Experian 2014 Annual Report Download - page 36

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Chief Executive’s statement continued
• EBIT margins in Marketing Services
improved, largely as a result of cost
actions taken during the year, and
notwithstanding revenue contraction
in Latin America and the wind-down of
a large marketing contract in EMEA.
• Consumer Services EBIT margins
contracted, reflecting increased
marketing and customer acquisition
expenditure in support of the brand
transition in North America.
• We absorbed adverse translational
foreign exchange movements, caused
principally by the depreciation of the
Brazilian real relative to the US dollar.
Cash flow and net debt
Cash generation during the year was very
strong, and we converted 101% of EBIT
into operating cash flow, significantly
exceeding our target of 90% conversion.
Net debt levels increased during the
year, rising by US$871m to US$3,809m
at 31 March 2014, primarily reflecting
the acquisitions of Passport and 41st
Parameter. We made good progress
with regard to the efficiency of capital
expenditure, and our capital expenditure
to revenue ratio reduced to 8.3% (2013:
9.7%). The net debt to EBITDA gearing
ratio was 2.27 times at 31 March 2014,
having peaked at over 2.5 times in
November 2013 following the acquisition
of Passport.
Dividend and capital
management
For the year ended 31 March 2014, we are
announcing a second interim dividend of
26.00 US cents per share. This gives a full
year dividend of 37.50 US cents per share,
up 8%. The second interim dividend will
be paid on 25 July 2014 to shareholders
on the register at the close of business on
27 June 2014. Net share purchases during
the year amounted to US$371m, of which
approximately US$180m was the cost of
satisfying vesting employee plans.
Our priority over the coming year will
be to return to our target net debt to
EBITDA range of 1.75 to 2.0 times. We
expect to achieve this during the year
ending 31 March 2015, subject to future
trading performance. Our target dividend
payout ratio is unchanged at 40% and
we expect to make share repurchases
only in respect of employee share plan
awards which vest in the year.
People
On 16 January 2014, Experian’s Board
announced my appointment to succeed
as Chairman of Experian, following Sir
John Peace’s retirement. I am deeply
honoured to have been chosen and am
greatly looking forward to taking up my
new role. At the same time, the Board
announced that Brian Cassin will be
appointed as Chief Executive Officer
and George Rose will become Deputy
Chairman and Senior Independent
Director. These appointments will become
effective from 16 July 2014, following our
Annual General Meeting. Sir John Peace
and Sir Alan Rudge will retire from the
Board at the conclusion of that meeting.
On 29 April 2014, we also announced the
appointment of Lloyd Pitchford as Chief
Financial Officer and as an executive
director of Experian and the appointment
of Jan Babiak as a new independent non-
executive director. Lloyd and Jan will bring
a great deal of experience to Experian and
I am delighted to welcome them both.
Today, we are announcing that our Chief
Operating Officer, Chris Callero, has
decided to retire from the Board at the
conclusion of the Annual General Meeting
on 16 July 2014. Chris joined Experian
in 2002 and has made an immense
contribution to the development of the
Group, particularly as it expanded from its
roots in the UK and the US to become the
global business it is today. We owe Chris
a deep debt of gratitude for his significant
achievements on behalf of the Group.
Chris will be succeeded as Chief
Operating Officer by Kerry Williams,
who will take up his new position and
join the Board as an executive director
following Chris’s retirement at the
Annual General Meeting. Kerry joined
Experian North America in 2003 and was
subsequently promoted to lead our Credit
Services operations globally. Last year
Kerry was appointed as President of our
Latin America region and most recently
assumed the post of Deputy Chief
Operating Officer for Experian. Kerry has
immense experience and deep knowledge
of Experian’s businesses across the world,
which I am certain will be of significant
benefit to the Group in the future.
Finally, I would like to take this
opportunity to thank everyone in
Experian for their dedication over the
year. Experian is a people business
and its achievements are down to
their enthusiasm, creativity and sheer
hard work. I would like to express my
gratitude for their ongoing support
and commitment to the success of
the business.
Strategic report • Chief Executive’s statement
I would like to pay tribute to Sir John Peace, on the eve of his retirement
as Chairman. It is true to say that without Sir John’s passion and energy
Experian would not be the global leader it is today. From the earliest days of
its formation, Sir John has driven the business to ever greater achievements.
His great foresight, leadership and gritty determination forged Experian into
the business it is today. His ethos and passion will, I am certain, live on in the
business for many years to come.