Experian 2015 Annual Report Download - page 30

Chief Executive’s review continued
Capital optimisation: earlier this year
we conducted a thorough review of our
capital plans to sharpen focus on capital
allocation. We’ve since implemented
changes in the way we assess risk and
how we allocate capital internally, with
a more prominent focus on returns. We
also seek to balance flexibility to invest,
with optimisation of our cost of capital
and balance sheet prudence, and as a
result we announced changes in January
2015 to our target debt ratios and dividend
policy. We also initiated a share repurchase
programme, which is targeted to complete
by 31 March 2016.
Other items
Cash generation and uses of cash
Cash generation during the year was
strong, with EBIT conversion into
operating cash flow of 104%, compared
to 101% in the previous year. Operating
cash flow increased to US$1,359m from
US$1,321m in 2014. During the year,
US$380m was utilised in organic capital
investment, and US$67m supported
acquisitions, principally a small credit pre-
qualification business in the UK. Share
purchases amounted to US$192m.
In January 2015 we announced a US$600m
share buyback programme, of which
US$64m had been completed by the
end of March 2015.
Equity dividends paid amounted to
US$374m, and after other small inflows a
balance of US$592m was used to reduce
net debt. At 31 March 2015, net debt was
US$3,217m, representing 1.9 times EBITDA
for the last twelve months, and just below
our target debt range of 2.0 to 2.5 times.
Return on capital employed
Return on capital employed (‘ROCE’)
for the year was 14.9% (2014: 15.6%). As
expected, ROCE reduced during the year
due to the effect of the Passport and 41st
Parameter acquisitions made during 2013.
Excluding this effect ROCE progressed by
110 basis points during the year.
Dividend
For the year ended 31 March 2015, we’re
announcing a second interim dividend
of 27.00 US cents per share. This gives a
full year dividend of 39.25 US cents per
share, up 5%, consistent with our policy
of growing the dividend in line with or
ahead of Benchmark earnings. The second
interim dividend will be paid on 24 July 2015
to shareholders on the register at the close
of business on 26 June 2015. If the current
foreign exchange rate (£1=US$1.54 as at
11 May 2015) prevails when the second
interim dividend is translated, the full
year dividend expressed in sterling would
increase by 16%.
People
Finally, I would like to acknowledge the
tremendous effort by all the people of
Experian during the past financial year.
While it was a year of some challenges,
we delivered a successful outcome and
I am incredibly proud of how committed
everyone is to pushing the business
forward. The energy I see across the
business is palpable and I am confident
that we’ll make great progress in the
coming year, delivering on the many
exciting initiatives we have across
the Group.
28 Strategic report •Chief Executive’s review