Experian 2010 Annual Report Download - page 15

13
Introduction 2 – 11
Governance 52 – 84
Financial statements 85 – 160
Business review 12 – 51
Delivering innovative data and analytics
We are investing in our data sources,
our platforms and our products across
the globe to bring the fresh insights
and innovation that our customers
need. For example, we are beneting
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
capabilities; we are introducing new
digital advertising services within
our marketing business and we are
investing further behind the launch of
ProtectMyID, our identity monitoring
tool for consumers.
Executing superior sales
and operations
Growth in our business will be delivered
by our people and we are investing
in our business to sustain our high
performance sales culture and to
maximise efciency across
our operations.
These initiatives, along with targeted,
inll acquisitions that are tightly
coupled to the core, are central to our
goal of delivering strong, sustainable
returns for our shareholders.
Net debt
Net debt was reduced by US$483m
to US$1,627m at 31 March 2010,
after funding capital expenditure of
US$314m, and net share purchases
of US$114m by employee trusts and in
respect of employee share incentive
plans. In addition, there was a net
inow of US$66m from disposals net of
acquisitions. As at 31 March 2010, the
net debt to EBITDA gearing ratio was
1.8x, which is at the lower end of our
1.75-2.0x adjusted target debt range.
The gearing ratio is adjusted to include
the put option over the 30% minority
stake in Serasa, valued at US$661m at
31 March 2010.
Debt funding
During the year, we started an 18
month programme to renance our
bank and bond facilities with an
issuance in February 2010 of €500m
Guaranteed notes at 4.75% due 2020,
which was swapped into US dollars.
This programme will continue in the
year ending 31 March 2011, as we aim
to spread debt maturities and diversify
our sources of funding. The marginal
cost of new funding sources is higher
than the funds being replaced and, as
a result, for the year ending 31 March
2011, our current expectation is that net
interest expense will be in the range of
US$90-100m.
Capital strategy
We have recently undertaken a re-
evaluation of our capital policy and
payout ratios in light of the investment
needs of the business, the reduction in
total net debt and ongoing strength in
cash generation. We remain committed
to a prudent but efcient balance sheet
consistent with our desire to retain a
strong investment grade credit rating.
Our target gearing ratio, net debt
adjusted for the current value of the
put option over the minority shares in
Serasa, divided by EBITDA, will remain
unchanged at 1.75-2.0x.
We anticipate that continuing strength
in our cash generation, as well as
receipts from the FARES disposal,
will result in net debt being below
our gearing targets. Accordingly, it
is our current intention to adjust our
distribution policies to shareholders as
follows:
We intend to increase our dividend •
payout ratio over the next twelve
months. By the time of the second
interim dividend next year, we expect
to have dividend cover based on
Benchmark EPS of around 2.5 times
on an annual basis; our previous
policy was to have cover on this basis
of at least three times.
We will commence a share buyback •
programme of around US$300m, to
be implemented over the next twelve
months, subject to free cash ow
and acquisition expenditure. It is
planned to repurchase an additional
US$50m to satisfy employee share
incentive plans. The total share
repurchase over the next twelve
months is therefore expected to be
approximately US$350m.
Dividend
For the year ended 31 March 2010, we
have announced a second interim
dividend of 16.00 US cents per share.
This gives a full-year dividend of
23.00 US cents per share, 2.9 times
covered by Benchmark EPS, and up
15% as we transition to our increased
dividend payout. The second interim
dividend will be paid on 23 July 2010
to shareholders on the register at the
close of business on 25 June 2010.
Changes to external
reporting calendar
We have undertaken a review of
nancial reporting frequency in order
to bring greater efciency to our
external reporting. Henceforth, we will
issue nancial updates on a quarterly
basis only. This brings us into line with
reporting frequencies across our peer
group. Going forward, our nancial
calendar will include the Q1 Interim
Management Statement (in July), the
half-yearly report (in November), the
Q3 Interim Management Statement
(in January) and the preliminary
results (in May). We aim to accelerate
the reporting of our half-yearly and
preliminary results starting in the year
ending 31 March 2012.
Our people
The strength of our performance is
down to the outstanding achievements
of our people. It is reective of a terric
effort by our employees, in the face of
some tough market conditions. I salute
their dedication and commitment and I
would like to take this opportunity
to thank all our employees for their
single -mindedness and strength of
purpose over the past year.
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