Experian 2009 Annual Report Download

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Realising a vision
Annual Report 2009
Winning in the
global marketplace

Table of contents

  • Page 1
    Annual Report 2009 Winning in the Realising a vision global marketplace

  • Page 2
    ... performance of Experian during the year, delivering top line organic growth, and good profit and cash performances. We also continued to invest in our business, helping to distinguish Experian competitively and positioning the business well for future growth." Don Robert Chief Executive Officer

  • Page 3
    ...30 40 Chief Executive's review Key performance indicators North America Latin America UK and Ireland EMEA/Asia Pacific Risks and uncertainties Financial review Corporate responsibility 44 - 72 Governance Governance 44 46 50 59 72 Board of directors Directors' report Corporate governance statement...

  • Page 4
    ...of financial services, we continued to diversify by taking our core data and analytics products into markets such as the public sector, healthcare and telecommunications. We also expanded our global footprint, winning substantial contracts in Eastern Europe and Asia Pacific, and opening a new credit...

  • Page 5
    ... restated to exclude French transaction processing activities Basic earnings per share (US cents) 09 08 07 43.3 49.9 48.0 FY08 restated to exclude French transaction processing activities 73 - 148 Financial statements Dividend (US cents) 09 08 07 17.0 20.0 18.5 Experian Annual Report 2009 3

  • Page 6
    ...four regions - North America, Latin America, UK and Ireland and EMEA/Asia Pacific. Its activities in these regions are grouped into four principal business lines: Credit Services Credit Services helps organisations to acquire new customers for credit products, to predict and manage credit risk, and...

  • Page 7
    ... in new media. Experian's direct-to-consumer, credit information business is the clear market leader in both the US and UK. In the US, competition is provided by Equifax, TransUnion, Fair Isaac and other smaller specialists, but Experian is more than twice the size of any of these competitors. In...

  • Page 8
    ...for the type of expertise, data and sophisticated software and analytical tools in which Experian has invested. Revenue by activity 1 Revenue by geography 1 Credit Services Decision Analytics Marketing Services Interactive North America Latin America UK and Ireland EMEA/Asia Pacific 1 Excludes...

  • Page 9
    ... revenue from Consumer Direct 15% 1,384 9% 1,083 33% International 745 Harte-Hanks 91% Fair Isaac 67% North America Source: Latest full-year revenue, company 10-K Management estimate of percentage of revenue by vertical market Excludes discontinuing activities 2 Experian Annual Report 2009...

  • Page 10
    ... is on nurturing, building and harvesting growth opportunities for our business. During 2009, we invested significantly in new growth opportunities, and our plan is to invest at a similar level in the year ending 31 March 2010. Don Robert Chief Executive Officer 8 Experian Annual Report 2009

  • Page 11
    ... investment in UK public sector, utilities, US healthcare payments and capital markets; - new products, for example in scoring, risk management, fraud prevention, contact data management and customer segmentation tools. Our success here will help offset short-term headwinds from financial services...

  • Page 12
    ... items1 Amortisation of acquisition intangibles Goodwill adjustment Charges for demerger-related equity incentive plans Financing fair value remeasurements Tax expense on share of profits of associates Profit before tax Group tax expense1 Profit after tax for continuing operations Benchmark EPS (US...

  • Page 13
    .... At the heart of Xbox's communications is a global marketing database, developed by Experian, holding information on customers in 29 countries. The database has been harnessed to Experian's email marketing technology to drive a highly targeted email communications programme. More than 150 million...

  • Page 14
    Business review Key performance indicators Experian's strategy is centred on three elements: to focus on data and analytics, drive profitable growth and optimise capital efficiency. Experian's financial objectives are to drive organic growth, to maintain or grow margins and to convert at least 85% ...

  • Page 15
    ...resource. Experian has taken a number of steps to improve employees' satisfaction and involvement with the Company and regularly surveys its whole working population to measure their engagement. 74% North America 53% Latin America 64% UK and Ireland 51% 62% EMEA 53% 56% 68% Asia Pacific 62% 57% 2009...

  • Page 16
    ...Recessionary conditions impact traditional marketing spend, but new media businesses deliver good growth • Strong performance at Consumer Direct with revenue up over 20% • EBIT margin improvement reflects progress on cost efficiency initiatives Year ended 31 March Revenue - Credit Services2...

  • Page 17
    ... to refine and execute our credit strategy with great precision and to be highly responsive to customer needs and changes in the marketplace." CREDIT DECISIONS AT VIRGIN MOBILE USA North America 44 - 72 73 - 148 Business review Governance Financial statements Experian Annual Report 2009 15

  • Page 18
    ...across custom analytics, as well as account management, commercial lending and fraud prevention software. This helped to offset weaker demand for loan origination products. Experian further penetrated the market during the year, with a number of new business wins. In addition, Experian is developing...

  • Page 19
    ... sales. Experian's unique personal identification number (PIN) also provides the ability to link customer records across multiple mailing lists and data sources, without risk of duplication, and to keep the central database continually updated and de-duplicated. Pat Connolly, Chief Marketing Officer...

  • Page 20
    ... conditions • Growing demand for customer management tools • Significant new business wins for Marketing Services Year ended 31 March Revenue - Credit Services - Decision Analytics - Marketing Services Total Latin America EBIT Total Latin America EBIT margin 118 25.5% 75 23.1% 67 2009...

  • Page 21
    ... part of its commitment to consumers, is piloting a major new financial education programme aimed at teachers and parents of young people. Latin America Business review Marketing Services There was very strong growth at Marketing Services, where organic revenue increased by 56%. Growth reflected...

  • Page 22
    ... UK and Ireland, notwithstanding exceptionally challenging market conditions for financial services clients. Performance benefited from growth in non-financial verticals, good demand for countercyclical products and further market penetration at Consumer Direct. Strong execution on cost efficiency...

  • Page 23
    ... type and size. The profitable expansion of this commercial customer base means having the confidence that new customers will honour their credit commitments. In 2008, ScottishPower signed a three-year contract for access to Experian's comprehensive business information database. The energy company...

  • Page 24
    ... performance within business information. Strategic initiatives during the year included further investment in sales infrastructure across the public sector and utilities verticals, and reorientation of existing sales resource towards countercyclical opportunities. Marketing Services Total revenue...

  • Page 25
    ... people's needs and preferences - we are delighted that Experian is helping us to develop this insight." TO DRIVE EUROPE'S LARGEST LOCAL AUTHORITY BUSINESS TRANSFORMATION PROjECT UK and Ireland 44 - 72 73 - 148 Business review Governance Financial statements Experian Annual Report 2009 23

  • Page 26
    ... investment across the EMEA/Asia Pacific region as well as business mix effects. • Revenue from continuing activities up 19%, 6% organic • Good progress for Credit Services across established and emerging markets • Consumer credit bureau launched in Morocco • Significant new client...

  • Page 27
    ...General Manager of China Minsheng Bank Credit Card Center: "Experian is enabling us to improve business efficiency and to enhance our overall customer and risk management capabilities." IN CREDIT RISK MANAGEMENT TO CHINA'S BANKING INDUSTRY 73 - 148 Financial statements Experian Annual Report 2009...

  • Page 28
    Business review EMEA/Asia Pacific continued Credit Services Total revenue for Credit Services grew 14% at constant exchange rates, with organic revenue growth of 4%. The acquisition contribution relates to KreditInform in South Africa and an increase to majority control of Experian's stake in ...

  • Page 29
    ... other, similar vehicles. ® 73 - 148 PROVIDING GREATER Financial statements Dick Gorris, Channel Manager at eBay: "Experian's vehicle history check has strengthened our position in the used car market and made the process of buying a used car less of a gamble". Experian Annual Report 2009 27

  • Page 30
    ... controls to ensure that such risks are appropriately mitigated. The corporate governance statement contained in this report provides further detail on this enterprise risk management process. Risks to Experian's business are either specific to Experian's business model, such as information security...

  • Page 31
    ...and investment in people, technology and products as prioritised by its strategic plan. Counterparties could fail Counterparty risk is a new principal risk. Experian's ability to engage in routine transactions to fund its operations and manage its risks could be adversely affected by the commercial...

  • Page 32
    ... on pension liabilities. The reduction of US$35m in the other elements of the Group's net interest expense stems from the environment of declining global interest rates together with the benefit of the Group's strong cash flow performance. Share price and total equity The share price of Experian...

  • Page 33
    ...their circumstances. Emilie Hardick, Manager Email Marketing at KLM: "Our use of permission-based email is translating into stronger and more profitable customer relationships. Working with Experian, email has become our most cost-effective channel of communication." Experian Annual Report 2009 31

  • Page 34
    ... year acquisitions. In addition, the Group purchased a 40% stake in DP Information Group, a credit bureau in Singapore, and invested in a joint venture in Japan with CCB. On 31 October 2008, the Group received US$203m on completion of the disposal of the transaction processing business in France...

  • Page 35
    ... and on what terms, monitoring customer performance and determining the best time to offer new products and, if accounts fall into arrears, deciding on the appropriate follow-up actions. Vadim Kulik, Director of Sberbank's Centre for Development of Centralised Retail Credit Back-Office: "Experian is...

  • Page 36
    ... risk. In order to reduce the impact of currency fluctuations on the value of such entities, the Group has a policy of borrowing in US dollars and euros, as well as in sterling, and of entering into forward foreign exchange contracts in the relevant currencies. 34 Experian Annual Report 2009

  • Page 37
    ... the joint venture in Japan. Demerger and related restructuring costs comprise legal and professional fees, together with costs in connection with the cessation of a number of subsidiaries of the former GUS plc. Financial review Business review Credit risk The Group's exposure to credit risk is...

  • Page 38
    ... 31 March Amortisation of acquisition intangibles Goodwill adjustment Charges in respect of the demerger-related equity incentive plans Financing fair value remeasurements Total other non-GAAP measures 2009 US$m 132 1 32 (19) 146 2008 US$m 121 2 49 29 201 An element of Experian's derivatives is...

  • Page 39
    ... Discontinuing activities include UK account processing, Loyalty Solutions and other smaller discounting activities EBIT margin is for continuing direct business only, excluding FARES 73 - 148 Financial statements Roundings Certain financial data have been rounded within this report. As a result...

  • Page 40
    ... Amortisation of acquisition intangibles Goodwill adjustment Charges for demerger-related equity incentive plans Financing fair value remeasurements Tax expense on share of profit of associates Profit before tax Share of post-tax profits of associates Net financing costs Operating profit 2009 US...

  • Page 41
    ... for each customer at the right time. We have also been able to automate many aspects of the collections process, which has made decision-making both faster and more cost-effective." Financial review 44 - 72 73 - 148 Business review Governance Financial statements Experian Annual Report 2009 39

  • Page 42
    ... and economic benefit through our products, services and capabilities, balancing commercial benefit with consumers' rights and needs. Inform and empower consumers, and ensure that those who interact directly with our company receive fair and honest treatment. Be a good employer to all, establishing...

  • Page 43
    ... against the goals set for each strand of the strategy. 73 - 148 Financial statements Business as usual - embedding CR Embedding considerations of SEE risks into standard processes supports Experian's investment in its key resources, specifically - data resources and the technology to manage them...

  • Page 44
    ... new geographic and vertical markets". As part of this growth the EMEA/Asia Pacific region has seen considerable expansion. To parallel this, Experian has extended the reach of its CR reporting of non-financial data to include China, Australia, South Africa and most of its smaller European offices...

  • Page 45
    ... - Build SEE opportunity reviews into product development processes in at least one region by the year ending 31 March 2010. - Continue to provide funding for 'Big Ideas' and publicise the programme internally. 44 - 72 Governance Focusing the community programme - Evolve the community focus to...

  • Page 46
    ...-executive director Alan Jebson is a non-executive director of Vodafone Group plc and MacDonald Dettwiler in Canada. He is Chairman of Experian's audit committee. Alan retired in May 2006 as Group Chief Operating Officer of HSBC Holdings plc, a position that included responsibility for IT and Global...

  • Page 47
    ... Experian, Chris spent 27 years at Bank of America, where his roles included Group Executive Vice President in retail banking. He also served as Chief Operating Officer at Wink Communications, a leading interactive television company at the time. Chris is a member of the Chancellor's Chief Executive...

  • Page 48
    ... to manage their credit relationships and to minimise the risk of identity theft. Experian reports its financial performance on a geographical basis across four regions: North America, Latin America, UK and Ireland and EMEA/Asia Pacific. As described in the business review, the Group's activities...

  • Page 49
    ... share. Further details are given in the shareholder information section of the annual report. Corporation with a call right to purchase the Group's interest in FARES in the event of a change of control of the Company. - Details of provisions relating to a change of control in directors' service...

  • Page 50
    ..., conferences, meetings, publications and intranet sites. Experian continues to support employee share ownership through the provision of save as you earn and other all-employee share plan arrangements which are intended to align the interests of employees with those of shareholders. directors...

  • Page 51
    ... at the annual general meeting. By order of the board Charles Brown Company Secretary 19 May 2009 Corporate headquarters: Newenham House Northern Cross Malahide Road Dublin 17 Ireland Registered office: 22 Grenville Street St Helier Jersey JE4 8PX Directors' report Relevant audit information As at...

  • Page 52
    ...the Company is appropriately managed and that it achieves its objectives.The board meets regularly to determine the Company's strategic direction, review the Company's operating and financial performance and oversee that the Company is adequately resourced and effectively 50 Experian Annual Report...

  • Page 53
    ... and services of the Company Secretary, whose appointment and removal may be effected only with board approval. He is responsible for ensuring board procedures are followed and for advising the board, through the Chairman, on governance matters. 8 - 43 Business review Board meetings and directors...

  • Page 54
    ...Chairman's performance, taking account of the views expressed by the executive directors. Going forward, the Chairman and the non-executive directors intend to normally meet as a group without the executive directors present at the end of each scheduled board meeting. Information flow Directors are...

  • Page 55
    ... governance structure of the Group, information on the duties and responsibilities of directors and information on dealing in the Company's shares.The induction process is continued throughout the directors' terms of office. The board believes strongly in the development of all Group employees and...

  • Page 56
    ... year), reviewed the time commitment required from the non-executive directors and reviewed its own performance and terms of reference. The committee also discussed succession planning for the Chairman and the Chief Executive Officer and received a report on the Experian Global Employee Survey which...

  • Page 57
    ... the Company's long-term incentive plans, a review of the Chairman's fee, salary reviews of the Chief Executive Officer, the Chief Financial Officer, the President and Chief Operating Officer and a number of senior executives, a review of pension matters, initiation of the invitation to employees to...

  • Page 58
    ... was the provision of further training opportunities for committee members and a plan has been put in place to address this issue. Internal controls and risk management The board acknowledges that it is responsible for the Group's system of internal control and for reviewing its effectiveness. Such...

  • Page 59
    ..., ethical principles and practice, accounting policies, treasury policy, information security policy and policy on fraud and whistleblowing. ensure appropriate response to changes and developments in risks and the control environment. 73 - 148 Financial statements Experian Annual Report 2009 57

  • Page 60
    ...investor relations team arranged a number of visits for investors to Experian operations, including in the USA and UK. To assist members of the board to gain an understanding of the views of institutional shareholders, at each of its meetings the board receives an investor relations and media report...

  • Page 61
    ..., the Chief Executive Officer, the Group HR Director and the Global Head of Reward who are invited to attend meetings of the committee as appropriate.The Chief Financial Officer is also consulted in respect of performance conditions attaching to short and long-term incentive arrangements. The...

  • Page 62
    ... performance measures that are designed to be aligned with the Group's strategic goals and that are transparent to directors and shareholders. Each element of remuneration is designed to support the achievement of different corporate objectives as outlined in the following table. Service contracts...

  • Page 63
    ... tool - Direct link to value creation through share price growth as major objective - Aligns with shareholder interests through delivery of shares - Acts as a retention tool - Opportunity for employees to invest in Experian shares over 3 or 5 year savings period -To provide market competitive post...

  • Page 64
    ...of this strong performance in uncertain market conditions. For annual bonuses earned in respect of the 2008/09 financial year, executive directors have been offered their first opportunity since the demerger of Experian and Home Retail Group from GUS plc in October 2006 ('demerger') to defer receipt...

  • Page 65
    ...the performance of Experian's total shareholder return ('TSR') (defined as share price movement plus reinvested dividends) relative to the following group of peer companies as set at the award date: Acxiom Alliance Data Systems Bisys Group Capita Group Choicepoint Dun & Bradstreet Equifax Fair Isaac...

  • Page 66
    Governance Report on directors' remuneration continued Experian share option plan The Experian share option plan was approved by GUS plc shareholders at the EGM held on 29 August 2006.This plan seeks to align shareholder and participant interests through share price growth and the employment of a ...

  • Page 67
    ... base salary, including shares held under the CIP and the reinvestment plan. Each of the executive directors meets these guidelines. The fees of non-executive directors will next be reviewed in late 2009. Fees are reviewed in the light of market practice in FTSE 100 companies and anticipated number...

  • Page 68
    ...further long-term incentive awards but continues to receive a company car benefit and coverage under the Group's private healthcare arrangements. 4. Experian plc pays directors' fees to Don Robert and Paul Brooks of â,¬106,154 per annum in respect of their services as directors of Experian plc. Such...

  • Page 69
    ... were granted under the GUS North America Stock Option Plan.The 2005 and 2006 grants were made under the GUS UK Executive Share Option Scheme. 3. Options were granted to DavidTyler in respect of his role as an executive director of GUS plc. On demerger, he was eligible to exchange his options for...

  • Page 70
    ... were automatically rolled over into Experian shares. As approved by GUS plc shareholders at the EGM held on 29 August 2006, awards equivalent to two times salary were made to executive directors on demerger in October 2006 under the Experian performance share plan. Both awards are outlined below...

  • Page 71
    ...investment plans and Experian reinvestment plans Awards to directors under the 2004 and 2005 cycles of the GUS co-investment plan and North America co-investment plan were reinvested in awards under the Experian reinvestment plan and North America reinvestment plan at demerger. Awards under the 2006...

  • Page 72
    ... year and the employer contributions to this arrangement were $8,507 (2008: $3,692). Paul Brooks is a member of the registered Experian UK pension scheme. His benefits are restricted by an earnings cap. However, benefits in excess of this cap are provided for through the Experian Limited SURBS.The...

  • Page 73
    ... Report on directors' remuneration Governance 99,315 5,568 220,199 42,184 18,518 514,441 2. The number of Experian shares for Don Robert and Paul Brooks reflects 304,441 and 134,655 shares respectively awarded to them under the legacy GUS North America co-investment plan and Experian reinvestment...

  • Page 74
    ... the management report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that they face. By order of the board Charles Brown Company Secretary...

  • Page 75
    ... Companies (Jersey) Law 1991 and Article 4 of the IAS Regulation; and the information given in the directors' report is consistent with the Group financial statements. PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London, United Kingdom 19 May 2009 Experian Annual Report...

  • Page 76
    ... ended 31 March 2009 2009 2008 (Restated) (Note 2) US$m Notes US$m Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating expenses Operating profit Finance income Finance expense Net financing costs Share of post-tax profits of associates Profit before tax Group...

  • Page 77
    ...,251 (16,017) 1,785 114 1,899 102 1,442 16,065 (15,653) 1,956 161 2,117 Group financial statements Financial statements The financial statements on pages 74 to 136 were approved by the board on 19 May 2009 and were signed on its behalf by: Chris Callero Director Experian Annual Report 2009 75

  • Page 78
    ... ended 31 March 2009 Net (expense)/income recognised directly in equity Reversal of net investment hedge Fair value losses on available for sale financial assets Actuarial (losses)/gains in respect of defined benefit pension plans Currency translation differences Recycled cumulative exchange gain...

  • Page 79
    ...Issue of ordinary shares Receipt of share option proceeds and sale of own shares by employee trusts New borrowings 32(g) Repayment of borrowings 32(g) Capital element of finance lease rental payments Net (payments)/receipts from derivative financial instruments held to manage currency profile Equity...

  • Page 80
    ... of the EMEA/Asia Pacific geographical segment and the Credit Services business segment (shown within note 4) have been restated accordingly. Following a review of the Group's assessment of risks and rewards, there have been a number of changes in the reporting of revenues and profits across the...

  • Page 81
    ...has significant influence but not control, generally achieved by a shareholding of between 20% and 50% of the voting rights.The equity method is used to account for investments in associates and investments are initially recognised at cost. 44 - 72 Governance The Group's share of net assets of its...

  • Page 82
    ... as held for sale, under IFRS 5. Share-based payments The Group has a number of equity settled, share-based employee incentive plans.These include awards in respect of shares in the Company made at or after the demerger of Experian and Home Retail Group from GUS plc in October 2006, together with...

  • Page 83
    ... Completed technology acquired as part of a business combination is capitalised at fair value on acquisition and amortised on a straight line basis over three to eight years, based on the expected life of the asset. Group financial statements Financial statements Experian Annual Report 2009...

  • Page 84
    ... exchange contracts and equity swaps. Assets at fair value through the profit and loss account Assets at fair value through the profit and loss account comprise holdings of listed equity securities, principally those held in the UK to secure unfunded pension benefit arrangements. Available for sale...

  • Page 85
    ... are recognised at cost, being the fair value at the date a contract is entered into, and are subsequently remeasured at their fair value. Depending on the type of the derivative financial instrument, fair value calculation techniques include, but are not limited to, quoted market value, present...

  • Page 86
    ... immediately in the Group income statement. Costs in respect of derivatives entered into in connection with social security obligations on employee share incentive plans, other than those of a financing nature, are charged as an employment cost; other costs and changes in fair value on such...

  • Page 87
    ...future taxable profit will be available against which the temporary differences can be utilised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and...

  • Page 88
    ...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 defined benefit obligation at the balance sheet date, together with adjustments for past service costs.The defined benefit obligation is calculated annually...

  • Page 89
    ...part on market conditions at the relevant balance sheet dates and additional information is disclosed in note 28. 8 - 43 44 - 72 Business review Governance Fair value of derivatives and other financial instruments The fair value of derivatives and other financial instruments that are not traded in...

  • Page 90
    ... payments The Group has a number of equity settled share-based employee incentive plans.The assumptions used in determining the amounts charged in the Group income statement include judgments in respect of performance conditions and length of service together with future share prices, dividend and...

  • Page 91
    ... the May 2008 annual improvements process: IFRS 5 'Non-current assets held for sale and discontinued operations' * IAS 16 'Property, plant and equipment' * IAS 19 'Employee benefits' * IAS 20 'Accounting for government grants and disclosure of government assistance' * IAS 29 'Financial reporting in...

  • Page 92
    ... managed and controlled in a prudent manner which will protect capital sums invested and ensure adequate short-term liquidity, whilst maximising returns. Market risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk from future commercial transactions...

  • Page 93
    ... cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce net debt. As part of its internal reporting processes the Experian Annual Report 2009...

  • Page 94
    ... builds on the Credit Services database information and helps clients by applying analytical tools and software to convert data held internally and other data into usable business information. Marketing Services helps clients to acquire new customers and to manage their relationships with existing...

  • Page 95
    ... information on discontinued operations, the results of which were formerly reported within the EMEA/Asia Pacific geographical segment, is shown in note 11. 2. Revenue from external customers arose principally from the provision of services. (b) Balance sheet at 31 March 2009 North America...

  • Page 96
    ... statements Notes to the Group financial statements continued 4. Segmental information (continued) (c) Other financial information Continuing operations North America US$m Latin America US$m UK & Ireland US$m EMEA/ Asia Pacific US$m Central Activities US$m T otal Discontinued continuing operations1...

  • Page 97
    ... operations North America US$m Latin America US$m UK & Ireland US$m EMEA/ Asia Pacific US$m Central Activities US$m T otal Discontinued continuing operations1 US$m US$m T otal Group US$m Revenue from external customers2 Profit Operating profit/(loss) Net financing costs Share of post-tax profits...

  • Page 98
    ... customers arose principally from the provision of services. 4. No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by geographical segment. 96 Experian Annual Report 2009

  • Page 99
    ... of services. 4. No allocation by business segment is made for charges in respect of the demerger-related equity incentive plans as the underlying data is maintained only to provide an allocation by geographical segment. Group financial statements Financial statements Experian Annual Report 2009...

  • Page 100
    ... corporate head office balances including retirement benefit assets, derivative assets and all Group properties as they are not allocated by business segment. (c) Capital expenditure 2009 US$m 2008 US$m Continuing operations Credit Services Decision Analytics Marketing Services Interactive...

  • Page 101
    ... 4 - 9 6 2 4 12 18 Group financial statements Total fees payable to the Company's auditor and its associates The guidelines covering the use of the Company's auditor for non-audit services are set out in the corporate governance statement. 14 Financial statements Experian Annual Report 2009 99

  • Page 102
    ...1,456 Average number of employees (including executive directors) in the continuing operations of the Group 2009 Full time Part time equivalent 2008 (Restated) (Note 2) Full time Full time Part time equivalent Full time North America Latin America UK & Ireland EMEA/Asia Pacific Central Activities...

  • Page 103
    .... Demerger and related restructuring costs comprise legal and professional fees, together with costs in connection with the cessation of a number of subsidiaries of the former GUS plc. In April 2006, Experian announced the phased withdrawal from large scale credit card and loan account processing in...

  • Page 104
    ... the Group financial statements continued 9. Net financing costs 2009 2008 (Restated) (Note 2) US$m US$m (a) Net financing costs Interest income: Bank deposits and money market funds Interest differentials on derivatives Expected return on pension plan assets Interest income Financing fair value...

  • Page 105
    ... 2) US$m (i) Reconciliation of the tax expense reported in the Group income statement Profit before tax Add: tax expense on share of profits of associates Adjusted profit before tax Adjusted profit before tax multiplied by the standard rate of corporation tax in the UK of 28% (2008: 30%) Effects of...

  • Page 106
    ... part of the Group. (c) Tax taken directly to equity A tax credit of US$60m (2008: charge of US$16m) has been taken directly to equity, relating mainly to employee share incentive plans, actuarial gains and losses on retirement benefit assets and obligations and foreign exchange.This includes US...

  • Page 107
    ... business for the year ended 31 March 2008 have been reclassified as discontinued. Results for discontinued operations 2009 US$m 2008 US$m Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating expenses Operating (loss)/profit on transaction processing activities...

  • Page 108
    ... shareholders of the Company by a weighted average number of ordinary shares in issue during the year (excluding own shares held in employee trusts, which are treated as cancelled). The calculation of diluted earnings per share reflects the potential dilutive effect of employee share incentive plans...

  • Page 109
    ... demerger of Experian and Home Retail Group in October 2006, shareholders in the Company can elect to receive their dividends from a UK source (the 'IAS election'). Shareholders who held 50,000 or fewer Experian shares (i) on the date of admission of the Company's shares to the London Stock Exchange...

  • Page 110
    ... which comprise trademarks and licences, trade names and completed technology. Internal use Databases software US$m US$m Internally generated Acquisition software intangibles US$m US$m Total US$m Cost At 1 April 2007 Differences on exchange Additions through business combinations Other additions...

  • Page 111
    ... a number of finance lease agreements. At the end of each of the leases the Group has the option to purchase the equipment at a beneficial price.The net book value of assets held under finance leases and capitalised in plant and equipment is US$9m (2008: US$18m). Experian Annual Report 2009 109

  • Page 112
    ... US$202m).The Group's share of the revenue of FARES for the year ended 31 March 2009 is US$237m (2008: US$249m) and its share of profit after tax US$46m (2008: US$50m). First American Corporation, which holds the balance of the capital of FARES, has the right to acquire from Experian its interest in...

  • Page 113
    ...9 8 - 43 Business review (c)Trade receivables of US$366m (2008: US$530m) were neither past due nor impaired and these are further analysed as follows: Current 2009 US$m Current 2008 US$m New customers (of less than six months' standing) Existing customers (of more than six months' standing) with...

  • Page 114
    ...trade receivables mainly comprise credit note provisions. 20. Cash and cash equivalents (a)The analysis of cash and cash equivalents disclosed in the Group balance sheet is as follows: 2009 US$m 2008 US$m Cash at bank and in hand Short-term investments 127 2 129 148 3 151 The accounting policies...

  • Page 115
    ... 8 - 43 Business review 2,811 The accounting policies for financial instruments set out in note 2 have been applied to the above items.There is no material difference between the carrying values of the Group's loans and borrowings and their fair values. During the year ended 31 March 2009, 6.375...

  • Page 116
    ...assets comprise: 42 (8) - (8) 26 38 1 4 (1) 42 2009 US$m 2008 US$m Listed equity securities - UK (sterling denominated) Listed equity securities - North America (US dollar denominated) 21 5 26 34 8 42 The accounting policies for available for sale financial assets set out in note 2 have been...

  • Page 117
    ... Non-hedging derivatives - equity swaps Non-hedging derivatives - foreign exchange contracts Non-hedging derivatives - interest rate swaps Liabilities at fair value through the profit and loss account Derivative financial instruments Put option in respect of acquisition of Serasa minority interest...

  • Page 118
    ... note (a). 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 financial instruments are estimated by discounting the future cash flows to net present values using appropriate market rates prevailing...

  • Page 119
    ... exchange contracts. 2. VAT and other tax payable of US$32m (2008: US$52m), social security costs of US$78m (2008: US$95m) and certain accruals and deferred income of US$447m (2008: US$474m) are included in trade and other payables in note 21 but are excluded from this analysis. Experian Annual...

  • Page 120
    ... 85 41 13 - - 1 55 1,473 12 - 1,003 1 2,489 701 12 - - - 713 3,168 88 1,223 1,003 722 6,204 1. Cash flows in respect of VAT, other tax payable, social security costs and accruals are excluded from this analysis. 118 Experian Annual Report 2009

  • Page 121
    ...were quoted prior to the demerger. (a) Share options 8 - 43 Business review (i) Summary of arrangements Experian Share Option Plan Experian Sharesave Plans The North America Stock Option Plan1 Nature Vesting conditions: - Service period - Performance/Other Expected outcome of meeting performance...

  • Page 122
    ...time of grant.The inputs utilised are an average of the forecast over the next three financial years. Risk-free rate - Rates are obtained from the UK Government Debt Management Office website which details historical prices and yields for gilt strips. Expected option life to exercise: Experian plans...

  • Page 123
    ... 1. To the extent that GUS options were rolled over into Experian plans, the inputs for share price at grant date and exercise price were rebased to be comparable with the Experian plc share price at demerger and to reflect the consequent changes to option terms. Experian Annual Report 2009 121

  • Page 124
    ... All-Employee Plan Arrangements Experian Co-Investment Plan Experian Reinvestment Plan Experian Performance Share Plan Nature of arrangement Vesting conditions: - Service period - Performance Grant of shares1 Grant of shares1 Grant of shares Grant of shares 4 years 100% - Benchmark profit...

  • Page 125
    ... that day's trading was used to determine the value of demerger share awards. For the former GUS plans the value of awards is determined as the market closing price on the date awarded grants are issued to participants. For the Experian Reinvestment Plan and the former GUS Co-Investment Plan, this...

  • Page 126
    ...an independently administered fund. Pension arrangements for the Group's UK employees are operated principally through the Experian Pension Scheme which is a defined benefit plan and the Experian Money Purchase Pension Plan which is a defined contribution plan.These plans are governed by trust deeds...

  • Page 127
    ...) 61 2009 US$m 2008 US$m At 1 April Differences on exchange Additions through business combinations Current service cost Interest on plans' liabilities Settlement or curtailment Actuarial gains on liabilities Contributions paid by employees Contributions paid from outside the Group Benefits paid...

  • Page 128
    ...$11m and the annual current service cost would remain unchanged.The discount rate is based on the market yields on high quality corporate bonds of appropriate currency and term to the defined benefit obligations. In the case of the Group's principal plan, the Experian Pension Scheme, the obligations...

  • Page 129
    ...of the Group's defined benefit plans and their expected long-term rates of return Fair value 2009 US$m Return 2009 % p.a. Fair value 2008 US$m Return 2008 % p.a. Equities Fixed interest securities Other 345 214 36 595 8.7 6.0 6.5 7.5 693 343 9 1,045 9.1 5.7 5.1 8 - 43 Business review 8.0 The...

  • Page 130
    ...Differences on exchange Income statement charge/(credit) Business combinations Tax charged to equity Transfers At 31 March 2008 5 - - - - - 5 34 - 1 - - 2 37 70 12 (18) 120 - - 184 1 - - - - - 1 5 - (1) - - - 4 154 1 43 (1) 5 (26) 176 269 13 25 119 5 (24) 407 128 Experian Annual Report 2009

  • Page 131
    ... the Group's withdrawal from large scale credit card and loan account processing in the UK. Contingent and other liabilities comprise liabilities of Serasa, in connection with local legal and tax issues, which were primarily recognised at fair value on the acquisition of that company. Adjustments to...

  • Page 132
    ... ended 31 March 2009 At 1 April 2008 1,023.4 Profit for the financial year - Net expense recognised directly in equity for the year - Employee share incentive plans: - value of employee services - - proceeds from shares issued 1.9 Exercise of share options - Minority interest arising on business...

  • Page 133
    ... the Experian UK Approved All-Employee Share Plan to satisfy certain of the Group's obligations under its share incentive plans. During the year ended 31 March 2008 these trusts purchased 509,518 shares in the Company at a cost of US$6m. The merger reserve arose on the demerger in October 2006 and...

  • Page 134
    ... continued 32. Notes to the Group cash flow statement 2009 2008 (Restated) (Note 2) US$m US$m (a) Cash generated from operations Profit after tax Adjustments for: Tax expense Share of post-tax profits of associates Net financing costs Operating profit Loss on sale of property, plant and equipment...

  • Page 135
    ...(k) Major non-cash transactions The Group did not enter into any new finance lease arrangements during the year (2008: US$nil). Finance lease obligations of Serasa at the date of acquisition in June 2007 were US$19m. Group financial statements Financial statements Experian Annual Report 2009 133

  • Page 136
    ...the whole of the issued share capital of KreditInform (Pty) Ltd, a leading provider of commercial credit information and analytics in South Africa.There were no other individually material acquisitions. In aggregate, the acquired businesses contributed revenues of US$14m to the Group for the periods...

  • Page 137
    ... was a loss of US$3m on the disposal of a number of the Group's smaller businesses with no associated cash flow. 57 28 15 3 138 (103) (10) (1) 127 203 (52) 3 27 203 (12) 191 8 - 43 44 - 72 Group financial statements Business review Governance Financial statements Experian Annual Report 2009 135

  • Page 138
    ... in legal proceedings, there is a risk of outcomes unfavourable to the Group. In the case of unfavourable outcomes the Group would benefit from applicable insurance recoveries. 37. Related parties The ultimate parent company of the Group is Experian plc which is incorporated in Jersey. Significant...

  • Page 139
    ... Accounting Practice, of the state of the Company's affairs as at 31 March 2009 and of the profit for the year then ended; the parent company financial statements have been properly prepared in accordance with the Companies (Jersey) Law 1991; and the information given in the directors' report...

  • Page 140
    Financial statements Parent company profit and loss account for the year ended 31 March 2009 2009 £m 2008 £m Notes Administrative expenses Operating loss Net interest income/(expense) Net foreign exchange gain Profit/(loss) on ordinary activities before tax Tax on profit/(loss) on ordinary ...

  • Page 141
    ... Share premium account Profit and loss account Total equity shareholders' funds I 2,093.1 0.3 2,093.4 Business review J (64.7) 2,028.7 5,910.1 K K L M 54.8 781.7 5,073.6 5,910.1 54.7 777.5 5,062.4 5,894.6 The financial statements on pages 138 to 146 were approved by the board on 19 May 2009...

  • Page 142
    ... to the parent company financial statements for the year ended 31 March 2009 A. Corporate information Experian plc (the 'Company') is incorporated and registered in Jersey as a public company limited by shares.The principal legislation under which the Company operates is Jersey Companies Law and...

  • Page 143
    ... increase in total equity shareholders' funds. C. Operating loss 44 - 72 8 - 43 Business review Governance The Company's operating loss is stated after charging: (i) Staff costs Directors' fees Wages and salaries 2009 £m 2008 £m 1.1 0.8 1.9 1.1 0.4 1.5 The Company employed an average of...

  • Page 144
    ... per ordinary share for the year ended 31 March 2009.This dividend is not included as a liability in these financial statements as it was not announced before 31 March 2009. For further details of payment arrangements see note 13 to the Group financial statements. 142 Experian Annual Report 2009

  • Page 145
    ...ended 31 March 2008 comprised the fair value of the share incentives issued to employees of subsidiary undertakings during the year of £33.0m and subscriptions of £150.0m for share capital of Experian Ireland Investments Limited and £2,528.6m for share capital in Experian Finance Holdings Limited...

  • Page 146
    ...of the issued share capital of the following companies: Country of incorporation Principal activity Experian Investment Holdings Limited Experian Holdings Ireland Limited Experian Group Services Limited Experian Ireland Investments Limited Experian Finance Holdings Limited The Company's significant...

  • Page 147
    ...of the Group's employee share incentive plans. As indicated in note F, during the year ended 31 March 2009 equity dividends of £34.1m (2008: £30.9m) were paid by the Company to those Experian plc shareholders who did not elect to receive dividends under the Income Access Share ('IAS') arrangements...

  • Page 148
    ... Experian Pension Scheme. During the year ended 31 March 2009, the Company entered into a guarantee in respect of the retirement benefit obligations of a Group company that participates in the Pension and Life Assurance Plan of Sanderson Systems Limited, a small defined benefit pension arrangement...

  • Page 149
    ... details please contact the Company's Registrars. Shareholder information Financial statements Capital Gains Tax ('CGT') base cost for UK shareholders On 10 October 2006, GUS plc separated its Experian business from its Home Retail Group business by way of demerger. Following the demerger, GUS...

  • Page 150
    ... Level 1 ADR programme is not listed on a stock exchange in the US and trades in the over-the-counter market under the symbol EXPGY. Each ADR represents one Experian plc ordinary share. For further information please contact: Shareholder Services Bank of New York Mellon PO Box 358516 Pittsburgh PA...

  • Page 151
    ... FSC certified environmental print technology, together with vegetable-based inks and a single-site production facility that required no transport between processes. The report is printed on an environmentally responsible paper that uses 50% certified de-inked post consumer waste and 50% certified...

  • Page 152
    Corporate headquarters Experian plc Newenham House Northern Cross Malahide Road Dublin 17 Ireland Corporate office Experian Cardinal Place 80 Victoria Street London SW1E 5JL United Kingdom Operational headquarters Experian Landmark House Experian Way NG2 Business Park Nottingham NG80 1ZZ United ...