,349) |
| Gross settled derivative fi nancial instruments |
(12) | 125 | 167 | — | — | — | 280 |
| Options in respect of non-controlling interests |
12 | — | — | — | — | — | 12 |
| Trade and other payables (note 25(b)) | 421 | 4 | 2 | 1 | 1 | 5 | 434 |
| Cash outfl ows | 1,257 | 1,252 | 847 | 18 | 517 | 5 | 3,896 |
The table above analyses fi nancial liabilities into maturity groupings, based on the period from the balance sheet date to the contractual maturity date. As the amounts disclosed are the contractual undiscounted cash fl ows, they diff er from the carrying values and fair values. Contractual undiscounted future cash outfl ows for derivative fi nancial liabilities in total amount to US\$169m (2017: US\$295m).
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Share awards | 72 | 58 |
| Share options | 4 | 3 |
| Expense recognised (all equity-settled) | 76 | 61 |
| Charge/(credit) for associated social security obligations | 8 | (1) |
| Total expense recognised in Group income statement | 84 | 60 |
The Group has a number of equity-settled, share-based employee incentive plans. Further information on share award arrangements is given in note 31(b). As the numbers of options granted or outstanding under share option plans and the related charge to the Group income statement are not signifi cant, no further disclosures are included in these fi nancial statements.
There are three plans under which share awards are currently granted – the two Experian Co-investment Plans (the 'CIPs') and the Experian Performance Share Plan (the 'PSP'). Awards take the form of a grant of free shares and nil cost options which vest over a service period of three years, with a maximum term generally of the same length, and are settled by share distribution. The assumption at grant date for employee departures prior to vesting is 20% for certain unconditional awards, which are only made under the PSP. Other details in respect of conditional awards are given below. These include an assumed outcome for Benchmark PBT per share growth, as that forms the basis of the Profi t performance condition for awards made.
| Performance conditions for vesting | Assumed outcome at grant date | |
|---|---|---|
| CIPs | 50% – Profi t performance assessed against specifi ed targets | Benchmark PBT per share – 88% of target |
| 50% – Cumulative Benchmark operating cash fl ow | Cumulative Benchmark operating cash fl ow – 74% to 76% of target | |
| PSP | 75% – Profi t performance assessed against specifi ed targets | Benchmark PBT per share – 81% of target |
| 25% – Distribution percentage determined by ranking Total | TSR – 28% to 50% | |
| Shareholder Return ('TSR') relative to a comparator group |
CIPs
For the purposes of IFRS 2, the grant date for these plans is the start of the fi nancial year in which performance is assessed. This is before the number of shares to be awarded is determined but the underlying value of the award is known, subject to the outcome of the performance condition. The value of awarded shares refl ects the performance outcome assumed at the date of their issue to participants and is recognised over a four-year period.
The range of performance conditions for awards under these plans is set out below. The Profi t performance condition requires Benchmark PBT per share growth at the stated percentages over a three-year period. The cumulative Benchmark operating cash fl ow performance condition (the 'Cash fl ow condition') is based on cumulative Benchmark operating cash fl ow over a three-year period. The period of assessment commences at the beginning of the fi nancial year of grant. These are not market-based performance conditions as defi ned by IFRS 2.
| Profi t performance condition | Cash fl ow condition | |||
|---|---|---|---|---|
| Year of award | Target | Maximum | Target | Maximum |
| Year ended 31 March 2018 | 4% per annum | 8% per annum | US\$3.6bn | US\$4.0bn |
| Year ended 31 March 2017 | 4% per annum | 8% per annum | US\$3.6bn | US\$4.0bn |
| Year ended 31 March 2016 | 4% per annum | 8% per annum | US\$3.6bn | US\$4.0bn |
The range of Profi t performance conditions for conditional awards under this plan is the same as those shown in the table immediately above for the CIPs, also measured over a three-year period.
The TSR performance condition is considered a market-based performance condition as defi ned by IFRS 2. In valuing the awarded shares, TSR is evaluated using a Monte Carlo simulation, with historic volatilities and correlations for comparator companies measured over the three-year period preceding valuation and an implied volatility for Experian plc ordinary shares.
Share grants are valued by reference to the market price on the day of award, with no modifi cation for dividend distributions or other factors, as participants are entitled to dividend distributions on awarded shares. Market-based performance conditions are included in the fair value measurement on the grant date and are not revised for actual performance. Awards granted in the year ended 31 March 2018 had a weighted average fair value per share of £15.90 (2017: £12.78).
for the year ended 31 March 2018 continued
(iii) Share awards outstanding 2018 million 2017 million At 1 April 13.5 12.2 Grants 5.2 6.2 Forfeitures (1.1) (0.7) Lapse of awards (1.0) (2.0) Vesting (2.7) (2.2) At 31 March 13.9 13.5 Analysis by plan: CIPs 4.7 4.2 PSP – conditional awards 4.2 3.6 PSP – unconditional awards 5.0 5.7 At 31 March 13.9 13.5
An overview of the Group's post-employment benefi t plans and the related risks is given below. The additional information required by IAS 19, which relates only to the Group's defi ned benefi t pension plans and post-employment medical benefi ts obligations, is set out in note 33.
The Group's principal defi ned benefi t plan is the Experian Pension Scheme, which provides benefi ts for certain UK employees but was closed to new entrants in 2009. This plan has rules which specify the benefi ts to be paid, with the level of pension benefit that an employee will receive on retirement dependent on age, length of service and salary. As at 31 March 2018, there were 144 active members of this plan, 1,490 deferred members and 2,758 pensioner members.
The Group provides a defi ned contribution plan, the Experian Retirement Savings Plan, to other eligible UK employees. Under this plan, employee and employer contributions are paid by the Group into an independently administered fund, which is used to fund member pensions at retirement. As at 31 March 2018, there were 3,366 active members of this plan (2017: 3,538).
Both UK plans are governed by trust deeds, which ensure that their fi nances and governance are independent from those of the Group. Trustees are responsible for overseeing the investments and funding of the plans and plan administration. The UK pensions environment is regulated by The Pensions Regulator whose statutory objectives and regulatory powers are described on its website at www.thepensionsregulator.gov.uk.
A full actuarial funding valuation of the Experian Pension Scheme is carried out every three years, with interim reviews in the intervening years. The latest full valuation was carried out as at 31 March 2016 by independent qualifi ed actuaries Mercer Limited, using the projected unit credit method. There was a small funding defi cit at the date of that valuation. The next full valuation will be carried out as at 31 March 2019.
Employees in the USA and Brazil have the option to join local defi ned contribution plans and, as at 31 March 2018, there were 4,172 active members in the USA (2017: 4,473) and 1,173 in Brazil (2017: 1,282). There are no other material funded pension arrangements.
The Group's unfunded pension arrangements are designed to ensure that certain directors and senior managers who are aff ected by the earnings cap, which was introduced by the UK government some years ago to set a ceiling on the amount of benefi ts that could be paid by defi ned benefi t pension plans, are placed in broadly the same position as those who are not. There are also unfunded arrangements for Don Robert, a current director of the Company, and certain former directors and employees of Experian Finance plc and Experian Limited. Certain of these unfunded arrangements in the UK have been secured by the grant to an independent trustee of charges over an independently managed portfolio of marketable securities owned by the Group and reported as available-for-sale fi nancial assets (note 28(a)).
The Group operates a plan which provides post-employment medical benefi ts to certain retired employees and their dependant relatives. This plan relates to former employees in the UK and, under it, the Group has undertaken to meet the cost of post-employment medical benefi ts for all eligible former employees who retired prior to 1 April 1994 and their dependants.
Through its defi ned benefi t pension plans and post-employment medical benefi ts plan, the Group is exposed to a number of risks that are inherent in such plans and arrangements, which can be summarised as follows:
There are no unusual, entity-specifi c or plan-specifi c risks, and no signifi cant concentrations of risk.
(i) Balance sheet assets/(obligations)
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Retirement benefi t assets/(obligations) – funded plans: | ||
| Fair value of funded plans' assets | 1,180 | 1,041 |
| Present value of funded plans' obligations | (1,133) | (1,027) |
| Assets in the Group balance sheet for funded defi ned benefi t pensions | 47 | 14 |
| Obligations for unfunded post-employment benefi ts: | ||
| Present value of defi ned benefi t pensions – unfunded plans | (53) | (49) |
| Present value of post-employment medical benefi ts | (5) | (5) |
| Liabilities in the Group balance sheet | (58) | (54) |
| Net post-employment benefi t obligations | (11) | (40) |
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 benefi ts are available to the Group in the form of reductions in future contributions or refunds of surplus.
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| By nature of expense: | ||
| Current service cost | 6 | 5 |
| Administration expenses | 2 | 2 |
| Charge within labour costs | 8 | 7 |
| Charge within operating profi t | 8 | 7 |
| Interest expense | 2 | 1 |
| Total charge to income statement | 10 | 8 |
The income statement charge and the remeasurement recognised in the Statement of comprehensive income relate to defi ned benefi t plans.
for the year ended 31 March 2018 continued
| Present value of obligations | ||||||
|---|---|---|---|---|---|---|
| Fair value of plan assets US\$m |
Defi ned benefi t pensions – funded US\$m |
Defi ned benefi t pensions – unfunded US\$m |
Post employment medical benefi ts US\$m |
Total US\$m |
Movements in net position US\$m |
|
| At 1 April 2017 | 1,041 | (1,027) | (49) | (5) | (1,081) | (40) |
| Income statement (charge)/credit: | ||||||
| Current service cost | — | (6) | — | — | (6) | (6) |
| Administration expenses | — | (2) | — | — | (2) | (2) |
| Interest income/(expense) | 26 | (26) | (2) | — | (28) | (2) |
| Total (charge)/credit to income statement | 26 | (34) | (2) | — | (36) | (10) |
| Remeasurements: | ||||||
| Return on plan assets other than interest | 17 | — | — | — | — | 17 |
| Gains from change in demographic assumptions | — | 7 | — | — | 7 | 7 |
| Gains from change in fi nancial assumptions | — | 3 | — | — | 3 | 3 |
| Experience gains | — | 1 | — | — | 1 | 1 |
| Remeasurement of post-employment benefi t assets and obligations |
17 | 11 | — | — | 11 | 28 |
| Diff erences on exchange | 134 | (130) | (5) | — | (135) | (1) |
| Contributions paid by the Group and employees | 14 | (2) | — | — | (2) | 12 |
| Benefi ts paid | (52) | 49 | 3 | — | 52 | — |
| At 31 March 2018 | 1,180 | (1,133) | (53) | (5) | (1,191) | (11) |
| Present value of obligations | ||||||
|---|---|---|---|---|---|---|
| Fair value of plan assets US\$m |
Defi ned benefi t pensions – funded US\$m |
Defi ned benefi t pensions – unfunded US\$m |
Post employment medical benefi ts US\$m |
Total US\$m |
Movements in net position US\$m |
|
| At 1 April 2016 | 1,023 | (997) | (49) | (6) | (1,052) | (29) |
| Income statement (charge)/credit: | ||||||
| Current service cost | — | (5) | — | — | (5) | (5) |
| Administration expenses | — | (2) | — | — | (2) | (2) |
| Interest income/(expense) | 31 | (30) | (2) | — | (32) | (1) |
| Total (charge)/credit to income statement | 31 | (37) | (2) | — | (39) | (8) |
| Remeasurements: | ||||||
| Return on plan assets other than interest | 160 | — | — | — | — | 160 |
| Gains from change in demographic assumptions | — | 5 | — | — | 5 | 5 |
| Losses from change in fi nancial assumptions | — | (200) | (5) | — | (205) | (205) |
| Experience gains | — | 27 | — | — | 27 | 27 |
| Remeasurement of post-employment benefi t assets and obligations |
160 | (168) | (5) | — | (173) | (13) |
| Diff erences on exchange | (143) | 139 | 5 | 1 | 145 | 2 |
| Contributions paid by the Group and employees | 10 | (2) | — | — | (2) | 8 |
| Benefi ts paid | (40) | 38 | 2 | — | 40 | — |
| At 31 March 2017 | 1,041 | (1,027) | (49) | (5) | (1,081) | (40) |
The accounting valuations at 31 March 2018 have been based on the most recent actuarial valuations, updated by Willis Towers Watson to take account of the requirements of IAS 19. The assumptions for the real discount rate, salary increases and mortality, used to calculate the present value of the defi ned benefi t obligations, all have a signifi cant eff ect on the accounting valuation.
Changes to these assumptions in the light of prevailing conditions may have a signifi cant impact on future valuations. Indications of the sensitivity of the amounts reported at 31 March 2018 to changes in the real discount rate, life expectancy and medical costs are included below. The methods and types of assumptions used are consistent with those used in the prior year and the absolute sensitivity numbers are stated on a basis consistent with the methodology used in determining the accounting valuation as at 31 March 2018. The methodology evaluates the eff ect of a change in each assumption on the relevant obligations, while holding all other assumptions constant.
| 2018 | 2017 | |
|---|---|---|
| % | % | |
| Discount rate | 2.4 | 2.5 |
| Infl ation rate – based on the UK Retail Prices Index (the 'RPI') | 3.1 | 3.2 |
| Infl ation rate – based on the UK Consumer Prices Index (the 'CPI') | 2.1 | 2.2 |
| Increase in salaries | 3.6 | 3.7 |
| Increase for pensions in payment – element based on the RPI (where cap is 5%) | 2.9 | 3.0 |
| Increase for pensions in payment – element based on the CPI (where cap is 2.5%) | 1.7 | 1.7 |
| Increase for pensions in payment – element based on the CPI (where cap is 3%) | 1.8 | 1.9 |
| Increase for pensions in deferment | 2.1 | 2.2 |
| Infl ation in medical costs | 6.1 | 6.2 |
The principal fi nancial assumption is the real discount rate, which is the excess of the discount rate over the rate of infl ation. The discount rate is based on the market yields on high-quality corporate bonds of a currency and term appropriate to the defi ned benefi t obligations. In the case of the Experian Pension Scheme, the obligations are in pound sterling and have a maturity on average of 18 years. If the real discount rate increased/ decreased by 0.1%, the defi ned benefi t obligations at 31 March 2018 would decrease/increase by approximately US\$21m and the annual current service cost would decrease/increase by US\$0.1m.
The rates of increase for pensions in payment refl ect the separate arrangements applying to diff erent groups of Experian's pensioners.
| (ii) Mortality assumptions – average life expectancy on retirement at age 65 in normal health | ||
|---|---|---|
| 2018 | 2017 | |
| years | years | |
| For a male currently aged 65 | 22.6 | 22.8 |
| For a female currently aged 65 | 24.9 | 25.0 |
| For a male currently aged 50 | 23.6 | 23.8 |
| For a female currently aged 50 | 26.0 | 26.1 |
The accounting valuation assumes that mortality will be in line with standard tables adjusted to refl ect the expected experience of the Experian Pension Scheme membership, based on analysis carried out for the 2016 actuarial valuation. A specifi c allowance for anticipated future improvements in life expectancy is also incorporated. An increase in assumed life expectancy of 0.1 years would increase the defi ned benefi t obligations at 31 March 2018 by approximately US\$6m.
The accounting valuation in respect of post-employment medical benefi ts assumes a rate of increase for medical costs. If this rate increased/ decreased by 1.0% per annum, the obligation at 31 March 2018 and the fi nance expense would remain unchanged.
An increase of 0.1% to the salary increase rate would increase the obligation at 31 March 2018 by approximately US\$1m, and the service charge would remain unchanged.
for the year ended 31 March 2018 continued
| 2018 | 2017 | |||
|---|---|---|---|---|
| US\$m | % | US\$m | % | |
| UK equities | 13 | 1 | 140 | 14 |
| Overseas equities | 380 | 32 | 357 | 34 |
| Index-linked gilts | 369 | 31 | 288 | 28 |
| Global corporate bonds | 171 | 15 | 157 | 15 |
| Diversifi ed growth fund | 116 | 10 | 96 | 9 |
| Secured credit | 122 | 10 | — | — |
| Other | 9 | 1 | 3 | — |
| 1,180 | 100 | 1,041 | 100 |
During the year the Trustee of the Experian Pension Scheme carried out an investment strategy review, with the aim of reducing risk, providing a better cash fl ow match for benefi t payments, and reducing funding volatility. The new strategy is being implemented and will include an allocation of 15% of the plan's assets in less liquid investments. All other assets are invested in a range of pooled, daily traded, unitised funds. Until such time as the new investment strategy has been fully implemented, the Trustee has adopted some triggers for accelerating de-risking the plan's investment strategy at opportune times.
The Group's defi ned benefi t plans have no material holdings of unlisted assets and no holdings of ordinary shares or borrowings of the Company.
There was a small funding defi cit at the date of the 2016 full actuarial valuation of the Experian Pension Scheme. To correct the shortfall the employer has agreed to pay defi cit contributions of US\$4m per annum over fi ve years from 1 April 2017. Contributions, including defi cit contributions, currently expected to be paid to this plan during the year ending 31 March 2019 are US\$10m by the Group and US\$2m by employees.
| 2018 | 2017 | ||
|---|---|---|---|
| Notes | US\$m | US\$m | |
| At 1 April | (213) | (193) | |
| Diff erences on exchange | (2) | 6 | |
| Tax credit/(charge) in the Group income statement – continuing operations | 15(a) | 179 | (87) |
| Tax credit in the Group income statement – discontinued operations | 16(a) | — | 54 |
| Business combinations | (20) | (17) | |
| Tax recognised within Other comprehensive income | (6) | 2 | |
| Tax recognised directly in equity on transactions with owners | (3) | 5 | |
| Disposal of subsidiaries | 1 | — | |
| Transfers | (2) | — | |
| Transfer in respect of liabilities held-for-sale | 40 | — | 17 |
| At 31 March | (66) | (213) | |
| Presented in the Group balance sheet as: | |||
| Deferred tax assets | 140 | 83 | |
| Deferred tax liabilities | (206) | (296) | |
| (66) | (213) |
Tax recognised in Other comprehensive income is in respect of the remeasurement of post-employment benefi t assets and obligations.
(ii) Movements in gross deferred tax assets and liabilities
| Assets | Intangibles US\$m |
Tax losses US\$m |
Share incentive plans US\$m |
Accelerated depreciation US\$m |
Other US\$m |
Total US\$m |
|---|---|---|---|---|---|---|
| At 1 April 2017 | 369 | 90 | 26 | 11 | 257 | 753 |
| Diff erences on exchange | (12) | — | 1 | 1 | (2) | (12) |
| Tax recognised in the Group income statement: | ||||||
| – continuing operations | 14 | 14 | 8 | 1 | (100) | (63) |
| Tax recognised within Other comprehensive income | — | — | — | — | (6) | (6) |
| Tax recognised directly in equity on transactions | ||||||
| with owners | — | — | (3) | — | — | (3) |
| Transfers | 1 | — | — | 1 | — | 2 |
| At 31 March 2018 | 372 | 104 | 32 | 14 | 149 | 671 |
| Assets | Intangibles US\$m |
Tax losses US\$m |
Share incentive plans US\$m |
Accelerated depreciation US\$m |
Other US\$m |
Total US\$m |
|---|---|---|---|---|---|---|
| At 1 April 2016 | 329 | 91 | 25 | 14 | 229 | 688 |
| Diff erences on exchange | 37 | — | (1) | (2) | 2 | 36 |
| Tax recognised in the Group income statement: | ||||||
| – continuing operations | (2) | (46) | (2) | (1) | (1) | (52) |
| – discontinued operations | — | 45 | — | — | 9 | 54 |
| Business combinations | — | — | — | — | 26 | 26 |
| Tax recognised within Other comprehensive income | — | — | — | — | 2 | 2 |
| Tax recognised directly in equity on transactions with owners |
— | — | 5 | — | — | 5 |
| Transfers | 5 | — | (1) | — | (10) | (6) |
| At 31 March 2017 | 369 | 90 | 26 | 11 | 257 | 753 |
| Accelerated | ||||
|---|---|---|---|---|
| Liabilities | Intangibles US\$m |
depreciation US\$m |
Other US\$m |
Total US\$m |
| At 1 April 2017 | 935 | 25 | 6 | 966 |
| Diff erences on exchange | (10) | — | — | (10) |
| Tax recognised in the Group income statement – continuing operations | (241) | 1 | (2) | (242) |
| Additions through business combinations (note 39(a)) | 20 | — | — | 20 |
| Transfers | (1) | 1 | 4 | 4 |
| Disposal of subsidiary | — | — | (1) | (1) |
| At 31 March 2018 | 703 | 27 | 7 | 737 |
| Intangibles | Accelerated depreciation |
Other | Total | |
|---|---|---|---|---|
| Liabilities | US\$m | US\$m | US\$m | US\$m |
| At 1 April 2016 | 828 | 21 | 32 | 881 |
| Diff erences on exchange | 32 | — | (2) | 30 |
| Tax recognised in the Group income statement – continuing operations | 35 | 1 | (1) | 35 |
| Additions through business combinations | 43 | — | — | 43 |
| Transfer in respect of liabilities held-for-sale (note 40) | (16) | — | (1) | (17) |
| Transfers | 13 | 3 | (22) | (6) |
| At 31 March 2017 | 935 | 25 | 6 | 966 |
These movements do not take into consideration the off setting of assets and liabilities within the same tax jurisdiction. Items classifi ed as Other assets in the above analyses predominantly relate to future tax benefi ts deferred in line with local tax laws.
for the year ended 31 March 2018 continued
As set out in note 5, there are a number of critical judgments in assessing the recognition of deferred tax assets. The Group has not recognised deferred tax on losses of US\$437m (2017: US\$650m) that could be utilised against future taxable income and on US\$367m (2017: US\$37m) in respect of capital losses that could be utilised against future taxable gains. While these losses are available indefi nitely, they have arisen in undertakings in which it is not currently anticipated that future benefi t will be available from their use. The capital losses arising on the investments are available for use within fi ve years, and future taxable profi ts against which the capital losses could be utilised are not currently anticipated.
There are retained earnings of US\$14,061m (2017: US\$13,666m) in subsidiary undertakings which would be subject to tax if remitted to Experian plc. No deferred tax liability has been recognised on these earnings because the Group is in a position to control the timing of the reversal of the temporary diff erence and it is probable that such diff erences will not reverse in the foreseeable future. Given the mix of countries and tax rates, it is not practicable to determine the impact of such remittance.
During the current year the main rate of UK corporation tax was 19% (2017: 20%). It will be reduced further to 17% from 1 April 2020.
| 2018 | 2017 | ||
|---|---|---|---|
| Notes | US\$m | US\$m | |
| At 1 April | (124) | (104) | |
| Exchange and other diff erences | 14 | (1) | |
| Tax charge in the Group income statement – continuing operations | 15(a) | (328) | (172) |
| Tax charge in the Group income statement – discontinued operations | (53) | (9) | |
| Tax recognised directly in equity on transactions with owners | 3 | 2 | |
| Additions through business combinations | — | 6 | |
| Tax paid on profi t on disposal of subsidiaries | 22 | — | |
| Tax paid – discontinued operations | — | 9 | |
| Other tax paid | 191 | 144 | |
| Transfer in respect of liabilities held-for-sale | 40 | — | 1 |
| Transfer | 24 | — | |
| At 31 March | (251) | (124) | |
| Presented in the Group balance sheet as: | |||
| Current tax assets | 27 | 26 | |
| Current tax liabilities | (278) | (150) | |
| (251) | (124) |
Tax recognised directly in equity on transactions with owners relates to employee share incentive plans.
| 2018 | 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| North | North | |||||||
| America | America | |||||||
| Legal | security | Legal | security | |||||
| claims | incident | Other | claims | incident | Other | |||
| costs | costs | liabilities | Total | costs | costs | liabilities | Total | |
| US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | US\$m | |
| At 1 April | 17 | 4 | 29 | 50 | — | — | 27 | 27 |
| Diff erences on exchange | — | — | (1) | (1) | — | — | 3 | 3 |
| Additions through business combinations (note 40) | — | — | — | — | 25 | — | — | 25 |
| Amount charged in the year | 22 | 22 | 11 | 55 | — | 4 | 11 | 15 |
| Utilised | (17) | (4) | (13) | (34) | (8) | — | (12) | (20) |
| At 31 March | 22 | 22 | 26 | 70 | 17 | 4 | 29 | 50 |
Legal claims represent a number of related legal claims. In the prior year legal claims included CSIdentity Corporation related provisions, which were utilised or released in the year.
The North America security incident costs are fully covered by insurance, with the US\$22m provided in the year off set by an equal insurance receivable recognised in other debtors. Details of the contingent liabilities are given in note 43(a).
Other liabilities principally comprise liabilities of Serasa S.A., in connection with local legal and tax issues, which were primarily recognised on its acquisition in 2007.
At 31 March 2018, there were 980.1m shares in issue (2017: 1,005.6m). During the year then ended, 1.1m (2017: 0.8m) shares were issued and 26.6m (2017: 18.2m) shares were cancelled. Further information on share capital is contained in note O to the Company fi nancial statements.
The diff erence between the amounts shown in the Group and Company fi nancial statements in respect of called-up share capital and the share premium account arose due to translation of sterling amounts into US dollars at diff erent exchange rates on the diff erent translation dates.
Retained earnings comprise net profi ts retained in the Group after the payment of equity dividends. There are no signifi cant statutory, contractual or exchange control restrictions on distributions by Group undertakings.
| Merger | Hedging | Translation | Own shares | Total other | |
|---|---|---|---|---|---|
| reserve US\$m |
reserve US\$m |
reserve US\$m |
reserve US\$m |
reserves US\$m |
|
| At 1 April 2017 | (15,682) | 11 | (901) | (1,232) | (17,804) |
| Purchase of shares by employee trusts | — | — | — | (37) | (37) |
| Exercise of share awards and options | — | — | — | 42 | 42 |
| Currency translation gains | — | — | 28 | — | 28 |
| At 31 March 2018 | (15,682) | 11 | (873) | (1,227) | (17,771) |
| Merger | Hedging | Translation | Own shares | Total other | |
|---|---|---|---|---|---|
| reserve US\$m |
reserve US\$m |
reserve US\$m |
reserve US\$m |
reserves US\$m |
|
| At 1 April 2016 | (15,682) | 11 | (919) | (1,240) | (17,830) |
| Purchase of shares by employee trusts | — | — | — | (28) | (28) |
| Exercise of share awards and options | — | — | — | 36 | 36 |
| Currency translation gains | — | — | 18 | — | 18 |
| At 31 March 2017 | (15,682) | 11 | (901) | (1,232) | (17,804) |
The merger reserve arose on the demerger from GUS plc in 2006 and is the diff erence between the share capital and share premium of GUS plc and the nominal value of the share capital of the Company before a share off er at that date.
Movements on the hedging reserve and the position at the balance sheet date refl ect hedging transactions which are not charged or credited to the Group income statement, net of related tax.
Movements on the translation reserve and the position at the balance sheet date refl ect foreign currency translations since 1 April 2004 which are not charged or credited to the Group income statement, net of related tax. The movement in the year ended 31 March 2018 comprises currency translation gains of US\$28m (2017: US\$18m) recognised directly in Other comprehensive income.
The balance on the own shares reserve is the cost of ordinary shares in the Company and further details are given in note 37(b)(iii). The diff erence between the amounts shown in the Group and Company fi nancial statements in respect of this reserve arose due to translation of pound sterling amounts into the US dollar at diff erent exchange rates on diff erent translation dates.
for the year ended 31 March 2018 continued
(iii) Movements in own shares held and own shares reserve
| Number of own shares held | Cost of own shares held | |||||
|---|---|---|---|---|---|---|
| Treasury million |
Trusts million |
Total million |
Treasury US\$m |
Trusts US\$m |
Total US\$m |
|
| At 1 April 2017 | 62 | 13 | 75 | 997 | 235 | 1,232 |
| Purchase of shares by employee trusts | — | 2 | 2 | — | 37 | 37 |
| Exercise of share options and awards | — | (3) | (3) | (5) | (37) | (42) |
| At 31 March 2018 | 62 | 12 | 74 | 992 | 235 | 1,227 |
| Number of own shares held | Cost of own shares held | ||||||
|---|---|---|---|---|---|---|---|
| Treasury million |
Trusts million |
Total million |
Treasury US\$m |
Trusts US\$m |
Total US\$m |
||
| At 1 April 2016 | 63 | 14 | 77 | 1,008 | 232 | 1,240 | |
| Purchase of shares by employee trusts | — | 1 | 1 | — | 28 | 28 | |
| Exercise of share options and awards | (1) | (2) | (3) | (11) | (25) | (36) | |
| At 31 March 2017 | 62 | 13 | 75 | 997 | 235 | 1,232 |
| Notes | 2018 US\$m |
2017 US\$m |
|
|---|---|---|---|
| Profi t before tax | 994 | 1,071 | |
| Share of post-tax profi t of associates | (8) | (4) | |
| Net fi nance costs | 109 | 8 | |
| Operating profi t | 1,095 | 1,075 | |
| Profi t on disposals of fi xed assets | (17) | (9) | |
| Depreciation and amortisation | 11 | 438 | 426 |
| Charge in respect of share incentive plans | 76 | 61 | |
| Increase in working capital | 38(b) | (70) | (39) |
| Acquisition expenses – diff erence between income statement charge and amount paid | 5 | 3 | |
| Fair value gain on revaluation of step acquisition | (4) | — | |
| Adjustment to the fair value of contingent consideration | 3 | — | |
| Movement in Exceptional items included in working capital | 3 | 8 | |
| Cash generated from operations | 1,529 | 1,525 |
Depreciation and amortisation includes amortisation of acquisition intangibles of US\$112m (2017: US\$104m) which is excluded from Benchmark PBT.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Inventories | — | 1 |
| Trade and other receivables | (142) | (59) |
| Trade and other payables | 72 | 19 |
| Increase in working capital | (70) | (39) |
| (c) Purchase of other intangible assets | 2018 US\$m |
2017 US\$m |
|---|---|---|
| Databases | 192 | 94 |
| Internally generated software | 129 | 38 |
| Internal use software | 39 | 187 |
| Purchase of other intangible assets | 360 | 319 |
| 2018 | 2017 | ||
|---|---|---|---|
| Note | US\$m | US\$m | |
| Purchase of subsidiaries | 39(a) | 147 | 380 |
| Net cash acquired with subsidiaries | 39(a) | (6) | (22) |
| Deferred consideration settled | 5 | 5 | |
| As reported in the Group cash fl ow statement | 146 | 363 | |
| Acquisition expenses paid | 15 | 13 | |
| Payments to acquire non-controlling interests | 8 | 9 | |
| Cash outfl ow for acquisitions (non-GAAP measure) | 169 | 385 |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Issue of ordinary shares | (16) | (11) |
| Purchase of shares by employee trusts | 37 | 28 |
| Purchase and cancellation of own shares | 544 | 336 |
| Cash outfl ow in respect of net share purchases (non-GAAP measure) | 565 | 353 |
| As reported in the Group cash fl ow statement: | ||
| Cash infl ow in respect of net share purchases | (16) | (11) |
| Cash outfl ow in respect of net share purchases | 581 | 364 |
| 565 | 353 |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Cash and cash equivalents in the Group balance sheet | 156 | 83 |
| Bank overdrafts | (19) | (2) |
| Cash and cash equivalents in the Group cash fl ow statement | 137 | 81 |
| 2018 | 2017 | ||
|---|---|---|---|
| Note | US\$m | US\$m | |
| Cash generated from operations | 38(a) | 1,529 | 1,525 |
| Purchase of other intangible assets | 38(c) | (360) | (319) |
| Purchase of property, plant and equipment | (71) | (80) | |
| Sale of property, plant and equipment | 26 | 15 | |
| Acquisition expenses paid | 15 | 13 | |
| Dividends received from associates | 3 | 3 | |
| Cash infl ow/(outfl ow) in respect of Exceptional items | 54 | (8) | |
| Benchmark operating cash fl ow (non-GAAP measure) | 1,196 | 1,149 |
Benchmark free cash fl ow for the year ended 31 March 2018, as set out in the Financial review within the Strategic report, was US\$915m (2017: US\$933m). Cash fl ow conversion for the year ended 31 March 2018 was 93% (2017: 96%).
for the year ended 31 March 2018 continued
The Group made three acquisitions during the year ended 31 March 2018, in connection with which provisional goodwill of US\$133m was recognised based on the fair value of the net assets acquired of US\$58m.
The Group acquired the whole of the issued share capital of Clarity Services, Inc. ('Clarity'), a leading credit bureau servicing the sub-prime market, based in the USA, on 6 October 2017, for a purchase consideration of US\$109m, net of cash acquired. Clarity's products are highly complementary to Experian's and include unique credit data and insights into over 60m individuals. The acquisition reinforces our position as the leading national credit bureau, striving to support 100% of US consumers.
Net assets acquired, goodwill and acquisition consideration are analysed below.
| Clarity Services, | |||
|---|---|---|---|
| Inc. | Other | Total | |
| US\$m | US\$m | US\$m | |
| Intangible assets: | |||
| Customer and other relationships | 21 | 17 | 38 |
| Software development | 24 | 11 | 35 |
| Marketing-related assets | 4 | 1 | 5 |
| Intangible assets | 49 | 29 | 78 |
| Property, plant and equipment | 1 | — | 1 |
| Trade and other receivables | 6 | 6 | 12 |
| Deferred tax | 1 | — | 1 |
| Cash and cash equivalents | 4 | 2 | 6 |
| Trade and other payables | (11) | (7) | (18) |
| Loans and borrowings | — | (2) | (2) |
| Deferred tax liabilities | (14) | (6) | (20) |
| Total identifi able net assets | 36 | 22 | 58 |
| Goodwill | 77 | 56 | 133 |
| Total | 113 | 78 | 191 |
| Satisfi ed by: | |||
| Cash | 104 | 43 | 147 |
| Fair value of 25% associate stake | — | 17 | 17 |
| Deferred and contingent consideration | 9 | 18 | 27 |
| Total | 113 | 78 | 191 |
These provisional fair values contain amounts which will be fi nalised no later than one year after the date of acquisition. Provisional amounts have been included at 31 March 2018 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\$133m is currently deductible for tax purposes.
The contingent consideration arrangement in respect of Clarity Services, Inc. and one of the immaterial acquisitions requires payments to the former owners based on the achievement of revenue targets. For the contingent consideration in respect of Clarity Services, Inc. the payments are due at the end of each year for three years following acquisition, and the potential amount that the Group could be required to pay under this arrangement is between US\$nil and US\$32m. For the other acquisition, payments are due at the end of each of the fi rst three years following acquisition, and the potential amount that the Group could be required to make under this arrangement is between US\$nil and US\$21m. The fair value of this consideration has been estimated during the year and an increase of US\$3m has been recognised in the Group income statement based on the latest forecast of business performance. Fair value measurements of contingent consideration are categorised as Level 3 as defi ned in IFRS 13 'Fair value measurement'.
There have been no other material gains, losses, error corrections or other adjustments recognised in the year ended 31 March 2018 that related to acquisitions in the current or prior years.
(i) Current year acquisitions
| Clarity Services, Inc. US\$m |
Other US\$m |
Total US\$m |
|
|---|---|---|---|
| Increase in book value from fair value adjustments: | |||
| Intangible assets | 49 | 29 | 78 |
| Net deferred tax liabilities | (14) | (6) | (20) |
| Increase in book value from fair value adjustments | 35 | 23 | 58 |
| Gross contractual amounts receivable in respect of trade and other receivables | 5 | 6 | 11 |
| Pro-forma revenue from 1 April 2017 to date of acquisition | 23 | 3 | 26 |
| Revenue from date of acquisition to 31 March 2018 | 23 | 10 | 33 |
| Profi t before tax from date of acquisition to 31 March 2018 | 1 | 1 | 2 |
At the date of acquisition, the gross contractual amounts receivable in respect of trade and other receivables of US\$11m were expected to be collected in full.
If the transactions had occurred on the fi rst day of the fi nancial year, then estimated additional contribution to Group revenues would have been US\$26m and the profi t before tax would have been US\$1m.
The Group acquired the whole of the issued share capital of CSIdentity Corp. during the year ended 31 March 2017 and a cash outfl ow of US\$358m was reported in the Group cash fl ow statement for that year, after deduction of US\$22m in respect of net cash acquired.
There was also deferred consideration settled of US\$5m on acquisitions made prior to 31 March 2015.
There have been no material gains, losses, error corrections or other adjustments recognised in the year ended 31 March 2018 that relate to acquisitions made prior to 31 March 2016.
On 15 March 2018, we agreed to acquire 100% of the share capital of ClearScore (Credit Laser Holdings Limited) for US\$385m. The transaction is expected to complete during the year ended 31 March 2019, subject to UK regulatory approval.
In March 2017 Experian agreed to divest CCM, a process which was completed on 31 May 2017. The assets and liabilities of this business were therefore classifi ed as held-for-sale at 31 March 2017.
| US\$m | |
|---|---|
| Assets classifi ed as held-for-sale: | |
| Goodwill | 214 |
| Other intangible assets | 50 |
| Property, plant and equipment | 18 |
| Trade receivables | 54 |
| Other prepayments and accrued income | 20 |
| Current tax asset | 2 |
| Assets classifi ed as held-for-sale | 358 |
| Liabilities classifi ed as held-for-sale: | |
| Trade payables | (7) |
| Accruals and deferred income | (24) |
| Other payables | (7) |
| Current tax liability | (3) |
| Deferred tax liability | (17) |
| Liabilities classifi ed as held-for-sale | (58) |
2017
for the year ended 31 March 2018 continued
On 31 May 2017 Experian completed the divestment of CCM:
| US\$m | |
|---|---|
| Net assets disposed of – book value at date of disposal: | |
| Goodwill | 214 |
| Other intangible assets | 50 |
| Property, plant and equipment | 17 |
| Trade and other receivables | 73 |
| Deferred tax assets | 2 |
| Trade and other payables | (10) |
| Accruals and deferred income | (13) |
| Current tax liabilities | (3) |
| Deferred tax liabilities | (17) |
| Net assets disposed of | 313 |
| Disposal proceeds: | |
| Net cash proceeds after consideration of working capital adjustments and mutual transaction costs | 270 |
| Promissory note | 75 |
| Share of divested business | 31 |
| Transaction costs and provisions | (9) |
| Total net proceeds | 367 |
| Profi t on disposal | 54 |
| Comparison shopping and lead generation |
||||
|---|---|---|---|---|
| CCM US\$m |
businesses US\$m |
Other US\$m |
Total US\$m |
|
| Proceeds received in cash | 270 | — | 2 | 272 |
| Transaction costs | (7) | — | — | (7) |
| Proceeds from loan note | — | 15 | — | 15 |
| Net cash infl ow | 263 | 15 | 2 | 280 |
In the year ended 31 March 2018, we divested CCM and received the remaining value of the loan note receivable in relation to the disposal of the comparison shopping and lead generation businesses in 2012. In addition, we divested a small North America based business, the proceeds of which were US\$2m.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Commitments under non-cancellable operating leases are payable: | ||
| In less than one year | 53 | 57 |
| Between one and fi ve years | 128 | 90 |
| In more than fi ve years | 55 | 35 |
| 236 | 182 |
The Group leases offi ces, vehicles and technology under non-cancellable operating lease agreements with varying terms, escalation clauses and renewal rights. The charge for the year was US\$54m (2017: US\$60m).
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Capital expenditure for which contracts have been placed: | ||
| Intangible assets | 13 | 19 |
| Property, plant and equipment | 14 | 14 |
| 27 | 33 |
Capital commitments at 31 March 2018 include commitments of US\$8m not expected to be incurred before 31 March 2019. Commitments as at 31 March 2017 included US\$13m not then expected to be incurred before 31 March 2018.
In September 2015, Experian North America suff ered 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 notifi ed the individuals who may have been aff ected and off ered free credit monitoring and identity theft resolution services. In addition, government agencies were notifi ed as required by law. The costs of directly responding to this incident were refl ected 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 eff ect 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 benefi t from applicable insurance recoveries.
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. In August 2017, the Brazilian courts ultimately upheld Experian's position in respect of the tax years from 2007 to 2010 with no further right of appeal. The Brazilian tax authorities have raised a similar assessment in respect of the 2011 and 2012 tax years, in which approximately US\$50m was claimed, and may raise similar claims in respect of other years. The possibility of this resulting in a liability to the Group is believed to be remote, on the basis of the advice of external legal counsel, success in the fi rst case and other factors in respect of the claim.
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 eff ect on the Group's fi nancial 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 benefi t from applicable insurance recoveries.
for the year ended 31 March 2018 continued
| Company | Principal activity | Country of incorporation |
|---|---|---|
| Experian Finance plc | Holding company and administrative services | England and Wales |
| Experian Holdings Limited | Holding company | England and Wales |
| Experian Limited | Information services | England and Wales |
| Experian Technology Limited | Development of intellectual property | England and Wales |
| Serasa S.A. | Information services | Brazil |
| Experian Colombia S.A. | Information services | Colombia |
| Experian Holdings Ireland Limited | Holding company | Ireland |
| Experian Ireland Investments Limited | Holding company | Ireland |
| ConsumerInfo.com Inc. | Consumer services | USA |
| Experian Health, Inc. | Information services | USA |
| Experian Holdings, Inc. | Holding company | USA |
| Experian Information Solutions Inc. | Information services | USA |
| Experian Marketing Solutions Inc. | Marketing services | USA |
| Experian Services Corp. | Administrative services | USA |
The above table shows the Company's signifi cant subsidiary undertakings at 31 March 2018 and for the year then ended. The Company holds direct or indirect interests in the whole of the issued ordinary shares of these undertakings apart from Serasa S.A., in which its interest is 99.7%. A full list of the Company's related undertakings, including subsidiary undertakings, is given in note R to the Company fi nancial statements. There are no signifi cant non-controlling interests.
A full list of associate undertakings is given in note R(iv) to the Company fi nancial statements. During the year an additional associate undertaking was created following the divestment of CCM disclosed in note 41. As a result of this transaction, the Group now owns 25% of the issued share capital of Vector CM Holdings (Cayman), L.P. ('Vector'), a partnership incorporated in Cayman Islands.
During the year ended 31 March 2018 the Group entered into the following transactions with Vector and its subsidiaries:
| Transaction amount | Balance owed to Experian | ||||
|---|---|---|---|---|---|
| To 31 March 2018 US\$m |
To 31 March 2017 US\$m |
At 31 March 2018 US\$m |
At 31 March 2017 US\$m |
||
| Promissory note | 78 | — | 78 | — | |
| Interest on promissory note | 2 | — | 2 | — | |
| Transitional Services Arrangement ('TSA') fees | 15 | — | 1 | — | |
| Net amounts exchanged and due under the TSA | 3 | — | 2 | — | |
| 98 | — | 83 | — |
The promissory note is due and payable to Experian on 31 May 2024 with interest also payable on this date. A TSA is in place between the Group and Vector to provide services to the partnership for a period of 12 months unless terminated earlier or an agreement to extend is executed. During the year ended 31 March 2018 and until the conclusion of the TSA, we process transactions on behalf of Vector. We receive a pre-agreed fee for the execution of the TSA and do not receive any margin on individual transactions. Details of amounts arising from the TSA are shown in the table below.
| Transaction amount | Balance owed to Vector | |||
|---|---|---|---|---|
| To 31 March 2018 US\$m |
To 31 March 2017 US\$m |
At 31 March 2018 US\$m |
At 31 March 2017 US\$m |
|
| Cash received on behalf of Vector | 77 | — | 6 | — |
| Transaction amount | Balance owed to Experian | |||
|---|---|---|---|---|
| To 31 March 2018 US\$m |
To 31 March 2017 US\$m |
At 31 March 2018 US\$m |
At 31 March 2017 US\$m |
|
| Cash paid on behalf of Vector | 80 | — | 8 | — |
The Group also acquired a 25% stake in London & Country Mortgages Limited. No material transactions have been entered into with the associate since the date of investment.
The Group transacts with a number of related undertakings in connection with the operation of its share incentive plans, pension arrangements in the UK, the USA and Brazil, and the provision of medical cover in the UK. These undertakings are listed in note R(v) to the Company fi nancial statements. Transactional relationships can be summarised as follows:
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Salaries and short-term employee benefi ts | 9 | 10 |
| Share incentive plans | 10 | 7 |
| Pension payments | 1 | 1 |
| 20 | 18 |
Key management personnel comprises the Company's executive and non-executive directors and further details of their remuneration are given in the audited parts of the Report on directors' remuneration. There were no other material transactions with the Group in which the key management personnel had a personal interest, in either the current or prior year.
Details of the second interim dividend announced since the end of the reporting period are given in note 18.
for the year ended 31 March 2018
| 2018 | 2017 | ||
|---|---|---|---|
| Notes | US\$m | US\$m | |
| Other operating income | F | 72.2 | 55.6 |
| Staff costs | G | (3.8) | (3.0) |
| Depreciation | — | (0.2) | |
| Other operating expenses | F | (83.4) | (70.4) |
| Operating loss | (15.0) | (18.0) | |
| Interest receivable and similar income | H | 6.0 | 0.3 |
| Interest payable and similar expenses | I | — | (0.5) |
| Dividend income from subsidiary undertakings | L | — | 1,718.3 |
| Impairment of investment in subsidiary undertakings on liquidation | L | — | (1,543.2) |
| (Loss)/profi t before tax | (9.0) | 156.9 | |
| Tax on loss | J | 66.5 | — |
| Profi t after tax and for the fi nancial year | 57.5 | 156.9 |
for the year ended 31 March 2018
The Company has no recognised items of income and expenditure other than those included in the profi t and loss account. Total comprehensive income for the fi nancial year is therefore equal to the profi t for the fi nancial year.
at 31 March 2018
| 2018 | 2017 | |||
|---|---|---|---|---|
| Notes | US\$m | US\$m | ||
| Fixed assets | ||||
| Investments – shares in Group undertakings | L | 8,357.7 | 5,713.2 | |
| Deferred tax assets | J | 66.5 | — | |
| 8,424.2 | 5,713.2 | |||
| Current assets | ||||
| Debtors – amounts falling due within one year | M | 15,733.7 | 12,587.8 | |
| Current liabilities | ||||
| Creditors – amounts falling due within one year | N | (10,216.2) | (3,909.5) | |
| Net current assets | 5,517.5 | 8,678.3 | ||
| Net assets | 13,941.7 | 14,391.5 | ||
| Equity | ||||
| Called-up share capital | O | 74.0 | 76.6 | |
| Share premium account | O | 1,215.8 | 1,200.1 | |
| Profi t and loss account reserve | P | 12,651.9 | 13,114.8 | |
| Total shareholders' funds | 13,941.7 | 14,391.5 |
These fi nancial statements were approved by the Board on 16 May 2018 and were signed on its behalf by:
George Rose
Director
for the year ended 31 March 2018
| Share | Profi t and loss account reserve | |||||
|---|---|---|---|---|---|---|
| Called-up share capital (Note O) US\$m |
premium account (Note O) US\$m |
Profi t and loss account US\$m |
Own shares reserve US\$m |
Total (Note P) US\$m |
Total equity US\$m |
|
| At 1 April 2017 | 76.6 | 1,200.1 | 14,315.7 | (1,200.9) | 13,114.8 | 14,391.5 |
| Profi t and Total comprehensive income for the fi nancial year |
— | — | 57.5 | — | 57.5 | 57.5 |
| Transactions with owners: | ||||||
| Employee share incentive plans: | ||||||
| – value of employee services | — | — | 75.7 | — | 75.7 | 75.7 |
| – shares issued on vesting | 0.1 | 15.7 | — | — | — | 15.8 |
| – other exercises of share awards and options | — | — | (42.4) | 42.1 | (0.3) | (0.3) |
| – purchase of shares by employee trusts | — | — | — | (37.1) | (37.1) | (37.1) |
| Purchase and cancellation of own shares | (2.7) | — | (541.8) | — | (541.8) | (544.5) |
| Dividends paid | — | — | (16.9) | — | (16.9) | (16.9) |
| Transactions with owners | (2.6) | 15.7 | (525.4) | 5.0 | (520.4) | (507.3) |
| At 31 March 2018 | 74.0 | 1,215.8 | 13,847.8 | (1,195.9) | 12,651.9 | 13,941.7 |
| Share | Profi t and loss account reserve | |||||
|---|---|---|---|---|---|---|
| Called-up share capital (Note O) US\$m |
premium account (Note O) US\$m |
Profi t and loss account US\$m |
Own shares reserve US\$m |
Total (Note P) US\$m |
Total equity US\$m |
|
| At 1 April 2016 | 78.3 | 1,189.7 | 14,490.1 | (1,209.2) | 13,280.9 | 14,548.9 |
| Profi t and Total comprehensive income for the fi nancial year |
— | — | 156.9 | — | 156.9 | 156.9 |
| Transactions with owners: | ||||||
| Employee share incentive plans: | ||||||
| – value of employee services | — | — | 61.1 | — | 61.1 | 61.1 |
| – shares issued on vesting | 0.1 | 10.4 | — | — | — | 10.5 |
| – other exercises of share awards and options | — | — | (35.7) | 36.2 | 0.5 | 0.5 |
| – purchase of shares by employee trusts | — | — | — | (27.9) | (27.9) | (27.9) |
| Purchase and cancellation of own shares | (1.8) | — | (333.9) | — | (333.9) | (335.7) |
| Dividends paid | — | — | (22.8) | — | (22.8) | (22.8) |
| Transactions with owners | (1.7) | 10.4 | (331.3) | 8.3 | (323.0) | (314.3) |
| At 31 March 2017 | 76.6 | 1,200.1 | 14,315.7 | (1,200.9) | 13,114.8 | 14,391.5 |
for the year ended 31 March 2018
Corporate information for Experian plc (the 'Company') is set out in note 1 to the Group fi nancial statements, with further information given in the Strategic report and the Corporate governance report.
The separate fi nancial statements of the Company are presented voluntarily and are:
Following the requirements of Financial Reporting Standard ('FRS') 100 'Application of fi nancial reporting requirements' coming into eff ect, the directors opted to prepare the fi nancial statements for the year ended 31 March 2016 in accordance with FRS 101 'Reduced Disclosure Framework'. The Company intends to continue to use this accounting framework until further notice.
FRS 101 allows certain exemptions from the requirements of IFRS to avoid the duplication of information provided in the Group fi nancial statements and to provide more concise fi nancial reporting in entity fi nancial statements. The following exemptions have therefore been applied in the preparation of these fi nancial statements:
paragraph 73(e) of IAS 16 'Property, Plant and Equipment' reconciliations between the carrying amount at the beginning and end of that period.
The following paragraphs of IAS 1:
The use of critical accounting estimates and management judgment is required in applying the accounting policies. Areas involving a higher degree of judgment or complexity, or where assumptions and estimates are signifi cant to the Company fi nancial statements, are highlighted in note E.
The signifi cant accounting policies applied are summarised below. They have been consistently applied to both years presented. The explanations of these policies focus on areas where judgment is applied or which are particularly important in the fi nancial statements. Content from accounting standards, amendments and interpretations is excluded where there is simply no policy choice under UK accounting standards.
The Company follows IAS 21 'The Eff ects of Changes in Foreign Exchange Rates'. Transactions in foreign currencies are recorded at the rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. All diff erences are taken to the profi t and loss account in the year in which they arise.
Investments in Group undertakings are stated at cost less any provisions for impairment. The Company follows IAS 36 'Impairment of Assets'. The fair value of share incentives issued by the Company to employees of Group undertakings is accounted for as a capital contribution and recognised as an increase in the Company's investment in Group undertakings, with a corresponding increase in equity.
Debtors are initially recognised at fair value and subsequently measured at this value. Where the time value of money is material, they are then carried at amortised cost using the eff ective interest rate method. Creditors are initially recognised at fair value. Where the time value of money is material, they are then carried at amortised cost using the eff ective interest rate method.
Cash at bank includes deposits held at call with banks and other short-term highly liquid investments.
The Company uses forward foreign exchange contracts to manage its exposures to fl uctuations in foreign exchange rates. The interest diff erential refl ected in forward foreign exchange contracts is taken to interest receivable and similar income or interest payable and similar expenses. Forward foreign exchange contracts are recognised at fair value, based on forward foreign exchange market rates at the balance sheet date. Gains or losses on forward foreign exchange contracts are taken to the profi t and loss account in the year in which they arise.
Current tax is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in Ireland, where the Company is resident.
Deferred tax is provided in respect of temporary diff erences that have originated but not reversed at the balance sheet date and is determined using the tax rates that are expected to apply when the temporary diff erences reverse. Deferred tax assets are recognised only to the extent that they are expected to be recoverable.
The Group has a number of equity-settled, share-based employee incentive plans. In connection with these, shares in the Company are held by The Experian plc Employee Share Trust and the Experian UK Approved All-Employee Share Plan. The assets, liabilities and expenses of these separately administered trusts are included in the fi nancial statements as if they were the Company's own. The trusts' assets mainly comprise Experian shares, which are shown as a deduction from total shareholders' funds at cost.
Experian shares purchased and held as treasury shares, in connection with the above plans and any share purchase programme, are also shown as a deduction from total shareholders' funds at cost. The par value of shares that are purchased and cancelled, in connection with any share purchase programme, is accounted for as a reduction in called-up share capital with any cost in excess of that amount being deducted from the profi t and loss account. The Company is not required to recognise the par value of cancelled shares in a capital redemption reserve.
Contractual obligations to purchase own shares are recognised at the net present value of expected future payments. Gains and losses in connection with such obligations are recognised in the profi t and loss account. Gains and losses which arise on fi nancial instruments created by advance instructions to trade in own shares are recognised directly in equity.
Income and expenses, which are recognised on an accruals basis, are reported by nature in the profi t and loss account, as this refl ects the composition of the Company's income and cost base.
Dividend income is recognised in profi t or loss on the date on which the Company's right to receive payment is established.
In preparing the fi nancial statements, management is required to make estimates and assumptions that aff ect the reported amount of income, costs and charges, assets and liabilities and the disclosure of contingent liabilities. The resulting accounting estimates, which are based on management's best judgment at the date of the fi nancial statements will, by defi nition, seldom equal the related actual results.
The most signifi cant of these estimates and assumptions for the Company that has a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is in respect of the carrying value of investments in subsidiary undertakings.
In applying the Company's accounting policies, management may make judgments that have a signifi cant eff ect on the amounts recognised in the Company fi nancial statements. These judgments may include the classifi cation of transactions between the Company profi t and loss account and the Company balance sheet.
The most signifi cant of these judgments for the Company is in respect of contingencies where, in the case of pending and threatened litigation claims, management has formed a judgment as to the likelihood of ultimate liability. No liability has been recognised where the likelihood of any loss arising is possible rather than probable.
Other operating income and expenses principally comprise charges to and from other Group undertakings in respect of Group management services provided during the year. Other operating expenses include a fee of US\$0.4m (2017: US\$0.4m) payable to the Company's auditor and its associates for the audit of the Group fi nancial statements.
for the year ended 31 March 2018 continued
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Directors' fees | 2.3 | 1.8 |
| Wages and salaries | 1.3 | 1.0 |
| Social security costs | 0.1 | 0.1 |
| Other pension costs | 0.1 | 0.1 |
| 3.8 | 3.0 |
Executive directors of the Company are employed by other Group undertakings and details of their remuneration, together with that of the non-executive directors, are given in the audited part of the Report on directors' remuneration. The Company had two employees throughout both years.
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Interest income | 5.6 | 0.3 |
| Foreign exchange gains | 0.4 | — |
| 6.0 | 0.3 |
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| Foreign exchange losses | — | 0.5 |
| (a) Tax on loss | 2018 US\$m |
2017 US\$m |
|---|---|---|
| Current tax: | ||
| Irish corporation tax credit on (loss)/profi t for the fi nancial year Deferred tax: |
— | — |
| Origination and reversal of timing diff erences | (66.5) | — |
| Tax credit for the year | (66.5) | — |
The tax credit for the year is at a rate lower than the main rate of Irish corporation tax of 25% (2017: 25%) with the diff erence explained below.
| 2018 US\$m |
2017 US\$m |
|
|---|---|---|
| (Loss)/profi t before tax | (9.0) | 156.9 |
| (Loss)/profi t multiplied by the applicable rate of tax | (2.3) | 39.2 |
| Eff ects of: | ||
| Income not taxable | (0.9) | (44.4) |
| Expenses not deductible | 0.9 | 0.9 |
| Group relief surrendered | 1.1 | — |
| Adjustment in respect of tax losses recognised | (65.3) | — |
| Tax losses not utilised | — | 4.3 |
| Tax credit for the year | (66.5) | — |
The Company's tax (credit)/charge will continue to be infl uenced by the nature of its income and expenditure and prevailing Irish and Jersey tax law.
The deferred tax asset is in respect of tax losses and the movements thereon are as follows:
| US\$m | |
|---|---|
| At 1 April 2017 | — |
| Credit to profi t and loss account in year | 66.5 |
| At 31 March 2018 | 66.5 |
The Company has no unrecognised deferred tax (2017: US\$65m) having recognised deferred tax in respect of losses which can be recovered against future profi ts.
Total dividends of US\$387.5m (2017: US\$380.8m) were paid to Experian shareholders during the year. The Company paid interim dividends of US\$16.9m (2017: US\$22.8m) to those shareholders who did not elect to receive dividends under the Income Access Share arrangements. The balance of US\$370.6m (2017: US\$358.0m) was paid by a subsidiary undertaking, Experian (UK) Finance Limited ('EUKFL'), under the Income Access Share arrangements. The Company's profi t and loss account reserve is available for distribution by way of dividend. At 31 March 2018, the distributable reserves of EUKFL as determined under UK company law are US\$3,485.5m (2017: US\$5,152.1m).
Since the balance sheet date, the directors have announced a second interim dividend of 31.25 US cents per ordinary share for the year ended 31 March 2018. No part of this dividend is included as a liability in these fi nancial statements. Further details of payment arrangements, including the Income Access Share arrangements, are given in the Shareholder and corporate information section of the Annual Report.
| 2018 | 2017 | |
|---|---|---|
| Cost and net book amount | US\$m | US\$m |
| At 1 April | 5,713.2 | 6,898.6 |
| Additions – fair value of share incentives issued to Group employees | 75.8 | 61.1 |
| Additional investment in direct subsidiary undertakings | 2,568.7 | 121.6 |
| Investment in subsidiary through dividend in specie | — | 175.1 |
| Liquidation of subsidiary investments through dividend distribution | — | (1,543.2) |
| At 31 March | 8,357.7 | 5,713.2 |
During the year ended 31 March 2018 Experian plc undertook two transactions as a result of Group restructuring which included subscription for an additional US\$2,568.7m of shares in existing subsidiary undertakings.
A list of the Company's subsidiary undertakings is given in note R(i). The Company directly holds interests in the whole of the issued share capital of the following undertakings.
| Company | Principal activity | Country of incorporation | |
|---|---|---|---|
| Experian Holdings (UK) Limited | Holding company | England and Wales | |
| Experian Finance Holdings Limited | Finance company | Ireland | |
| Experian Group Services Limited | Administrative services | Ireland | |
| Experian Holdings Ireland Limited | Holding company | Ireland | |
| Experian Ireland Investments Limited | Holding company | Ireland |
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Amounts owed by Group undertakings | 15,733.6 | 12,587.3 |
| Other debtors | 0.1 | 0.5 |
| 15,733.7 | 12,587.8 |
Amounts owed by Group undertakings are primarily unsecured, interest free and repayable on demand.
for the year ended 31 March 2018 continued
| 2018 | 2017 | |
|---|---|---|
| US\$m | US\$m | |
| Amounts owed to Group undertakings | 10,214.0 | 3,908.5 |
| Accruals and deferred income | 2.2 | 1.0 |
| 10,216.2 | 3,909.5 |
Amounts owed to Group undertakings are primarily unsecured, interest free and repayable on demand.
| 2018 | 2017 | |
|---|---|---|
| Allotted and fully paid | US\$m | US\$m |
| 980,136,306 (2017: 1,005,576,373) ordinary shares of 10 US cents | 74.0 | 76.6 |
| 20 (2017: 20) deferred shares of 10 US cents | — | — |
| 74.0 | 76.6 |
At 31 March 2018 and 31 March 2017, the authorised share capital was US\$200m, divided into 1,999,999,980 ordinary shares and 20 deferred shares, each of 10 US cents. The ordinary shares carry the rights to (i) dividend, (ii) to attend or vote at general meetings and (iii) to participate in the assets of the Company beyond repayment of the amounts paid up or credited as paid up on them. The deferred shares carry no such rights.
During the year ended 31 March 2018, the Company issued 1,174,220 (2017: 797,045) ordinary shares for a consideration of US\$15.8m (2017: US\$9.8m). Issues of shares were made in connection with the Group's share incentive arrangements, details of which are given in note 31 to the Group fi nancial statements. The diff erence between the consideration and the par value of the shares issued is recorded in the share premium account.
During the year ended 31 March 2018, 26,614,287 (2017: 18,221,921) ordinary shares were cancelled after being purchased by the Company.
The profi t and loss account reserve is stated after deducting the balance on the own shares reserve from that on the profi t and loss account. The balance on the profi t and loss account comprises net profi ts retained in the Company, after the payment of equity dividends. The balance on the own shares reserve is the cost of ordinary shares in the Company and further details are given below.
| Number of shares held | Cost of shares held | |||||
|---|---|---|---|---|---|---|
| Treasury million |
Trusts million |
Total million |
Treasury US\$m |
Trusts US\$m |
Total US\$m |
|
| At 1 April 2017 | 62.4 | 13.0 | 75.4 | 996.7 | 204.2 | 1,200.9 |
| Purchase of shares by employee trusts | — | 1.8 | 1.8 | — | 37.3 | 37.3 |
| Exercise of share awards and options | (0.4) | (2.7) | (3.1) | (5.3) | (36.8) | (42.1) |
| At 31 March 2018 | 62.0 | 12.1 | 74.1 | 991.4 | 204.7 | 1,196.1 |
| Number of shares held | Cost of shares held | |||||
|---|---|---|---|---|---|---|
| Treasury million |
Trusts million |
Total million |
Treasury US\$m |
Trusts US\$m |
Total US\$m |
|
| At 1 April 2016 | 63.2 | 13.4 | 76.6 | 1,007.4 | 201.8 | 1,209.2 |
| Purchase of shares by employee trusts | — | 1.5 | 1.5 | — | 27.9 | 27.9 |
| Exercise of share awards and options | (0.8) | (1.9) | (2.7) | (10.7) | (25.5) | (36.2) |
| At 31 March 2017 | 62.4 | 13.0 | 75.4 | 996.7 | 204.2 | 1,200.9 |
The Company has guaranteed:
The Company has also issued a small number of other guarantees in connection with the performance of business contracts by Group undertakings.
| Company | Country of incorporation | Company | Country of incorporation |
|---|---|---|---|
| Experian Strategic Solutions SA | Argentina | Experian NA Holdings Unlimited | England and Wales |
| Experian Asia Pacifi c Pty Ltd | Australia | Experian NA Unlimited | England and Wales |
| Experian Australia Credit Services Pty Ltd | Australia | Experian Nominees Limited | England and Wales |
| Experian Australia Fraud Services Pty Ltd | Australia | Experian SURBS Investments Limited | England and Wales |
| Experian Australia Holdings Pty Ltd | Australia | Experian Technology Limited | England and Wales |
| Experian Australia Pty Ltd | Australia | Experian US Holdings Unlimited | England and Wales |
| Riverleen Finance Pty Ltd | Australia | Experian US Unlimited | England and Wales |
| Tallyman Australia Pty Limited | Australia | G.G.C. Leasing Limited | England and Wales |
| Experian Österreich GmbH | Austria | G.U.S. Property Management Limited | England and Wales |
| Experian Tecnologia Brasil Ltda | Brazil1 | General Guarantee Corporation Unlimited | England and Wales |
| Serasa S.A. | Brazil2 | General Guarantee Finance Limited | England and Wales |
| Experian Bulgaria EAD | Bulgaria | GUS 1998 Unlimited | England and Wales |
| Experian Canada Inc. | Canada | GUS 2000 Finance Limited | England and Wales |
| Experian Services Chile S.A. | Chile | GUS 2000 UK Unlimited | England and Wales |
| Beijing Yiboruizhi Technology Co., Ltd | China3 | GUS 2000 Unlimited | England and Wales |
| Experian Credit Services (Beijing) Company Limited | China4 | GUS 2002 Unlimited | England and Wales |
| Experian Information Technology (Beijing) | GUS 2004 Limited | England and Wales | |
| Company Limited | China5 | GUS 2005 Finance Unlimited | England and Wales |
| Byington Colombia S.A.S. | Colombia | GUS Catalogues Limited | England and Wales |
| Experian Colombia S.A. | Colombia | GUS Finance (2004) Limited | England and Wales |
| Experian Services Costa Rica, S.A. | Costa Rica | GUS Finance 2006 Unlimited | England and Wales |
| Experian A/S | Denmark | GUS Finance Holdings Unlimited | England and Wales |
| 192business Ltd | England and Wales | GUS Finance Luxembourg Limited | England and Wales |
| Accolade Unlimited | England and Wales | GUS Financial Services Unlimited | England and Wales |
| Cardinal Finance Unlimited | England and Wales | GUS Holdings (2004) Limited | England and Wales |
| CCN UK 2005 Limited | England and Wales | GUS Holdings Unlimited | England and Wales |
| CCN UK Unlimited | England and Wales | GUS International | England and Wales |
| Chatsworth Investments Limited | England and Wales | GUS International Holdings SE | England and Wales |
| CSID International Limited | England and Wales | GUS Ireland Holdings SE | England and Wales |
| EHI 2005 Limited | England and Wales | GUS NA Unlimited | England and Wales |
| EHI UK Unlimited | England and Wales | GUS Netherlands Unlimited | England and Wales |
| EIS 2005 Limited | England and Wales | GUS Overseas Holdings SE | England and Wales |
| EIS UK Unlimited | England and Wales | GUS Overseas Investments SE | England and Wales |
| Experian (UK) Finance Limited | England and Wales | GUS Overseas Retailing Unlimited | England and Wales |
| Experian (UK) Holdings 2006 Limited | England and Wales | GUS Overseas Unlimited | England and Wales |
| Experian 2001 Unlimited | England and Wales | GUS Property Investments Limited | England and Wales |
| Experian 2006 Unlimited | England and Wales | GUS Unlimited | England and Wales |
| Experian CIS Limited | England and Wales | GUS US Holdings SE | England and Wales |
| Experian Europe Unlimited | England and Wales | GUS US Holdings Unlimited | England and Wales |
| Experian Finance 2012 Limited | England and Wales | GUS US Unlimited | England and Wales |
| Experian Finance plc | England and Wales | GUS Ventures Unlimited | England and Wales |
| Experian Group Limited | England and Wales | HD Decisions Limited | England and Wales |
| Experian Holdings (UK) Limited | England and Wales | Hugh Wyllie, Ltd | England and Wales |
| Experian Holdings Limited | England and Wales | International Communication & Data Limited | England and Wales |
| Experian International Unlimited | England and Wales | Masterlist Limited | England and Wales |
| Experian Investment Holdings Limited | England and Wales | Motorfi le Limited | England and Wales |
| Experian Latam Holdings Unlimited | England and Wales | QAS Limited | England and Wales |
| Experian Limited | England and Wales | Riverleen Finance Unlimited | England and Wales |
for the year ended 31 March 2018 continued
| Company | Country of incorporation | Company | Country of incorporation |
|---|---|---|---|
| Runpath Group Limited | England and Wales | Experian AS | Norway |
| Runpath Marketing Limited | England and Wales | Experian Perú S.A.C | Peru |
| Runpath Pilot Limited | England and Wales | Experian Polska spółka z ograniczoną | |
| Runpath Regulated Services Limited | England and Wales | odpowiedzialnością | Poland |
| Runpath Support Limited | England and Wales | DP Credit Bureau Pte Ltd | Singapore |
| Serasa Finance Limited | England and Wales | DP Information Network Pte Ltd | Singapore |
| Tallyman Limited | England and Wales | DP Management Pte Ltd | Singapore |
| Techlightenment Ltd | England and Wales | Experian Asia-Pacifi c Holdings Pte. Ltd. | Singapore |
| The 41st Parameter, Ltd. | England and Wales | Experian Singapore Pte. Ltd | Singapore |
| The Royal Exchange Company (Leeds) Unlimited | England and Wales | Experian South Africa (Pty) Limited | South Africa |
| The Witney Mattress, Divan & Quilt Co. Unlimited | England and Wales | Great Universal Stores (South Africa) (Pty) Ltd | South Africa |
| X88 Software Limited | England and Wales | Experian Bureau de Credito SA | Spain8 |
| Experian France S.A.S. | France | Experian Colombian Investments, Sociedad Limitada Spain8 | |
| Experian Holding EURL | France | Experian Espana SLU | Spain8 |
| Experian Holding France SAS | France | Experian Holdings Espana S.A. | Spain8 |
| Experian PH Sarl | France | Experian Latam España Inversiones, S.L | Spain9 |
| CONET Corporate Communication Network GmbH | Germany | Rexburg Spain, S.L | Spain8 |
| Experian GmbH | Germany | Experian (Thailand) Co., Ltd | Thailand |
| Experian Hong Kong Holdings Limited | Hong Kong | Experian Micro Analytics B.V. | The Netherlands |
| Experian Hong Kong Limited | Hong Kong | Experian Nederland BV | The Netherlands |
| Experian Credit Information Company of India | Experian Scorex Russia BV | The Netherlands | |
| Private Limited | India6 | GUS Europe Holdings BV | The Netherlands |
| Experian Services India (Private Limited) | India6 | GUS Holdings BV | The Netherlands |
| W2 Software (India) Private Limited | India7 | GUS Treasury Services BV | The Netherlands |
| PT. Experian Decision Analytics Indonesia | Indonesia | Experian Bilgi Hizmetleri Limited Şirketi | Turkey |
| Experian Finance Holdings Limited | Ireland | ClarityBlue Inc | USA10 |
| Experian Group Services Limited | Ireland | Clarity Services, Inc. | USA11 |
| Experian Holdings Ireland Limited | Ireland | ConsumerInfo.com Inc | USA11 |
| Experian Ireland Investments Limited | Ireland | CSIdentity Corporation | USA11 |
| Experian Ireland Limited | Ireland | Experian Credit Advisors, Inc. | USA11 |
| Experian US Finance Limited | Ireland | Experian Data Corp | USA11 |
| GUS Finance Ireland Unlimited Company | Ireland | Experian Fraud Prevention Solutions, Inc. | USA11 |
| GUS Investments 2003 Unlimited Company | Ireland | Experian Health, Inc. | USA11 |
| Newenham Finance Unlimited Company | Ireland | Experian Holdings, Inc. | USA11 |
| Experian Holding Italia S.r.l. | Italy | Experian Information Solutions Inc | USA11 |
| Experian Italia S.p.A. | Italy | Experian Marketing Solutions, LLC | USA11 |
| Experian Japan Co., Ltd | Japan | Experian Services Corporation | USA11 |
| Experian Luxembourg Finance S.A.R.L. | Luxembourg | MyExperian, Inc. | USA11 |
| Experian U.S. Finance S.à.r.l. | Luxembourg | Riverleen Finance, LLC | USA11 |
| Experian (Malaysia) Sdn. Bhd. | Malaysia | StatSchedules India, LLC | USA11 |
| Experian Marketing Services (Malaysia) Sdn Bhd | Malaysia | String Automotive Solutions, Inc. | USA11 |
| ESI Servicios S. de R.L. de C.V. | Mexico | String Enterprises, Inc. | USA11 |
| Experian de Mexico S. de R.L. de C.V. | Mexico | The 41st Parameter Inc | USA11 |
| Experian Soluciones de Informacion, S.A. de C.V. | Mexico | Experian Soluciones V, S.A. | Venezuela |
| Experian Micro Analytics SAM | Monaco | ||
| Scorex SAM | Monaco | Numeric superscripts refer to registered offi ce addresses given in | |
| Experian New Zealand Limited | New Zealand | note R(ii). | |
| Experian Northern Ireland Limited | Northern Ireland |
| Country of incorporation | Address of registered offi ce | |
|---|---|---|
| Argentina | Carlos Pelligrini 587, 4th Floor, Ciudad Autonoma | |
| de Buenos Aires, Buenos Aires | ||
| Australia | Level 6, 549 St Kilda Road, Melbourne, VIC 3004 | |
| Austria | Strozzigasse 10/14, 1080 Vienna | |
| Brazil1 | Al. Vicente Pinzon, 51, cj. 1301, Parte, Reserva Vila Olímpia, São Paulo/SP, 04547-130 |
|
| Brazil2 | Alameda dos Quinimuras, 187, Planalto Paulista, São Paulo/SP, 04068-900 |
|
| Bulgaria | Sofi a 1784, 'Mladost' district, 115G 'Tsarigradsko Shosse' 115G, Business center MEGAPARK, FL. 10-11 |
|
| Canada | 199 Bay Street, Suite 4000, Toronto, Ontario M5L 1A9 |
|
| Chile | Av. del Valle 515, Huechuraba, Santiago | |
| China3 | Room 604 6F, One Indigo, 20 Jiuxianqiao Road, Chaoyang District, Beijing, 100015 |
|
| China4 | Room 601-603 6F, One Indigo, 20 Jiuxianqiao Road, Chaoyang District, Beijing, 100015 |
|
| China5 | Room 607-608 6F, One Indigo, 20 Jiuxianqiao Road, Chaoyang District, Beijing, 100015 |
|
| Colombia | Carrera 7, No. 76 -35 Floor 10, Bogota | |
| Costa Rica | San José, de la Estación de Ferrocarril al Pacífi co, Zona Franca Ultrapark II Building Three, 3rd Floor Lagunilla, Heredia, Costa Rica |
|
| Denmark | Lyngbyvej 2, DK-2100, Copenhagen | |
| England and Wales | The Sir John Peace Building, Experian Way, NG2 Business Park, Nottingham, NG80 1ZZ |
|
| France | Tour Ariane 5, place de la pyramide La Défense 9, 92088 Paris La Défense Cedex |
|
| Germany | Speditionstraße 21, 40221 , Düsseldorf | |
| Hong Kong | Room 2604, 26th Floor, The World Trade Center, 280 Gloucester Road, Causeway Bay, Hong Kong |
|
| India6 | 5th Floor, East Wing, Tower 3, Equinox Business Park, LBS Marg, Kurla (West), Mumbai, 400070 |
|
| India7 | 1st Floor, Plot No. 6, Janakpuri Colony, Gunrock, Hyderabad, Telangana 500009 |
|
| Indonesia | Gedung DBS Bank Tower Lantai 28, Ciputra World 1, Jl. Prof. Dr. Satrio Kav 3-5, Karet Kuningan, Setiabudi, Jakarta Selatan |
|
| Ireland | Newenham House, Northern Cross, Malahide Road, Dublin 17, D17 AY61 |
| Country of incorporation | Address of registered offi ce |
|---|---|
| Italy | Piazza dell'Indipendenza No 11/B, 00185, Rome |
| Japan | 1-1 Otemachi 1-chome, Chiyoda-ku Tokyo |
| Luxembourg | 99 Grand Rue, L-1611 |
| Malaysia | 10th Floor Menara Hap Seng, No. 1 & 3 Jalan P. Ramlee, 50250 Kuala Lumpur, Wilayah Persekutuan |
| Mexico | Paseo de la Reforma No. 115, Desp. 1503 , Col. Lomas de Chapultepec, México, D.F., C.P. 11000 |
| Monaco | Athos Palace 2, rue de la Lujerneta, MC 98000, Monaco |
| The Netherlands | Grote Marktstraat 49, 25 11BH 's-Gravenhage |
| New Zealand | Level 8, DLA Piper Tower, 205 Queen Street, Auckland, 1010 |
| Northern Ireland | Murray House, Murray Street, Belfast, BT1 6DN |
| Norway | Karenslyst Allé 6, 0278 Oslo |
| Peru | Av. Canaval y Moreyra Nº 480, Piso 19, San Isidro, Lima |
| Poland | Plac Marsz. Józefa Piłsudskiego 3, 00-078 Warsaw |
| Singapore | 10 Kallang Avenue, #14-18 Aperia Tower 2, Singapore, 339510 |
| South Africa | Experian House, Ballyoaks Offi ce Park, 35 Ballyclare Drive, Bryanston Ex 7, 2191 |
| Spain8 | C/Principe de Vergara 132, 1a Planta, 28002, Madrid |
| Spain9 | Principe de Vergara 131 1°, Madrid |
| Thailand | No. 399 Interchange 21, 32nd Floor, Room no. 3241-3243, Sukhumvit Road, North Klongtoey Sub-district, Wattana District, Bangkok |
| Turkey | River Plaza Büyükdere Cad.Bahar Sok.No:13 K:8 Levent 34394 İstanbul |
| USA10 | 475 Anton Boulevard, Costa Mesa, CA 92626 |
| USA11 | The Corporation Trust Company, 1209 Orange Street, Wilmington DE 19801 |
| Venezuela | Av. Francisco de Miranda, Edif. Parque Avila Torre A (antes Torre Hewlett Packard) Pisco 7, Ofi cina 7A. Urbanización Los Palos Grandes, Caracas, 1060 |
Numeric superscripts refer to subsidiary undertakings given in note R(i).
for the year ended 31 March 2018 continued
The results of the undertakings listed at note R(i) are included in the Group fi nancial statements. Except as indicated below, the Company has direct or indirect interests in the whole of the issued equity shares of these undertakings. Those undertakings which, in the opinion of the directors, comprise signifi cant subsidiary undertakings at 31 March 2018 and for the year then ended are listed in note 44(a) to the Group fi nancial statements. Undertakings which are direct subsidiaries of the Company are detailed in note L to these fi nancial statements.
Since demerger from GUS plc in 2006, the Company has eliminated dormant and inactive companies through an ongoing internal programme.
Interests of less than 100% of the issued equity of subsidiary undertakings are: Experian Australia Credit Services Pty Ltd – 74.9% Experian Bureau de Credito SA – 75.0% Experian Colombia S.A. – 99.9% Experian Credit Information Company of India Private Limited – 66.7% Experian Italia S.p.A. – 95.0% Experian Micro Analytics B.V. – 55.0% Experian Micro Analytics SAM – 55.0% Serasa S.A. – 99.7%
The Company's equity interests comprise direct or indirect holdings of ordinary shares, common stock or common shares only, except as listed below:
GUS 2004 Limited, Motorfi le Limited and Experian Soluciones V, S.A. – A ordinary and B ordinary shares
GUS International and GUS Investments 2003 – B ordinary shares
GUS 2000 Unlimited – X ordinary and Y ordinary shares
Experian Holdings, Inc. – class A common stock
Experian Information Solutions Inc – common no par value shares
Riverleen Finance, Inc. and Search America, Inc. – common stock shares
Opt-out Services, LLC – membership interests shares
Experian Services Corporation – ordinary no par value shares
| Company | Holding | Country of incorporation |
|---|---|---|
| Vector CM Holdings (Cayman), L.P. | 25.0% | Cayman Islands |
| London & Country Mortgages Limited | 25.0% | England and Wales |
| A & A Dukaan Financial Services Private Limited | 10.0% | India |
| RAM Credit Information Sdn Bhd | 31.9% | Malaysia |
| United Credit Bureau | 25.0% | Russia |
| Who Owns Whom (Pty) Limited | 32.9% | South Africa |
| MCI-Experian Co, Ltd | 49.0% | South Korea |
| Finicity Corporation | 20.0% | USA |
| Online Data Exchange LLC | 25.0% | USA |
| Opt-out Services, LLC | 25.0% | USA |
| Central Source LLC | 33.3% | USA |
| New Management Services, LLC | 33.3% | USA |
| VantageScore Solutions, LLC | 33.3% | USA |
| Undertaking | Country of incorporation or operation |
|---|---|
| Serasa Experian Pension Plan | Brazil |
| Brigstock Finance Limited | England and Wales |
| Experian Medical Plan Limited | England and Wales |
| Experian Pension Scheme | England and Wales |
| Experian Retirement Savings Plan | England and Wales |
| Experian Retirement Savings Trustees Limited | England and Wales |
| Experian Trustees Limited | England and Wales |
| Experian UK Approved All-Employee Share Plan | England and Wales |
| The Pension and Life Assurance Plan of Sanderson Systems Limited | England and Wales |
| The Experian Ireland Pension Plan | Ireland |
| The Experian plc Employee Share Trust | Jersey |
| Experian Personal Investment Plan | USA |
These undertakings are not subsidiaries or associates. Brigstock Finance Limited is a fi nance company. The other undertakings operate in connection with the Group's share incentive plans, pension arrangements in the UK and USA, and the provision of medical cover in the UK.
| Number of | Number of | |||
|---|---|---|---|---|
| shareholders | % | shares | % | |
| Over 1,000,000 | 134 | 0.6 | 813,322,845 | 83.0 |
| 100,001 to 1,000,000 | 336 | 1.5 | 116,589,155 | 11.8 |
| 10,001 to 100,000 | 771 | 3.3 | 26,975,361 | 2.8 |
| 5,001 to 10,000 | 661 | 2.9 | 4,495,759 | 0.5 |
| 2,001 to 5,000 | 2,375 | 10.2 | 7,153,290 | 0.7 |
| 1 to 2,000 | 18,926 | 81.5 | 11,599,896 | 1.2 |
| Total | 23,203 | 100.0 | 980,136,306 | 100.0 |
| Number of | Number of | |||
|---|---|---|---|---|
| shareholders | % | shares | % | |
| Corporates | 3,333 | 14.4 | 893,825,363 | 91.2 |
| Individuals | 19,869 | 85.6 | 24,352,440 | 2.5 |
| Treasury shares | 1 | — | 61,958,503 | 6.3 |
| Total | 23,203 | 100.0 | 980,136,306 | 100.0 |
A full range of investor information is available at www.experianplc.com. Details of the 2018 Annual General Meeting ('AGM'), to be held at The Shelbourne Hotel, 27 St Stephen's Green, Dublin 2, D02 H529, Ireland at 9.30 am on Wednesday, 18 July 2018, are given on the website and in the notice of meeting. Information on the Company's share price is available on the website.
Shareholders may register for Share Portal, an electronic communication service provided by Link Market Services (Jersey) Limited, via the Company website at www.experianplc.com/shares. The service is free and it facilitates the use of a comprehensive range of shareholder services online.
When registering for Share Portal, shareholders can select their preferred communication method – email or post. Shareholders will receive a written notifi cation of the availability on the Company's website of shareholder documents, such as the Annual Report, unless they have elected to either (i) receive such notifi cation by email or (ii) receive paper copies of shareholder documents, where such documents are available in that format.
A second interim dividend in respect of the year ended 31 March 2018 of 31.25 US cents per ordinary share will be paid on 20 July 2018, to shareholders on the register of members at the close of business on 22 June 2018. Unless shareholders elect by 22 June 2018 to receive US dollars, their dividends will be paid in pounds sterling at a rate per share calculated on the basis of the exchange rate from US dollars to pounds sterling on 29 June 2018. A fi rst interim dividend of 13.5 US cents per ordinary share was paid on 2 February 2018.
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 Income Access Share ('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 fi rst 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 indefi nitely 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.
The DRIP enables those shareholders who receive their dividends under the IAS arrangements to use their cash dividends to buy more shares in the Company. Eligible shareholders, who wish to participate in the DRIP in respect of the second interim dividend for the year ended 31 March 2018, to be paid on 20 July 2018, should return a completed and signed DRIP application form, to be received by the registrars no later than 29 June 2018. Shareholders should contact the registrars for further details.
On 10 October 2006, GUS plc separated its Experian business from its Home Retail Group business by way of demerger. GUS plc shareholders were entitled to receive one share in Experian plc and one share in Home Retail Group plc for every share they held in GUS plc.
The base cost of any GUS plc shares held at demerger is apportioned for UK CGT purposes in the ratio 58.235% to Experian plc shares and 41.765% to Home Retail Group plc shares. This is based on the closing prices of the respective shares on their fi rst day of trading after their admission to the Offi cial List of the London Stock Exchange on 11 October 2006.
For GUS plc shares acquired prior to the demerger of Burberry on 13 December 2005, which are aff ected by both the Burberry demerger and the subsequent separation of Experian and Home Retail Group, the original CGT base cost is apportioned 50.604% to Experian plc shares, 36.293% to Home Retail Group plc shares and 13.103% to Burberry Group plc shares.
Shareholders are advised to be wary of any unsolicited advice, off ers to buy shares at a discount or off ers of free reports about the Company. More detailed information on such matters can be found at www.moneyadviceservice.org.uk. Details of any share dealing facilities that the Company endorses will be included on the Company's website or in Company mailings.
Experian owns and participates in The Unclaimed Assets Register, which provides a search facility for shareholdings and other fi nancial assets that may have been forgotten. For further information, please contact The Unclaimed Assets Register, PO Box 9501, Nottingham, NG80 1WD, United Kingdom (T +44 (0) 333 000 0182, E [email protected]) or visit www.uar.co.uk.
Experian has a sponsored Level 1 ADR programme, for which Bank of New York Mellon acts as depositary. This programme trades on the highest tier of the USA over-the-counter market, OTCQX, under the symbol EXPGY. Each ADR represents one Experian plc ordinary share. Further information can be obtained by contacting:
BNY Mellon Shareowner Services PO Box 505000 Louisville, KY 40233-5000 USA
T +1 201 680 6825 (from the US 1-888-BNY-ADRS)
W www.mybnymdr.com
| Second interim dividend record date | 22 June 2018 |
|---|---|
| Trading update, fi rst quarter | 13 July 2018 |
| AGM | 18 July 2018 |
| Second interim dividend payment date | 20 July 2018 |
| Half-yearly fi nancial report | 13 November 2018 |
| Trading update, third quarter | January 2019 |
| Preliminary announcement of full-year results | May 2019 |
Experian plc Newenham House Northern Cross Malahide Road Dublin 17 D17 AY61 Ireland
T +353 (0) 1 846 9100 F +353 (0) 1 846 9150
Experian plc 22 Grenville Street St Helier Jersey JE4 8PX Channel Islands Registered number – 93905
Experian Shareholder Services Link Market Services (Jersey) Limited PO Box 532 St Helier Jersey JE4 5UW Channel Islands
T 0371 664 9245
T (for calls from outside the UK) + 44 800 141 2952
Call are charged at the standard geographic rate and will vary by provider. Calls from outside the United Kingdom will be charged at the applicable international rate. Lines are open from 9.00am to 5.30pm (UK time) Monday to Friday excluding public holidays in England and Wales.
Exchange: London Stock Exchange, Premium Main Market
Index: FTSE 100
Symbol: EXPN
The following abbreviations are used in this Annual Report, and are taken to have the following meanings:
| Abbreviation | Meaning |
|---|---|
| AGM | Annual General Meeting |
| B2B | business-to-business |
| B2C | business-to-consumer |
| Benchmark EBIT | Benchmark earnings before interest and tax. See note 6 to the Group fi nancial statements |
| Benchmark EBITDA | Benchmark earnings before interest, tax, depreciation and amortisation. See note 6 to the Group fi nancial statements |
| Benchmark EPS | Benchmark earnings per share. See note 6 to the Group fi nancial statements |
| Benchmark operating cash fl ow | See note 6 to the Group fi nancial statements |
| Benchmark PBT | Benchmark profi t before tax. See note 6 to the Group fi nancial statements |
| CCM | Experian's email/cross-channel marketing business (a discontinued operation) |
| CIP | Co-investment Plan |
| Clarity | Clarity Services, Inc., a business acquired by Experian in FY18 |
| Code | the UK Corporate Governance Code |
| CSID | CSIdentity Corporation, a business acquired by Experian in FY17 |
| D&I | Diversity and inclusion |
| DRIP | Dividend Reinvestment Plan |
| DTR | the FCA Disclosure Guidance and Transparency Rules Sourcebook 7.2 |
| EMEA | Europe, Middle East and Africa |
| EPS | Earnings per share |
| ERMC | Executive Risk Management Committee |
| 'Experian' or the 'Group' | the Experian group of companies |
| FBU | fair, balanced and understandable |
| FCA | The UK Financial Conduct Authority |
| FRS | Financial Reporting Standard |
| FVOCI | fair value through other comprehensive income |
| FVTPL | fair value through the profi t and loss account |
| FY16 | Year ended 31 March 2016 |
| FY17 | Year ended 31 March 2017 |
| FY18 | Year ended 31 March 2018 |
| FY19 | Year ending 31 March 2019 |
| GAAP | Generally Accepted Accounting Principles |
| GAM | Group Accounting Manual |
| GDPR | General Data Protection Regulation |
| H1 | The fi rst half of Experian's fi nancial year, being the 6 months ending 30 September |
| H2 | The second half of Experian's fi nancial year, being the 6 months ending 31 March |
| HMRC | the UK's 'Her Majesty's Revenue and Customs' |
| IAS | International Accounting Standard |
| IAS arrangement | Income Access Share arrangement for the payment of dividends from a UK source |
| IASB | International Accounting Standards Board |
| IFRIC | International Financial Reporting Standards Interpretations Committee |
| IFRS or IFRSs | International Financial Reporting Standards |
| IRS | the US Internal Revenue Service |
| NED | non-executive director |
| OECD | Organisation for Economic Co-operation and Development |
| OpCo | Group Operating Committee |
| PSP | Performance Share Plan |
| Q1 | The fi rst quarter of Experian's fi nancial year, being the 3 months ending 30 June |
| Q2 | The second quarter of Experian's fi nancial year, being the 3 months ending 30 September |
| Q3 | The third quarter of Experian's fi nancial year, being the 3 months ending 31 December |
| Q4 | The fourth quarter of Experian's fi nancial year, being the 3 months ending 31 March |
| ROCE | Return on capital employed |
| the Company | Experian plc |
| the Policy | Directors' remuneration policy |
| TSR | Total shareholder return |
| WACC | the Group's pre-tax weighted average cost of capital |
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Newenham House Northern Cross Malahide Road Dublin 17 D17 AY61 Ireland
T +353 (0) 1 846 9100
London SW1E 5JL United Kingdom
T +44 (0) 20 304 24200
The Sir John Peace Building Experian Way NG2 Business Park Nottingham NG80 1ZZ United Kingdom
T +44 (0) 115 941 0888
www.experian.co.uk
475 Anton Boulevard Costa Mesa CA 92626 United States
T +1 714 830 7000
Av. Doutor Heitor José Reali 360 CEP 13571-385 São Carlos Brazil
T +55 11 3004 7728
www.serasaexperian.com.br
Corporate Responsibility Report 2018 www.experianplc.com/crreport
Experian plc website www.experianplc.com
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