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Annual Report 2010
Taking control of growth

Table of contents

  • Page 1
    Annual Report 2010 Taking control of growth

  • Page 2
    ...sure that our sales teams and infrastructure are best in class and that we continue to be the best possible partner to our clients." Don Robert Chief Executive Officer To help you get the most from this report, we have introduced symbols indicating where additional information can be found. Please...

  • Page 3
    ... Chief Executive's review Key performance indicators North America Latin America UK and Ireland EMEA/Asia Pacific Risks and uncertainties Financial review Corporate responsibility Business review 12 - 51 Business review A comprehensive review of Experian's performance during the year Governance...

  • Page 4
    ... significant future growth opportunities. In this annual report, we have illustrated some of the ways in which Experian has supported clients during the year across an ever-broadening range of markets. For example, we have helped the UK public sector to reduce 27 housing benefit fraud, enabled a 39...

  • Page 5
    ... non-executive strongly in new data sources and directors. Both have extensive new analytical products, together boardroom experience, as well as with the platforms that support their a broad perspective of the global worldwide delivery. Over 20% of technology and software industries, Group revenues...

  • Page 6
    ...implemented addresses the fact that we have to manage both geographies and product lines. Experian serves clients across multiple geographies and many of our growth opportunities are in fast-growing emerging markets, so we draw our talent from a very diverse pool in order to best serve our customers...

  • Page 7
    ... and understand their customers, and enabling consumers and businesses to have access to the credit they need. The value we deliver to clients and consumers is a very motivating force for all of us at Experian. Business review 12 - 51 "Experian has never been short of opportunities and, in many...

  • Page 8
    ..., utility companies and public service providers, who rely on Experian's predictive tools and sophisticated software to control decisionmaking at all points of contact with customers. Revenue by region North America 42% Latin America 32% UK and Ireland 14% EMEA/Asia Pacific 12% North America 26...

  • Page 9
    ...improving returns on marketing investment. Experian maintains extensive geographic, demographic and lifestyle data on consumers and businesses. This information is used in conjunction with advanced analytical systems to enable clients to understand their customers and execute relevant communications...

  • Page 10
    8 Experian Annual Report 2010 Introduction Strategy Experian's strategic goal is to grow the business and increase shareholder value by leveraging its global scale, maximising opportunities in new market segments and sustaining its leadership position through constant innovation. The Group's ...

  • Page 11
    ... across a range of fast growing markets. Many of Experian's products can be adapted and repurposed to enable quick deployment in sectors beyond financial services. This is enabling the Group to diversify its revenue base by developing opportunities in vertical markets such as the public sector...

  • Page 12
    ...detailed information is available at a regional level and is available in the CR report at www.experiancrreport.com. Ensuring the future senior leadership team better reflects the diversity of Experian's customer, investor and general employee base is a key objective. The following business actions...

  • Page 13
    ... the business to meet its growth goals by maximising global technology synergies and leveraging economies of scale. IT is foundational in the support of Experian's products and services and is critical to its ability to innovate. For example, highly secure and highly available processing centres in...

  • Page 14
    ...our business, our goal is to accelerate growth by creating new market opportunities, building greater scale and further cementing our global leadership position. Each year, we develop specific plans which set our priorities and allow us to concentrate our resources. These plans are 8 executed within...

  • Page 15
    ... the fresh insights and innovation that our customers need. For example, we are benefiting from recent addition of income data in our US consumer credit bureau; we are enhancing our products and platforms in business information; we are developing new analytics which will extend our fraud prevention...

  • Page 16
    14 Experian Annual Report 2010 Business review Chief Executive's review (continued) Revenue and EBIT by geography Revenue EBIT Growth1 % 2010 US$m 2009 US$m Growth1 % 2010 US$m 2009 US$m Year ended 31 March North America Latin America UK and Ireland EMEA/Asia Pacific Sub total Central ...

  • Page 17
    ... our global reach Deliver innovative data and analytics Execute superior sales and operations Introduction 2 - 11 UNDERSTANDINg AT NATIONAL gRID The capabilities that Experian has developed to support the financial services marketplace are increasingly being applied to other industry sectors, such...

  • Page 18
    ... as public sector, telecoms and utilities, and the consumer channel. Experian now generates more than 60% of revenue from outside financial services. 10 09 08 07 06 48% 47% 45% 64% 59% 2% 3% 4% 8% 12% 07 06 See pages 40 and 101 for definition of operating cash flow and cash flow conversion. For...

  • Page 19
    ...time in 2007. For further information on Experian minimising its impact on the environment please refer to the Corporate Responsibility report at www.experiancrreport.com. 2010 data reflects improved measurement and estimation processes which it has not been possible to apply to previous years' data...

  • Page 20
    ...analytics and fraud prevention tools, with client focus largely directed towards risk management tools, such as loan loss forecasting, credit criteria evaluation and risk-based pricing. There was good progress in the start-up public sector vertical, where both the pipeline and conversions have grown...

  • Page 21
    ... data and analytics Execute superior sales and operations Introduction 2 - 11 Business review 12 - 51 Governance 52 - 84 MAKINg Tv ADvERTISINg MORE RELEvANT The ability to target potential new customers with the right offers across all types of media is central to Experian's Marketing Services...

  • Page 22
    ... 2010 Business review North America (continued) Marketing Services Total and organic revenue at Marketing Services declined by 8%. In the early part of the year, contraction in retail spending impacted the traditional activities of list processing, data and database, although there were signs...

  • Page 23
    ...? For more than six years, Experian has been a partner to NADAguides.com, the most comprehensive vehicle information website on the internet today. Launched in 2000, NADAguides.com provides research information and education to consumers who are in the process of buying and selling vehicles, as...

  • Page 24
    ...While organic revenue declined at Decision Analytics and Marketing Services, this was off a small base in each case. Experian launched a number of new products during the year, including account management and fraud prevention products in Decision Analytics and competitive intelligence (Hitwise) and...

  • Page 25
    ... in Latin America into a suite of highly accessible products for the smaller business user. The product range extends from prospecting for new customers to assessing the credit risk of existing customers and managing the collection of overdue accounts. New online and telephone ordering channels have...

  • Page 26
    ... and diversity are addressed in the workplace. During the year, Serasa Experian launched a new information product that enables companies to investigate the environmental compliance records of thousands of businesses. It will potentially be of great use to ethical investors and companies wishing to...

  • Page 27
    ...interactive entertainment software company and a major client of Experian CheetahMail. Robert Slinn, Senior Director of Marketing at Electronic Arts, explains: "CheetahMail aids us in delivering information such as new product offers and service updates to more than five million customers throughout...

  • Page 28
    ...coupled with weak consumer demand, gave rise to reductions in origination volumes. Revenue weakness also reflected ongoing headwinds relating to financial services consolidation and market exits. There was continued progress in vertical market diversification, with growth in public sector, utilities...

  • Page 29
    ... UK government in recent years. Benefit fraud is estimated to cost taxpayers an annual £1.1bn. Over the past year, Experian has been working closely with the Department for Work and Pensions (DWP) to establish whether the Group's fraud detection products could help identify certain types of housing...

  • Page 30
    ... marketing and contact data management. These partially offset declines in more traditional activities. There was good strategic progress during the year, with further penetration of the government, utilities and telecoms sectors. During the year, Experian invested in product enhancements in order...

  • Page 31
    ... resorting to fraud as a result of financial stress. Experian's Fraud Open Account Monitoring has been developed to tackle this growing threat to organisations. The service monitors the accounts of existing customers, screening them against an array of specialist data sources, to identify...

  • Page 32
    ...Annual Report 2010 Business review EMEA/Asia Pacific There was a solid performance in EMEA/Asia Pacific, notwithstanding tough market conditions, particularly across more developed markets. Strategically, Experian expanded its presence with significant advancement in India, a series of new product...

  • Page 33
    ...best tools in the market for managing credit risk and has become an important strategic partner to BBVA, helping us improve the speed and quality of decision-making at almost every point in the relationship with our customers". Governance 52 - 84 Financial statements 85 - 160 Business review 12 - 51

  • Page 34
    .... EBIT margin was 11.3% (2009: 11.5%). 48 Social, ethical and environmental (SEE) risks and opportunities Experian in EMEA/Asia Pacific has continued to improve the level and quality of the data included in the Group's full CR report at www.experiancrreport.com and to make further links with local...

  • Page 35
    ... Moosa Suliman, Transnet Group Credit Manager. "As a result, Experian's services are now written into our credit and procurement policies. We don't grant credit or award supplier contracts without first checking with Experian." Governance 52 - 84 Financial statements 85 - 160 Business review 12 - 51

  • Page 36
    ... impacting delivery of our products or services. The Group's legal, regulatory and government affairs departments work closely with senior management to adopt strategies to help secure and maintain access to public and private information. The Group's global strategic sourcing department works...

  • Page 37
    ... levels. System or network interruptions, or the unavailability of key staff or management resulting from a pandemic outbreak, could delay and disrupt our ability to develop, deliver or maintain our products and services, causing harm to our business and reputation and resulting in loss of customers...

  • Page 38
    ... in these and other industries could result in reductions in the Group's revenue and profits through price compression from combined service agreements or through a reduced number of clients. 7 Related Group strategy: - Drive profitable growth No single client accounts for more than 1% of the...

  • Page 39
    .... The Group has strict standards, procedures and training schemes for physical security. Governance 52 - 84 Key aspects of the Experian risk management framework: • Executive risk management committee • Defined and communicated business • Control reviews and follow-ups with global oversight...

  • Page 40
    ... Business Database in North America. Demerger and related restructuring costs in the year ended 31 March 2009 comprised legal and professional fees, together with costs in connection with the cessation of a number of subsidiaries of the former GUS plc. Interest In the year ended 31 March 2010...

  • Page 41
    ... to raise the level of customer satisfaction. Central to this has been the development of a dedicated information management system, supported by four separate research methods, to monitor the sales and after-sales processes of Guangqi Honda dealers, as well as to collect customer evaluations and...

  • Page 42
    40 Experian Annual Report 2010 Business review Financial review (continued) Earnings and dividends per share Basic earnings per share were 59.0 US cents (2009: 48.0 US cents), after a loss of 0.8 US cents (2009: earnings of 1.2 US cents) in respect of discontinued operations. Benchmark earnings ...

  • Page 43
    ...by FAC of its buy-out option over Experian's 20% interest in FARES on 22 April 2010 and cash consideration of some US$314m will be payable to Experian by 31 December 2010. Format of financial information - Group income statement As the Group further develops cost management globally, a new format is...

  • Page 44
    42 Experian Annual Report 2010 Business review Financial review (continued) consists of a deficit in the principal Experian defined benefit plan in the UK of US$38m (2009: US$19m) and other pension obligations of US$50m (2009: US$39m). Further details are included 136 in note 30 to the Group ...

  • Page 45
    ...management of existing customer debt. Over the past year, Experian has seen unprecedented demand for information to help clients avoid bad debt through timely and appropriate collections actions. Experian's Collection Triggers is a powerful and cost-effective tool for monitoring uncollected accounts...

  • Page 46
    44 Experian Annual Report 2010 Business review Financial review (continued) Income statement analysis - continuing operations 2010 NonBenchmark benchmark1 Total US$m Benchmark US$m 2009 Nonbenchmark1 US$m Total US$m Year ended 31 March Revenue Cost of sales Gross profit Distribution costs ...

  • Page 47
    ... Decision Analytics Marketing Services Interactive Total EBIT margin3 1. Growth at constant exchange rates 2. Discontinuing activities include UK account processing and other smaller discontinuing activities 3. EBIT margin is for continuing direct business only, excluding FARES 2010 US$m 2009 US...

  • Page 48
    ...Experian Annual Report 2010 Business review Financial review (continued) Revenue and EBIT by operating segment 2010 Continuing activities Discontinuing activities1 US$m Total US$m Continuing activities US$m 2009 Discontinuing activities1 US$m Total US$m Year ended 31 March Revenue North America...

  • Page 49
    ... solution has enabled Integris to instantly verify a patient's identity, determine eligibility for charity care and Government assistance, and highlight fraudulent activity. Patients are also classified according to their financial status and likelihood to pay, enabling collections processes...

  • Page 50
    ...Annual Report 2010 Business review Corporate responsibility Experian's approach to Corporate Responsibility (CR) can be typified by one of the four global behaviours that drive our Group culture - 'Doing it right'. A determination to get things right for clients, consumers, employees, shareholders...

  • Page 51
    ...part of Experian, has been designed to protect individuals from the financial loss and emotional strain that accompanies this crime. Members are provided with daily monitoring of their credit profile across all three US credit bureaux. They are also alerted to address change notifications that might...

  • Page 52
    ... all geographies. A global code of conduct has been developed and is now being implemented, and the business is running training programmes to ensure compliance with national legislation. Experian takes into consideration every aspect of information security in its data centre management and invests...

  • Page 53
    ... status with public sector organisations such as Her Majesty's Revenue and Customs in the UK. s Executing superior sales and operations As Experian invests in its sales and operations, a priority is made of ensuring everyone is aware of data compliance issues and operating to a strict ethical code...

  • Page 54
    ... and Chief Executive Officer of Transora, a technology software and services company. She previously served as Executive Vice President, Food Operations and, before that, as Chief Financial Officer of Sara Lee Corporation. Judith is a non-executive director of Reckitt Benckiser Group plc, Allstate...

  • Page 55
    ...Institute of Management Accountants and a member of the Association of Corporate Treasurers. David was appointed to the Experian plc Board on 6 July 2006. Paul Walker (53) Non-executive director Paul Walker has been Chief Executive of The Sage Group plc, a worldwide leader in business solutions for...

  • Page 56
    ... Annual Report 2010 Governance Directors' report The directors present their report and the audited financial statements for the year ended 31 March 2010. Principal activities and business review Experian provides data and analytical tools to businesses to help manage credit risk, prevent fraud...

  • Page 57
    ... of the Company to deal in its shares. - Some of Experian's share-based employee incentive plans include restrictions on transfer of shares while the shares are subject to the plan. 77 Business review 12 - 51 Governance 52 - 84 - As described in the report on directors' remuneration, nonexecutive...

  • Page 58
    ..., Experian plc Employee Share Trust and together with information on diversity, the Experian UK Approved All Employee succession planning and talent 10 development can be found in the key Share Plan are set out in note L to the Company's financial statements. resources section of the annual report...

  • Page 59
    ... proposed at the annual general meeting. By order of the Board Charles Brown Company Secretary 19 May 2010 Corporate headquarters: Newenham House Northern Cross Malahide Road Dublin 17 Ireland Registered office: 22 Grenville Street St Helier Jersey JE4 8PX Business review 12 - 51 Governance 52 - 84...

  • Page 60
    ... Code during the year. Experian's governance framework Advice, review, recommendation and monitoring Strategic project committees (global and regional) Delegated authority flow Board committees Board Audit Committee Principal subsidiaries Risk management committees (executive, regional and global...

  • Page 61
    ... human resources are in place to achieve the goals. The Board reviews management and financial performance against those goals. It is accountable to shareholders for delivering financial performance and long-term shareholder value. To achieve this, the Board directs and monitors the Group's affairs...

  • Page 62
    ... of executive and non-executive directors at 31 March 2010 Chairman Executive Non-executive Length of tenure of directors at 31 March 2010* 0-3 years 3-4 years * Company incorporated in July 2006 Board time usage Operational and financial performance M&A governance Investor relations Other

  • Page 63
    ...of directors and information on dealing in the Company's shares. The training process is continued throughout the directors' terms of office. Business review 12 - 51 Governance 52 - 84 Attendance by individual directors at meetings of the Board and its principal committees Nomination and Corporate...

  • Page 64
    ... Annual Report 2010 Governance Corporate governance statement (continued) Examples of how development is achieved include briefings on Experian's businesses and the environment in which those businesses operate. During the year, the Board directors received a number of induction and training...

  • Page 65
    ...employees to participate in the 2009 Sharesave scheme, discussed the 2009 bonus outcome and the preliminary 2010 bonus targets, agreed to make share plan awards, reviewed the fee of the Chairman and the salaries of the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer...

  • Page 66
    ... 31 March 2010 included the following: - Reviewed the 2009 preliminary and half-year results announcements and the 2009 annual report and accounts. - Assessed critical policies and practices and management and accounting judgments. - Reviewed the control of financial and business risks, the nature...

  • Page 67
    ... Code is that the Board, There is an ongoing process in place for annually, reviews and reports to anticipating, identifying, assessing and shareholders on the effectiveness of the mitigating the significant risks faced by Group's system of internal control - the the Group. The process has operated...

  • Page 68
    ... quarter of the year under review and oversees the management of operational related risks associated with the Group's shared service and data centres as well as global product development and delivery activities. The regional and global operations risk committees review summary risk assessments...

  • Page 69
    ...Chief Financial Officer and institutional investors and analysts. At these meetings a wide range of relevant issues including strategy, performance, management and governance are discussed within the constraints of information already made public. The announcement of the annual and half-year results...

  • Page 70
    ... Experian Annual Report 2010 Governance Report on directors' remuneration The report has been drawn up in line with the Combined Code on Corporate Governance, Schedule 8 of the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 and the UK Listing Authority Listing...

  • Page 71
    ... awarded for other employees in the Group. The Chief Executive Officer ('CEO') has not received an increase in base salary since 1 April 2007 and the other executive directors last received a base salary increase on 1 April 2008. The Committee reviewed salaries in early 2010 and. taking into account...

  • Page 72
    ...Base salary - Reflects the competitive market salary level for the individual and their role - Takes account of personal contribution and performance - In cash - Pensionable - Based on individual contribution - Reviewed annually Annual bonus - Rewards the achievement of annual financial targets...

  • Page 73
    .... The maximum bonus opportunity for executive directors is 200% of base salary. However, this level of annual bonus is only payable if Experian's financial performance surpasses stretching financial targets designed to deliver exceptional results to shareholders. During the year, Kepler advised on...

  • Page 74
    ... business environment for both Experian and our clients, the performance of the Group exceeded the stretching performance targets set by the Committee. In the light of this excellent achievement, in uncertain and testing market conditions, maximum bonus is payable to the executive directors...

  • Page 75
    ...awards made in 2010/11 will be subject to satisfactory ROCE performance. Experian share option plan The Experian share option plan was approved by GUS plc shareholders at the EGM held on 29 August 2006. Grants were made to executive directors under this plan in June 2009. However, following a review...

  • Page 76
    ... testing determined in 2009/10 GUS performance share plan In June 2006, executive directors received a share award under the GUS performance share plan with a face value of one times salary. On the demerger of Experian and Home Retail Group from GUS plc in October 2006 ('demerger') these awards...

  • Page 77
    ...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 to ensure that directors remained fully aligned with the performance of the demerged business. Matching awards of shares were...

  • Page 78
    ... certain GUS schemes, newly issued shares. The current policy is that, where possible, all awards will be satisfied by the purchase of shares, or from shares previously purchased, by the employee trusts. The policy will remain under regular review. The rules of the Experian share plans are in line...

  • Page 79
    ... any benefits-in-kind with the exception of the Chairman who has the use of a company car and private healthcare. The fees of the non-executive directors were initially set in November 2006, following demerger. The first review of these took place in late 2009 taking into account market practice...

  • Page 80
    ... the year ended 31 March 2010. Salary and fees(1) '000s Annual bonus '000s Benefits(2) '000s Total 2010 '000s Total 2009 '000s Chairman John Peace (3) Executive directors Don Robert (4)(5) Paul Brooks (4) Chris Callero (4)(6) Non-executive directors (7) Fabiola Arredondo Laurence Danon Roger Davis...

  • Page 81
    ...the board of GUS plc in April 2005 were granted under the GUS North America Stock Option Plan.The 2005 and 2006 grants were made under the GUS 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...

  • Page 82
    ... Experian Annual Report 2010 Governance Report on directors' remuneration (continued) Performance share plans Details of awards made to directors under the Experian PSP and GUS PSP are set out in the table below. Plan shares held at 1 April 2009(1) Plan shares awarded during the year Plan shares...

  • Page 83
    ...2. John Peace was not eligible to participate in the reinvestment plan. He was granted a special reinvestment award over Experian shares which vested on 11 October 2009. Details of this award were disclosed in the circular to GUS plc shareholders dated 26 July 2006. 74 Financial statements 85 - 160...

  • Page 84
    ... Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 and those in columns (6) and (7) are those required by the UK Financial Services Authority's Listing Rules. Executive directors' service contracts Don Robert has a service agreement with Experian Services Corporation ('ESC...

  • Page 85
    ... Group or in any shares or debentures of the Group's subsidiaries. Shares held in Experian plc 31 March 2010(1) Business review 12 - 51 Governance 52 - 84 Chairman John Peace Executive directors Don Robert (2) Paul Brooks (2) Chris Callero(2) Non-executive directors Fabiola Arredondo Roger Davis...

  • Page 86
    ... 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 87
    ... and the related notes.These Group financial statements have been prepared under the accounting policies set out therein. We have reported separately on the parent company financial statements of Experian plc for the year ended 31 March 2010. Respective responsibilities of directors and auditors...

  • Page 88
    86 Experian Annual Report 2010 Financial statements Group income statement for the year ended 31 March 2010 Notes 2010 US$m 2009 US$m Revenue Cost of sales Gross profit Distribution costs Administrative expenses Operating expenses Operating profit Finance income Finance expense Net finance costs...

  • Page 89
    ... income for the year ended 31 March 2010 2010 US$m 2009 US$m Introduction 2 - 11 Profit for the year Other comprehensive income: Fair value gains/(losses) - available for sale financial assets Actuarial losses - defined benefit pension plans Currency translation differences Reclassification...

  • Page 90
    ...Experian Annual Report 2010 Financial statements Group balance sheet at 31 March 2010 Notes 2010 US$m 2009 US$m Non-current assets Goodwill Other intangible assets Property, plant and equipment Investments in associates Deferred tax assets Trade and other receivables Available for sale financial...

  • Page 91
    ... with owners: Employee share incentive plans: - value of employee services - proceeds from shares issued Exercise of share options Minority interests arising on business combinations Disposal of minority interests Dividends paid during the year Transactions with owners At 31 March 2009 102 - 1,442...

  • Page 92
    90 Experian Annual Report 2010 Financial statements Group cash flow statement for the year ended 31 March 2010 Notes 2010 US$m 2009 US$m Cash flows from operating activities Cash generated from operations Interest paid Interest received Dividends received from associates Tax paid Net cash inflow...

  • Page 93
    ... resident in Ireland.The address of its registered office is 22 Grenville Street, St Helier, Jersey JE4 8PX.The Company's shares are traded on the London Stock Exchange's Regulated Market. Experian is a global information services group. The consolidated financial statements of Experian plc and its...

  • Page 94
    92 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 3. Recent accounting developments (continued) At the balance sheet date, a number of new standards, amendments and interpretations were in issue but are not yet effective for the Group and ...

  • Page 95
    ... 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 awards previously made in respect of shares in GUS plc...

  • Page 96
    94 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 4. Significant accounting policies (continued) Goodwill Goodwill is the excess of the fair value of the consideration payable for an acquisition over the fair value of the Group's share of ...

  • Page 97
    95 Introduction 2 - 11 4. Significant accounting policies (continued) Completed technology 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 ...

  • Page 98
    96 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 4. Significant accounting policies (continued) Cash and cash equivalents Cash and cash equivalents include cash in hand, term and call deposits held with banks and other short-term highly ...

  • Page 99
    ... carried at fair value with unrealised gains or losses reported in the Group income statement. Business review 12 - 51 Governance 52 - 84 Impairment of non-financial assets Assets that are not subject to amortisation are tested annually for impairment. Assets that are subject to amortisation are...

  • Page 100
    98 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 4. Significant accounting policies (continued) If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate ...

  • Page 101
    ... which require the use of cash flow projections based on financial budgets approved by management, looking forward up to five years. Management determines budgeted gross margin based on past performance and its expectations for the market development. Cash flows are extrapolated using estimated...

  • Page 102
    ... Notes to the Group financial statements (continued) 4. Significant accounting policies (continued) The key assumptions used for value-in-use calculations are: CGU Pre-tax WACC 2010 Long term growth rate Pre-tax WACC 2009 Long term growth rate North America Latin America UK & Ireland EMEA Asia...

  • Page 103
    ... reasonable possible changes in such exposures, the Group's sensitivity to foreign exchange risk can be quantified as follows with all other variables held constant: Foreign exchange exposure 2010 2009 Governance 52 - 84 Sterling against US dollar: Currency strengthening/weakening Effect on profit...

  • Page 104
    ... Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 5. Financial risk management (continued) The Group has investments in undertakings with other functional currencies, whose net assets are exposed to foreign exchange translation risk. In order...

  • Page 105
    ...The Group manages its working capital in order to meet its target to convert at least 90% of EBIT into operating cash flow and the conversion percentage for the year ended 31 March 2010 was 98% (2009: 99%). Governance 52 - 84 Fair value estimation The fair value of derivative financial instruments...

  • Page 106
    ...and for which discrete financial information is available. Experian is organised into, and managed on a worldwide basis over, the following five operating segments, based on geographic areas, supported by its central Group functions: North America; Latin America; UK and Ireland; Europe, Middle East...

  • Page 107
    ...data held in databases, Marketing Services provides clients with information designed to assist them in matching the right offer or product to the relevant customer using the most appropriate communication channels. Interactive helps customers to understand and manage their own financial information...

  • Page 108
    106 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 6. Segment information (continued) a) Segment information (GAAP disclosures) (i) Income statement Continuing operations1 Year ended 31 March 2010 North America US$m Latin America US$m UK ...

  • Page 109
    ... Introduction 2 - 11 6. Segment information (continued) (ii) Balance sheet At 31 March 2010 North America US$m Latin America US$m UK & Ireland US$m EMEA/ Asia Pacific1 US$m Segment assets and liabilities US$m Central Activities and other2 US$m Total Group US$m Goodwill Investments in associates...

  • Page 110
    108 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 6. Segment information (continued) (iii) Other segment financial information Continuing operations1 Year ended 31 March 2010 North America US$m Latin America US$m UK & Ireland US$m EMEA/...

  • Page 111
    ... 3,873 1. No single customer accounted for 10% or more of the Group's revenue from external customers in the year ended 31 March 2010 and the year ended 31 March 2009. Business review 12 - 51 2. The Company is resident in Ireland. Revenue with Irish external customers represents less than 1% of...

  • Page 112
    110 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 6. Segment information (continued) (b) Information on business segments (including non-GAAP disclosures) Continuing operations1 Year ended 31 March 2010 Credit Services US$m Decision ...

  • Page 113
    ... Other assurance services, including the review of the Group's half-yearly financial report Other services: Taxation services Services in respect of the demerger Total fees payable to the Company's auditor and its associates 2010 US$m 2009 US$m 1 3 1 5 4 4 9 1 3 1 5 5 4 9 14 Financial statements...

  • Page 114
    ... Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 9. Employee benefit costs and employee numbers Aggregate employee costs for the continuing operations of the Group Notes 2010 US$m 2009 US$m Wages and salaries Social security costs Share-based...

  • Page 115
    ... of the National Business Database in North America. Demerger and related restructuring costs in the year ended 31 March 2009 comprised legal and professional fees, together with costs in connection with the cessation of a number of subsidiaries of the former GUS plc. Cash outflows in respect...

  • Page 116
    114 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 11. Net finance costs 2010 US$m 2009 US$m (a) Net finance costs Interest income: Bank deposits and money market funds Interest differential on derivatives Expected return on pension plan ...

  • Page 117
    ...84 Governance 52 - 84 2010 US$m 2009 US$m (i) Reconciliation of the tax expense 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...

  • Page 118
    ... 3 585 (e) Tax credit recognised in equity on transactions with owners In the year ended 31 March 2010, tax relating to employee share incentive plans of US$12m (2009: US$4m) was recognised in equity and reported as appropriate within transactions with owners.This amount comprised current tax of US...

  • Page 119
    ... operations The Group disposed of its transaction processing activities in France on 31 October 2008 and the results and cash flows of that business are accordingly classified as discontinued. Results for discontinued operations 2010 US$m 2009 US$m Revenue Cost of sales Gross profit Distribution...

  • Page 120
    118 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 14. Basic and diluted earnings per share Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders of the Company by the weighted average number of...

  • Page 121
    ... the exchange rate from US dollars to sterling on 2 July 2010. Pursuant to the Income Access Share arrangements put in place as part of the 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...

  • Page 122
    120 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 17. Other intangible assets Databases Internal use software US$m Internally generated software US$m Acquisition intangibles US$m Total US$m US$m Cost At 1 April 2009 Differences on ...

  • Page 123
    ... the year Disposal of businesses Other disposals Transfer in respect of assets held for sale (note 37) At 31 March 2010 Net Book Value at 31 March 2009 Net Book Value at 31 March 2010 272 17 3 (36) 256 123 1 (1) 123 523 24 2 54 (3) (80) (4) 516 918 41 2 58 (3) (117) (4) 895 Business review 12...

  • Page 124
    ... for its direct and indirect holdings in FADV Class A common stock. FARES disposed of its interests in the two business assets and Experian received cash consideration of US$48m in the year ended 31 March 2010. Experian received notice from FAC in respect of the exercise of its buy-out option...

  • Page 125
    ... Finished goods 1 2 3 2 2 4 21. Trade and other receivables (a)The analysis of trade and other receivables reported in the Group balance sheet is as follows: Current 2010 US$m Non-current 2010 US$m Current 2009 US$m Non-current 2009 US$m Business review 12 - 51 Trade receivables Less: provision...

  • Page 126
    124 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 21. Trade and other receivables (continued) (d)Trade receivables of US$182m (2009: US$134m) were past due but not considered impaired and these are further analysed as follows: Current 2010 ...

  • Page 127
    ...-current 2010 US$m Current 2009 US$m Non-current 2009 US$m Governance 52 - 84 Trade creditors VAT and other taxes payable Social security costs Accruals and deferred income Other creditors 110 31 95 767 59 1,062 8 6 14 104 32 78 751 30 995 17 25 42 The accounting policies for other financial...

  • Page 128
    126 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 24. Loans and borrowings (continued) The accounting policies for financial instruments set out in note 4 have been applied to the above items.There is no material difference between the ...

  • Page 129
    ... (2,003) (2,188) 29 21 28 (2,110) 2010 US$m 2009 US$m Listed equity securities - UK (sterling denominated) Listed equity securities - North America (US dollar denominated) 32 1 33 21 5 26 Governance 52 - 84 The accounting policies for available for sale financial assets set out in note 4 have...

  • Page 130
    128 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 27. Other financial assets and liabilities (a) Analysis of other financial assets and liabilities reported in the Group balance sheet: Assets Bank deposits Derivative financial instruments: ...

  • Page 131
    ...(107) Total US$m Business review 12 - 51 14 1 15 642 (650) (8) 7 22 1 23 23 11 11 11 - (5) (5) (5) - 42 2 44 642 (650) (8) 36 Governance 52 - 84 Financial statements 85 - 160 The table above analyses the Group's derivative financial liabilities into relevant maturity groupings based on the...

  • Page 132
    130 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 28. Maturity profile of financial liabilities - contractual undiscounted cash flows At 31 March 2010 Loans and borrowings Net settled derivative financial instruments (note 27 (c)) Gross ...

  • Page 133
    ... to directors of the Company after 1 April 2009 have been subject to performance conditions based on the growth in benchmark earnings per share. 2. Three day averages are calculated by taking middle market quotations of an Experian plc share from the London Stock Exchange daily official list. 3. The...

  • Page 134
    ...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 - Options under the Experian Share Option Plan vest after 3 years or 4 years.The expected...

  • Page 135
    ...5.39 6.12 4.42 2.1 2.1 2.4 1.0 1.4 2.5 7.8 7.4 5.2 7.2 Governance 52 - 84 At 31 March 2009 Range of exercise prices £ Number of options m Weighted average exercise price £ Weighted average remaining lives Expected years Contractual years 2-3 3-4 4-5 5-6 6-7 2.8 10.4 8.6 10.9 1.1 33.8 2.91...

  • Page 136
    134 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 29. Share-based payment arrangements (continued) (b) Share awards (i) Summary of arrangements Experian Co-Investment Plan Experian Reinvestment Plan Experian Performance Share Plan Experian ...

  • Page 137
    ...to dividend distributions on awarded shares. Market-based performance conditions are included in the fair value measurement on grant date and are not revised for actual performance. (iii) Movement in number of share awards outstanding Number of awards 2010 m Number of awards 2009 m Business review...

  • Page 138
    ... 2009.The Group provides a defined contribution plan, the Experian Money Purchase Pension Plan, to other eligible UK employees. Both plans are governed by trust deeds which ensure that their finances and governance are independent from those of the Group. In North America and Latin America, benefits...

  • Page 139
    ... paid by employees Benefits paid At 31 March The actual return on plans' assets was a gain of US$225m (2009: loss of US$167m). (v) Expense/(income) recognised in the Group income statement 595 25 47 178 12 4 (39) 822 1,045 (261) 69 (236) 14 4 (40) 595 Governance 52 - 84 2010 US$m 2009 US...

  • Page 140
    ...$16m 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 141
    ... real rates of return experienced in the respective markets. (xi) Other information 2010 US$m 2009 US$m 2008 US$m 2007 US$m 2006 US$m Business review 12 - 51 Present value of defined benefit obligations Fair value of plans' assets Net pension obligations/(assets) Experience adjustment on defined...

  • Page 142
    140 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 31. Deferred tax (a) Net deferred tax liabilities 2010 US$m 2009 US$m At 1 April Differences on exchange Income statement (credit)/charge (note 12) Business combinations (note 36(a)) Tax ...

  • Page 143
    ... differences US$m 390 33 10 5 (4) 434 Total Business review 12 - 51 Intangibles Share option and award plans US$m US$m US$m US$m At 1 April 2008 Differences on exchange Income statement charge/(credit) Business combinations Transfers At 31 March 2009 5 8 (13) - 37 (2) 6 (36) 5 184 (48) (57...

  • Page 144
    ... liabilities included US$18m (2009: US$24m) in connection with the strategic programme of cost efficiency measures and US$nil (2009: US$11m) in respect of obligations relating to the Group's withdrawal from large scale credit card and loan account processing in the UK.The restructuring provision at...

  • Page 145
    ...'s issued share capital. Further details relating to the share capital of Experian plc at the balance sheet dates, together with details of ordinary shares issued during the year and since 31 March 2010, are contained in note K to the parent company financial statements. The share premium account...

  • Page 146
    144 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 35. Notes to the Group cash flow statement 2010 US$m 2009 US$m (a) Cash generated from operations Profit after tax Adjustments for: Tax expense Share of post-tax profits of associates Net ...

  • Page 147
    ... 35. Notes to the Group cash flow statement (continued) 2010 US$m 2009 US$m (e) Disposal of subsidiaries Disposal of transaction processing activities in France (note 13) Disposal of other businesses (note 36(b)) Cash (outflow)/inflow from disposal of subsidiaries (f) Financing Debt due within one...

  • Page 148
    ... the disposal of a number of the Group's smaller businesses including the National Business Database in North America with a related cash inflow of US$6m. Costs and cash outflows during the year ended 31 March 2010 in respect of the earlier disposal of the transaction processing activities in France...

  • Page 149
    ... 107 54 207 Governance 52 - 84 The Group leases offices and technology under non-cancellable operating lease agreements with varying terms, escalation clauses and renewal rights. 39. Capital commitments 2010 US$m 2009 US$m Capital expenditure for which contracts have been placed: Property, plant...

  • Page 150
    148 Experian Annual Report 2010 Financial statements Notes to the Group financial statements (continued) 41. Related parties The ultimate parent company of the Group is Experian plc which is incorporated in Jersey. Significant subsidiary and associate undertakings at 31 March 2010 are shown in ...

  • Page 151
    ... on the Group financial statements of Experian plc for the year ended 31 March 2010. Respective responsibilities of directors and auditors The directors' responsibilities for preparing the annual report and the parent company financial statements in accordance with applicable law and UK Accounting...

  • Page 152
    150 Experian Annual Report 2010 Financial statements Parent company profit and loss account for the year ended 31 March 2010 Notes 2010 2009 (Represented) (Note B) US$m US$m Administrative expenses Operating loss Net interest (expense)/income Net foreign exchange gain (Loss)/profit on ordinary ...

  • Page 153
    ....9 8,468.4 I Business review 12 - 51 J K K L M 78.6 1,124.3 7,183.7 8,386.6 78.5 1,120.1 7,269.8 8,468.4 The financial statements on pages 150 to 158 were approved by the Board on 19 May 2010 and were signed on its behalf by: Governance 52 - 84 John Peace Director Financial statements 85...

  • Page 154
    ... holding company of the Experian group of companies (the 'Group') and its shares are traded on the London Stock Exchange's Regulated Market. Experian is a global information services group. B. Basis of preparation and significant accounting policies Basis of preparation The separate financial...

  • Page 155
    .... C. Operating loss Operating loss is stated after charging: (i) Staff costs 2010 2009 (Represented) (Note B) US$m Business review 12 - 51 Governance 52 - 84 US$m Directors' fees Wages and salaries 1.8 1.0 2.8 1.6 1.1 2.7 Financial statements 85 - 160 Executive directors of the Company are...

  • Page 156
    ... 2010, the Company paid interim dividends of US$21.0m to those shareholders who did not elect to receive dividends under the Income Access Share ('IAS') arrangements.Total dividends of US$205.7m were paid to Experian shareholders during the year with the balance of US$184.7m paid by Experian Finance...

  • Page 157
    ... Q.The Company holds directly its interests in the whole of the issued share capital of the following undertakings: Country of incorporation Principal activity Experian Investment Holdings Limited Experian Holdings Ireland Limited Experian Group Services Limited Experian Ireland Investments Limited...

  • Page 158
    156 Experian Annual Report 2010 Financial statements Notes to the parent company financial statements (continued) I. Debtors - amounts due within one year 2010 2009 (Represented) (Note B) US$m US$m Amounts owed by subsidiary undertakings Other prepayments and accrued income Other debtors 2,...

  • Page 159
    ...269.8 Governance 52 - 84 Own shares represent the cost of some 10.8m (2009: 10.6m) ordinary shares in the Company held, to satisfy obligations under employee share incentive plans, in two trusts: 2010 m 2009 m The Experian plc Employee Share Trust Experian UK Approved All-Employee Share Plan 10...

  • Page 160
    158 Experian Annual Report 2010 Financial statements Notes to the parent company financial statements (continued) N. Commitments The Company has an annual operating lease commitment and related annual cost of US$0.4m (2009: US$0.5m) in respect of the corporate headquarters in Dublin and this ...

  • Page 161
    ...% to Experian plc shares and 41.765% to Home Retail Group plc shares (based on the closing prices of the respective shares on their first day of trading after their admission to the Official List of the London Stock Exchange on 11 October 2006). For GUS plc shares acquired prior to the demerger of...

  • Page 162
    ...Mellon acts as Depositary.The Level 1 ADR programme is not listed on a stock exchange in the USA 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 Relations Bank of NewYork Mellon...

  • Page 163
    ... 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 164
    Corporate headquarters Experian plc Newenham House Northern Cross Malahide Road Dublin 17 Ireland Corporate of fice 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 ...