Experian 2013 Annual Report Download - page 33
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Please find page 33 of the 2013 Experian annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.THE ACQUISITION, INTEGRATION OR DIVESTITURE OF BUSINESSES MAY NOT PRODUCE
THE DESIRED FINANCIAL OR OPERATING RESULTS
Performance indicator
EBIT
Strategic alignment
• New customer segments
• Expanding geographically
• Product innovation
Further information
• Business review section
– discussion of how we
extend our global lead
through geographic
expansion
• Financial statements
note 45 for a detailed
description of the
financial impact
of these acquisitions to
the Group
Description of risk and potential impact
We continue to expand our global reach and extend our capabilities through
a combination of acquisitions, strategic alliances/joint ventures and organic
strategic investments. The contributions of these businesses and initiatives
to Experian may result in financial outcomes that are different than expected
or we may have difficulty assimilating new businesses and their products,
services, technologies and personnel into our operations. These difficulties
could disrupt on-going business, distract management and the workforce,
increase expenses and otherwise materially adversely affect our operating
results and financial condition.
How we manage this risk
We assess all acquisitions rigorously, using both in-house experts and
professional advisers. In addition, we conduct extensive post-acquisition
and organic investment reviews to ensure performance remains consistent
with the business plan. Similarly, we continually review the performance of
all businesses within our portfolio and, as a result, sometimes withdraw from
low growth or low return markets.
Change from 2012
Stable
2013 update
We acquired a further 29.6% interest
in Serasa, our market leading credit
bureau in Brazil. This takes our holding
to 99.6%. The opportunity to increase
our shareholding this year was part
of the original agreement in 2007.
We acquired the shares from a bank
group comprising BIU Participações
S.A. (a consortium comprising the
stakes in Serasa held by Itaú Unibanco
and Bradesco), Banco Bradesco
Financiamentos, Grupo Santander
and HSBC. This included an extension
of existing agreements to provide
negative data, and commitments for
the provision of positive data once the
applicable law is fully operational.
EXPOSURE TO INCREASING COMPETITION
Performance indicator
EBIT
Strategic alignment
• New customer segments
• Expanding geographically
• Product innovation
Further information
• Business review section
Description of risk and potential impact
We operate in a number of geographic, product and service markets that are
highly competitive. Competitors may develop products and services that are
superior to, or that achieve greater market acceptance than, our products and
services. Some of our competitors may choose to sell products competitive to
our products at lower prices by accepting lower margins and profitability, or
may be able to sell products competitive to ours at lower prices given proprietary
ownership of data, technological superiority and economies of scale. Such price
reductions may negatively impact our margins and results of operations and
also harm our ability to obtain new customers or retain existing ones.
How we manage this risk
We are committed to continued research and investment in new data
sources, people, technology and products to support our strategic plan.
Change from 2012
Stable
2013 update
We continue to focus on the
development of new products
that leverage our scale to deploy
capabilities into new markets and
geographies. Many new platforms
have been or are being rolled out in
multiple geographies. For further
examples of these please refer to the
our strategy for growth section of the
annual report.
RESULTS OF OPERATIONS MAY BE AFFECTED BY ADVERSE MARKET CONDITIONS CAUSED BY THE
GLOBAL FINANCIAL CRISIS AND EURO ZONE DEBT CRISIS
Performance indicator
EBIT
Strategic alignment
• Expanding geographically
Further information
• Business review section
Description of risk and potential impact
Our international operations are exposed to adverse market conditions
resulting from concerns about the large sovereign debts and/or fiscal deficits
of a number of European countries and the US or an economic slowdown in
high growth markets such as Brazil and China. The default, or a significant
decline in the credit rating, of one or more sovereigns or financial institutions
could cause severe stress in the financial system generally and could adversely
affect the markets in which we operate and the businesses and economic
condition and prospects of our customers, suppliers, counterparties or
creditors, directly or indirectly, in ways that are difficult to predict.
How we manage this risk
Our financial risk management focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on our financial
performance. We apply conservative currency hedging strategies to minimise
the impact of currency volatility. Treasury and insurance activities are
conducted only with financial and insurance institutions with strong credit
ratings, within limits set for each organisation.
Change from 2012
Stable
2013 update
We have operations in 40 countries
and provide services in many
countries around the world. For
2013, businesses in North America
accounted for 48% of global revenue,
in Latin America 21% and the UK
and Ireland 19%. Only 5% of global
revenue is derived from the euro zone.
EXPOSURE TO THE UNPREDICTABILITY OF FINANCIAL MARKETS (FOREIGN EXCHANGE,
INTEREST RATE AND OTHER FINANCIAL RISKS)
Performance indicator
EBIT
Strategic alignment
• Expanding geographically
Further information
• Financial review section
and notes to the Group
financial statements
Description of risk and potential impact
Our international operations expose us to the unpredictability of international
financial markets. We face several market risks including: foreign exchange
risk from future commercial transactions; recognised assets and liabilities
and investments in, and loans between, undertakings with different functional
currencies; interest rate risks arising from its net debt; and price risks. We are
also exposed to credit and liquidity risks arising from our derivative financial
instruments and long-term facilities. The impact of changes in market
conditions could adversely affect our business, operations and profitability.
How we manage this risk
Our financial risk management focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on our financial
performance. We apply conservative currency hedging strategies to minimise
the impact of currency volatility. Treasury and insurance activities are
conducted only with financial and insurance institutions with strong credit
ratings, within limits set for each organisation.
Change from 2012
Increasing risk
2013 update
Concerns about credit risk (including
that of sovereigns) are contributing
to currency volatility and downgrades
of some financial institutions. We
continue to monitor counterparty
positions regularly.
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Business overview Business review Governance Financial statements